Proposed Guidance on Conforming Loan Limit Calculations

SUMMARY: ​The Office of Federal Housing Enterprise Oversight is seeking public comment on a proposed Guidance on Conforming Loan Limit Calculations. These calculations establish the maximum size limit for loans that Fannie Mae and Freddie Mac may purchase, as provided in their charters. The conforming loan limit is adjusted annually through a calculation of year over year changes to the existing level of home prices based on data from the Federal Housing Finance Board. Because of the importance of the conforming loan limit, OFHEO has sought to craft procedures that avoid problems in the setting of the limit, that provide an understandable framework for setting the limit and that do not represent significant operational challenges to mortgage and financial markets.

The guidance elaborates on and revises an existing guidance—Supervisory Guidance Conforming Loan Limit Calculations, SG-04-01 (February 20, 2004) that delineated OFHEO role in calculating and announcing the conforming loan limit. In 2006, after a decline in housing price numbers, OFHEO announced that, while the conforming loan level had decreased, the resulting decline in the limit would be delayed a year and that OFHEO would revise the existing guidance and address how the decline would be implemented.

OFHEO is seeking comment on all aspects of the guidance. Significant matters include whether and how the limit should decline, rounding of dollar amounts, deferral of loan limit declines for the later of one year or until they reach at least a cumulative one percent (1%) level, “grandfathering” of qualified conforming loans and a number of procedural matters set forth in the guidance.

Because of the importance of Fannie Mae and Freddie Mac and the conforming loan limit to the mortgage markets and the interest of other financial institutions, mortgage bankers, builders, realtors and others, OFHEO has determined to seek public comment on the guidance.

Comments are due by July 19 and should be addressed to Alfred Pollard, General Counsel, OFHEO, at either 1700 G Street N.W., 4th ​Floor, Washington, D.C. 20552 or alfred.pollard@fhfa.gov.​

Link to Guidance and Supplemental Materials​