TEMPORARTY INCREASE ON LOAN LIMITS

 

The Economic Stimulus Act of 2008, signed into law on February 13, 2008, establishes temporary increases to Fannie Mae’s conventional loan limits for first lien mortgage loans in high-cost areas, as defined by the U.S. Department of Housing and Urban Development (HUD). This new legislation is intended to bring stability, liquidity and affordability to an important part of the housing finance system.

The purpose of this Announcement is to outline Fannie Mae’s requirements for the origination, underwriting, delivery and servicing of “jumbo-conforming” mortgage loans. A jumbo-conforming mortgage loan is any conventional conforming mortgage loan for which the original principal balance exceeds our conforming loan limits in effect prior to the temporary increase up to the new limits set by HUD for the area in which the property is located. Unless otherwise stated in this Announcement, all requirements of Fannie Mae’s Selling Guide and Servicing Guide apply to jumbo-conforming mortgage loans.

 

Loan Limits

 

Fannie Mae will purchase jumbo-conforming mortgages secured by one-unit properties only. The new loan limits are applicable only to high-cost areas and will be calculated based on the location of the subject property as follows:

 

• 125 percent of the area median home price in high-cost areas, not to exceed $729,750 except in Alaska, Hawaii, Guam and the U.S. Virgin Islands

 

• In situations where 125 percent of the area median home price is less than $417,000, the loan limit will remain at $417,000 ($625,500 for Alaska, Guam, Hawaii, and the U.S. Virgin Islands)