House Tells Senate to Raise GSE Loan Limit

House Financial Services Committee Chairman Barney Frank (D-Massachusetts) and Rep. Gary Miller (R-California) urged the U.S. Senate August 17 to raise the conforming loan limit beyond the House passed reform bill for the Government Sponsored Enterprises (GSE) of Fannie Mae and Freddie Mac.

Right now, Fannie and Freddie can only buy a mortgage up to $417,000, explains Steve Adamske, a spokesperson for the House Financial Services Committee. The House wants the Senate to increase that amount. But the House bill, the Federal Housing Finance Reform Act of 2007 (H.R. 1427), which passed in May, includes a "carve out for major metropolitan areas (high cost areas) where the median home price exceeds the current limit," Adamske adds. "In these high cost areas, the limit would be set at the median home price up to a ceiling of 150% of the current limit."

Rep. Frank said in a prepared statement that "It now is clear we underestimated in the House bill how far we should raise the conforming loan limit, and the current crises in the mortgage market demonstrate we should raise it to a higher level." He added: "I urge the Senate to make this a priority as part of GSE reform, because we now have the opportunity to help homeowners get access to needed credit by allowing Fannie Mae and Freddie Mac to play a larger role."