2012 Conforming Limits Released

The Office of Federal Housing Enterprise Oversight, which previously regulated the two secondary lending giants, originally increased the conforming limit to $417,000 in November 2005 for the calendar year 2006. The limit was raised from $359,650 a year earlier and had been consistently increasing annually for years before that.

But since loan limits were tied to increases in home prices, 2006 was the last year the conforming limit was increased. From October 2006 to October 2007, the average home value declined to $306,258 from $306,759.

In an effort to help stabilize home prices, a temporary limit of $729,750 for high-cost areas was established through the Economic Stimulus Act of 2008, which was signed by President George W. Bush in February 2008.

But after several extensions, the temporary limit expired last month.

However, the Housing and Economic Recovery Act of 2008 signed by Bush in July 2008 established permanent loan limits up to $625,500 in high-cost areas.

Except for Fairfield County, Conn., the 2012 loan limits in all high-cost areas eligible under HERA will not change from this year, the Federal Housing Finance Agency announced Tuesday. FHFA took over regulation of Fannie and Freddie from OFHEO as part of HERA.

In Fairfield County, the limit will increase from $575,000 to $601,450.

Conforming mortgages on one-unit properties in areas not impacted by HERA, though, are limited to $417,000 for 2012, FHFA said.

Freddie issued a bulletin today indicating that the loan limit on two-unit properties remains at $533,850, while the three-unit maximum is $645,300 and the limit on fourplexes is $801,950.

In Alaska, Guam and Hawaii, the loan limit is 50 percent higher than the conforming limit, or $625,500.

FHFA noted that loans originated between July 1, 2007, and Sept. 30, 2011, but acquired by Fannie or Freddie next year will be subject to the higher temporary limits in effect at the time of origination.