Much has been going on in the area of loan limits. Last month, the FHFA announced that the loan limits for Freddie Mac and Fannie Mae would not be going down in 2014, as had been previously suggested. That was good news for homebuyers. However, just last week FHA published their 2014 loan limits. As expected, these limits did decrease, in order to implement the statutory decline from $729,750 to $625,500 and the formula change from 125% of local area median price to 115% of local area median price. This would put FHA limits on par with the Freddie/Fannie limits.
Unfortunately, the new FHA limits seem to go beyond that change. In some instances, we are seeing significantly lower limits. In fact there are 146 counties that will experience declines of 20% or more. FHA has offered no explanation for these significant decreases. NAR joined with coalition partners in sending a letter to FHA last week, urging them to reconsider these changes and asking for more transparency in the process of determining the limits.
In addition, the notice includes language for appealing loan limits at the local level. However, the deadline for submitting appeals is January 6, 2014. In the coalition letter, NAR has also urged HUD to extend this deadline. Details for appealing are included in the mortgagee letter, linked below.
The limits published on December 6th are effective for case numbers assigned on January 1, 2014 and beyond.
Coalition Letter to FHA
FHA mortgagee letter implementing the limits
FHA loan limit lookup (be sure to use the correct year)