Interest Rate Roundup

Wednesday, January 16, 2008

Reports: Treasury still not on board with raising the conforming loan limit

Some news out of Washington today: The U.S. Treasury reportedly still objects to allowing Fannie Mae and Freddie Mac to buy mortgages above the current $417,000 conforming loan limit -- unless it's part of a comprehensive regulatory reform package for the GSEs. Some have discussed at least a temporary increase in order to lower financing costs for jumbo mortgages. They've been driven up recently because investors are shunning most kinds of mortgage paper except for plain-vanilla, Fannie/Freddie stuff.

Here's some more coverage from Marketwatch and Reuters. And if you're a tried and true policy wonk who wants to know the potential benefits and drawbacks of raising the jumbo cap -- at least in certain high-cost areas -- then by all means click on over to the OFHEO (Office of Federal Housing Enterprise Oversight) website. You can read this study (PDF link), which explores the issue in 19 riveting pages.


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