California Realtors Object to Fannie, Freddie Loan Limit Reductions

California Realtors are raising objections to the Corker-Warner GSE reform bill because of the reduction in loan limits in high-cost areas.

The GSE reform bill (S. 1271) calls for winding down Fannie Mae and Freddie Mac’s operations over five years and encourages more private capital to enter the mortgage market.

So the bill reduces the GSE single-family conforming limit from $625,500 in high-cost areas to $417,000 by the end of five years.

“While the bill is a starting point, any final legislation must not hinder liquidity for qualified homebuyers, especially in a down market,” according to the California Association of Realtors.

“California, in particular, will be adversely impacted by this bill, which seeks to lower loan limits in high-cost areas, thereby making it more difficult for California homebuyers to get equal access to affordable mortgage capital and reducing homeownership opportunities,” said CAR president Don Faught.

Sens. Bob Corker, R-Tenn., and Mark Warner, R-Va., introduced their bipartisan GSE reform bill on June 25, which has generally been well-received by industry groups, regulators and consumer groups.

“We commend Sens. Bob Corker and Mark Warner for proposing meaningful and bipartisan legislation, which provides an opportunity to redefine America’s commitment to housing,” Faught said.

However, CAR will be working with California senators to improve the bill to “ensure it won’t harm California homebuyers or its housing market,” he added.