OFHEO Reverses Course on Loan Limits

The Office of Federal Housing Enterprise Oversight has reversed course and decided to keep the conforming loan limit at $417,000 in "2009 and subsequent years" in using final guidance on calculating the loan limits for Fannie Mae and Freddie Mac. OFHEO initially proposed to lower the conforming loan limit if house prices declined by more than 1% nationally. Mortgage industry groups opposed the change, and OFHEO backed off as house prices started to decline. OFHEO's index shows that house prices have declined by 3% since January 2007. "The revised guidance responds to the comments that we received and OFHEO's belief that stability in the mortgage market is very important," OFHEO Director James Lockhart said. OFHEO said it will not raise the conforming loan limit "until cumulative increases in house prices exceed cumulative decreases since the $417,000 limit was first reached." The agency can be found online at http://www.ofheo.gov.