A bill squeaked by the Senate Thursday that would reverse lower limits for conforming loans backed by the federal government and reinstate the $729,750 threshold until 2013.[IMAGE]
Lawmakers adopted the amendment to a federal spending measure by a count of 60 to 38, giving backers of the bill the supermajority needed to avoid wrangling over the issue.
""Sen. Johnny Isakson"":http://isakson.senate.gov/ (R-Georgia) and ""Sen. Robert Menendez"":http://menendez.senate.gov/ (D-New Jersey) introduced the amendment to restore federal limits for conforming loans, which fell to $625,500 for homeowners with mortgages backed by ""Fannie Mae"":http://www.fanniemae.com/portal/index.html, ""Freddie Mac"":http://www.freddiemac.com/, and the ""Federal Housing Administration"":http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/fhahistory in early October.
Congress had fixed the limits at the higher threshold in 2008 as a way to curtail the worst effects of the financial crisis for the housing industry and economy at large.
A spokesperson for the ""Mortgage Bankers Association"":http://www.mbaa.org/default.htm said the trade group had no comment for the story.
Bob Nielsen, chairman of the ""National Association of"":http://www.nahb.org/default.aspx[COLUMN_BREAK]
""Home Builders"":http://www.nahb.org/default.aspx (NAHB), commended lawmakers for passing the bill in a ""statement"":http://www.nahb.org/news_details.aspx?newsID=13746, calling the decision to raise conforming loan limits one that will ""help mend the struggling housing market, provide affordable mortgages for creditworthy home buyers, and move the economy forward.""
He added that restoring the loan limits ""will provide home owners and home buyers with safe and affordable financing while providing a much-needed boost to housing markets all around the country.""
Multiple news outlets reported that Congress had allowed the higher limits for conforming loans to ease in October despite a massive lobbying effort by companies and trade groups in the housing industry.
A flurry of statements and reports from trade groups lent credibility to the news, with the NAHB and ""California Association of Realtors"":http://www.car.org/ ""predicting peril for the housing industry"":https://themreport.com/articles/what-lower-conforming-loan-limits-mean-for-housing-2011-10-03 and economy as a result of any expiration in limits earlier this year.
Despite forbidding forecasts, the ""Federal Reserve"":http://www.federalreserve.gov/ released a report this fall tallying up figures from federal agencies that found homeowners in only 250 to 669 counties would see fallout from the lower limits.
""Congress must act soon to ensure that this measure is enacted into law,"" Nielsen added in the statement. ""Otherwise, the current drop in mortgage loan limits will reduce housing demand, and place downward pressure on home prices in major markets. This will exacerbate the current housing downturn, trigger more foreclosures, impede job growth and endanger the fragile economic recovery.""
The House must vote for a similar bill in order for the Senate legislation to become law.