The House of Representatives voted in favor for a bill that re-raised the limit of conforming jumbo mortgages for the Federal Housing Administration (FHA), ending a nearly two month gridlock in Washington.
The 292-121 vote did not come easy. Originally raised in 2008 to counter stricter private lending practices, the higher limits (up to $729,750 in some areas) applied to loans from the FHA and other GSEs, including Fannie Mae and Freddie Mac.
Though the higher limits had been extended on a couple of occasions, they were allowed to expire on Oct. 1, a measure the Obama administration argued was necessary for the mortgage markets to transition back to private lending. Since then, lobbying groups and housing activists (especially the National Association of Realtors and National Association of Home Builders) had appealed to Congress ceaselessly to restore the limits, arguing that higher-priced markets in areas such as San Francisco were adversely affected by the declining limits.
A bill re-authorizing the higher limits passed in the Senate in mid-October, but compromises, had to made to pass the bill in the Republican-controlled House. Now, instead of FHA and GSE loans, only FHA loans will carry the higher limits through 2013.
Rep. John Campbell, R-Calif., who had been working within Congress to restore the higher limits, was disappointed with the concessions.
“The compromise made by the conference committee to only restore the loan limits for mortgages guaranteed by FHA is a half-measure and one that ignores the tremendous need for restoration of the conforming loan limits,” Campbell said in the HousingWire piece. “While this is better than no extension of either loan limit, it is not the compromise we should have made.”
As far as the FHA is concerned, they’ll work with whatever Congress provides, said Acting Commissioner Carole Galante in an appearance before the Senate Banking Committee.
“We will implement whatever Congress decides on the matter,” Galante said. “Our traditional mission is to help first-time low- and moderate-income borrowers, and that continues to be the core of our mission. When the loans were higher, it was a very, very small percentage of the work FHA does.”