Higher FHA Loan Limits Back in Effect in High-Cost Areas

President Obama today signed legislation that reinstates higher limits for FHA-backed mortgages in high-cost areas, such as most of California. In L.A. County, the bill raises the loan limits from $625,500 back to $729,750, where they were before Oct. 1.

NAHB Chairman Bob Nielsen said the legislation, which reinstates the higher limits for another two years, is an important step to help mend the struggling housing market.

We commend congressional leaders in both parties and each chamber of Congress for taking this action to boost overall mortgage liquidity in the marketplace, create jobs, and provide home owners and home buyers with safe and affordable financing.

Restoring the higher FHA loan limits will help to stabilize home values, provide constancy while private investors re-enter the market, and enable millions of creditworthy consumers to get home loans with the best mortgage rates and lowest fees and downpayment requirements.

As Alejandro Lazo wrote in the L.A. Times' online edition today, "Uncle Sam has thrown California and other high-priced housing markets a lifeline." Lazo pointed out that sales of properties in Orange and Los Angeles counties with loans between $625,500 and $729,750 dropped by 71 percent last month compared to September.

We would like to thank all the BIASC members who took the time to write or call your Member of Congress in the past few weeks to urge them to vote in favor of the higher loan limits.