Officials at Redwood Trust are calling for a gradual decline in conforming loan limits as opposed to an immediate repeal of the high-cost agency loan limits. Martin Hughes, CEO and director of the real estate investment trust, said market disruption due to a decline in loan limits is unlikely while non-agency mortgage-backed security investors said additional reforms are necessary. “If the conforming loan limits are reduced, I believe the private market would aggressively compete for those loans that exceed the new limit without any market disruption,” Hughes wrote in testimony this week for a hearing by the Senate Committee on Banking, Housing and Urban Affairs. He drew a parallel to the reduction of the high-cost loan limit in 2012 from $729,750 to $625,500. A gradual decline in the high-cost loan limit would be...