With Soaring Home Prices, Government May Back Home Loans of Close to $1 Million

Fannie Mae and Freddie Mac are government-sponsored entities (GSEs). Because lenders take on less risk when loans can be resold to Fannie Mae and Freddie Mac, lenders are more willing to issue loans to borrowers even if the would-be homeowners don't have perfect credentials. Next year, however, conforming limits could increase dramatically and, in some cases, Fannie and Freddie may actually back loans valued at close to $1 million.