O.C.'s FHA loan limit raised to $729,750

Posted by Teresa Mihelic at 3/6/2008 1:21 PM
Categories: uncategorized

New conforming loan limit expected to be announced today.

By MATHEW PADILLA
The Orange County Register   

 Beginning today, Orange County's limit on loans insured by the Federal Housing Administration will be temporarily raised to $729,750, more than double the current limit of $362,790, the U.S. Department of Housing and Urban Development announced Wednesday.


    The limit, which is good until the end of the year when it reverts back to $362,790, will apply only to loans insured under a program administered by FHA, which targets low- to moderate-income home shoppers. Under a previously announced plan by President Bush, dubbed FHASecure, FHA has expanded to refinance some homeowners with adjustable rate mortgages even if they are behind on payments.


    HUD is expected to announce today the new conforming loan limit for Orange County and other markets, a spokesman said. Conforming loans are sold to government-sponsored buyers such as Fannie Mae and Freddie Mac and have a current limit of $417,000 in California and most states.


    The FHA and conforming limit increases could give Orange County's housing market a boost.


    In housing markets such as Orange County, many consumers can't get the best mortgage rate because the price of a home is greater than the $417,000 conforming loan limit. Many here depend on jumbo loans, anything above the current $417,000 limit. Rates on jumbo loans are more expensive, having risen about a percentage point above conforming rates.


    The average rate Wednesday on a 30-year fixed conforming loan in Orange County was 5.875 percent with a one-point fee, while the average jumbo rate on a 30-year fixed was 6.959 percent with a one-point fee.

HUD Secretary Alphonso Jackson announced the limit increase at the Anaheim Convention Center where HOPE NOW, a national anti-foreclosure campaign, arranged for nine lenders to meet with hundreds of borrowers facing foreclosure.

    "The dawn will break for you," Jackson said. He pledged to fight for a permanent increase in the FHA limit.

A couple of borrowers at the convention center said lenders were friendly and receptive, but promised nothing.

Hugo Casian said he and his mother drove more than an hour from Fontana to speak with their loan servicer, EMC Mortgage. They were told to submit paperwork and wait, he said. His mother has two mortgages and her payments this month jumped to $3,200 from $2,400 after initial low fixed rates ended.


    If EMC doesn't come through with a deal, "She's going to let it go," Casian said.


    Fannie Mae and Freddie Mac have yet to say when they will begin buying larger loans or if they will impose any restrictions, such as requiring larger down payments. Some housing watchers say rates on loans up to $729,750 might not drop as much as government officials hope.


    President Bush signed a stimulus package into law last month that included granting HUD the power to raise the conforming limit based on 125 percent of the median home price in high-cost areas. HUD said Wednesday that Orange County's median home price is $710,000. That's much higher than DataQuick, which pegged the median home price in January at $520,000 for all houses and condos, and $583,250 for just resale houses.

HUD said it calculated median prices based on government and commercial data.

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