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| 30 Yr Fix |
6.37% |
0.02% |
| 15 Yr Fix |
5.91% |
-0.01% |
| 1 Yr ARM |
5.17% |
0.00% |
| 5/1 ARM |
5.82% |
0.04% |
| 30 Yr Tres |
4.47% |
-0.05% |
| Fed Prime |
5.00% |
-0.25% |
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FHA Loan Limits Raised By Senate
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Update: HUD has released the new loan limits. Find your local loan limit here. So-called FHA reform reached an important milestone on Friday
when the U.S. Senate overwhelmingly approved its version of the legislation.
The bill, which passed by a vote of 93-1, seeks to make the
Federal Housing Administration more relevant in the current housing and mortgage
lending environment by expanding the agency, loosening some underwriting standards,
and raising its current restrictive loan limit.
The FHA was established in 1934 to help borrowers, particularly those with
low incomes, purchase homes by guaranteeing banks that those loans would be
repaid should the borrower default. But the agency's loan limits have
generally lagged behind those of Freddie Mac and Fannie Mae and as home prices
climbed dramatically and lenders with looser underwriting standards proliferated
the agency became less and less of a player in the mortgage market.
Over a ten year period ending last December the FHA's share of new mortgages
fell from 9.1 percent to 1.8 percent according to Inside Mortgage Finance. A
major reason for the slide is the FHA loan cap which, in many parts of the country
such as both coasts, falls short of covering the purchase price of even a low
end house.
FHA insured loans have been mentioned as a possible escape hatch for borrowers
who may be unable to make payments on their current adjustable rate
mortgages when their interest rates reset over the next year. The restrictive
loan limits, however, make that impossible for many of those borrowers. There
is also a theory that a more widely available federal guarantee would encourage
lenders to make more loans in the current tight credit environment.
The Senate version of FHA reform would raise the limit on
FHA loans from $362,000 to at least $417,000 which is the current limit on Freddie
Mac, Fannie Mae, and Veterans Administration loans.
The FHA estimates that it may be able to help some 200,000 borrowers who are
facing foreclosure with the new limits coupled with loosened underwriting standards
which were announced by the president several months ago.
In October the House of Representatives passed legislation similar to that
passed in the Senate but some differences between the two bills will have to
be hammered out before a final version is sent to the president for his signature.
The House bill would raise the loan limit as high as $829,750
in certain areas of the country but the biggest stumbling block to a compromise
is a feature of the House bill which establishes a new housing trust fund for
troubled borrowers and would require FHA to contribute to it.
Also on Friday the Senate passed a separate borrower relief bill which would
end, for three years, a provision in the tax code which has bitten many a homeowner
after foreclosure or a loan workout. Under current rules the Internal Revenue
Service requires lenders to send borrowers and the IRS a form detailing any
loan amounts written off by the lender after a foreclosure, short sale, or loan
restructure. The IRS treats that forgiven debt as ordinary income and taxes
the borrower accordingly.
The House had earlier passed similar legislation but without the three year
sunset provision.
In other mortgage news, Reuters reported on Friday that the hotline established
by the HOPE NOW alliance had received 45,000 calls in the three
days after its establishment was announced by President Bush. The hot-line provides
foreclosure prevention counseling to borrowers who qualify for an interest rate
freeze worked out between the Treasury Department and major lenders. The telephone
number for the program is 1-888-995-HOPE.
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Comments (27)
| Does anyone know of the time frame until lenders begin accepting and closing on these higher loan limits?
thanks for the article. |
|
| Above Posted By:
Ryan
| Thu, 21 Feb 2008 21:27:11 EST |
| I can appreciate many of your comments. I hope that we as a society have all learned from the mistakes that have put us into this situation. Good Luck to all of you. |
|
| Above Posted By:
Ryan
| Tue, 19 Feb 2008 21:36:05 EST |
| If I am reading this correctly, it appears that it is applicable now until Dec 2008. It states:
SEC. 202. TEMPORARY LOAN LIMIT INCREASE FOR FHA.
