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Current conforming loan limits are scheduled to expire Friday, Sept. 30.  The maximum FHA, Fannie Mae, and Freddie Mac conforming loan limit will decline to $625,500 beginning Oct. 1, 2011, from the current $729,750 limit, though the majority of counties will fall far below the $625,500 maximum.  The conforming loan limit determines the maximum size of a mortgage that FHA, Fannie Mae, and Freddie Mac government-sponsored enterprises (GSEs) can buy or guarantee.  Non-conforming or jumbo loans typically carry a higher mortgage interest rate than a conforming loan and require a higher down payment, increasing the monthly payment and negatively impacting housing affordability for California home buyers.
Congressmen Gary Miller and Brad Sherman jointly introduced a bill in the house that would have made permanent the current loan limits, and Congressman John Campbell introduced a bill that would have extended the current limits.  Additionally, Senators Dianne Feinstein and Barbara Boxer jointly cosponsored a bill in the Senate that would have extended the conforming loan limits.
Although bills were introduced to extend and to make permanent the current conforming loan limits, it is unlikely Congress will take action by the Sept. 30 deadline.
C.A.R. and NAR will continue to remain vigilant in this area and hope that elected officials also will continue this fight on the hill.
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NAR recently issued a Call For Action urging REALTORS® to contact Congress and clearly communicate that Congress needs to prevent loan limits from expiring on Sept. 30.
Unless Congress acts, the current loan limits will expire on Sept. 30 and the cost of a mortgage could rise significantly.  More than 30,000 California families will face higher down payments, higher mortgage rates, and stricter loan qualification requirements if conforming loan limits on mortgages backed by the Federal Housing Administration (FHA), Fannie Mae, and Freddie Mac are reduced beginning October 1, 2011, according to analysis by C.A.R. 
Despite the Obama administration claiming it will support a one-year extension of the current loan limits, Bank of America has already lowered their loan limits for new loans, and others will follow suit.
Please contact Congress today and communicate clearly that a housing recovery depends on keeping mortgages affordable and that Congress needs to prevent these higher loan limits from taking effect.
Take action now