Does the deal address the mortgage crisis?
Yes. The House package would temporarily increase the size of mortgage loans — known as the conforming loan limit — that Fannie Mae and Freddie Mac can purchase: from the current $417,000 to a maximum of $729,750. It would also permanently raise the cap on Federal Housing Administration mortgage loans from $367,000 up to $729,750. Why raise the conforming loan limits? Supporters say raising the loan limits will deliver lower interest rates to a large number of homebuyers. Right now, mortgages for more than $417, 000 carry higher interest rates than mortgages below that amount. That’s because Fannie Mae and Freddie Mac are not allowed to back loans above that cutoff. Higher loan limits will make many more homeowners eligible for lower rates, which could translate to savings of hundreds of dollars each month for those in high-cost areas of the country. But some critics warn that higher loans limits will merely result in more — and bigger — bad loans being bought up by government agencies
