As the housing recovery hits a roadblock, and the industry blames a tight and pricey mortgage market, those who hold the purse strings are finally responding. Both the new regulator for Fannie Mae () and Freddie Mac (), as well as the secretary of Housing and Urban Development, announced on Tuesday they would shift strategies by making credit more available to homeowners.
Federal Housing Finance Agency (FHFA) Director Mel Watt, who recently took over the job of regulator for the mortgage giants, said in his first public comments that he would not lower the maximum loan limits for Fannie Mae and Freddie Mac, which currently stand at $417,000 in most markets. Watt’s predecessor, Edward DeMarco, had contemplated the move as a way to shrink Fannie and Freddie’s footprint in the mortgage market.
“This decision is motivated by concerns about how such a reduction could adversely impact the health of the current housing finance market,” said Watt.
Critics of a proposal to lower the limits said some higher-priced markets, specifically much of California, would be unfairly impacted by such a move.