FHFA Raises Conforming Home Loan Limits

The Federal Housing Finance Agency announced it will raise its conforming loan limit on Jan. 1, 2018. Mortgage financing giants Fannie Mae and Freddie Mac will allow maximum conforming loan limits for mortgages in most parts of the U.S. to be $453,100.  “El Dorado County, CA.” will be $517,500.

For 10 years, the FHFA had set the conforming loan limit in most places at $417,000. But as home prices started rising, the FHFA bumped up the conforming loan limit in 2017 to $424,100. As prices continued to move higher this year, the FHFA has raised limits again for 2018.

The Housing and Economic Recovery Act requires the conforming loan limit of the government-sponsored entities to be adjusted each year to reflect any changes in the average U.S. home price.

Source: Federal Housing Finance Agency

FHFA’s Dramatic Easing of Mortgage Standards

Federal Housing Finance Agency Director Mel Watt said FHFA will release guidelines “in the coming weeks” to allow increased lending to borrowers with down payments as low as 3 percent. FHFA, which regulates Fannie Mae and Freddie Mac, also will help lenders who sell loans to the mortgage giants by easing standards on borrowers who don’t have perfect credit profiles. The move is expected to help open up the credit box to first-time buyers, self-employed borrowers, borrowers who have had recent job switches, and borrowers who faced financial hardship during the recession.

FHFA said it will clarify to lenders when it will force buy-back loans that were issued based on inaccurate information. FHFA acknowledges that it failed to provide lenders with enough clarity in the past. That caused lenders to get cautious with lending after facing a flood of high-dollar settlements from loans they issued that later turned sour.

“We know that this issue has contributed to lenders imposing credit overlays that drive up the cost of lending and also restrict lending to borrowers with less than perfect credit scores or with less conventional financial situations,” Watt said. Addressing such issues are “critical to ensuring that there is liquidity in the housing-finance market and to providing access to credit for borrowers.”

Source: “Regulator Unveils Plan to Spur Lending by Fannie, Freddie,” Los Angeles Times (Oct. 20, 2014) and “Fannie-Freddie Clarify Buyback Rules in Bid to Ease Credit,” Bloomberg (Oct. 20, 2014)

Home Affordable Refinance Program is ‘Not a Scam’

About 800,000 families across the country could benefit from the Home Affordable Refinance Program by lowering their monthly mortgage payments, but fear is keeping them away from the program, said Mel Watt, director of Federal Housing Finance Agency, in remarks at a public campaign in Atlanta this week to promote HARP.

“HARP is designed to reward those borrowers who are the most committed in this country,” Watt said. “This is not a scam.”

The FHFA estimates that eligible borrowers could save nearly $2,300 per year on their mortgage payments with HARP. But Watt said too many borrowers are still not taking advantage of the program.

“As it stands now, people don’t trust their lenders, and it’s creating uncertainty,” Watt told HousingWire. “We know that there are hundreds of thousands of borrowers who can still benefit from the Home Affordable Refinance Program and are essentially leaving money on the table by not taking advantage of the program.”

FHFA released a new interactive map that reveals the number of estimated borrowers who are eligible for HARP across the country. Borrowers in Florida, Michigan, Ohio, Illinois, Georgia, and California have some of the largest number of borrowers eligible.

Source: “Watch: FHFA Director Watt Ensures HARP Is ‘Not a Scam,’” HousingWire (Aug. 25, 2014)