DEC 16, 2013 5:16pm ET

Fannie, Freddie Regulator Considering Loan Limit Reduction Again

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The Federal Housing Finance Agency is once again raising the possibility of reducing Fannie Mae and Freddie Mac’s loan limits but not before October at the earliest.

The FHFA issued a “request for public input” Monday, to gather comments on reducing the GSE maximum loan limit to $600,000 from $625,000 and the floor loan limit to $400,000 from $417,000.

For counties with loan limits between $400,000 and $600,000, lenders would see them reduced by 4%.

FHFA acting director Edward DeMarco advanced such a reduction earlier this year but he appeared to back down because of congressional pushback. Senate and House members claimed only Congress could set the maximum and lower loan limits.

However, DeMarco has responded to these congressional claims by asserting that the FHFA, as the appointed conservator of Fannie and Freddie, has the “legal authority and responsibility” to set the GSE loan purchase limits.

Meanwhile, the FHFA is not threatening to reduce the GSE loan limits before Oct. 1. “This contemplative action is a plan and not a final decision,” the FHFA says. When a decision is made, lenders will have at least six months to adjust to the new loan limits.

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