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Regulators Weigh Reductions in Size of U.S.-Guaranteed Mortgages

Lawmakers and regulators are debating whether it’s time to shrink the size of mortgages that the U.S government will guarantee, five years after they first boosted loan limits in response to the financial crisis.

President Barack Obama and housing regulators have been calling for gradual reductions, citing a need to contract the government’s 90 percent share of the mortgage market. Trade groups including the National Association of Realtors say it’s too risky to make a change that would increase borrowing costs for some homebuyers at a time when interest rates have been rising and the effect of new lending regulations is still unclear.