HUD Wants GSE Loan Limits Localized

The Department of Housing and Urban Development is advocating that a new GSE regulator have the authority to set conforming loan limits in different regions to address the issue of high housing costs.Testifying before the House Financial Services Committee on Wednesday, HUD Secretary Alphonso Jackson said a regulator of the housing government-sponsored enterprises should have the ability to set loan limits "on a local basis each year" using "available" data. Currently, the Office of Federal Housing Enterprise Oversight sets the loan limit in a given year based on home prices in the previous year. The 2005 loan limit is $359,650, no matter where the house is located. Housing costs -- and the size of a mortgage -- can vary greatly from region to region. Historically, conforming mortgage rates have been cheaper than nonconforming rates, though in recent years the difference has been lessened to some degree. "We can't have a set conforming loan limit," Mr. Jackson testified.