The Federal Housing Finance Agency (FHFA) is set to announce 2009 conforming loan limits for Fannie Mae and Freddie Mac by Nov. 7. The limits define the maximum loan size of mortgages that can be purchased by the Enterprises.
Under the Housing and Economic Recovery Act of 2008 (HERA) that was passed in July, FHFA was directed to set conforming loan limits each year for the nation as a whole and specifically for high-cost areas.
The rules governing how the loan limits are established differ from the rules set forth in the Economic Stimulus Act of 2008 (ESA), which applies to loans originated in 2008. For instance, under ESA, loan limits for high-cost areas were set at 125 percent of local house price medians and the maximum high-cost limit was 175% of the national conforming limit ($729,750 in the continental U.S.)
A release from FHFA said that under HERA, the high-cost area loan limits are 115% of local price medians up to a maximum of 150 % of the national limit. In 2009, if the national limit remains at $417,000 for one-unit properties, the maximum limit in high-cost areas would be $625,500 for the continental U.S, the release said.
In determining high-cost area limits under HERA for 2009, FHFA will use median home values estimated by the Federal Housing Administration (FHA). The FHA median prices will be calculated in the coming weeks by FHA to determine its 2009 loan limits.