Frequently Asked Questions - Economic Stimulus Package

The Economic Stimulus Package was signed into law on February 13, 2008.  In addition to several other benefits, it provides temporary loan limit increases for some high-cost areas for Fannie Mae & Freddie Mac loans and potentially all areas for FHA loans.

HUD has 30 days from the day the President signed the package into law to identify the impacted MSA's (Metropolitan Statistical Area), meaning sometime in mid-March,  all lenders will simultaneously receive the official notification.

Although several lenders have promoted lists of what they believe the new limits will be, these are only estimates because HUD has yet to determine the higher loan limits.  We know the HUD will determine the new loan limits based on the median area sales price.  But, we do not know what time-frame will be considered.

Because of the changes in the mortgage industry, the median area sales prices may be dramatically different through the year.  So the time-frame used by HUD to determine the higher loan limits is key.

Answer to frequently asked questions:

1. Will loan limits for Fannie Mae, Freddie Mac and FHA increase to $729,750 in all areas?   No, not all areas will offer loan amounts up to $729,750.  In mid-March, HUD will announce the higher loan limits, identified by MSA's.
2. Are the higher FHA loan limits a part of the FHA Modernization Act?   No.  There are many other changes for FHA loans included in the FHA Modernization Act, which has not been passed by Congress.
3. Will the down payment requirement change for FHA?   Decreasing the down payment requirement from 3% to 1 1/2% is part of the FHA Modernization Act, not the Economic Stimulus Package.  The FHA Modernization Act has not been passed by Congress.
4. Will reverse mortgages be able to offer the higher loan limits?   No.  FHA and Fannie Mae have confirmed that their reverse mortgage products are excluded from the higher loan limits as part of the Economic Stimulus Package.  FHA reverse mortgage loan limits may be increased as part of the FHA Modernization Act which has not been passed by Congress.
   

We expect the impacted areas to be announced in mid-March and remain in effect until Dec. 31, 2008.