August 16, 2011 (Chris Moore)
Without a deal on the table to extend or make permanent current conforming loan limits on government-backed mortgages by Fannie Mae and Freddie Mac, Wells Fargo will no longer accept applications for loans that fall under the soon to expire temporary loan limits.
Congress temporarily raised the conforming loan limits from $417,000 to $729,750 in 2008 to help the slumping housing industry, but the current loan limits are set to expire on October 1st.
Once the temporary loan limits expire, the maximum conforming loan limit for the Federal Housing Administration (FHA), Freddie Mac, and Fannie Mae will decline to $625,500 with many areas that have enjoyed the higher loan limits falling far below the new maximum.
Wells Fargo’s deadline for accepting loan applications under the temporary loan limits ended yesterday, August 15th, and all application for loans of $625,501 or more will now be considered as jumbo loans.
Housing industry heavyweights such as the National Association of Realtors (NAR), the National Association of Home Builders (NAHB), and the Mortgage Bankers Association (MBA) have advocated making permanent or extending the higher current conforming loan limits.
There is still a possibility that the current loan limits could be extended as a bill that was introduced by Rep. John Campbell (R-CA) and Rep. Gary Ackerman (D-NY) that extends the current loan limits for two more years is waiting for Congress to consider when they come back from their summer recess in September. The bill has wide support from within the housing industry.
Housing advocates fear that the higher down payment requirements and interest rates that typically accompany non-conforming and jumbo loans will have a negative impact on the housing industry, with as many as 17 million homes nationwide being affected by the reduced loan limits according to NAR.
Tag: conforming loan limits, Wells Fargo, NAR, HAHB, MBA, jumbo loans, housing industry, temporary loan limits, FHA, Freddie Mac, Fannie Mae