WASHINGTON (UPDATED: 1:20 P.M. ET, 10/9/13)--Reducing the size of the mortgages that Fannie Mae and Freddie Mac can finance "would have a very disruptive impact on the availability of affordable housing credit," the ongoing housing recovery and the economy as a whole, the Credit Union National Association said in a joint letter sent to Federal Housing Finance Agency Acting Director Ed DeMarco today.
The letter follows the recent FHFA announcement that it is considering reducing Fannie Mae and Freddie Mac loan limits. Any change would be implemented on Jan. 1, 2014.
CUNA cosigned the letter alongside several financial services and housing groups.
"Not only is lowering loan limits bad for housing, we question to what extent FHFA's authority would allow for such a change considering Congressional intent when passing [the Housing and Economic Recovery Act of 2008] was certainly opposed to a reduction," the letter said. HERA clearly indicates that the maximum loan limits for loans taken on by Fannie and Freddie shall not decline below the current limit of $417,000, the letter added.
"Lowering the loan limits further restricts liquidity and makes mortgages more expensive for households nationwide. Without affordable financing, families are unable to purchase or refinance homes, and those who wish to sell find it more difficult, all of which will continue to prolong our housing crisis," the cosigners wrote.
The letter was cosigned by the American Escrow Association, American Financial Services Association, American Land Title Association, Asian Real Estate Association of America, Coalition of US Mortgage Insurers, Community Home Lenders Association, Community Mortgage Lenders of America, Leading Builders of America, Mortgage Bankers Association, National Association of Federal Credit Unions, National Association of Hispanic Real Estate Professionals, National Association of Home Builders, National Association of REALTORS® and The Realty Alliance.