There have been reports the GSE regulator is considering lowering the floor to $400,000.
But a joint letter by 15 organizations points out that the Housing and Economic Recovery Act of 2008 specifically prohibits a reduction in the $417,000 floor.
“Not only is lowering loan limits bad for housing, we question to what extent FHFA’s authority would allow for such a change considering congressional intent when passing the HERA law was certainly opposed to a reduction,” according to the Oct. 8 letter.
The letter is signed by groups representing, builders, Realtors, credit unions, mortgage banking companies, mortgage insurers and title companies.
Currently, the GSEs can purchase a loan with the principal balance of up to $417,000 anywhere in the U.S.
“A reduction of the conventional conforming loan limit to $400,000 would have impacted nearly 154,000 borrowers in 2012, many of whom were in markets still in recovery,” the letter says.