HPC's Ed DeMarco quoted in CNN Business
Quote below. Read the full article (Sky high home prices may push Fannie Mae and Freddie Mac to back loans of nearly $1 million) here.
"Approaching a $1 million loan limit highlights the need for Congress and the administration to think hard about how much support taxpayers should provide the mortgage market," said Ed DeMarco, president of the Housing Policy Council, an industry group focused on housing finance.
He said that as home prices are rising faster than incomes, rising loan limits allow taxpayers to back mortgages to higher-income households.
"Taxpayer backing of mortgage securities results in slightly lower mortgage rates," he said.
"This encourages people to buy more expensive homes and it feeds the runup in house prices, exacerbating the affordability challenges we face in today's supply-constrained marketplace."
While the increase in the loan limits happens automatically based on a formula, the FHFA has the discretion to put in place a smaller increase or even to freeze or reduce the limit, DeMarco said.
"Providing such mortgages with government-backed financing drives up house prices and crowds out private financing," he said.