President's economic recovery package to make more families eligible for FHA-insured mortgagesMortgagePress.comFHA, refinance, economic stimulus package, President Barack Obama, Shaun Donovan, HUD, HECM
More American families will be eligible this year to purchase or
refinance their homes using affordable, FHA-insured mortgages,
thanks to the economic stimulus package signed into law by
President Barack Obama last week. The American Recovery and
Reinvestment Act of 2009 will allow HUD's Federal Housing
Administration to temporarily increase its maximum loan limit,
allowing FHA to insure larger mortgages at a more affordable price
in high-cost areas of the country.
"This is one of many elements of the President's recovery plan
that will help homeowners and homebuyers in these high cost areas
secure lower cost mortgage financing," said HUD Secretary Shaun
Donovan. "These loan limit increases will help FHA continue to
provide safe, affordable mortgage products to families in all areas
of the nation. Today's announcement is just one example of how the
President's recovery and homeowner affordability plans work
together to make homeownership more affordable for those looking to
buy a house or refinance their current loans."
HUD will increase FHA loan limits up to $729,750 in high-cost
metropolitan areas such as New York, Los Angeles, San Francisco and
Washington, D.C. There are 73 counties in the U.S. that will now be
eligible for the highest loan limit of $729,750. Previously, FHA's
loan limits in these high-cost areas were capped at $625,500. The
change in loan limits is applicable to all FHA-insured mortgage
loans originated until Dec. 31, 2009.
Increasing loan limits will help FHA continue to provide needed
stability to housing markets across the country. As conventional
sources of mortgage credit have contracted, FHA has been filling
the void. From September to December 2008, FHA facilitated $97
billion of much-needed mortgage activity in the housing market, $35
billion of which was through FHA's refinancing products. By
focusing on 30-year fixed rate mortgages, FHA helps homeowners
avoid and escape the risks associated exotic sub-prime mortgage
products, which have resulted in rising default and foreclosure
rates.
Home Equity Conversion Mortgages
FHA's reverse mortgage product known as the Home Equity Conversion
Mortgage (HECM) will have a new national mortgage limit of
$625,500, up from the previous limit of high of $417,000. Reverse
mortgages allow homeowners age 62 and older to borrow against the
value of their homes without selling them or having to make any
monthly repayments. Homeowners can select a lump-sum payment,
monthly payments or tap into a line of credit. No repayment is
required as long as a homeowner lives in a home with a reverse
mortgage. The reverse mortgage is repaid, with interest, when a
homeowner sells the home or dies.
FHA loan limits are based on the county in which the property is
located. However, for properties located in metropolitan or
micropolitan statistical areas, the limit is set for the county
with the highest median home price within the metropolitan or
micropolitan area.
The new temporary FHA loan limits are posted on the HUD Web site
and may be viewed by clicking here.
Additional details on these new temporary loan limits, including
FHA's mortgagee letter and attachments, are available online by
clicking
here.
For more information, visit www.hud.gov.
