Mortgage and real estate trade groups are pressing Senate leaders to take action on a bill that would extend the maximum mortgage loan limits through 2013.
The current conforming loan limit for government-backed mortgages is set to expire on Sept. 30. A bipartisan bill introduced in early August would allow the Federal Housing Administration, the Department of Veterans Affairs and government-sponsored enterprises Freddie Mac and Fannie Mae to continue insuring homes up to the higher levels for another two years.
The Homeownership Affordability Act of 2011 is sponsored by Robert Menendez (D-NJ) and Johnny Isakson (R-GA). Sen. Diane Feinstein (D-CA) is a co-sponsor.
Congress boosted the conforming loan limit in 2008 to 125 percent of local median home prices. The higher limits are currently capped at $729,750 in the nation's costliest counties. The prior high-cost cap was about $625,000.
In a joint letter released this week, more than a dozen industry organizations warned that failing to extend the limits would delay the housing recovery and make it more difficult for consumers to secure affordable financing.
"With tight underwriting already constraining mortgage availability, lowering the loan limits will only further restrict liquidity," the letter reads in part. "Private lending remains wary of returning to the market with all the current uncertainty. Extending the existing limits at levels appropriate for all parts of the country will provide homeowners and home buyers with safe, affordable financing and help stabilize local housing markets."
In all, more than 800 counties would be affected by the loan limit reduction. Those counties contain about 85 percent of the nation's owner-occupied homes.
With time winding down, mortgage groups aren't the only ones making a last-minute push.
On Thursday, a bipartisan group of 37 lawmakers sent a letter to the House Appropriations committee recommending a short-term extension of the current conforming limits. The lawmakers urged the committee to attach the provision to a temporary government funding bill.
Opponents of retaining the loan limits claim there's an appetite in private markets for jumbo loans.
The Treasury Department recommended in February that Congress let the loan limits reset.
Chris Birk is director of communications for the VA Mortgage Center, which specializes in VA loans for veterans and active duty service members.