On Friday December 6th the Department of Housing and Urban Development or HUD for short announced that they are once again making changes to the FHA Single Family Loan Limits. These changes will be implemented for FHA case numbers that are requested after January 1st 2014.
This new loan amount limit is the first decrease in loan limits that has taken place under Housing and Economic Recovery Act of 2008 or HERA for short. In 2008 higher loan limits were put into place to assist the housing market during the Great Recession. The move to lower lending limits comes at a time when the housing market has recovered much of its losses from the crash and the economy is strengthening. The higher loan limits under HERA were never meant to be a long term solution and making the change back will help improve FHA’s portfolio and risk tolerance as the government makes the move away from the housing market and puts the lending responsibility back on the private sector capital markets.
The Full 2008 Housing & Economic Recovery Act of 2008
As a result of the January 1st change approximately 650 counties will be forced to accept lower lending limits. This timing has caused a lot of frustration with real estate professionals and prospective home buyers looking to enter the housing market for the first time or re-enter it after the recession. Just a few months ago the FHA announced the roll out of their new “Back to Work” program. This permits those who had a dramatic economic event that resulted in the loss of income or employment as a result of the Great Recession. By dramatically reducing waiting periods after bankruptcies, short-sales, and foreclosures, MA residents will now have the opportunity to take advantage of the historically low interest rate environment that the Federal Reserve has facilitated for Americans. With the lower limits many buyers looking to benefit from FHA’s new program will be limited in their buying power or be forced to sit on the sidelines until Fannie Mae or Freddie Mac roll out a similar program, unfortunately by the time that happens the interest rates may not be as favorable as they are now.
To access the FHA loan limits in your area follow this link
IMPORTANT- When utilizing the loan limit link above don’t forget to change the “Limit Year”, this is the second box up from the bottom.
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