Brentwood TN Real Estate
President Bush signed HR 5140 aka: The Economic Stimulus Act of 2008 into law on February 13th. The law took effect immediately and is effective through December 31st of this year. A major point of the bill for those of us in the mortgage industry is that it significantly increases mortgage lending limits in certain areas of the country but the bill leaves a lot of questions on the table and leads to a great deal of confusion as everyone seems to be asking the question "So what does this mean for loan limits in my area?" Let's take a closer look and see if we can make more sense of HR5140.
For conforming lending, the bill raises current conforming loan limits from the current $417000 cap to 125% of the median home price in high-cost areas with a new cap at $729750. This statement leads to several questions which I am including answers for:
1. What is "median home price" and how do I find out what it is in my area?
The National Association of Realtors aka: NAR releases a report of statistics on state-by-state existing- home sales and metropolitan area median home prices each quarter. The state existing-home sales report includes single-family houses, condos and co-ops. The price report reflects sales prices of existing single-family homes by metropolitan statistical area (MSA). MSAs are defined by the U.S. Office of Management and Budget and include the specified city or cities and surrounding suburban areas.
You will find the 4th quarter 2007 median home price reports by state at
You will find the 4th quarter 2007 median home price report for metropolitan areas at
2. What is a high cost area and how do I know if my area is considered such? High cost areas as those areas of the country where the trend of median sales prices has been appreciating at a rate higher than the average rate in other areas of the country. For these areas, the new conforming loan limit will be 125% of the median sales price for the area as of 12/2007. My understanding is that the following are those areas considered as "high cost areas" that will be affected by the new conforming loan limit increases:
· CA MSAs: Los Angeles, Napa, Oxnard, Riverside, Sacramento, Salinas, San Diego, San Francisco, San Jose, San Luis Obispo, Santa Barbara, Santa Cruz, Santa Rosa, Stockton, and Vallejo
· CT MSA: Bridgeport
· DC MSA: Washington
· FL MSA: Naples
· HI MSA: Honolulu
· MA MSAs: Barnstable and Boston
· MD MSA: Baltimore
· NJ MSAs: Atlantic City, Ocean City and Trenton
· NY MSAs: Poughkeepsie and New York City
· OR MSA- Bend
· VA MSA: Charlottesville
· WA MSA: Seattle
Other areas of the country are not considered high-cost areas and thus, will not be affected by the new conforming loan limits provided from HR5140.
It is being reported that we should not expect to be able to use lenders using these new limits until June or July because Fannie Mae and Freddie Mac need ample time to adjust their guidelines to accommodate these higher loan sizes. Therefore, in reality, with the current bill set to expire December 31st, we may have limited time to take advantage of these loan limit opportunities. It is being widely speculated, however, that the current expiration date is likely to be extended when it's proposed for renewal later this year.
The stimulus bill also increases the loan limit for most FHA loan programs in high-cost market areas from the current limit of $372,790 to 125% of the median sales price of each area not to exceed $729,750.
So when can we expect to hear of further clarification from Fannie Mae, Freddie Mac and the Department of Housing and Urban Development aka: HUD as to the new loan limits for all areas? HUD is given 30 days from the date of bill passage in which to update their systems so we should expect an announcement regarding FHA limits to come no later than March 14th. Speculation is that it may take Fannie and Freddie longer than 30 days to work through the changes they need to implement with their guidelines and systems.
*Information courtesy Tonya Esquibel, WR Starkey Mortgage, Franklin TN*
Brentwood TN Real Estate