U.S. Due to Ease Jumbo Loan Aid
Author: Nick Timiraos</br></br>Government backing for many pricey home mortgages is set to expire at the end of the year, which could begin to ratchet down federal support for the housing market but also jeopardize the sector's shaky recovery.</br></br>Congress allowed government-chartered mortgage titans Fannie Mae and Freddie Mac to back loans as high as $729,750 two years ago to help resuscitate the housing market. The new limits, which offer exceptions in some locales to the standard $417,000 limit, also applied to the Federal Housing Administration.</br></br>The fewer bank-issued mortgages that the three agencies guarantee, the harder it is for borrowers to qualify for loans and the higher their interest rates. Unless lawmakers intervene, those higher limits, which mostly affect high-cost areas such as San Francisco, New York and Washington, D.C., will fall at year end to around $625,500.</br></br>If that happens, home prices would "drop precipitously" because it would be "impossible to finance homes in most parts of Los Angeles and certain other major cities" with high prices, Rep. Brad Sherman, a member of the House Financial Services Committee, said at a hearing last week. The California Democrat has introduced a bill to make the larger limits permanent and has attracted 74 co-sponsors.