The Silicon Valley Association of REALTORS® (SILVAR) applauds the Federal Housing Finance Agency's (FHFA) announcement to keep the current limits on conforming loans in effect until further notice. The FHFA planned to lower the conforming loan limits at the start of 2014, but decided to postpone making changes.
The FHFA plan to lower conforming loan limits is in line with the Obama administration's long-term goal of reducing government's role and having private capital take the lead in the mortgage market. REALTORS®, builders and mortgage lenders oppose the change because lowering conforming loan limits would increase costs for consumers and reduce their access to conventional mortgages.
A conforming loan limit is the maximum size for loans that can be purchased by government-sponsored enterprises Fannie Mae or Freddie Mac. Mortgages purchased by the GSEs are generally less expensive than the larger jumbo loans because the government absorbs the cost of default. The conforming loan limit will remain at $417,000 in most areas at the beginning of 2014, and at $625,500 in high-cost areas like Santa Clara and San Mateo counties.
REALTORS® say now is not the time to make the changes in conforming loan limits. The mortgage industry is already facing many new rules and regulatory changes next year. Many changes stemming from the Dodd-Frank Act are going into effect January 2014, including the ability-to-repay requirement. Risk retention regulations remain in flux, including the definition of a Qualified Residential Mortgage (QRM). Lowering the conforming loan limits would jeopardize homeownership for many creditworthy buyers, especially first-time home buyers who are often less likely to meet the 20 percent minimum down payment requirement.
"At a time when the housing market is just recovering, we are asking our legislators and the administration to do no harm to housing. Lowering loan limits would make borrowing more costly for home buyers. Conforming loan limits are important for families who plan to buy homes at or near the current limits," said SILVAR President Carolyn Miller.
The National Association of REALTORS®, the California Association of REALTORS® and SILVAR have aggressively fought to prevent a reduction in the loan limits. Without the extension of the higher loan limits, many California borrowers would have a harder time obtaining financing for new home purchases and refinancing homes.
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 email or call the SILVAR office at (408) 200-0100.