U.S. Gambles With Mortgage Retreat

Three years after virtually nationalizing the U.S. mortgage market, the government has embarked on a pullback to see whether private industry picks up the slack.  Some people in the housing industry worry that Washington’s move will cause fresh pain in many regions where demand has yet to recover amid the sluggish economy.   The limits in hundreds of counties fell by 10% or more on Oct. 1.  For loans backed by Fannie and Freddie, the limits declined to between $417,000 and $625,500 in about 200 counties.  More worrisome to real-estate agents are declines in the FHA limits, which fell to between $271,050 and $625,500 in 600 counties. Those changes are causing concern because the FHA allows buyers to make down payments of just 3.5%, and it has financed as many as half of all home purchases in recent quarters.

Wall Street Journal   October 10, 2011