Thursday, November 3, 2011

Call to action: contact your member of Congress about lowered loan limits

The National Association of Home Builders issued a call to action today asking HBA members to contact their members of Congress and seek their support for extending the conforming loan limits for Federally-backed home mortgages.

If you and your customers want to continue to receive the types of mortgages you have become used to getting, the ones with the best interest rates, lower fees, a lower down payment requirement, and less stringent credit requirements, you need to tell your U.S. Representative to extend the conforming loan limits for home mortgages backed by the Federal government.

"Conforming Loans" are those mortgage loan amounts that qualify to be backed by the Federal government under programs run by Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA).  On September 30 Congress allowed the maximum limits for loans backed by the Federal government to expire, and the average loan limit fell by about 10 percent.

For the Upstate, the conforming loan limits did not change for Fannie Mae and Freddie Mac.  The limits did change, however, for FHA-backed mortgages.  The limit dropped 8 percent to $271,050 on a home with a maximum price of $280,881 in Greenville, Pickens, and Laurens counties.  According to NAHB, 2.24 percent of Greenville County's owner-occupied housing stock no longer qualifies for an FHA mortgage.  In Pickens County, 1.61 percent of owner-occupied homes no longer qualify, and in Laurens County 1.82 percent no longer qualify.

Fannie Mae, Freddie Mac, and FHA guarantee most traditional mortgages in America today. What are the consequences of these changes?  The next time you, your family, or your customers seek a mortgage that are higher than these lowered limits, you will be required to seek what is called a Jumbo Mortgage. These mortgages come with higher rates, higher fees, higher down payment requirements, and stricter credit requirements.


  1. Asking Congress to revert back to what got us into this housing trouble is so irresponsible that it defies logic. This is our leadership?

  2. Anonymous: The loan limits did not cause the problem, the loan standards did. Home Builders are not asking for a return to the loose lending standards, just to maintain the size of the mortgage that is guaranteed at least until the market gets back on its feet.