Could Loan Limits Be Restored?

The Senate voted on Thursday to attach a proposal to a spending bill that could restore the size of loans the government buys or insures to a maximum mortgage amount of $729,750 in many markets.

The higher conforming loan limits expired at the end of September, reverting to a maximum amount of $625,500, despite mass calls from the industry that doing so could potentially weaken the housing market, particularly in high-priced areas.

The lower loan limits are making it more difficult for “middle class home buyers to get credit when credit is tight," says Robert Menendez, D-N.J., who introduced the bill amendment. "Getting our housing market moving again is one of the most important tasks facing the country.”

The Senate voted 60-38 on the spending bill. It’s expected to go before the House later this year.

The National Association of REALTORS®, along with several other housing groups, have been urging Congress to renew a two-year extension that would maintain the GSE maximum loan limit at $729,750.

Source: “Senate Backs Plan to Help Americans Buy Homes,” Reuters (Oct. 21, 2011)