Loan Limits Raised For Fannie, Freddie

Government-sponsored Fannie MaeFNM and Freddie MacFRE are now able to buy mortgages up to $729,750 in some parts of the country, under new limits made public by federal regulators Thursday.

The new temporary loan limit was authorized by the economic stimulus bill Congress passed earlier this year. It will allow Fannie and Freddie to buy many more loans than the prior $417,000 limit, in the hope that it will provide stability to the market for mortgage securities that has been seized since last summer.

The temporary limit will apply to mortgages for one-unit homes in the continental U.S. originated between July 1, 2007 through the end of this year. Two, three and four-unit homes and homes in Alaska, Hawaii, Guam and the Virgin Islands also have higher maximum limits.

Counties in which mortgages are eligible to the highest of the new limits are primarily located in California, Colorado, Hawaii, Maryland, New Jersey, New York, Virginia and Washington, D.C. The new limits are a function of median home prices estimated by the Department of Housing and Urban Development.

The Office of Federal Housing Enterprise Oversight said 71 Metropolitan and Micropolitan Statistical Areas are affected, including 224 counties and cities not in counties. The newly increased limits range from $417,500 in Greeley, Colorado to the highest of $793,750 in Honolulu, Hawaii, OFHEO said.