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FHFA Leaves GSE Loan Limits Unchanged for 2014, Industry Declares Victory?

By Paul Muolo
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The Federal Housing Finance Agency Thursday morning punted on the issue of lower GSE loan limits, leaving the caps unchanged for 2014, despite earlier declarations by agency Acting Director Edward DeMarco that they were headed downward sometime next year.
“Holding loan limits at the current level was the prudent decision given all of the operational changes that are currently taking place,” Mortgage Bankers Association President David Stevens told Inside Mortgage Finance.
Industry executives and lobbyists following the issue say DeMarco’s decision to leave the limits unchanged means that the issue is dead – for now. Rep. Mel Watt, D-NC, the White House’s pick to replace DeMarco, is expected to leave the baseline limit of $417,000 for one-unit homes alone as well as the “high-cost” cap of $625,500.
“Watt will not lower the ceiling for 2014,” said one mortgage insurance executive. “Maybe he will change them at some point, but not next year.”
Despite what appears to be a victory for most of the mortgage industry – jumbo MBS issuers won’t be thrilled – the wording in the FHFA’s press release leaves some doubt: “Further information on potential future changes in the maximum size of loans that Fannie Mae and Freddie Mac guarantee will be forthcoming.” For more on the story, see the new edition of Inside Mortgage Finance, available online Wednesda

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