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It was never going to be easy to wind down Fannie or Freddie, as the mortgage giants dominate the industry along with backing by many lobbies and home builders’ associations. It’s concerning, however, that a predominantly Republican House will not take the necessary steps toward privatization.

The Speaker of the House is likely to read a letter that Republicans are circulating for signatures. It supports an amendment to an appropriations bill that looks to raise the mortgage limits that Fannie, Freddie and the FHA can insure by $104, 250 – to $729, 750 – in particular markets for a couple of years.

It’s argued that raising the limits will not cost taxpayers a single cent because Fannie and Freddie can charge more to insure expensive homes. This echoes the 1995 administration’s claim that expanding taxpayer-backed mortgages wouldn’t cost taxpayers a thing.

The letter refutes claims that raising the limits will result in taxpayer-backed luxury homes. It’s claimed in the letter that now isn’t the time to lower limits because the private market will not, or is unable, to pick up the slack and provide enough credit to middle-income families.

The fact is that private companies have done quite well in this area, having closed private-label mortgage deals this year and would like to be involved even more. However, Fannie and Freddie remain an obstacle to further private business.

It seems the letter is receiving a lot of support in Congress and there is discussion that the House and Senate will begin to negotiate the final details on the appropriations bill that includes the hike in mortgage-loan limits; this, without so much as a floor debate or hearing.

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