conforming loan


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Conforming Loan

A mortgage loan that Freddie Mac and Fannie Mae are allowed to buy. These organizations buy mortgages from the original lenders so as to reduce risk to the lenders and, thereby, maintain a smooth flow of mortgage credit. Conforming loans must meet certain guidelines. Included among these guidelines are requirements, such as a maximum debt-to-income ratio for the property owner, but the most important rule states that neither organization may buy a loan worth more than a certain amount. This amount changes every year according to changes in the median home price. See also: Jumbo loan, Mortgage-backed security.

conforming loan

A loan that meets the underwriting requirements necessary for sale to Fannie Mae (FNMA—Federal National Mortgage Association) or Freddie Mac (FHLMC—Federal Home Loan Mortgage Corporation). There is nothing derogatory about a nonconforming loan; it may be too large,it may be for a property flipped within the prior 90 days,or any number of other disqualifying reasons besides creditworthiness or value of collateral.

References in periodicals archive ?
has endorsed the recently announced increase of conforming loan limits by the Federal Housing Finance Agency (FHFA).
The researchers estimate differences in interest rates and mortgage origination volumes in the conforming and non-conforming mortgage markets (including both "jumbo" mortgages that exceed conforming loan limits and other non-conforming loans that have over 80 percent LTV ratios) during Federal Reserve market interventions from 2008 through 2014.
BANKING AND CREDIT NEWS-January 26, 2016-Redwood Trust restructures conforming loan operations
M2 EQUITYBITES-January 26, 2016-Redwood Trust restructures conforming loan operations
The baseline maximum loan limit for loans eligible for purchase by Fannie Mae and Freddie Mac remained unchanged in 2016, but in 39 high-cost areas the conforming loan limit was increased.
FHAs minimum national loan limit floor is set at 65 percent of the national conforming loan limit of $417,000.
Recent changes in the conforming loan limits provide a useful natural experiment to study the price impact of TBA eligibility, even for agency MBS pools that already enjoy a credit guarantee.
It turns out, the quasi-governmental Fannie Mae and Freddie Mac played a major role in the mess, as did private mortgage issuers, conforming loan limits and lax credit guidelines.
Fannie Mac's decision to utilize the temporary increase in conforming loan limits to purchase jumbo-conforming mortgages under the same pricing structure accorded portfolio purchases of regular conforming loans will help home buyers in high-priced markets.
5 percent to $295,573 since last October, the Office of Federal Housing Enterprise Oversight said the maximum 2008 conforming loan limit for single-family mortgages purchased by Fannie Mae and Freddie Mae (the Enterprises) will remain at the 2007 level of $417,000 for one-unit properties for most of the United States.
The Veterans Benefits Improvement Act of 2004 tied increases in the VA guaranty to the Federal Home Loan Mortgage Corporation's conforming loan limit, allowing VA to keep pace with rising home values.
The 2005 conforming loan limits for first mortgages/family homes in the Lower 48 is $359,650, but in Alaska is $ 539,475.