House and Senate committees have approved the Department of Housing and Urban Development(HUD) appropriation bills that extend the $729,750 loan limit through September 2011.

The maximum $729,750 loan limit for Fannie Mae, Freddie Mac and Federal Housing Administration (FHA) loans in high cost areas is due to expire at the end of this year.
As expected, elected officials and industry groups want to pass an extension now to prevent possible disruptions if the legislative process gets bogged down later this year.

Without an extension, the maximum loan limit would drop back to $625,500. House and Senate appropriators also are in sync in renewing the FHA's and Ginnie Mae's loan commitment authority at full-year 2010 levels.

The appropriation bills, which are waiting approval by the House and Senate, authorize FHA to insure up to $400 billion of single-family loans in full-year 2011 and Ginnie Mae to guarantee up to $500 billion of MBS.

The appropriators also are allocating $150 million for the FHA Home Equity Conversion Mortgage program.

Without this credit subsidy, FHA would have to make deeper reductions in the loan proceeds that seniors receive in a reverse mortgage transaction.

"We are glad to see this affirmation of support for the HEMC program and a willingness to fund it at a level that will sustain the program," according to Peter Bell, president of the National Reverse Mortgage Lenders Association.

In other GSE news, Freddie Mac disclosed that mortgages purchases rose, while delinquencies on Freddie guaranteed loans are still falling.

The delinquency rate on Freddie Mac guaranteed mortgages fell to 3.96% in June, the lowest reading since November of last year.

Delinquency readings on its credit- and non-credit enhanced portfolio also showed improvement, according to the GSE's new monthly performance statement.

Meanwhile, Freddie purchased $30.9 billion of mortgages during June, a 24% improvement from May, but a 52% decline from the same month in 2009. At June 30, its retained portfolio totaled $740 billion, a 1% decline from May.

A ward of the government since September 2008, Freddie continues to lose money. It expects to release its second quarter results sometime in August. The GSE reported 21,367 loan modifications for the month, and 93,568 since January.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.