U.S. conforming loan limit unchanged for 2009: FHFA

NEW YORK (Reuters) - The size of most loans eligible for Fannie Mae (FNM.P) and Freddie Mac (FRE.P) funding will be unchanged in 2009 at $417,000, but caps on exceptions in many costly regions fell, the companies' regulator said on Friday.

Exceptions in high-cost areas will decline in most parts of the country since legislation lowered the ceiling and home prices have fallen, the Federal Housing Finance Agency said.

Under the Housing and Economic Recovery Act of 2008, the government-sponsored enterprises, or GSEs, may purchase and guarantee loans up to $625,500 in high-cost areas next year, the FHFA said. The limit declined by varying amounts in 51 metropolitan regions and rose in three areas in Virginia, an FHFA economist said.

The regulator's index of home purchase prices fell 5.9 percent in the 12 months through August.

Congress allowed higher limits for GSE-eligible loans in high-cost areas such as California as the credit crunch dried up programs funded by Wall Street banks and other financial institutions. Fannie Mae and Freddie Mac have boosted their shares of the mortgage market as competitors dropped out, and despite credit losses of their own are being pushed on initiatives that expand their reach.

The $417,000 conforming limit cannot decline as a result of falling home prices, the agency said.

Loans made under the earlier Economic Stimulus Act, which boosted the cap to $729,750 for loans originated by December 31 of this year, are also eligible for GSE purchase, it said.

(Reporting by Al Yoon; Editing by Dan Grebler)