The California Association of Realtors (CAR) has come out in support of the Federal Housing Finance Agency's decision to keep the 2015 maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac at $417,000 on one-unit properties in most areas, and a cap of $625,500 in high-cost areas.
The FHFA also decided to raise loan limits for Monterey, Napa, San Diego, and Ventura counties.
In a statement to Realty Biz News, CAR President Chris Kutzkey said the decision was the correct one given the changes in the local housing market. “The FHFA recognizes that home prices have risen significantly in California, especially in high-cost coastal areas, where lowering the loan limits would have hurt the housing recovery," said Kutzkey.
Indeed, the CAR, together with the National Association of Realtors, has long advocated that higher conforming loan limits should be made permanent. This support led to a recent decision by Congress to make the $625,000 ceiling a permanent one.
What this means is that government sponsored enterprises Fannie Mae and Freddie Mac can buy or "guarantee" home mortgages of up to $625,000. Consumers can still take out non-conforming (or "jumbo loans") above this limit, but such loans typically have stricter underwriting standards and carry higher interest rates. This leads to increased monthly payments that can cause families to struggle to keep up with their repayments.