SIFMA will allow loans on expensive housing financed by Fannie Mae and Freddie Mac to be included in up to 10% of the agency lenders mortgage-backed securities, SIFMA spokeswoman Katrina Cavalli said.
The cap, effective in January, will be raised to $625,550 from $415,000, a 50% increase, on Fannie Maes and Freddie Mac mortgages that qualify for the $4.5 trillion MBS market, Ms. Cavalli said.
She added that the new cap will apply to mortgage-backed securities traded in the to-be-announced market, the main mortgage-backed market that handles sales of MBS to be delivered at a future date.
In a statement, the Securities Industry and Financial Markets Association said the decision to include mortgages with higher value in the agency lenders MBS sought to preserve the homogeneity and minimize liquidity disruption in this important market.
The decision by SIFMA, which issues guidelines for the mortgage-backed market, follows legislation passed by Congress on July 24 in a bid to alleviate the U.S. housing crisis.