(a) Increase of High-Cost Area Limit- For mortgages for which the mortgagee has issued credit approval for the borrower on or before December 31, 2008, subparagraph (A) of section 203(b)(2) of the National Housing Act (12 U.S.C. 1709(b)(2)(A)) shall be considered (except for purposes of section 255(g) of such Act (12 U.S.C. 1715z-20(g))) to require that a mortgage shall involve a principal obligation in an amount that does not exceed the lesser of
(1) in the case of a 1-family residence, 125 percent of the median 1-family house price in the area, as determined by the Secretary, and in the case of a 2-, 3-, or 4-family residence, the percentage of such median price that bears the same ratio to such median price as the dollar amount limitation determined for 2008 under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) for a 2-, 3-, or 4-family residence, respectively, bears to the dollar amount limitation determined for 2008 under such section for a 1-family residence, or
(2) 175 percent of the dollar amount limitation determined for 2008 under such section 305(a)(2) for a residence of the applicable size (without regard to any authority to increase such limitation with respect to properties located in Alaska, Guam, Hawaii, or the Virgin Islands),
except that the dollar amount limitation in effect under this subsection for any size residence for any area shall not be less than the greater of: (A) the dollar amount limitation in effect under such section 203(b)(2) for the area on October 21, 1998, or (B) 65 percent of the dollar amount limitation determined for 2008 under such section 305(a)(2) for a residence of the applicable size. Any reference in this subsection to dollar amount limitations in effect under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act means such limitations as in effect without regard to any increase in such limitation pursuant to section 201 of this title.
Am I reading this wrong? |
|
| Above Posted By:
Gy
| Tue, 19 Feb 2008 15:57:39 EST |
| The dates used on HR 5140 are actually July 1,2007 (not 2008) to December 31, 2008... has anyone found out when this "officially" starts for the increased loan limits? |
|
| Above Posted By:
Rick
| Tue, 19 Feb 2008 14:02:50 EST |
| Will the new FHA limit increase also raise the reverse mortgage ceiling as well?? |
|
| Above Posted By:
Anonymous
| Mon, 18 Feb 2008 16:29:23 EST |
| It looks like the changes will not be implemented until July 1, 2008 and will expire at the end of 2008. Take a look at HR 5140. Refer to the H.R.5140.ENR link and check out Title II. |
|
| Above Posted By:
Anonymous
| Mon, 11 Feb 2008 13:37:02 EST |
| Does anyone know how long it will take to implement the new loan limits once the bill is signed by Bush? |
|
| Above Posted By:
Mischi
| Mon, 11 Feb 2008 12:23:21 EST |
| If anyone is shirking responsibility it appears that the educated professionals in the mortgage and real estate industry SHOULD have known is that one who only makes 20K a year is no qualify within two year (upon maturity of a 2-28) to refinance and repay a 30 year fixed 500K loan. Therefore, a teaser rate loan should never have been granted in the first place. Another issued that is frustrating to deal with is comments referring to consumers loosing their homes. If they purchased with $0 down, interest only then they are not loosing a dam thing. They leased the property for the lifespan of the teaser rate loan. |
|
| Above Posted By:
jose
| Sat, 9 Feb 2008 00:03:29 EST |
| 'The FHA increased loan limits will help thouseands of homeowners that do not fit underwriting guidelines for credit requirements. I do not agree with the guy above, I think he has a mentality of a typical self centered Loan Officer...whom is only out for his own needs..."commission". I've been in this industry for 27 years...owning my own mortgage business myself, processing and underwriting. Its really not a matter of being mislead or non disclosure..Obviously, the lender will not do a loan for a borrower if they bought too high of a loan to qualify for the loan. Bad things happen to good people. Things happen, problems happen, life happens... If the credit and income did not qualify, the loan will not be approved. Its a matter of the borrowers waiting for their prepayment penalty expiring after the two years fixed rate and then at the time of submitting the loan...they do not qualify to get another loan. All these lending institutions that approved these borrowers under subprime requirements...are no longer available for the borrower to even get out of the loan. Sure, the lenders are in business to make loans....however, they are the very ones that put these homeowners in a bad situation. Some of these idiot lenders will not negotiate the adjustment and remodify the payment for the borrower to afford...therefore, they put the borrower in a position they cannot afford the loan anymore. The banks put clerks in the position of helping the borrower negotiate their "dream" of owning their home therefore, these so called clerks do not care about...helping the borrowers keep their home. Look at so many lenders going out of business...and have a high debt loss from foreclosures. They play hard ball with the borrower...therefore...their are so many short sales...Does this make sense? Having idiot lenders that do not want to negotiate and remodify payments....and therefore forcing these borrowers to short sale. Whomever is running these banks are idiots. |
