Scott Garrett: “I yield myself 2 minutes. My amendment would strike the language in the bill that raises the conforming loan limits for…”

“I yield myself 2 minutes. My amendment would strike the language in the bill that raises the conforming loan limits for certain parts of the United States. H.R. 1461 would raise by 50 percent the maximum size mortgage Fannie Mae and Freddie Mac could buy. This language hurts the very basic functions of GSEs to provide liquidity and help lower-income home buyers. While the GSEs are chartered to operate in every district across the country, their effectiveness in serving low-income borrowers has been seriously hindered because they focus instead on bigger and bigger loans to higher and higher-income borrowers. Presently, Fannie and Freddie can buy first mortgages on single-family houses up to $359,000. That limit is the so-called ``conforming loan limit,'' and it rises every year. Next year it will go up to $400,000. But with the bill now, it will go up to $600,000 in 2006. A home buyer would need an income of almost $200,000 to buy that home. Is that what Fannie Mae was intended to help? According to a study by the Federal Reserve published last January, the interest rate difference between a conforming loan and a jumbo loan fluctuates between .15 percent and .18 percent, most of which is pure profit for Fannie Mae. Based on the current interest rate environment, this means at best Fannie is going to lower monthly costs by simply $60 for someone buying that $200,000 loan who is now paying $3,300 or so a month in mortgage payments.…”