Boswell urges House Conferees to protect taxpayers against housing loan limit changes

Des Moines, IA – November 7, 2011 – (RealEstateRama) — Congressman Leonard Boswell (IA-3) sent a letter to House Conferees to H.R. 2112 urging them to reject language contained in the legislation that would restore the currently expired Federal Housing Authority (FHA) loan limits.

Currently, the FHA limits high loans to $625,500. The Senate language, currently being considered by a joint House-Senate conference committee, would revert back to the higher limit of $729,750.

“Not a single Iowan would benefit from a loan limit extension. These high-dollar loans for a select few of the very wealthy should not be on the shoulders of the American taxpayers,” Boswell said. “These limits were set to expire for a reason, so we could reduce the risk assumed by the federal government.

“I urge conferees to resist this provision, and put the focus back on moderate- and middle-income homebuyers – not the most affluent,” Boswell said.

The full text of Boswell’s letter is below the break.

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November 3, 2011

The Honorable Hal Rogers, Chairman
House Committee on Appropriations
H-307 The Capitol
Washington, DC 20515

Dear Chairman Rogers:

On October 20, 2011, the United States Senate voted 60-38 to approve the Menendez-Isakson amendment (No. 857) to H.R. 2112, the Agriculture, Commerce/Justice/Science, Transportation/Housing and Urban Development Appropriations Bill (mini-bus) which would restore the recently expired $729,750 high loan limit, up from FHA’s current limit of $625,500. On October 24th, the Wall Street Journal, in a review and outlook piece asked, “Should taxpayers continue to guarantee personal McMansions, even as Fannie Mae and Freddie Mac have lost $142 billion, and counting?” Special interests in the housing industry might say yes, but I believe the hardworking taxpayers of Iowa, none of whom would benefit from a loan limit extension, resoundingly say no. On their behalf, I urge you reject this Senate provision as H.R. 2112 is considered by the conference committee.

The Menendez-Isakson amendment would restore the recently expired maximum loan amounts that the Federal Housing Administration (FHA) can insure and that Fannie Mae and Freddie Mac (the GSEs) can purchase. When the FHA’s “high loan limits” expired on September 30th, only 669 of the 3,334 counties or county equivalents that are eligible for FHA insurance experienced a decline in its loan limit, according to the Department of Housing and Urban Development (HUD). Further, not a single affected county is located in Iowa. Not one Iowan was harmed by the loan limits expiration, nor will any citizen of the state draw any benefit from restoring FHA’s temporary loan limits increase. In fact, taxpayer dollars back those government-sponsored loans; and therefore Iowa taxpayers will be at risk if there are further defaults in the housing market because of the expansion of this provision.

The Menendez-Isakson amendment is an unwarranted extension of the federal government’s activity in home mortgages because there was very little FHA volume between $625,000 to $729,000 in calendar year 2010 – about 9,000 loans nationwide in only a handful of states, according to FHA data – not to mention that the only borrowers who even qualify for loans at the high end of the limit have to earn at least $200,000 – hardly the demographic that needs federal assistance to buy a home. It is appropriate for FHA from a policy perspective to focus on moderate- and middle-income homebuyers – not the most affluent.

Again, I urge you to reject the Senate provision as the conference committee considers H.R. 2112 and join me in protecting the interests of taxpayers across the nation.

Sincerely,

Leonard L. Boswell
Member of Congress

CC: The Honorable Bill Young
The Honorable Jerry Lewis
The Honorable Frank Wolf
The Honorable Jack Kingston
The Honorable Tom Latham
The Honorable Robert Aderholt
The Honorable Jo Ann Emerson
The Honorable John Culberson
The Honorable John R. Carter
The Honorable Jo Bonner
The Honorable Steven C. LaTourette
The Honorable Norm Dicks
The Honorable Rosa DeLauro
The Honorable John Olver
The Honorable Ed Pastor
The Honorable David Price
The Honorable Sam Farr
The Honorable Chaka Fattah
The Honorable Adam Schiff