Conforming Limits coming SOON!!!

Real Estate Agent with Lending Bee, Inc

Hopefully we all will see some movement in conforming limits

Temporary Increases in Conforming Loan Limits Coming


Last week, legislators on Capitol Hill passed President Bush's economic stimulus package. An important component of the Bill - Section 2 of H.R. 5140, the Economic Stimulus Act of 2008 - directly impacts the mortgage industry by temporarily raising the conforming loan limits in high cost areas across the country.


This legislation allows increases in the loan limits for FHA and the GSEs from 125-175% of the median house price in the area of the property for the period 7/1/07-12/31/08, resulting in new loan limits from $417,000 to $729,750 for single family properties. The legislation requires HUD to publish revised median house prices and principal obligation limits to implement the legislation "as soon as practicable", which should be within days/weeks after the bill is signed.

There are several issues with this new law. Most importantly, several high cost states (California and New York come to mind) tie their anti-predatory lending threshold tests to the conforming loan limit. If the limit increases retroactively to last year, then 'mini-jumbo' loans that were previously exempt from high cost testing may now be subject to these laws. For example, a loan between $417,001-$729,000 originated in California or New York in late 2007 must now be retested under the state law anti-predatory lending tests to identify potential violations, unless the state issues policy statements to the contrary.

Another issue is the potential for accusations of redlining, which is the practice of denying credit to residents in certain, often racially determined areas that can't take advantage of the heightened limits.



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