U.S. Rep. Gary Ackerman (D-NY) today blasted Congressional Republicans for removing a provision from the fiscal spending bill enacted this morning that would have fully restored the conforming loan limits which expired on September 30th.
Two and a half weeks ago, Ackerman, joined by 131 members of Congress, sent a letter to House Speaker John Boehner and Minority Leader Nancy Pelosi urging them to support the reinstatement of the conforming mortgage limits in the House-Senate appropriations conference committee. While Ackerman was successful in securing an increase and a two-year extension of the loan limits for the Federal Housing Administration (FHA), the GOP refused to restore them for Fannie Mae and Freddie Mac, who have traditionally served a larger share of the housing market than FHA.
"The restoration of the FHA loan limits, but not the Fannie and Freddie limits, is not even close to the shot in the arm that the housing market is dire need of right now," said Ackerman, a Senior Member of the Financial Services Committee. "With a quarter of American homeowners currently "under water' on their mortgage loans, the GOP leadership apparently believes that making mortgages more expensive and harder to obtain will somehow improve housing prices and ease the economic pain that many middle-class homeowners are currently experiencing. Their backwards reasoning illustrates just how out of touch with the housing market they really are. By not fully restoring the loan limits, they have deprived a large portion of the housing market of its main source of liquidity in the middle of the most catastrophic housing crisis since the Great Depression. Unfortunately, as a result, homeowners are going to be forced to endure more pain."
The conforming loan limits were increased in 2008 from $625,500 to $729,750 in order to stabilize the housing sector and ensure that liquidity remained in the mortgage market throughout the nation's economic crisis. Even though the housing market remains a drag on a robust economic recovery, the limits were allowed to expire seven weeks ago.
Since the conforming mortgage limits for Fannie and Freddie were not restored, many homebuyers will now be forced to rely solely on private lenders who have been unwilling to provide reasonably-priced, long-term, fixed-rate mortgages over the last several years. In addition, these privately-backed loans usually come with higher mortgage rates and require larger down payments.
"Although it will be an uphill battle, I will continue to push the legislation I introduced in July with Rep. John Campbell (R-CA) -- the Conforming Loan Limit Extension Act of 2011 (H.R. 2508) -- that would extend the mortgage limits for Fannie Mae and Freddie Mac for two additional years," vowed Ackerman. "We will also continue to identify other legislative vehicles to which we can attach the measure."
The fiscal spending "minibus" is an appropriations measure that funds several Cabinet departments and Federal agencies for fiscal year 2012, including the Departments of Agriculture, Commerce, Justice, and Housing and Urban Development. It was passed by the House yesterday afternoon, approved by the Senate last night and signed into law today by President Obama. Before the conference committee produced a final version of the legislation, the provision to extend the loan limits was included in the Senate version of the bill but not the House version.
In September, Ackerman attempted to attach an extension of the conforming loan limits to the continuing resolution (CR) Congress passed that kept federal government running when the 2012 fiscal year began on October 1. However, the extension was not included in that temporary funding measure.
A conforming loan is within the limits set by Congress that applies to Fannie Mae, Freddie Mac and the Federal Housing Administration. Any loan that exceeds these limits is considered a jumbo loan.