It's not looking good for fans of keeping the higher GSE loan limits, but that hasn't stopped housing, realty and mortgage trade groups from promoting the issue through their elected officials.
Lobbyists told National Mortgage News that the National Association of Realtors (NAR), National Association of Home Builders, and Mortgage Bankers Association are now making a full court press for a quick legislative fix.
"They're going to try, but I don't see it happening," one Jumbo executive said. "Can the House and Senate pass something quickly and get it on the president's desk? And if they do, will he sign it?"
If the loan limit drops as expected, roughly $30 billion in Jumbo loans would no longer be considered 'GSE Jumbos' and would potentially be funded by conduits itching to enter the nonconforming space. For consumers the biggest question mark would be: how much more for credit will they pay?
Meanwhile, Rep. Bill Posey, R-Fla., is making a last-minute push to stop a loan limit reduction in non-high cost areas that is slated to go into effect Oct. 1.
His bill would not delay a drop in $729,750 maximum loan limit (to $625,500) in high cost areas, but would stop a change in the formula that determines the limit at the county level in non-high cost areas. The limit is set at 125% of the local area median home price and will decline to 115% come October 1 unless Congress acts quickly.
According to NAR, lending limits will decline in 593 counties in 42 states with the change to 115%. NAR estimates loan limits would fall by an average of $30,000 in 100 Midwestern counties, and 200 counties in the South would experience an average reduction of $47,000.
The impact will fall mostly on Federal Housing Administration lending. The floor, or minimum loan limit on Fannie Mae and Freddie Mac loans, is $417,000.
Posey wants to attach his loan limit bill to the continuing resolution that the House is scheduled to vote on Tuesday. The CR would fund government operations from Oct. 1 to Nov. 18. However, Republican lenders are reluctant to make any more changes to the CR.
In the Senate, Robert Menendez, D-N.J., and Johnny Isakson, R-Ga., are sponsoring a bill to postpone any changes to the loan limits for two years. The two sponsors are lobbying to get their loan limit bill included in the Senate CR.