The Office of Federal Housing Enterprise Oversight kept 2008 conforming loan limits purchased by Fannie Mae and Freddie Mac at $417,000, but it's considering lower limits if housing prices continue to fall. Meanwhile, The House is trying to get higher Enterprise loans limits passed, but the Senate won't cooperate.

Here's why it matters. Banks make mortgage loans, enterprises like Fannie Mae and Freddie Mac buy the loans and package them into securities so banks can make more loans. Affordability is a huge issue in many parts of the country. So, lower conforming loan limits may be good for Fannie and Freddie but it's bad for homebuyers, considering that credit has tightened for jumbo loans and home prices haven't dropped but five percent after 100 percent gains since 2000.

More buyers will be put into higher risk, non-conforming loans. Aren't record defaults on non-conforming loans one of the reasons why housing sales and prices are fallling?

Here's proof: Housing sales have dropped over 20 percent to less than a half-million housing units sold year over year. That's the October report from the National Association of Realtors. The NAR blames constipated lending. If people can't get loans, they can't BUY houses.

The news was worse from California. Home sales decreased 40 percent in October, and median home prices dropped nearly 10 percent. Not surprisingly, the California Association of Realtors blames lending problems on the sudden decline.

So if the OFHEO decides to lower conforming loan limits, that will force housing prices down even further. And that means a lot of recent homebuyers can't SELL houses.

Maybe Congress and the OFHEO should put their fiddles down and have a little summit. Housing is getting burned. And so are consumers.

Published: November 30, 2007

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Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.