Increasing FHA Loan Limits

The Federal Housing Administration (FHA) was created through the National Housing Act of 1934. In short, the goal of FHA are: "to improve housing standards and conditions; to provide an adequate home financing system through insurance of mortgage loans; and to stabilize the mortgage market." (Federal Housing Administration; Wikipedia)

The Problem Today:

With delinquencies continuing to pile well into 2008 and often limited financing in high-cost areas (above $417,000), homeowners are pressing for some action to help their situation.

From the Statement of Administration Policy: H.R. 1852 - Expanding American Homeownership Act of 2007...

"The President has called on Congress to expeditiously pass the Administration's FHA Modernization bill to assist more homeowners during this period of stress in the mortgage markets...

As proposed by the Administration, the legislation authorizes an increase in FHA loan limits from $362,000 to $417,000 or 100 percent of the Federal Home Loan Mortgage Corporation (Freddie Mac) conforming loan limit in high-cost areas, and from $200,000 to $271,000 in lower-cost areas. These changes are needed to adapt the program to increasing home prices. The Administration strongly opposes amendments that would authorize FHA guarantees of loans greater than the conforming loan limit as the program should remain targeted to traditionally underserved homebuyers, such as low- and moderate-income families."

Though this will help some borderline home buyers afford a new home purchase, it's not the answer for everyone.

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