Pleasanton Real Estate

Fri, 2011-08-19 16:48 — NationalMortgag…

The Federal Housing Administration (FHA) will implement new single-family loan limits as specified by the Housing and Economic Recovery Act of 2008 (HERA) as of Oct. 1, 2011. According to Mortgagee Letter 11-29, FHA will reduce loan limits in the highest cost metropolitan areas of the country, while limits would remain unchanged in most other parts of the nation. 

These new loan limits were scheduled to take effect in January of 2009, but continuing strains in credit markets led the Congress to delay implementation. The result has been nearly three years of higher loan limits for some areas based on the Economic Stimulus Act of 2008 (ESA).

Barring any new action by the Congress, many affected areas will have lower FHA loan limits come Oct. 1. The current standard (floor) loan limit for areas where housing costs are relatively low will remain unchanged at $271,050 for one-unit properties. The new “ceiling” loan limit for higher cost areas will be reduced from $729,750 to $625,500 for one-unit properties. FHA loan limits vary based on area median home price, but all will fall within the range of $271,050 and $625,500 for one-unit properties. Additional information and loan limits for two-, three- and four-unit properties are noted in FHA’s Mortgagee Letter 11-29. As in previous years, Alaska, Hawaii, Guam, and the Virgin Islands may have higher loan limits.

FHA estimates that only a fraction of borrowers living in the nation’s highest cost areas will be impacted by the new loan limits announced today. For example, last year only three percent of FHA-insured borrowers lived in these high-cost areas. The change in FHA loan limits will affect 669 counties across the country, out of a total of 3,234 jurisdictions in which FHA insures home loans. Most loan applications with an FHA case number assigned on or after October 1, 2011, will be subject to the new limits. However, there are some exceptions for FHA-insured to FHA-insured refinances that are noted in HUD’s Mortgagee Letter. In addition, there are exceptions for loans that were issued case numbers on or before Sept. 30, 2011 and meet all of the credit approval criteria detailed in Mortgagee Letter 2011-29.

The mortgage loan limit and maximum claim amount for FHA-insured reverse mortgages will remain unchanged. FHA’s Home Equity Conversion Mortgage (HECM) will continue to have a maximum claim amount of $625,500.

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Compliance NMP News Originations Residential Reverse Federal Housing Administration (FHA) Economic Stimulus Act of 2008 (ESA) Home Equity Conversion Mortgage (HECM) Housing and Economic Recovery Act (HERA) loan limits median home price Mortgagee Letter 11-29

By Dina ElBoghdady
President Obama’s proposed budget includes $41.74 billion for the Department of Housing and Urban Development, about $1.1 billion less than what was enacted by Congress for fiscal 2010.

Programs designed to help the homeless and those in need of rental assistance got the biggest boost in this budget. The administration proposed roughly $2.3 billion for Homeless Assistance Grants, up from the $1.9 billion enacted in fiscal 2010. Another $9.4 billion was requested for project-based rental assistance, up from $8.6 billion in fiscal 2010.

“In this constrained fiscal environment, increases were made only for the neediest Americans,” the proposal states.

Funding was slashed by $300 million for the community development block grant program, which was funded at $3.98 billion in 2010. The grants are designed to help rehabilitate housing and invest in the economic development of primarily low-income neighborhoods. The budget also proposes about $172 million less for new housing construction for seniors and people with disabilities. The administration is requesting $953 million for that program.

Housing and Urban Development Secretary Shaun Donovan said the cuts would not have been made if economic conditions were stronger.

The Federal Housing Administration, which is part of HUD, insures its lenders against losses when mortgages default. To beef up the cash cushion that FHA uses to pay for unexpected losses, the administration proposes raising the annual premiums that FHA borrowers pay from 0.9 percent to 1.15 percent starting April 18. The premium is used to compensate lenders for loans gone bad. The annual premiums and other fees that FHA collects from borrowers are expected to generate $5 billion in fiscal 2012, up from $2.6 billion in 2010 but less than the $9.8 billion projected for 2011.

In a call with reporters, Donovan said the increase in annual premiums should generate $2 billion of additional revenue next year. The higher premiums will also help reduce the volume of FHA-insured loans, which should drop to $218 billion from this year’s projected $300 billion. That reduction is in line with the administration’s push to scale back the government’s involvement in housing finance.

WASHINGTON, D.C. — Fannie Mae’s latest national housing survey finds that most Americans believe the housing market has reached bottom, but they are more cautious about owning a home. Respondents to the Fannie Mae National Housing Survey believe that home prices will hold steady (47 percent) or increase (31 percent) over the next year, and that rental prices will stay the same (46 percent) or go up (39 percent). Across the general population, the average expected rise in rental prices is four times that of home prices (3.6 percent versus 0.9 percent).

Seventy percent of Americans think it is a good time to buy a house, compared with 64 percent in a similar survey conducted in January 2010. But 33 percent — up from 30 percent — of all respondents said they would be more likely to rent their next home if they were to move.

“Our survey shows that consumers see a mixed outlook for housing and homeownership,” said Doug Duncan, Vice President and Chief Economist, Fannie Mae. “These findings indicate a return to a more balanced and realistic approach toward housing. While this will likely weigh on the housing recovery in the near-term, it should, over time, help to build a stronger and healthier market focused on sustainable homeownership.”

“Although most Americans believe that home prices have bottomed, they are adopting a much more cautious approach toward buying,” Duncan continued. “Homeowners and renters alike continue to be wary of taking on risk, and they are less confident in the long-term outlook for housing.”

A majority of Americans (67 percent) continue to believe that housing is a safe investment; however, that number is down 16 percentage points from a similar survey conducted in 2003 — the largest drop by far among all investment types tracked since then. Delinquent borrowers and renters are notably more discouraged than mortgage borrowers and underwater borrowers about a home’s safety as an investment and the appeal of buying versus renting. More than 70 percent of all respondents believe it will be harder for the next generation to buy a home, up three points from the beginning of the year.

The Fannie Mae National Housing Survey polled homeowners and renters between June 2010 and July 2010. Findings were compared to a similar survey conducted by Fannie Mae from December 2009 to January 2010 and released in April 2010, and a similar survey conducted in 2003.