Edward DeMarco, Acting Director of the FHFA, pretty much confirmed that we can anticipate lower conforming loan limits next year. This is from his prepared remarks for “Getting Our House in Order”:
“…one of the most direct ways to increase private sector participation and reduce taxpayer exposure is through a reduction in the maximum size of loans that the Enterprises guarantee. This summer the President specifically endorsed a gradual reduction in maximum loan size. I understand the potential timing issues associated with such a change given the other regulatory changes that are scheduled to take place in the mortgage market. FHFA will follow its practice of announcing the 2014 conforming loan limits in late November, at which time further information will be provided on potential reductions in the size of loans the Enterprises will guarantee going forward. We expect to give market participants at least six months’ notice of any change. Any reduction would be across the board, not just in some parts of the country. And, consistent with our practice when increasing guarantee fees, any change would be measured and gradual so as not to disrupt markets.”
It looks like we can assume that a reduction in conforming loan limits for 2014 will be announced late next month and that IF the change will not be effective for at least six months, then we may have current loan limits until at least May 2014.
Washington State currently has 4 counties that enjoy a higher loan limit. King, Snohomish and Pierce Counties all have a conforming high balance limit of $506,000 and San Juan County’s high balance loan limit is $483,000 for a single family dwelling. My prediction is that we will see the conforming high balance loan limits removed.
Current conforming loan limits for a single family dwelling in counties that do not have a “high balance” limit is $417,000. Here is a history of conforming loan limits dating back to 1980. Our conforming loan limit has been at $417,000 since 2006. It’s hard for me to imagine that limit being reduced. I guess we’ll know more next month!
Once the 2014 conforming loan limits are announced, I’ll be sure to post them here.