What’s New
Federal Housing Administration (FHA) Announces New 2014 Loan Limits
FHA’s Office of Single Family Housing published Mortgagee Letter 2013-43 today, which announces that on January 1, 2014, FHA will implement new Single Family loan limits for Title II Forward Mortgages as detailed in the Housing and Economic Recovery Act of 2008 (HERA). As a result, the calculation of FHA’s maximum loan limits in high cost metropolitan areas of the country will be reduced and the current high “ceiling” of $729,750 will be reduced to $625,500.
The revisions will be effective for all FHA case numbers assigned on or after January 1, 2014 through December 31, 2014. We strongly urge Mortgagees to review today’s Mortgagee Letter to understand the full scope of these changes, and to begin planning for implementation. It will be important for lenders to order case numbers on loans that exceed the new loan limits prior to the effective date of the
new loan limits. Mortgagees may review Mortgagee Letter 2013-43 at www.hud.gov/lenders under “What’s New.”
To enable Mortgagees to easily identify areas with loan limit reductions and increases resulting from the new limit calculations, FHA has published separate lists of counties with loan limit increases and loan
limit decreases. Mortgagees may also view these lists at www.hud.gov/lenders under “What’s New.”
Policy Change Highlights
Forward Mortgages:
Due to the expiration of the authority granted in the Consolidated and Further Continuing Appropriations Act of 2012 (Public Law 112-55), the calculation of FHA’s single family loan limits is altered, resulting in a decrease in the calculation of high cost area limits and the loan limit “ceiling” for case numbers assigned on or after January 1, 2014 through December 31, 2014.
The expiring authority had required the maximum loan limits to be calculated as the higher of the limits established under section 203(b) of the NHA or the limits established under ESA (Public Law 110-185). ESA used higher multiples than the NHA in establishing limits in high cost areas (125 percent versus 115 percent) and in establishing the national FHA loan limit “ceiling” as a percentage of the conforming loan limit (175 percent versus 150 percent).
The following table illustrates 2014 FHA loan limits for low cost and high cost areas.
Property Size
|
Low Cost Area “Floor”
|
High Cost Area “Ceiling”
|
One Unit
|
$271,050
|
$625,500
|
Two Units
|
$347,000
|
$800,775
|
Three Units
|
$419,425
|
$967,950
|
Four Units
|
$521,250
|
$1,202,925
|
As in previous years, Alaska, Hawaii, Guam, and the Virgin Islands have higher loan limits than the rest of the country.
If you have any questions about how this effects you or have any other real estate questions, call me at 818-472-7830. - Brian Stroh • Estates Agent • Dilbeck Estates • Studio City, CA 91604 •
BRE#01523170
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