FHA Loan Limit Reductions Greater in Some Minority Areas

Recent downward adjustments in Federal Housing Administration loan limits in certain metropolitan statistical areas will have a significant affect on minority borrowers, according to a new Urban Institute research paper. 

“Overall, the impact of the change in the loan limits is small, but certain communities will be greatly affected,” according to the authors Laurie Goodman, Ellen Seidman and Jun Zhu.

The authors identified 30 census tracks in seven MSAs (Riverside, Fresno, Stockton, Bakersfield, Las Vegas, Salt Lake City and Phoenix) with a high percentage of minority FHA borrowers.

They note that the loan limits in those census tracks have dropped more than FHA's formula would suggest. And many borrowers who qualified for a FHA loan in 2012 and 2013 might not be eligible in 2014.

“We urge the FHA to take another look at all areas in which the drop in loan limits exceeds 20% and determine whether corrective action is necessary,” the Urban Institute paper says.

Comments (3)
Ed: Google Disparte Impact.
Posted by JIM P | Friday, January 17 2014 at 5:48PM ET
why is this about minorities? Reduced loan limits will hurt anyone who wants to purchase a house in those areas that cannot qualify otherwise. why is this all about the minorities, what about everyone else?

as a non minority that lends to everyone without prejudice, its getting old listening to special reports about what is happening to minorities, as if no one else matters.
Posted by ed h | Friday, January 17 2014 at 5:31PM ET
Census TRACT, not track. And where's the analysis of race/ethnicity vs. funded loan amounts to confirm that minorities are disproportionately, or even proportiniately, affected by reducing the limits in these markets? You can't just report that the 30 census tracts have high minority populations and, therefore, minorities are adversely impacted. That's a stupid syllogism.
Posted by DAVID K | Friday, January 17 2014 at 2:16PM ET
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