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. And that means that when these loans go bad, taxpayers will be left holding the bag. What’s in the Senate version? The proposal from Senate Finance Committee Chairman Max Baucus (D-MT) includes tax rebates and business tax cuts. It would also offer 13 weeks of additional unemployment insurance, a proposal that House Democrats dropped during negotiations with Presiden
