WASHINGTON, Sept 8 The U.S. government should
allow the caps on the size of mortgages it will back to return
to pre-financial crisis levels in order to revitalize the role
of private lenders in the home loan market, an Obama
administration housing official said on Thursday.
Congress had raised the caps to $729,750 in high-priced
real estate markets in 2008 in a move to provide liquidity
following the subprime mortgage meltdown.
The temporarily higher loan limits at Fannie Mae FNMA.OB,
Freddie Mac FMCC.OB and the FHA will revert to pre-crisis
levels on Oct. 1 unless Congress extends them, with the upper
limit falling back to $625,500.
While time is short, it is still possible Congress will
"We want private capital to come back into the market," the
acting commissioner of the Federal Housing Administration,
Carol Galante, told a House Financial Services subcommittee.
"We support the expiration of the higher mortgage loan
A group of bipartisan lawmakers in the House on Thursday
asked that a measure that would provide for a short-term
extension of the higher caps be placed on legislation Congress
will need to move by the end of the month.
The group of 37 lawmakers, led by Representative Gary
Ackerman, a New York Democrat, sent a letter to top lawmakers
on the House Appropriations Committee urging them to attach the
provision to a stop-gap funding bill needed to keep the
government running when the new fiscal year begins.
The Obama administration initially called for letting the
higher limits expired in February as a step toward letting the
private sector play a larger role in a market the government
has come to dominate.
Federal Reserve Chairman Ben Bernanke has also said he
feels the mortgage market should "wean" itself off the higher
backstop from the government-controlled enterprises.
(Reporting by Margaret Chadbourn; Editing by Leslie Adler)