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Some Conforming Loan Limits for Mortgages Return to $729,750

Date:February 23, 2009 | Author:Diane Tuman | Category:Mortgages

Just announced: As part of the President Obama’s housing plan (the American Recovery and Reinvestment Act), the maximum amount for conforming loan limits for mortgages originated in 2009 have been returned to their late-2008 levels. This means Fannie Mae and Freddie Mac conforming loan limits will be $729,750 for one-unit properties in certain high-cost areas of the continental U.S. The previous limit for high-cost areas was $625,500. See local area loan limits.

This announcement comes from the Federal Housing Finance Agency, which regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $6.3 trillion in funding for the U.S. mortgage markets and financial institutions.

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Responses (23)

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Janet Giacoma 3:52 PM - Feb 23,2009

That is a big help for the west coast folks.
Jennifer 1:33 AM - Feb 24,2009

Great news, what the economy needs now are lending guidelines that allow people to take on more debt.
Terrence Askew 5:01 PM - Feb 28,2009

I think that it is great news as well. I have a lot of customers who couldn’t refinance until this increase. I just hope that it stays this way.
Prince William Homes 6:52 PM - Mar 1,2009

I really wonder if it will really help the eonomy, or is it just too late. When they started talking about this it was back in 2007. Now that Alt-A foreclosures are supposed to hit like a tsunami…why buy or take on a high priced mortgage? They should have done this a while ago before unemployment went off the charts. Too little, too late… Just my thoughts!
Robert 8:51 PM - Mar 15,2009

I’d like to think Janet and Jennifer are being sarcastic, Terrence.
I’ll never understand why San Diego County was NOT considered a high-cost area in 2007 when I needed to refinance my $500,000+ loan…on a house you could probably buy for $150,000 or less in some parts of the U.S.
San Diego County IS considered a high-cost area for loan originations in 2009 but that does not help me and countless others in a similar situation.
margie 10:47 PM - Apr 9,2009

what happen if the loan is not back up by freddie
or fannie…It is nothing we can do?
Mike 5:10 AM - Apr 13,2009

One major problem not addressed by this is all the folks who already have first mortgage balances significantly below the value of their home, but have home equity loans bringing their total balance into the 80% range or higher. This is a very common strategy to avoid mortgage insurance when there is not a large enough down payment, so MANY people are in this situation.

The problem here is that many lenders are refusing to resubordinate home equity loans when the total loan balance is over 80%. This means that people under these conditions are unable to refinance their primary mortgage at all because their current home equity lender is unwilling to resubordinate under the refinanced loan (even though it lowers their risk), and they cannot find another institution to give them a new equity loan.
mary 6:18 AM - Apr 17,2009

If 2 combined loans are with in 105 % of the resale value of the property, Why would the lenders NOT allow folks to refinance and combine a first and 2nd mortgage into 1 loan with a lower interest rate? That does not seem helpful or make any sense.
Propertymortgage 4:51 AM - Oct 23,2009

It seems to be moving the economy slightly but still far to go.
Sarah Fordham 8:33 AM - Oct 26,2009

Am I taking crazy pills? Are there really that many homes out there in need of financing that cost more than $600,000.00? Are they made of titanium, and built underground bowling alleys? Certainly I am being slightly facetious here but, are these the folks who the government really needs to be concerned about in the current downturn?

Maybe I’m being slightly arrogant here, but if you could afford a 600 – 700 thousand dollar house (or convinced yourself you could) can’t you convince yourself some way to save your own butt without a federal low interest loan?
Mike 5:35 PM - Nov 12,2009

I live in a high cost area (Marin, north of San Francisco) and no such lenders in this area are honoring the new conforming cap of 625,000. I owe 507,000, have good credit, income, and own over 23% of the home, but no one will give me any type of re-finance!
Kai 5:18 AM - Nov 27,2009

I agree with Sarah, surely the market for these mortgages isn’t that large.
Sarah Fordham 11:54 PM - Dec 10,2009

This seems like a bit of a double edged sword. On one hand, opportunities for folks living in high cost areas will have greater opportunities to buy, and in a perfect world, this will speak to consumer confidence in the real estate market. On the other hand I find the comment about allowing people to take on much more debt to be funny (as sarcasm) as well as a bit scary. Are we going to be putting ourselves in the same situation that crumbled before???
Nick 9:10 AM - Jan 19,2010

I think there is still a long way to got but it’s important that steps are being made. However I just hope that these steps are not undone in the future when people start to forget all about the recession. Nick
unitedcashloans 12:22 AM - Jan 28,2010

If you don’t pay your mortgage, then there’s an option that the banker can foreclose on your home. This process is a time consuming process and also involves lot of money expenditure for the bank. Being the recession period, more people are facing problems in repaying their mortgage loan and New York Times has reported that nearly 1 in 11 mortgage loan holders are finding difficulty in repaying their payday loans with no fax. It takes about nearly $50,000 for the bank to undergo the foreclosure process on a house.
Read more : http://samedaypaydayloan2009.blogspot.com/2009/10/modification-of-mortgage-loan-learn-how.html
Payday Loan Limits 4:33 PM - Mar 3,2010

True though people who already have first mortgage balances significantly below the value of their home, but have home equity loans bringing their total balance into the 80% range or higher. This is a very common strategy to avoid mortgage insurance when there is not a large enough down payment, so MANY people are in this situation.
Equity Release 1:11 AM - Apr 5,2010

This is to some degree high risk and will still account for home buyers, bankers and brokers being stringent in the lending practice. Whilst this may appear reasonable the fact is the recession is not entirely over. Business are still responding negatively and some home buyers will continue to lose their employment status.
HighValueHomeInsurance 11:00 AM - Aug 24,2010

That is interesting information, I hadn’t been aware of the limit on return.
Annuities 2:43 PM - Jan 16,2011

Most people don’t borrow this amount, although this will help those that do.
Annuities 9:58 AM - Feb 2,2011

Has to be a good thing, we need the mortgage market moving again after the disaster of the last few years.
Payday Loan Credit 4:09 PM - Mar 10,2011

Note, please, that the loan limits apply based on the original loan amount, rather than the unpaid principal balance (UPB).