|
| Above Posted By:
Lori
| Fri, 8 Feb 2008 15:46:03 EST |
| Chaynes, you just don't get it do you...mortgage companies don't want to foreclose on you or anyone else. Mortgage companies lose money when they foreclose. They want to loan money to people such as yourself, whom promise to pay them back with interest on time(the worse your credit the more you should pay in interest), when you break your promise they only follow through on what they outlined to you upfront when you read and signed your mortgage loan papers (oh don't tell me you didn't read them because it was to much paperwork and then complain later that you were mislead). The Note of your loan was no more then 3 pages(the standard is 2 pages). And any addendum would have been right behind the note in your paperwork (standard 1 page). You may have had a pre-payment penalty and an Adjustable rate rider(again the standard is 1 page each). These disclose to you what if any additional terms their are to your note (not a lot to read). Were you mislead or did you just not read and understand the terms of your loan. Most people don't want to take responsibility for their own actions that put them in their financial situations and you sound like you fit that mold. Your Realtor and your mortgage lender didn't put a gun to your head and make you sign the papers did they? If not, own up to your own decisions or as it sounds poor decision (buying more then you can afford) and quit making everyone else the scapegoat for poor little old you! |
|
| Above Posted By:
Rad
| Mon, 4 Feb 2008 17:46:42 EST |
| When will the FHA mortgage limits be increase to at least 417,000. Does anyone know?
Thanks Thomas
|
|
| Above Posted By:
Thomas Martin
| Tue, 29 Jan 2008 04:27:36 EST |
| I am semi-retired and living on social security only, how much of a fha loan can I get in West Virginia. I saw some property that I want to bid on in the $120,000 range and want a 30 year mortgage. I would prefer no down payment and I would like to know the settlement costs on this and could the seller absorb the closing closts. I don't mind paying the inspection fees for rodents and wood mites of all kinds. With your mortgage rates at 1.8%, when could I make a bid on some properties with homes in West Virginia.
Thanks |
|
| Above Posted By:
t
| Wed, 16 Jan 2008 15:44:40 EST |
| Chaynes, it is people like you that take no responsibility for their actions and feel all their problems are others peoples fault, that we are in the situation we are now with the mortgage and housing industry. I've written many 2/28 loans, and have ALWAYS disclosed the terms in full, while at the same time presenting a fixed option if available. Those loans are designed to help people in a temporary situation recover from financial hardships, whether they are the result of living beyond means or an outside factor. 9 times out of 10 it's the former. I can't tell you how many borrower's i've worked with that take those loans to consolidate debt, save hundreds if not thousands a month, and improve their credit with the plan being to stay on track and refinance into a conforming loan when they qualify for one, only to max out their debt again in those 2 years and keep themselves from getting a better loan. When that happens, which I'd bet is your situation, it's always the borrowers fault. But, that all to true side of the story doesn't sell newspapers. |
|
| Above Posted By:
Jeff
| Wed, 16 Jan 2008 08:28:22 EST |
| When a corporate entity like a mortgage company or bank uses illegal means to create a situation where they can litteraly steal your home, are there no laws that can make them, like any theif, pay? Are they not liable? When a corupt judiciary is a party to that theft, are they not responsible?When a realtor has recieved a commission in the sale of a stolen home, like with recievership in a normal theft? I haven't been answered. I am not unreasonable, just savy. |
|
| Above Posted By:
chaynes
| Mon, 14 Jan 2008 16:58:03 EST |
| Any time frame when " W " will sign off on the increase and how soon after can we apply??? |
|
| Above Posted By:
Tim P
| Sun, 13 Jan 2008 10:15:57 EST |
| Is there any update on when the House and Senate will meet to determine when and how a happy medium can be reached between the House's proposal to raise FHA limits to those similar to Freddie Mac, etc, and the Senate's proposal of $800K?
