The GSE regulator is considering a reduction in the loan limits as part of an effort to reduce the government’s footprint in the mortgage market.
“Such action by a single regulator would serve only to further tighten credit availability and thereby erode progress in our fragile housing recovery,” according to the congressional letter to FHFA acting director Edward DeMarco.
The 66 representatives that signed the Oct. 10 letter also claim the FHFA does not have the authority to reduce the GSE loan limits.
“Congress did not give FHFA the authority to reduce the loan limits. In fact, we included language in statute explicitly stating that the loan limits could not be reduced,” said Rep. Gary Miller, R-Calif.
Miller stressed that the limit issue should be left to Congress, which is currently working on GSE reform.
As previously reported, 13 U.S. senators and a number of industry trade groups have sent similar letters to the GSE regulator.
Before the FHFA takes any action, the senators want DeMarco to describe what legal basis he would use to authorize a reduction in the GSE loan limits.