Update from HUD on FHA loan limits

On November 18, President Obama signed a bill re-establishing higher loan limits on FHA loans. Below are some of the particulars about what-qualifies-for-what, straight from HUD:

Forward Mortgages:
Therefore, effective for all Forward mortgages with a case number assigned on, or after, November 18, 2011 through December 31, 2011, the loan limits referenced in Mortgagee letter 10-40 shall be in effect.

As a reminder, Mortgagee Letter 11-29 still applies to the time period 10/1/11 through 11/17/11:

  • Loans that did not have credit approval on, or before, 9/30/11 are subject to the lower limits that were in effect 10/1/11 through 11/17/11.
  • Loans that had credit approval on or before 9/30/11 and FHA to FHA refinances may be eligible for exceptions to those loan limits as defined in Mortgagee Letter 11-29.

The Department will be issuing a Mortgagee Letter by mid-next week that will include more detailed guidance and applicable updated loan limit tables for 2012. We expect supporting system changes to be completed within that same time frame.

Lenders are reminded that the maximum claim amount for HECMs is not affected by HR 2112 and the maximum claim amount for HECM remains at $625,500 as stated in Mortgagee Letters 10-40 and 11-29. This loan limit will remain the same for 2012 and will be included in the pending Mortgagee Letter.

AUS Systems:
Be advised that Automated Underwriting Systems (AUS) that utilize Total Scorecard may not be updated with the new mortgage limits. Lenders are reminded that when a case file is scored that exceeds the statutory loan limits, the results of the scoring event may reflect “approve/ineligible” or “accept/ineligible” and a feedback message identifying that the “ineligible” result is due to the loan amount exceeding the statutory county loan limits. Case files that receive an “approve/ineligible or accept/ineligible” may be eligible for endorsement under the applicable loan limits for the time periods described above.

You and your clients can get FHA tech support and answers to many FAQs HERE.

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2 Responses to Update from HUD on FHA loan limits

  1. D. Reynolds says:

    I’m curious in what form of communication did this come from HUD? I have spoken with several lenders as of 11/28 who have not seen that information. Is that some kind of blast email that goes out to all FHA-approved lenders? If so, it seems like every FHA lender across the country should have received it by now… 5 days later.

    Not only have lenders I’ve spoken with not seen that HUD communication, but if you call the HUD Information Resource Center, the people helping you don’t have any idea about the new higher FHA Forward limits going back into effect.

    I know for a fact that Obama signed HR 2112 into law on Nov. 18, 2011. I know for a fact that a section in that bill reinstates the higher FHA limits from mortgagee letter 10-40 (you can read the bill in its entirety on the Library of Congress website). I also know that the bill became law and was implemented the moment the president’s signature graced the page.

    So why, 10 days later, is HUD not only not implementing the law, but they don’t even seem like they have a clue that the law exists in the first place. I want to find a lender that knows the law and has received this information you have posted from HUD and I want HUD to start acknowledging the old limits have been effective now for the past 10 days and will be effective through 12/31/2013. Why does this seemingly simple task seem so impossibly hard at the moment? That’s a rhetorical question, I’m just venting because the entire “system” seems to take forever to understand what is going on. Technically, I should have been able to initiate a higher FHA limit loan 10 days ago, but I couldn’t then and I still can’t now. In my county in CA, the difference is over $100,000 in the loan amount limit, which is extremely significant.

  2. It seems to be beneficial as far if HECM will stay constant.

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