WASHINGTON (Reuters) - The United States will finance single-family home mortgages as high as $484,350 across much of the country next year, according to the regulator for Fannie Mae and Freddie Mac, the mortgage finance companies that are owned by taxpayers.
The new loan limit means more large homes are eligible for backing by Fannie (FNMA.PK) and Freddie (FMCC.PK) - companies conceived to promote home ownership. This year, the companies would not finance home loans larger than $453,100 in most communities.
Fannie and Freddie fell into government hands after the housing crisis hit in 2008 and the companies have been controlled by Washington ever since. They are regulated by the Federal Housing Finance Agency (FHFA), which sets the ‘conforming loan limit’ each year.
Fannie and Freddie buy mortgages from lenders, thereby freeing up money for further mortgage loans. The two in turn sell the mortgages to investors with a guarantee that principal and interest payments will passed on to the investors.
While the $484,350 limit will hold across much of the country, more expensive homes in some urban areas will also be eligible for backing from Fannie and Freddie. In high-cost areas, the mortgage loan limit will be $726,525, the FHFA said in a statement.
Reporting By Patrick Rucker; Editing by Steve Orlofsky