Federal regulators will allow Fannie Mae and Freddie Mac to continue funding higher-priced mortgages, at least through the middle of next year. President Barack Obama had called on the Federal Housing Finance Agency, the conservator of the two mortgage giants since September 2008, to lower the limits by the end of this year in order to shrink their role in the market. FHFA acting director Ed DeMarco, however, said the timing is not right just yet.
"We are not making a change there in the immediate term," DeMarco told reporters. "I recognize and understand that the industry is very busy right now making implementation of other regulations that take effect the first of next year, and that's enough."
DeMarco is referring to new mortgage regulations from the Consumer Financial Protection Bureau, requiring lenders to prove a borrower has the ability to repay a loan. The so-called "Qualified Mortgage rule," goes into effect Jan. 1, and lenders are scrambling to make sure they will be in compliance with all its requirements.
(Read more: Home affordability down as housing slows)