Conforming Loan Limits Updates

Congress is considering legislation to raise the loan limits
for Fannie Mae, Freddie Mac, and the Federal Housing Administration,
which could give the government-sponsored enterprises and the FHA
a large share of the jumbo mortgage market, according to
banking expert Karen Shaw Petrou. Atop this is talk from
Treasury that the GSEs could also go beyond their current charter
to rely on self-insurance for high-risk mortgages,
she told a group of general counsels from large banks.
Treasury Secretary Henry Paulson recently suggested that the
mortgage insurance requirements on Fannie Mae and Freddie Mac could
be relaxed to facilitate refinancings of subprime borrowers with
little or no equity in their homes. I think lenders and securitizers
are looking at legislation that would put the federal government
-- directly through the FHA and indirectly through the GSEs
-- into every segment of the mortgage market from the
highest-risk subprime loans to jumbo, prime-quality loans,
she said. Ms. Petrou is the managing partner of Federal
Financial Analytics in Washington.