Loan limits on Fannie Mae, Freddie Mac, and FHA mortgages will be cut if we do not act now.

Loan limits on Fannie Mae, Freddie Mac, and FHA mortgages will be cut if we do not act now.

This news is important to all net branch companies. Congress passed two temporary laws (The Economic Stimulus Act ) earlier this year that raised the maximum loan amount eligible to be purchased by Fannie Mae and Freddie Mac or insured by FHA. When this limit expires on December 31, 2008, the loan limit in high-cost markets will be reduced by over $100,000. If the loan limits are decreased as scheduled this could have a profound negative effect on our nation’s housing market and would limit the availability of affordable mortgage financing at a time when it is needed more than ever.

The Economic Stimulus Act temporarily raised the high-cost loan limit to a maximum of 175 percent ($729,750) of the conforming loan limit of $417,000.  When this limit expires on December 31, 2008, the loan limit in high-cost markets will be reduced by over $100,000 to the Housing and Economic Recovery Act’s maximum of 150 percent ($625,500) of the conforming loan limit.

Unless Congress acts next week, the GSE and FHA loan limits in many markets will decline on January 1, 2009. If you believe that reducing the loan limits should not happen and you are in favor of keeping the new limits you should write your legislators (Congressman and two Senators).

To make it easier to contact your legislators the Mortgage Action Alliance has put a letter together for you to use, which you are free to edit.

The Mortgage Action Alliance Link

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