October 21st, 2011 11:05 AM by Michele Morse Reen
October 21, 2011, 12:16 AM EDT
By Phil Mattingly
Oct. 20 (Bloomberg) -- The U.S. Senate adopted a measure that would raise the maximum size of a home loan backed by mortgage companies Fannie Mae, Freddie Mac and the Federal Housing Administration to $729,750.
Senator Robert Menendez, a New Jersey Democrat, offered the increase as an amendment to a spending bill today. The measure was approved less than a month after the limit on so-called conforming loans was automatically reduced to $625,500.
“If we want to get the economy moving, the housing market has to be part of it,” Menendez said tonight on the Senate floor.
The Senate adopted the amendment 60-31. The amendment required 60 votes for approval and was offered during the chamber’s consideration of a package of spending measures. If the Senate passes the underlying bill, the House would then have to vote for it to become law.
The higher limits, should they be signed into law, would apply until Dec. 31, 2013. Lawmakers would pay for the cost of the higher limits by imposing an annual fee on the loans of 15 basis points of the unpaid principal balance of the mortgage.
The limits, which vary by locale, apply to loans backed by the FHA and government-controlled mortgage companies Fannie Mae and Freddie Mac, which together buy or guarantee about 90 percent of all residential home loans.