The Senate late Thursday approved an amendment to restore the $729,750 maximum loan limit on government-back mortgages for two more years.
Sponsored by Senators Robert Menendez, D-N.J. and Johnny Isakson, R-Ga., the measure rolls back the Oct. 1 reductions in Fannie Mae, Freddie Mac and FHA/VA loan limits in high cost areas.
The expiration of the higher loan limit has "made a weak housing market even weaker,” said Menendez during the Senate debate. “If we don't get that weak housing market moving again, we won't get the kind of robust economic recovery that Americans deserve.”
The Menendez-Isakson amendment also restores the FHA loan limit to 125% of the median house price in low cost areas. It was reduced to 115% on Oct. 1.
The Senate approved the loan limit amendment by a 60-38 vote. It now moves to the House.
It took a minimum of 60 votes under Senate rules to approve and attach the amendment to a Department of Housing and Urban Development appropriations bill.
The National Association of Realtors lobbied heavily to get the necessary votes, officials said.
To cover possible losses on higher balance Fannie/Freddie mortgages, the amendment imposes an annual 15 basis point fee on “Jumbo GSE” loans.