A federal regulator has raised the dollar amount of home loans that qualify for backing by Fannie Mae
and Freddie Mac
the two giant government-sponsored enterprises.
In 201[ads1]9, the maximum compliance limit will be $ 484,350, the Federal Housing Finance Agency said Tuesday. That's up 6.9% from the 2018 maximum of $ 453,100. The change is based on the rate of change in home prices between the third quarter of 2017 and the third quarter of 2018, as measured by FHFA's House Price Index.
But in higher-priced areas, loan limits are capped at 150% of the baseline $ 484,350. That means Fannie and Freddie will provide loans up to $ 726,525 in roughly 100 higher-cost counties.
Raising the dollar limit on Fannie and Freddie-backed loans is one way of lubricating the mortgage market. Hvis banker eller andre långivere kan sælge større lån til de virksomheder, som gør det lettere for dem å holde utlån. Til gengæld, det gør det lettere for købere at finde finansiering, der generelt er mere fordelagtigt end andre typer af boliglån, ligesom dem, der støttes af Federal Housing Administration.
Men det øger også risikoen for skatteydere. Fannie and Freddie operate with only a slim capital reserve, as the result of a 2012 directive from Congress that was patched late in 2017. The update was due to an agreement between FHFA Director Mel Watt and the U.S. Treasury even if they continue to guarantee between 40% -50% of new mortgages. Det betyder at i et hvilket som helst kvartal, enten et selskap er risikoen for å ta skattepenger penger.
Also read: Fannie Mae to turn to taxpayers after $ 6.5 billion loss
Many Washington housing analysts were carefully watching FHFA's move on the loan limits this year. Watt's term is up this year, and he will probably be replaced by someone well known to Treasury Secretary Steven Mnuchin. Many Washington insiders think it will be Joseph Otting, who currently serves as the comptroller of the currency. Otting worked for Mnuchin at OneWest Bank, and it is widely believed that Mnuchin intends to attempt a permanent Fannie-Freddie fix once he has a trusted deputy helm FHFA.
Related: To free Fannie and Freddie, their regulator may bypass do-nothing Congress
In any such overhaul, Republicans are expected to press for the government to have a smaller footprint in the mortgage market, a step det kan være opnået ved at indsnævre de typer af lån, der tilbydes eller låntagernes evne til at få adgang til markedet, analytikere har sagt. In turn, Democrats would probably okay lower loan limits, on the premise that anyone with the means to buy a home worth nearly a million dollars may not need as much government assistance.
The loan limits are the right policy to live to debate, "said Ed Golding, currently a fellow at the Urban Institute, who previously served as head of FHA. Golding thinks scaling back the limits is "the cleanest way to reduce the government's footprint" if that's what policymakers want.
While Golding acknowledges that the optics of the higher loan limits are uncomfortable, he points out that the government's fingerprints are all over the financial system, including in backing the banks that make – and keep on their books – jumbo mortgages.
"Loan limits are something that should not be one-offs, but part of the overall discussion of housing finance reform," Golding told MarketWatch.
See: Blue-state Republicans embraced the 2017 tax cuts. It may have cost them.