Democrats Seeking To Extend Fannie, Freddie Loan Limits

U.S. House and Senate lawmakers are proposing to extend temporary higher limits on the size of home mortgages Fannie Mae (FNM) and Freddie Mac (FRE) can buy or guarantee as part of a stopgap funding legislation that could pass Congress as soon as this week.

The legislation, known as a continuing resolution, would fund the federal government through Dec. 18 at 2009 levels, giving lawmakers more time to complete appropriations measures. Language in the bill would also extend the loan limits, which are set to expire Dec. 31, through the end of next year, the top Democratic appropriators, Sen. Daniel Inouye of Hawaii and Rep. David Obey of Wisconsin, said in a press release late Tuesday.

The legislation would also extend temporary higher limits on the size of mortgages the Federal Housing Administration could insure.

The housing industry has grown anxious about the looming expiration of the higher loan limits, which they argue are necessary to sustain a housing recovery. Rates on mortgages that Fannie and Freddie can buy - known as "conforming" loans - typically are lower than on other larger mortgages. The loan limits were lifted to nearly $730,000 from $625,500 by economic stimulus legislation passed early in the year.

The continuing resolution still must pass both houses of Congress.

-By Jessica Holzer, Dow Jones Newswires; 202-862-9228; [e-mail]