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Conforming Loan Limits Established for 2013

Limits announced on Fannie and Freddie loans

Nov. 29, 2012

By Mortgage Daily staff

The maximum limit on mortgages originated for Fannie Mae and Freddie Mac has been released for next year.

Conforming loan limits are established each year according to the Housing and Economic Recovery Act of 2008.

A baseline limit is determined based on changes in the national average home price, while local limits are a function of median home values in local areas.

However, because prices dropped so much during the recent housing crash without a corresponding decline in the maximum loan limit, home prices need to recover to their prior levels before the conforming loan limit will be raised.

Although the Federal Housing Finance Agency indicated that its monthly and quarterly home price indices rose between 4.0 percent and 4.4 percent over the latest year, the increase wasn't enough to offset the 19 percent cumulative decline through mid-2011 from prior years.

As a result, the conforming limit for one-unit residences will remain at a baseline level of $417,000.

In areas where 115 percent of the local median home value exceeds the $417,000 limit based on median home values based on estimates from the Federal Housing Administration, local limits up to $625,500 have been established -- though in no case will the local limit exceed 50 percent of the baseline limit.

On two-unit properties, the conforming limit will remain at $533,850, while three-unit properties will be limited to $645,300 and the four-unit conforming limit will remain at $801,950.

Baseline single-family limits in Alaska, Hawaii, Guam and the U.S. Virgin Islands will remain at 50 percent above the U.S. baseline limit.

The 2013 limits apply to loans acquired in calendar-year 2013 and originated either after Sept. 30, 2011, or before July 1, 2007.

However, based on previously passed legislation -- including the Economic Stimulus Act of 2008, the American Recovery and Reinvestment Act of 2009, Public Law 111-88, and Public Law 111-242 -- the loan limit on one-unit loans originated between July 1, 2007, and Sept. 30, 2011, and acquired in 2013 will maintain limits as high as $729,750 based on those laws.

In Lender Letter LL-2012-11 outlining the 2013 limits, Fannie said that the second mortgage loan limit for next year is $208,500 in the contiguous United States and $312,750 in Alaska, Guam, Hawaii and the U.S. Virgin Islands.

Fannie reminded its seller-servicers that modified loans which had an original loan amount in excess of current loan limits are ineligible for purchase.

The FHA national loan-limit floor will be subsequently set at 65 percent of the conforming limit in low cost areas, or $271,050. High-cost, one-unit, FHA limits are $729,750.

Because FHA's own limits and corresponding median home values could be challenged and changed, FHFA noted that conforming limits could be impacted.

view HERA-based conforming loan limits for calendar-year 2013 for all counties

view HERA-based loan limits for calendar-year 2013 for high-cost areas only

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