President Barack Obama has signed HR 2112, the Consolidated and Further Continuing Appropriations Act of 2012 into law renewing the expired higher loan limits for Federal Housing Administration (FHA) and U.S. Department of Veterans Affairs (VA) loans for an additional two years, through Dec. 31, 2013. The higher loan limits expired on Oct. 1, 2011, when the size of a mortgage that the FHA could buy or guarantee was reduced to $625,500, down from $729,750. In addition, the formula for establishing limits for high-cost areas also fell from 125 percent to 115 percent of an area’s median home price.
"NAMB, the Association of Mortgage Professionals, applauds the efforts of Congress and the President for signing HR 2112," said NAMB President Donald J. Frommeyer, CRMS. "This will give responsible qualified homeowners in high-cost areas the ability to refinance and access the dream of homeownership. We encourage Congress and President Obama to further extend the former temporary loan limits through $729,750 on Fannie Mae and Freddie Mac loans. This will continue to help homeowners have access to credit in high-cost areas, allowing our economy to recover quickly."
Prior to President Obama's signature, HR 2112 was approved by a 298-121 vote in the U.S. House of Representatives, and was faced with opposition by 101 House Republicans, many of whom opposed the measure due to the loan limit increase.
"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," said National Association of Home Builders (NAHB) Chairman Bob Nielsen.
HR 2112 will provide a total of $128 billion in discretionary appropriations to provide funding for three fiscal year 2012 appropriations bills: Agriculture, Commerce-Justice-Science, and Transportation-Housing and Urban Development.
The Consolidated and Further Continuing Appropriations Act of 2012 will provide approximately $1.3 billion for management and administration of the U.S. Department of Housing & Urban Development (HUD), an increase of $16 million or one percent over 2011 and a reduction of $18 million from the president’s request.
"We [NAHB] 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," said Nielsen.