Higher conforming loan limits, Act 2

According to a column by Lew Sichelman, the higher conforming loan limits will disproportionately assist 15 counties, most of those in California, and the NAHB is worried that the Office of Federal Housing Enterprise Oversight will drag its feet in implementing higher conforming loan limits:

Only 15 counties in the U.S. have a median house price high enough to qualify for the temporary maximum conforming loan limit called for in the economic stimulus package, an indication that the big jump may not help as many home buyers and refinancers as originally expected. The National Association of Home Builders had hoped that as many as 29 metropolitan areas would qualify for the new $729,725 ceiling. But according to a staff member at the group's convention in Orlando last week, it now appears that less than 10 will make it...

NAHB officials also expressed concern that Fannie and Freddie's safety and soundness regulator, the Office of Federal Housing Enterprise Oversight, will drag its feet in approving the GSEs' programs to buy the higher-limit conforming loans...

Although he has vowed to work with the GSEs, OFHEO Director James Lockhart is on record as opposing the temporary increase in the conforming loan limit. And the concern is that OFHEO will set such high capital requirements and set the bar so high for qualifying for a jumbo conforming mortgage that only a relative handful of loans will be made...

At the convention, Edward DeMarco, OFHEO's deputy director, said his agency is "committed" to carrying out the intent of Congress. And he stressed that the internal review processes that must be undertaken are those of Fannie and Freddie, not OFHEO.

"We're asking them to operate their businesses is a safe and sound manner," DeMarco said. "We're not trying to impede them. We're right there with them, making sure they understand the added risk they are undertaking."

But in a late January statement, Lockhart indicated his agency would have a large presence in the process, saying it wants to be certain the GSEs have the "appropriate risk management policies and capital in place."

Hence, the fear that OFHEO will make Fannie and Freddie "jump through hoops."