Origination News Feature Story

Higher Limits May Persist

By Brian Collins

WASHINGTON - The House Appropriations Committee has approved an extension of the maximum loan limits for Fannie Mae, Freddie Mac and the Federal Housing Administration for another nine months.

The massive stimulus bill that President Obama signed in February raised the maximum loan limit for Fannie, Freddie and FHA to $729,750. The higher limit is due to expire at yearend. But the appropriators want to extend it through September 2010.

In approving the Department of Housing and Urban Development appropriations bill, the committee also increased FHA and Ginnie Mae's loan commitment authority, as requested by the Obama administration.

Under the bill, FHA can insure $400 billion in single-family loans during fiscal year 2010, up from $315 billion in FY 2009, which ends Sept. 30.

The FY 2010 appropriations bill allows Ginnie Mae to guarantee up to $500 billion in securities backed by single-family and multifamily mortgages. Congress provided the secondary market agency with $400 billion in MBS guarantee authority in the FY 2009 appropriations bill.

Senate appropriators at press time were slated to markup a HUD appropriations bill.

Meanwhile, FHA and Ginnie Mae have been on a tear.

FHA endorsements are up 83%, compared to a year ago, as the federal mortgage insurance program ended its third quarter of the 2009 fiscal year.

As of June 30, FHA has endorsed 1.39 million single-family mortgages, according to an FHA report. This represents an estimated $255.2 billion in loans, based on an $184,000 average loan size.

The Government National Mortgage Association guaranteed $207 billion in MBS during the first six months of this calendar year, compared to $107 billion in the first half of 2008.

Ginnie Mae MBS issuance totaled $43.6 billion in June - setting a new monthly record - and outstanding Ginnie Mae MBS totaled $680 billion as of June 30.

Analysts at Bank of America/Merrill Lynch Research see outstanding GNMA MBS hitting $1 trillion by the end of 2010.

"Clearly, such a development means that the GNMA sector will receive a lot more attention from different market participants leading to further improvement in liquidity for the sector," the analysts said in their "Mortgage Investor" report.