House and Senate agree to extend Fannie Mae, Freddie Mac and FHA loan limits through 2010.

Federally-funded home loan limits were temporarily increased in 2008, with limits up to $729,750 for high-cost areas. That increase was set to expire at the end of this year, which would have dropped the size of loans eligible for GSE and FHA funding to $625,500, so both the House and the Senate have agreed to extend the higher limits through December 31, 2010.

In California, more than 80 percent of all loans are financed by Fannie Mae, Freddie Mac, or Federal Housing Administration (FHA) loans and many California regions have the higher $729,750 loan limit in place. The extension of the higher loan limits for these federally-funded loan products is expected to help maintain the positive signs we are now seeing in California’s mortgage market.

According to Robert E. Story, Jr., chairman of the Mortgage Bankers Association (MBA), ”Given the lack of a private secondary mortgage market, FHA, Fannie Mae, and Freddie Mac are pretty much the only game in town. Extending the current loan limits through 2010 will allow more loans to qualify for these important programs and will help keep mortgage credit more accessible and affordable for qualified borrowers.”