To help mend the struggling housing market, provide affordable mortgages for creditworthy home buyers and stabilize home values, which are all critical to creating jobs and helping the sputtering economy, .
The Senate has already approved a plan to reinstate and extend the higher loan limits for an additional two years. In light of the continuing weakness in the overall housing market, it is incumbent upon the House to follow suit to ensure that millions of homes will still be eligible for Fannie Mae, Freddie Mac and FHA funding.
Last month, the national ceiling for mortgages securitized by Fannie Mae and Freddie Mac or insured by the FHA dropped from $729,750 to $625,500 and the formula for establishing area loan limits became more restrictive, producing decreases in more than 650 counties in 42 states in addition to those bound by the national ceiling.
This ripple effect means that millions of homes nationwide, including a substantial number in our local community, are now ineligible for Fannie Mae, Freddie Mac and FHA funding. In order to obtain a home loan, buyers will be subject to higher mortgages interest rates, fees and downpayments and more stringent credit standards.
Restoring the higher loan limits will provide home owners and home buyers with safe and affordable financing while providing a much-needed boost to housing markets all around the country.
If the House fails to act, the results could prove catastrophic for our local and national economy. The current drop in mortgage loan limits will reduce housing demand and place downward pressure on home prices in our local market and other areas across the nation. In turn, this will trigger more foreclosures, impede job creation and cause the fragile economy to backslide into recession.
The stakes could not be higher. At a time when stabilizing home values is vital to bolster household wealth, spur job growth and get the flagging economy moving forward, the House must act responsibly and reinstate the higher loan limits.
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