If the stumbling block is determining whether to create a new housing trust fund that would require FHA to contribute to it, why can't they mandate that the funds from the FHA Insurance Program, which is funded and paid for by the mortage loan borrowers be used for that purpose? Wouldn't that cover FHA's contribution to it? Or, are they looking for a different source of funds?
|
|
| Above Posted By:
DSW
| Thu, 10 Jan 2008 09:07:53 EST |
| For those that think FHA is tax payer funded, think again. The FHA Insurance Program is funded and paid for by the mortage loan borrowers with their upfront Mortgage Insurance Premium and monthly payments. Forclosure costs are paid from these collected funds not from the taxpayers. In the entire history of FHA, these insurance funds have never been insolvent and in fact have always been in a surplus. Of all the different proposed programs being bantered around, this would appear to be the one with the least amount of risk to the American Taxpayer. |
|
| Above Posted By:
Bob
| Wed, 9 Jan 2008 11:55:19 EST |
| This new legislation will really help those in high cost areas, that have excellent credit, and are great potential homebuyers, but have to accept higher jumbo interest rates, and therefore cannot afford to buy a home. It's great to see the legislation not only focusses on the adjustable rate borrowers, but also other borrowers that can take advantage of low FHA interest rates. |
|
| Above Posted By:
Joe
| Mon, 7 Jan 2008 12:00:56 EST |
| Regardless of whether the FHA limit will be pushed as high as the Fannie/Freddie conforming limit, does anyone have an opinion as to when the 'standard' 2008 FHA increase would be announced? |
|
| Above Posted By:
Tom W.
| Fri, 28 Dec 2007 14:25:02 EST |
| This is transfering the risk from lending institutions to the tax payers. The loans will fail and we will be holding the bag. One other problem is it drags out the defaults over a longer time frame. |
|
| Above Posted By:
reality
| Thu, 20 Dec 2007 19:38:41 EST |
| Low interest rates and high risk lending create a housing price bubble, which causes prices to double in five years. Now the local, the national and even the global economy depend on those prices not eroding. Mr. Mozilla wants the GSE limit raised to a $million. That will make it easier for people to get loans to purchase some of the foreclosure property Countrywide now owns - 3800 in California alone. Let it collapse which would only hasten the inevitable regression to the mean. |
|
| Above Posted By:
Jane
| Mon, 17 Dec 2007 19:39:03 EST |
| Most people that are making interest only payments for the overpriced properties they purchased (2 to 3 times the realistic value) cannot afford payments of $2,166.66 for a 400K loan at 6.5% interest. Increasing the jumbo cap to 829K will render interest only payments at 6.5% to $4,494.47. How is that going to help? The solution lies in allowing the housing market to correct itself and for property value to come down to realistic AFFORDABLE levels. |
|
| Above Posted By:
Jose
| Mon, 17 Dec 2007 17:46:56 EST |
| No, it does not address the bond requirement. Hopefully the House will get this added when the two sides meet together. Not many brokers these days can afford to have their financials audited by CPAs who don't really want to touch the mortgage industry in the first place.
|
|
| Above Posted By:
Mike
| Mon, 17 Dec 2007 16:22:59 EST |
| 417k will help tons. Try buying anything in that ball park In NYC or Long Island !! |
|
| Above Posted By:
broker
| Mon, 17 Dec 2007 13:43:43 EST |
| $830k for a FHA loan??? Even $417k is too high for 80%+ of the country. FHA is built for 1st time homebuyers and low to moderate income people. We don't need to put that kind of burden on the tax payers. |
|
| Above Posted By:
Tim Rogge
| Mon, 17 Dec 2007 11:34:34 EST |
| That is great news! When will this take effect? |
|
| Above Posted By:
Edward Olssen
| Mon, 17 Dec 2007 10:42:40 EST |
| Did the Senate Bill include the bond requirement rather than audited financials for new FHA applicants? |
|
| Above Posted By:
Mack
| Mon, 17 Dec 2007 10:15:08 EST |
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