It’s Official: Congress Passes FHA Loan Limit Hike

Mortgage & Real Estate

Mortgage bankers soon will able to originate Federal Housing Administration loans of up to $729,750 in high cost areas thanks to Congress, which passed a “minibus” appropriations bill Thursday night.

But Fannie Mae and Freddie Mac lenders will be stuck at the lower $625,500 limit.

President Obama is expected to sign the combined Transportation, Housing and Agriculture minibus measure shortly.

House and Senate conferees hammered out this strange FY 2012 compromise under heavy lobbying from housing-related groups – in particular the National Association of Realtors. In the end, House conferees refused to raise the limit for the GSEs, whose seller/servicers began adapting to the lower loan limit in late September. 

The spending bill (H.R. 2112) also extends the National Flood Insurance Program through Dec.16 and provides $80 million for foreclosure prevention programs.

The House passed the appropriations bill by a 298-212 vote Thursday and the Senate passed it by a 70-30 vote later that night.

Sen. Bob Corker, R-Tenn., voted against the measure.  “It is unconscionable that Congress would renew the excessive loan limits for any of the government housing agencies when we should be weaning ourselves off government dependence in the housing finance sector,” Sen. Corker said.

The banking committee member recently introduced a bill to unwind Fannie and Freddie over 10 years.

National Association of Home Builders chairman Bob Nielson said restoration of the higher loan limits for FHA is “essential to help stabilize the nation’s housing financial markets.”

The minibus appropriations bill also restores the FHA loan limit in hundreds of counties by raising the local benchmark to 125% of the median house price from 115%.  The benchmark in these low cost markets dropped to 115% at the end of September.

NAR, as expected, welcomed the outcome. “As the nation’s leading advocate for homeownership, we applaud members of Congress for restoring FHA’s previous loan limits, which will help reduce consumer cost burdens, stabilize local housing markets and allow qualified, creditworthy borrowers to access affordable mortgage financing,” said NAR President Moe Veissi.

Daily Briefing | Friday, November 18, 2011

  • Clayton Buys BPO Specialist

    Due diligence provider Clayton Holdings LLC on Friday said it has agreed to buy Green River Capital, West Valley, Utah, a provider of REO, short sale and broker price opinions whose client base includes mortgage giant Freddie Mac.

  • Lenders Have Already Started Their Engines for HARP 2.0

    Some lenders are already chomping at the bit on ‘HARP 2.0’ and plan to hit the ground running to refinance Fannie Mae/Freddie Mac-backed mortgages when the application process commences on December 1.

  • Ruling Against MERS That Caused Foreclosure ‘Re-dos’ Overturned by Mich. High Court

    The appeals court ruling against MERS that caused the GSEs and the Department of Housing and Urban Development to reinitiate foreclosures on more than 1,600 Michigan properties was overturned by the state’s highest court this week.

  • House Dems Urge McConnell to Allow CFPB Confirmation Vote

    A group of House Democrats is pressuring Senate Minority Leader Mitch McConnell to allow a vote on the confirmation of a director for the Consumer Financial Protection Bureau.

  • Fraud Risk Tied to Income is on the Rise

    The risk of employment and income-related mortgage fraud rose nearly 9% in the third quarter compared to a year ago, and is up almost 50% from 2009, according to a new report from Interthinx.

  • LPS Sees Improvement in Late Payments

    The national 30-day delinquency rate improved by 2% in October over September and by nearly 15% compared to a year ago, according to a new “first look” report from Lender Processing Services, Jacksonville, Fla.

  • Hoenig Wins Wide Support for FDIC Nomination

    The freeze on confirming picks to the Federal Deposit Insurance Corp.’s board appears to be melting.

Leave a Reply