Fannie Mae, Freddie Mac Lift Mortgage Limit

Fannie Mae and Freddie Mac will buy single-family mortgages worth up to $252,700 beginning next year, a 5.3% increase from the current maximum of $240,000. The increased limit will help more people obtain mortgages. In Los Angeles County, the increase will give about 3,000 more home buyers a chance to qualify for Fannie Mae or Freddie Mac mortgages, the California Assn. of Realtors said. The 5.3% increase is in line with the change in the average price of a home for the 12 months ended in October, which was $184,485, as estimated by the Federal Housing Finance Board. Fannie Mae and Freddie Mac are shareholder-owned, government-sponsored enterprises. Their government charter requires them to base their mortgage purchase limits on the federal index. Fannie Mae and Freddie Mac make their profits and help keep the mortgage market liquid by purchasing mortgages from banks and other original lenders. They keep some mortgages in their portfolios and repackage others as mortgage-backed securities.