www.hudclips.org U. S. Department of Housing and Urban Development Washington, D.C. 20410-8000 MORTGAGEE LETTER 96-2 TO: ALL APPROVED MORTGAGEES SUBJECT: Single Family Loan Production - Increase in FHA Maximum Mortgage Limits Public Law 103-327, enacted September 24, 1994, amended Section 203(b) of the National Housing Act to establish nationwide basic mortgage limits ("the floors") for 1-4 family unit properties based on 38 percent of the maximum loan limits established by the Federal Home Loan Mortgage Corporation (Freddie Mac). On November 30, 1995, Freddie Mac announced that it will increase its single family mortgage loan limits for 1996. As a result of Freddie Mac increases, HUD's new basic nationwide mortgage limits will be as follows. New Limit One-Unit $ 78,660 Two-Unit $100,600 Three-Unit $121,600 Four-Unit $151,150 These new basic limits became effective January 1, 1996 and will apply to loans insured on or after that date. The legislation also increased the mortgage limit "ceilings" for high cost areas to 75 percent of the Freddie Mac loan limits. This means that, effective January 1, 1996, in high cost areas, the loan limit will remain equal to 95 percent of the area median house price, however, subject to the ceiling for the high cost areas that has increased to: New Limit One-Unit $155,250 Two-Unit $198,550 Three-Unit $240,000 Four-Unit $298,350 By regulation, the mortgage amount must be a multiple of $50.00 for a mortgage that does not include financing of a mortgage insurance premium (primarily mortgages for condominium units). For condominium mortgages and other mortgages affected by this requirement, the floor for a condominium unit is $78,650. Attached to this Mortgagee Letter is a list of the high cost areas that will be increased to the new ceiling on January 1, 1996. Local HUD Offices, pursuant to the Commissioner's redelegated authority set forth in Mortgagee Letter 95-27, may add to this list as appropriate. Other areas with current limits higher than the new floors are not affected by the increases except that the limit for an area cannot be below the revised floor. Section 214 of the National Housing Act provides that mortgage limits for Alaska, Guam, Hawaii and the Virgin Islands may be adjusted up to 150 percent of the new ceilings. This results in new ceilings for these areas of $232,875; $297,800; $360,000; and $447,500 for one-, two-, three- and four-family dwellings, respectively. An increase for the Honolulu, HI MSA, pursuant to this section, is also reflected in the attached list. A complete schedule of mortgage limits for high cost areas is available through the Internet. To access the high cost mortgage limits, enter the HUD Home Page on the World Wide Web located at HTTP://WWW.HUD.GOV/. Then select the menu item entitled, "Doing Business with HUD", followed by the sub- category, "Information for Lenders". A schedule of high cost limits is also available through the CLAS System. Questions concerning this Mortgagee Letter or the mortgage limits in a particular area should be addressed to the local HUD Office. Sincerely yours, Nicolas P. Retsinas Assistant Secretary for Housing- Federal Housing Commissioner Effective January 1, 1996, the following areas' FHA single family maximum mortgage limits will be at the revised statutory ceiling. Orange County, CA PMSA Los Angeles-Long Beach, CA PMSA Oakland, CA PMSA Salinas, CA MSA San Diego, CA MSA San Francisco, CA PMSA San Jose, CA PMSA San Luis Obispo-Atascader-Paso Robles, CA MSA Santa Cruz-Watsonvill, CA PMSA Santa Barbara-Santa Maria-Lompoc, CA MSA Santa Rosa, CA PMSA Vallejo-Fairfield-Napa, CA PMSA Washington, DC-MD-VA-WV PMSA Boston, MA-NH PMSA Brockton, MA PMSA Lawrence, MA-NH PMSA Lowell, MA-NH, PMSA New Bedford, MA PMSA Bergen-Passaic, NJ PMSA Middlesex-Somerset-Hunterdon, NJ PMSA Nassau-Suffolk, NY PMSA Newark, NJ PMSA New York, NY PMSA * Honolulu, HI MSA * Section 214 Limits .