Fannie Mae Loan Limit Increase?
Fannie Mae and Freddie Mac should be allowed to play a greater role in easing the mortgage lending credit crunch, and alllow them to raise the conforming loan limit.
A bill passed by the House this spring overhauling oversight of the government-sponsored entities, or GSEs, should have gone farther in raising the conforming loan limit — the maximum-size loan Fannie and Freddie normally purchase or guarantee.
A bill the House sent to the Senate in May, HR 1427, would leave the conforming loan limit at $417,000, but allow Fannie and Freddie to securitize and sell loans up to 150 percent over the limit in areas where the median home price exceeds the limit.
We cannot afford a ‘wait and see’ approach when it comes to a credit crisis that threatens to derail our economy. The Bush administration continues to ignore one tell-tale sign after another that the subprime woes are threatening the broader mortgage markets. Fannie and Freddie are uniquely positioned to inject badly needed liquidity into the economy, but President Bush won’t let them do their job.
Bush, when asked about a larger role for Fannie and Freddie at an Aug. 9 press conference, said he would only consider such moves after Congress passes a GSE reform bill.
