Fannie Mae & Freddie Mac To Reduce Loan Sizes

Come this fall many residential mortgage markets in the United States are going to see the maximum loan sizes available through Fannie Mae and Freddie Mac reduce. Right now the maximum loan available in the highest price markets is $729,750, and this is set to reduce to $625,500 in those markets this fall. Right now the lowest maximum available across all markets is $417,000, but there is talk on the Federal level that this number could be reduced as well in the near future as the current administration looks to get away from a government backed housing market. The big question is whether there is sufficient capacity in the capital markets to support the housing market and home mortgages without Fannie Mae and Freddie Mac backing them. With both traditional and non-traditional financing sources still reeling from the worst mortgage crisis in our nation’s history, will capital pour in to support home mortgages should Fannie Mae and Freddie Mac cease to do so, or will fear keep that capital from the mortgage markets? It is obvious local community banks do not have the capital to offer extensive mortgage financing on their own books, at least not without further straining the capital available for commercial loans.