WASHINGTON—After a long August recess, the House and Senate have both been in session, and mortgage industry lobbyists will be looking for every opportunity to pass an extension of the $729,750 GSE loan limit.
But this is an election year and even passing routine legislation can get complicated. In addition, the fall session will be very short. By Oct. 9, lawmakers will be back home, campaigning for re-election.
Mortgage Bankers Association chief lobbyist Bill Killmer notes that in the current political atmosphere it takes a lot of “blocking and tackling” to get a bill through the House and Senate.
(The maximum $729,750 loan limit for Fannie Mae, Freddie Mac and Federal Housing Administration-backed loans in high-cost areas will expire at yearend unless policymakers act.)
With the slow pace of this Congress, it could take until December to pass a loan limit extension, lobbyists believe.
The main focus of this fall’s congressional session will be passing appropriations bills to fund government operations for fiscal year 2011, which starts Oct. 1.
The House already passed a Department of Housing and Urban Development appropriations bill which includes an extension of the $729,750 loan limit through September 2011.
The Senate Appropriations Committee approved a HUD appropriations bill that also extends the $729,750 loan limit. But it is unclear if the Senate will be able to pass the HUD bill before Congress adjourns for the Nov. 2 election.
It is likely lawmakers will resort to a continuing resolution, which will fund federal government operations until they return in November for a lame duck session.
Hopefully, Congress will come to terms on a budget before yearend.
Without an extension, the maximum loan limit would drop back to $625,500 on Jan. 1, which would be disruptive to certain portions of the GSE jumbo market.
Fortunately, House and Senate appropriators appear to be in agreement on several issues important to the mortgage industry.
House and Senate HUD appropriation bills are in sync on renewing the commitment authority for the Federal Housing Administration and Government National Mortgage Association at FY 2010 levels.
The FY 2011 appropriation bills authorize FHA to insure up to $400 billion of single-family loans during the government’s fiscal year. Ginnie Mae can guarantee up to $500 billion in mortgage-backed securities.
The appropriators also are allocating $150 million for the FHA Home Equity Conversion Mortgage program.
Without this credit subsidy, the FHA would have to make deeper reductions in the loan proceeds seniors can receive from government-backed reverse mortgages.
Of more immediate concern is the National Flood Insurance Program.
Congress has passed several short-term extensions of the flood insurance program this year and the current extension expires Sept. 30.
The Federal Emergency Management Agency’s authority to renew flood insurance policies and approve new ones has already lapsed three times this year. Hopefully, it won’t happen a fourth time.
