GSE Home Loan Limit Extension Passes

By Franklin Rhodes • October 20th, 2010

Mortgage lenders will tell you that negative equity in their homes has become a significant problem for borrowers attempting a mortgage refinance.  Congress passed another extension on the $729,750 maximum GSE loan limit cap before leaving town for the November elections. With FHA mortgage rates below 4% on thirty-year fixed rate mortgages, most lenders and brokers are busy processing refinance loans.  Needless to say, FHA mortgage refinancing has become a popular financial move for homeowners nationally.

The GSE mortgage bill also extends the current maximum mortgage limit for the Home Equity Conversion Mortgage Program.  The timely approval is a relief for loan companies who were concerned about possible disruptions in the mortgage market, particularly the “conventional jumbo market.”  The extension expires at the end of September 2011.  Mortgage lenders should enjoy the next year, but many loan companies are privately concerned they may’ve seen their last extension.  The Senate passed the temporary funding bill known as a continuing resolution by a 69-30 vote. The House passed the bill by a relatively narrow margin of 228-194.  Without an extension, the maximum loan limit for Fannie, Freddie and single-family FHA home loans would have dropped to $625,000 on January 1st.

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