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REALTORS® champion Senate move to reinstate higher loan limits

Wednesday, October 26, 2011

The Senate has passed an amendment that would reinstate the higher loan limits through December 31, 2013, raising the Federal Housing Administration (FHA) and Government-sponsored enterprise (GSE) loan limits back to 125 percent of the local area median home price from the current 115 percent, and the high cost cap to $729,750 from the current $625,500. REALTORS® strongly supported and worked for passage of this amendment, which cleared the Senate with a vote of 60-38.

"Extending the higher mortgage loan limits will especially help buyers in high-cost regions like ours," said Gene Lentz, president of the Silicon Valley Association of REALTORS® (SILVAR).  "The higher loan limits are critical to providing liquidity in today's market and important for our housing recovery."

The conforming loan limit determines the maximum size of a mortgage that FHA, Fannie Mae, and Freddie Mac can buy or guarantee. Non-conforming or jumbo loans typically carry a higher mortgage interest rate and require a higher down payment, increasing the monthly payment and negatively impacting housing affordability for California home buyers.

In 2008, Congress temporarily raised the conforming loan limits from $417,000 to $729,750 and extended them annually through fiscal year 2011. Congress allowed the loan limits to expire on September 30 and the maximum mortgage amounts insurable by the government dropped from $729,750 to $625,500.

The California Association of REALTORS® (C.A.R.) estimates more than 30,000 California families now face higher down payments, higher mortgage rates, and stricter loan qualification requirements with conforming loan limits on mortgages backed by FHA, Fannie Mae, and Freddie Mac now reduced.

"The reduced loan limits are already impacting buyers," said Lentz. "According to early data from a National Association of REALTORS®  (NAR) survey, buyers who now find themselves above the new lower conventional conforming loan limit are facing significantly higher interest rates and substantially larger down payments."

According to C.A.R., regionally, Marin County is impacted the most, with more than 12 percent of home sales rendered ineligible under the lower GSE loan limit, followed by Contra Costa (11.5%), San Mateo (10.7%), San Francisco (9.9%), Monterey (8.8%), San Diego (8.2%), Sonoma (7.9%), and Santa Clara (7.8%) counties.  Under the lower FHA loan limit, San Francisco County are impacted the most, with more than 14 percent of home sales rendered ineligible, followed by Santa Cruz (13.9%), Orange County (13.3%), Marin (13.2%), San Mateo and Ventura (both at 12.7%), Santa Clara (12.2%), San Diego (11.9%), Alameda (11.8%), Riverside (11.5%), and Contra Costa (11%) counties.

The REALTOR® community and several housing groups want Congress to make the high loan limits permanent to provide home buyers with affordable financing and help stabilize local housing markets. The Senate must still vote on the overall bill, H.R. 2112, which is now the combined Appropriations bill for the Department of Agriculture and Department of Housing and Urban Development. The Senate is expected to approve that bill next week, but its future in the House is uncertain.


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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