OFHEO Issues Final Loan-Limit Guidance

The Office of Federal Housing Enterprise Oversight (OFHEO) has transmitted to the Federal Register a final Examination Guidance – Conforming Loan Limit Calculations. The final guidance addresses the handling of decreases in the house price data used to set the conforming loan limit as well as procedural matters relating to calculation of the limit that determines the size of mortgages eligible for purchase by Fannie Mae and Freddie Mac, OFHEO explains.

Based on comments received in two public comment periods, OFHEO is issuing a final guidance that provides that the conforming loan limit would not decrease from its current level of $417,000 in 2009 and subsequent years. However, OFHEO adds, the conforming loan limit will not increase until cumulative increases in house prices exceed cumulative decreases since the $417,000 limit was first reached.

‘This revised guidance responds to the comments that we received and OFHEO's belief that stability in the mortgage market is very important,’ says James B. Lockhart, OFHEO director. ‘Not decreasing the limit will eliminate potential operational and implementation issues.’

For the purpose of simplification, the new Examination Guidance also provides that increases in the conforming loan limit will be rounded down to the nearest $100, instead of the present $50.

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