Loan limits on Fannie Mae, Freddie Mac, FHA and VA loans should be gradually reduced to encourage the private sector to play a larger role in the housing finance system, according to a Bipartisan Housing Commission.

A gradual reduction in the maximum loan limits should “serve as the primary policy dial to assist in this transition” to where private capital has the dominant share of the mortgage market, according to a report the BHC released Monday morning.

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