www.hudclips.org U. S. Department of Housing and Urban Development Washington, D.C. 20410-8000 December 5, 1996 OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER MORTGAGEE LETTER 96-66 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 27, 1996, Freddie Mac announced that it will increase its single family mortgage loan limits for 1997. As a result of the Freddie Mac increases, FHA's new basic nationwide mortgage limits will be as follows. New Limit One-Unit $ 81,548 Two-Unit $104,329 Three-Unit $126,103 Four-Unit $156,731 These new basic limits become effective January 1, 1997 and will apply to eligible 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, 1997, in high cost areas, the loan limit will remain equal to 95 percent of the area median house price subject, however, to the ceiling for the high cost areas that has increased to: New Limit One-Unit $160,950 Two-Unit $205,912 Three-Unit $248,887 Four-Unit $309,337 - 2 - Attached to this Mortgagee Letter is a list of the high cost areas that will be increased to the new ceiling on January 1, 1997. Local FHA 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 $241,425; $308,868; $373,330; and $464,005 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 FHA Home Page on the World Wide Web located at http://www.hud.gov/fha/fhahome.html. Under "Business" select "Single Family" then page down to "Development", then "FHA Maximum Mortgage Limits". A schedule of high cost limits is also available through CLAS. If you are unsure if a county or other political unit is within one of the MSAs listed on the anachment, you should check carefully the high-cost listings before closing the mortgage at the revised limit. Questions concerning this Mortgagee Letter or the mortgage limits in a particular area should be addressed to the local FHA Office. Sincerely yours, Nicolas P. Retsinas Assistant Secretary for Housing- Federal Housing Commissioner Attachment Attachment Effective January 1, 1997, the FHA single family maximum mortgage limits in the following metropolitan statistical areas 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-Watsonville, 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