C.A.R. applauds reinstatement of FHA loan limits; urges longer extension of flood insurance
LOS ANGELES, CA – November 18, 2011 – (RealEstateRama) — The U.S. Congress late yesterday passed a “minibus” appropriations measure that will continue to fund the government and includes a provision to reinstate the Federal Housing Administration (FHA) loan limit in high-cost areas for two years. President Obama signed the measure into law today.
The higher Fannie Mae, Freddie Mac, and FHA conforming loan limits of $729,750 expired Oct. 1, when it was reduced to $625,500. The passage of H.R. 2112 provides for an extension of FHA-insured mortgages at the higher level through December 2013. It also provides for a short-term extension of the National Flood Insurance Program (NFIP) through Dec. 16, 2011. C.A.R. and NAR strongly urge Congress to work on a five-year NFIP reauthorization bill to provide certainty and avoid further disruption to real estate markets.
“C.A.R. is pleased the Senate and House were able to come to a reasonable compromise on extending the FHA loan limit to ensure affordable home financing for middle-class buyers,” said 2012 C.A.R. President LeFrancis Arnold. “However, we are disappointed that the Senate and House could not agree on increasing the loan limits for Fannie Mae- and Freddie Mac-insured loans, especially since the Senate bill included a premium on high-cost loans that protected U.S. taxpayers from footing the costs.”
The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) and the NATIONAL ASSOCIATION OF REALTORS® (NAR) have long advocated making permanent higher loan limits.
A continued government role in housing financing will ensure stability in mortgage markets and that home buyers in high-cost areas will be able to refinance and obtain FHA financing for new home purchases more easily. However, it will cost these home buyers more to finance their homes either through jumbo mortgages or with FHA than it would have through Fannie Mae or Freddie Mac.
The conforming loan limit determines the maximum size of a mortgage that government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac can buy or “guarantee.” Non-conforming or “jumbo loans” typically carry higher mortgage interest rates than conforming loans, increasing monthly payments and hampering the ability of families in California to purchase homes by making them less affordable.
Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 160,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
