By Rich Bockmann
U.S. Rep. Gary Ackerman (D-Bayside) criticized his Republican colleagues after Congress watered down legislation in late November that he said would have stabilized the housing market in Queens.
In an attempt to stabilize the housing sector, Congress raised the limit in 2008 — from $625,000 to $725,750 — on which the Federal Housing Authority, Fannie Mae and Freddie Mac were allowed to guarantee mortgages in high-cost areas.
Those high-cost areas include the New York metropolitan area, Boston, Chicago, southern California, San Francisco and Washington, D.C., among others.
That increased limit expired Sept. 30, and since then Ackerman has been working to have it restored.
Last month, Congress passed a spending bill that granted a two-year extension of the limits for the FHA, but not Fannie Mae or Freddie Mac, which the congressman said have traditionally served a larger share of the housing market.
“The restoration of the FHA loan limits, but not the Fannie and Freddie limits, is not even close to the shot in the arm that the housing market is in dire need of right now,” said Ackerman, member of the House Financial Services Committee.
The 15-term Democrat said that without the government guarantee, home buyers are forced to rely solely on private lenders who have been unwilling to provide reasonably priced, long-term, fixed-rate mortgages over the last several years.
“With a quarter of American homeowners currently under water on their mortgage loans, the GOP leadership apparently believes that making mortgages more expensive and harder to obtain will somehow improve housing prices and ease the economic pain that many middle-class homeowners are currently experiencing,” he said. “Their backward reasoning illustrates just how out of touch with the housing market they really are.”
Fannie Mae and Freddie Mac are government-sponsored enterprises backed by the federal government that purchase mortgages from banks and other financial institutions so they have enough money to make new loans. The FHA provides mortgage insurance on loans and provides lenders with protection against losses from homeowners defaulting on their mortgages.
“By not fully restoring the loan limits, [the GOP leadership] have deprived a large portion of the housing market of its main source of liquidity in the middle of the most catastrophic housing crisis since the Great Depression. Unfortunately, as a result homeowners are going to be forced to endure more pain,” he said.
Ackerman, along with 131 members of Congress, sent a letter to congressional leaders in early November urging them to support the reinstatement of the loan limits, but despite the legislative defeat and Republican control of the House, he vowed to continue his efforts.
“Although it will be an uphill battle, I will continue to push the legislation I introduced in July with Rep. John Campbell [R-Calif.] — the Conforming Loan Limit Extension Act of 2011 [H.R. 2508] — that would extend the mortgage limits for Fannie Mae and Freddie Mac for two additional years,” Ackerman said. “We will also continue to identify other legislative vehicles to which we can attach the measure.”
Reach reporter Rich Bockmann by e-mail at rbockmann@cnglocal.com or by phone at 718-260-4574.
