Should the Loan Limits for Freddie Mac and Fannie Mae be Raised?

From Bend Weekly News:

"’Why should someone who lives in South Dakota be able to buy a 10,000-acre ranch for the same amount of money and get that subsidized, but I can't buy a 1,000-square-foot, three-bedroom, one-bath (home) in the (San Francisco) Bay Area?’ asked Colleen Badagliacco, president of the California Association of Realtors.

Sen. Charles Schumer, D-N.Y., is trying to revive the moribund Senate effort to force an increase in the loan limit. He would like to raise it as high as $625,500 in high-cost areas for one year as well as increase the size of the Fannie Mae and Freddie Mac mortgage portfolios.”

From Forbes:

“Federal Reserve Board Chairman Ben Bernanke today reiterated that Congress should be careful when considering whether to raise the non-conforming loan limit on mortgages that securitizers Fannie Mae and Freddie Mac can purchase.

Testifying before the House-Senate Joint Economic Committee, Bernanke indicated he does not support raising the loan limit, now at 417,000 usd, and said if this step is taken, it should only be temporary.”

From The Dallas Morning News:

“Fannie Mae is pushing federal regulators and lawmakers to allow it to provide funding for more and higher price loans to help overcome the credit crunch.

The Federal Housing Administration, which provides government-backed insurance for home loans, is also seeking federal approval to modernize and provide more financing.”