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I’m sure you’ve seen on the news by now that Fannie Mae and Freddie Mac loan limits are going up due to the fiscal stimulus bill pushed through Congress recently. The good news is that this also means that FHA limits are going up temporarily. They are even going up to as high as $729,750 in accordance with the original House of Representatives proposal for FHA reform instead of the lower Senate bill limits.

The bad news is that the official HUD Mortgagee letter which will make the increase official in not expected to arrive until March and the major lenders are not expecting to be able to fund loans under the new limits until around May. There are several reasons for these delays. First, HUD is government bureaucracy so their delay is expected. Second, once the limits are officially raised lenders must make arrangements to be able to price and sell the loans in the secondary mortgage markets. It takes some time to set up the “pools” that are used to securitize and provide the money for these fundings. Needless to say, more care is being taken in this process these days due to the ongoing credit crunch.

More bad news might be that FHA interest rates may have to increase to accommodate the increased risk involved in larger loans. We will have to wait and see how this impacts us.

But the good news is that if you are a borrower who can benefit from an FHA loan (meaning you are lucky enough to still have a tiny bit of equity in your home), or a loan officer with a long list of good people you haven’t been able to help then hope is on the horizon.

PS. I apologize for the lack of updates over the last several weeks. I had a family health emergency that didn’t allow for extra time to update FHA Loan Advice, but there will be several updates over the next few days since a LOT of interesting developments have occurred over the last month. I will also be changing the format of the email updates, so don’t be alarmed at the changes.

FHA Loan Limits Are Now Officially Raised AND Down Payment Assistance Is Continued!


Related posts:

  1. Update: FHA Reform Bill Passes The Senate
  2. FHASecure and Foreclosure News
  3. FHASecure: What In The World Is Going On?
  4. Will the FHA Mortgage Limits Get Raised?
  5. FHA Mortgage Reform: The Bill Is Heading For A Vote!

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Filed under: Consumer Information • FHA Updates • H.R. 1852 • HUD Regulations • Industry Information • Refinancing

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