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FANNIE AND FREDDIE PROVIDE GUIDANCE ON 2009 CONFORMING LOAN LIMITS

Fannie Mae and Freddie Mac have each released guidance on conforming loan limits for high cost areas that are scheduled to take effect in 2009. Unless Congress acts during a possible lame duck session after the election, conforming loan limits in some high cost areas will go down. For 2008, the loan limits are 125% of the area median house price, up to $729,750, but not less than $417,000. Starting in 2009, the limits will be 115% of area median, up to $625,5000, but not less than $417,000. NAR supports making the 2008 limits permanent.

On October 16, 2008, Fannie Made issued Announcement 08-27 providing detailed guidance on what it calls "high-balance mortgages" under the statutory authority that takes effect in 2009. On October 17, 2008, Freddie Mac issued a Bulletin explaining how it would treat the conforming loan limits for high cost areas that take effect on January 1, 2009 (these policies were previewed in a Freddie Mac email dated October 3, 2003). Freddie is using the term "super conforming mortgages" instead of high-balance mortgages.