2009 Conforming Loan Limits: $625,500 Cap, 30-Days For Appeals
The Federal Housing Finance Agency announced that conforming loan limits for 2009 will be $417,000 nationwide, the same as last year, and they can go up to 150% of that according to median price of a specific area—this puts the cap at $625,500 for high-cost areas. Anything above these conforming caps by region will not be purchased or backed by Fannie Mae or Freddie Mac, which means either lenders need to keep these loans on their books or find private buyers for these loan pools. The market for private-label mortgage backed securities has all but disappeared since August 2007.
This year was unique in the conforming limit process because the Economic Stimulus Act passed February 13, 2008 and the Housing and Economic Recovery Act passed July 30, 2008 set up loan limits by region instead of one limit for the entire country. The 2009 announcement seems to be a hybrid of the two approaches, but doesn’t accurately reflect median loan amounts for high-cost regions. As such, FHFA also announced a 30 day appeals process and left it open for future methodologies for high-cost area calculations and limits:
HUD will allow a 30-day appeals period for those wishing to contest its median price estimates. Appeals are to be based upon data suggesting a potentially higher price median for a given area. Details concerning the appeals process will be released today in an FHA mortgagee letter. To the extent that appeals are deemed valid and HUD’s median price estimates change in response to the one-time appeals process, the FHFA loan limits will be changed to reflect the updated data.
While FHFA has used median house prices estimated by FHA for 2009 loan limits, it may choose alternative methods in future years. FHFA will be seeking public comment on a forthcoming proposal concerning the best approach to measuring price medians for this application.
Below are the links to the loan limits by region.