Conforming loan limit for U.S. to remain $417,000 in 2009; different limits in some areasMortgagePress.comloan limits, Federal Housing Finance Agency, Housing and Economic Recovery Act of 2008, Stimulus Act, FHA, MSAs
The Federal Housing Finance Agency (FHFA) has announced the
conforming loan limit will remain $417,000 for 2009 for most areas
in the U.S. but specified higher limits in certain cities and
counties. The conforming loan limit is the maximum size of loans
that Fannie Mae and Freddie Mac can purchase in 2009.
According to provisions of the Housing and Economic Recovery Act
of 2008 (HERA), the national loan limit is set based on changes in
average home prices over the previous year, but cannot decline from
year to year. Loan limits for two-, three-, and four-unit
properties in 2009 will remain at 2008 levels as well: $533,850,
$645,300, and $801,950 respectively, for homes in the continental
U.S.
The national limit was left unchanged at $417,000 based on
declines in FHFA's monthly and quarterly house price indexes over
the past year. The monthly purchase-only index declined 5.9 percent
over the 12 months ending August 2008, and the quarterly
all-transactions index dropped 1.7 percent from second quarter 2007
to second quarter 2008. Virtually every other measure of house
prices has also fallen, with many showing even larger declines.
FHFA has not yet determined whether it will continue to use a
currently existing FHFA price index to gauge price movements in
future years. For this year, however, all reliable metrics point to
lower prices, and a price decline of any size is sufficient to
determine that the national limit will not change.
Following the provisions of HERA, FHFA has set loan limits for
"high-cost" areas in 2009. These limits are set equal to 115
percent of local median house prices and cannot exceed 150 percent
of the standard limit, which is $625,500 for one-unit homes in the
continental U.S. The new limits affect loans purchased by an
Enterprise in 2009, unless the loans were made permanently eligible
for purchase under the Economic Stimulus Act enacted earlier in
2008 and has generally higher limits.
Under rules set forth in the Stimulus Act, loans originated in
2008 and the second half of 2007 are subject to limits of 125
percent of local price medians up to a maximum of $729,750. As a
result of the difference in the formula for determining high-cost
area limits, many of the high-cost area loan limits are different
for 2009 than they were for 2008. They are generally lower because
of the lower median price multiplier in HERA (i.e., loan limits are
115 percent rather than 125 percent of median prices) and the lower
ceiling ($625,500 rather than $729,570). For loans originated
during the period covered by the Stimulus Act, the higher of those
limits and the 2009 limits will apply.
In calculating loan limits, FHFA used median house price
estimates calculated by the Federal Housing Administration (FHA) of
the Department of Housing and Urban Development (HUD). Those values
have been estimated in a manner consistent with requirements of the
National Housing Act, which requires that median prices for all
counties in metropolitan statistical areas (MSAs) be set equal to
the median price for the highest-cost county. FHA has estimated
median house prices for the purpose of setting its own loan limits
and has used data from a number of sources, including aggregated
county recorder data (supplied by Radar Logic), the American
Community Survey, and the National Association of Realtors. HUD
will allow a 30-day appeals period for those wishing to contest its
median price estimates. Appeals are to be based upon data
suggesting a potentially higher price median for a given area.
Details concerning the appeals process will be released today in an
FHA mortgagee letter. To the extent that appeals are deemed valid
and HUDs median price estimates change in response to the one-time
appeals process, the FHFA loan limits will be changed to reflect
the updated data.
 While FHFA has used median house prices estimated by FHA for
2009 loan limits, it may choose alternative methods in future
years. FHFA will be seeking public comment on a forthcoming
proposal concerning the best approach to measuring price medians
for this application.
As in previous years, the 2009 maximum conforming limits are
higher in Alaska, Hawaii, Guam, and the U.S. Virgin Islands than in
the contiguous U.S. In those areas, as delineated in the attached
list, loan limits vary from $625,500 to $721,050 for one-unit
properties. In addition to a table containing a list of all
conforming loan limits for all U.S. counties and statistically
equivalent areas, also attached is a list showing only those areas
where 2009 loan limits are set by the high-cost area provisions in
HERA. These areas have loan limits above $417,000 for one-unit
properties in the continental U.S. and above $625,500 for
properties in Alaska, Hawaii, Guam and the U.S. Virgin Islands.
A link to 2009 High-Cost Area Loan Limits may be found by
clicking here.
A link to 2009 Loan Limits for All Counties may be found by
clicking
here.
