umber2son, do you really want to see us head into a year of Really Bad News for the housing market with more loans going "nonconforming" (i.e., "exotic") than less? Lowering the limit right now would push some marginal percent of the 07 business out of plain vanilla relatively high-standard fixed rate or amortizing hybrid ARM products (what the agencies buy) into IOs, short introductory-period ARMs, Option ARMs, etc. with loosey-goosey underwriting standards (what the "jumbo lenders" buy). Why would this be a good thing for any of the parties involved? Sure, keeping the limit in place rather than dropping it means that the GSEs pick up some high-balance loans on the margins that incrementally increase their risks, that they wouldn't have had if the limit had been dropped. But why is everyone so convinced that this is worse than the alternative? I am genuinely puzzled. Do we really think that upward pressures on the GSE limits over the last few years were major drivers of home price inflation, compared to, say, the proliferation of "nontraditional lending" in the non-GSE mortgage market? If so, do we have any plausible data for that? I may have missed an important point, but my reading of what had been driving the direction and magnitude of changes to "median" prices was more a matter of the availability and relatively cheap pricing of financing at the high end. Somebody help me out here.