Why Are Baseline Conforming Loan Limits Set Each Year? The Housing and Economic Recovery Act (HERA) requires that the baseline conforming loan limits are adjusted each year to reflect the change in the average U.S. home price.5HERA was a piece of financial reform legislation passed by Congress...
The loan limits were increased because lenders were only making loans backed by Fannie and Freddie (which carry an implicit government guarantee) after themortgage crisiswiped away private capital. In other words, it didn’t make much sense to originate a jumbo loan, as it carried far too much...
Other than the loan size, mortgages may become non-conforming based on a borrower’s loan-to-value ratio (down payment size), debt-to-income ratio, credit score and history, and documentation requirements. Understanding Non-Conforming Mortgages Non-conforming mortgages are not bad loans because th...