The U.S. Department of Housing and Urban Development has already confirmed some of the California counties that will qualify for the temporary increase to maximum limit on loans insured by the Federal Housing Administration.
H.R. 5140, the Economic Stimulus Act of 2008, was signed into law by President Bush last month. The legislation raises the maximum FHA loan to $729,250 through Dec. 31, 2008.
Today, HUD Secretary Alphonso Jackson said the new maximum will be available in Los Angeles County and Orange County. He said the temporary limits, ranging from $271,050 to $729,750 for varying areas, will be published later this week.
"We estimate that nearly 33,000 Californians will benefit over the next 18 months," Jackson said in a speech to the Commonwealth Club of California. "But in January 2009 the loan limits will return to their previous setting. That is why we need to raise the loan limits permanently to an acceptable level."
He indicated that 250,000 people may benefit across the entire country from the higher limit.
Jackson noted that during January, foreclosures in Southern California were up by 433 percent over the same month last year. He said homes sales in the Los Angeles area fell by 38 percent in January while the city's median home price fell by 18 during February.
The secretary explained that more than 100,000 homeowners have been able to refinance through the FHASecure program since it was announced last fall, and more than 300,000 refinances are expected by yearend.
FHA Limits May Rise in March
Borrowers may be able to apply in March under the expanded loan limits for mortgages insured by the Federal Housing Administration.
FHA, Conforming Limits Boosted
President Bush has signed into law emergency legislation that will temporarily increase the conforming limit by 75 percent. In addition, the limit for loans insured by the Federal Housing Administration will also see a temporary boost.