fhfa announces increase in maximum conforming loan limits for fannie mae and freddie mac in 2017

Robert explains the process: “The GSEs take individual mortgage loans, buy them from lenders, and then pool them – or package them together – into securities. These securities are later sold on the secondary market. When a buyer takes out a home loan, lenders can sell the mortgage to Fannie Mae and Freddie Mac, who bundle numerous mortgages together to create securities.

Fannie Mae and Freddie Mac help make this possible by purchasing conventional mortgages from lenders. Supporting homebuyers through the secondary mortgage marketĬonventional mortgages are designed to benefit the average homebuyer, ensuring that the housing market is affordable for most people. This puts increased risk on lenders and drives up interest rates for homebuyers. Instead, they generally must be maintained by the lender for the entire life of the loan. Unlike conventional mortgages, jumbo loans cannot be purchased by Fannie Mae and Freddie Mac.

Jumbo loans are mortgages that exceed these conforming loan limits. Additionally, the Federal Housing Finance Agency (FHFA), which regulates the GSEs, sets guidelines on maximum loan sizes (i.e., conforming loan limits) that qualify for purchase by Fannie Mae and Freddie Mac, helping them manage their risk when purchasing conventional mortgages from lenders. Fannie Mae and Freddie Mac, sometimes referred to as government sponsored enterprises (GSEs), set requirements like down payments, minimum credit scores, and documentation for mortgages they purchase. Read on to learn what conforming loan limits are and how they impact the housing market.Ĭonforming loan limits, at their core, are used to separate conventional loans from jumbo loans. Bank financial industry and regulatory affairs expert Robert Schell shares his insights on why this occurred.

With this year’s larger-than-normal increase, U.S. If you’ve been home shopping this winter or work in real estate, you’ve probably heard more buzz again this year about the recent adjustment to conforming loan limits. Find a financial advisor or wealth specialist.

Fhfa announces increase in maximum conforming loan limits for fannie mae and freddie mac in 2017