President Barack Obama signed a bill Friday that reinstates the recently expired higher loan limits that were in effect for FHA and VA loans through December 31, 2013 but does not provide this extension to Freddie Mac and Fannie Mae.
This bill returns the limit on FHA loans to the multi-tiered arrangement that existed under the Economic Stimulus Act of 2008, provisions for which expired on October 1. Since that date the FHA and GSE maximum has been at $625,500. Under the restored limits the highest FHA loan available in designated high cost areas will be $729,750. Loans written between October 1 and today’s effective date of the new legislation will not be eligible for the new limits. Limits on VA loans will return to the levels established under the Veterans Benefits Improvement Act of 2008 which are, in some cases, higher than FHA limits.
The administration and many congressional Democrats had opposed the higher limits for FHA because this might increase FHA’s market share at the same time the government was trying to encourage private lending. Others were opposed to excluding the GSEs from the increase, also because of the potential impact on the FHA share.
The National Association of Home Builders (NAHB) was quick to applaud the bill, issuing a press release from Chairman Bob Nielsen that says in part, “We commend congressional leaders in both parties and each chamber of Congress for taking this action to boost overall mortgage liquidity in the marketplace, create jobs, and provide home owners and home buyers with safe and affordable financing. “Restoring the higher FHA loan limits will help to stabilize home values, provide constancy while private investors re-enter the market, and enable millions of creditworthy consumers to get home loans with the best mortgage rates and lowest fees and downpayment requirements”
Paul Wickstrom
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