FHA to Drop Jumbo Support

Jumbo mortgages likely will be taking a bath by the end of the year, when government support for many high-amount loans is scheduled to expire. After two years during which Fannie Mae and Freddie Mac were authorized by Congress to back loans up to $729,750, the limit in some areas will fall back to the normal $417,000 limit. That same applies to the Federal Housing Administration. High-cost areas on the coasts, such as New York City and San Francisco, will lower the loan limit to $625,500. Some industry experts anticipate that the move will further undermine home prices, while some economists say that the effects of the shift are unlikely to change affected markets dramatically. The Obama administration announced Wednesday that it would push for a one-year extension to the high limits, to help stabilize the housing market nationally.