WASHINGTON Dec 16 The U.S. government said on
Monday it could reduce its support for high-cost mortgages as
soon as October of next year, a sign of confidence in the
recovery of the American housing market.
The regulator for taxpayer-owned Fannie Mae and
Freddie Mac unveiled a plan in which the two mortgage
finance giants would gradually reduce the maximum size of U.S.
home loans they buy.
Because the government guarantees the loans bought by the
two firms, the move would amount to dialing back the heavy
support Washington provides the mortgage market.
"Setting reduced loan purchase limits furthers the goal of
contracting the market presence of Fannie Mae and Freddie Mac
gradually over time," the Federal Housing Finance Agency said in
The FHFA said it could reduce the loan limit to $600,000
from $625,500 in the nation's highest-cost areas, which include
cities like Los Angeles, New York and Washington. The limit
would drop in much of the rest of the country to $400,000 from
The regulator said it will seek public comment before
implementing the plan. If adopted, the plan "will not affect
loans originated before October 1, 2014," the FHFA said.