Pols Want Reversal of GSE Loan Limit Rule

Reps. Barney Frank, D-Mass., and Gary Miller, R-Calif., are urging federal housing officials to reverse a decision that would lower Fannie Mae, Freddie Mac and FHA loan limits in 399 counties starting Jan. 1. The Federal Housing Administration has recalculated local median housing prices nationwide and 157 counties have experienced double-digit price declines. However, "there is no statutory requirement to make the downward adjustments," the two congressmen say in letter to FHA commissioner Brian Montgomery and Federal Housing Finance Agency director James Lockhart. House Financial Services Committee chairman Frank and Rep. Miller also note that the maximum federal loan limit is scheduled to decline from $729,750 to $625,000 on Jan. 1 along with local loan limit dropping from 125% to 115% of area median house prices. (Despite industry lobbying efforts, it appears unlikely Congress will extend the $729,750 loan limit.) Lowering local median house prices is "likely to exacerbate problems which already exist in many housing markets. Therefore we request that you not make adjustments for declining local area median home prices at this time," the congressmen say.