FHA homeowners hoped for increased loan limits for purchase and refinance. In a recent speech, Chairman Ben Bernanke suggested that the nation's central bank continues to monitor the fallout of problems with the sub-prime mortgage market According to the Federal Reserve chief, "In modernizing the FHA, the Congress might encourage joint efforts with the private sector that expedite the refinancing of non-prime loans held by creditworthy borrowers facing resets."
The recent finance bill passed by a vote of 93-1 brings in the Federal Housing Administration to play a more crucial role with the present housing and home lending market by expanding the FHA agency, loosening several underwriting standards, and increasing its present mortgage loan limit significantly.
The Senate passed a similar version of FHA loan reform increases the limit on FHA mortgages from $362,000 to at least $417,000 which is the present limit by which Fannie Mae platform is measured for conforming home loans.
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There is new proposed legislation in Congress to increase FHA mortgage loan limits, which would significantly assist and provide more credit to potential home buyers who could be forced into high rate subprime loans that are deemed a much higher risk. The maximum 2008 conforming loan limit for single-family mortgages will be increase up to $700,000 in high cost states.
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New Home Loan Limits Need to Increase to Improve Homeownership Opportunities for Borrowers in states like Californian, Florida, Virginia, Maryland and Connecticut.
"Now is the time for the U.S. Senate to pass legislation allowing regional adjustments to Fannie Mae and Freddie Mac loan limits and to modernize FHA loan programs," Willie Brown, president of the California Association of Realtors. "This critical legislation remains an essential step to encouraging families in California an opportunity to become homeowners."
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