FHA Loan Limits Rise

House and Senate banking committee chairmen have agreed to raise the Federal Housing Administration loan limit to 125% of median house prices with a $730,000 cap as part of a FHA reform bill that is expected to be included in an economic stimulus package Congress wants to pass in a few weeks. House Financial Services Committee chairman Barney Frank, D-Mass., and Senate Banking Committee chairman Chris Dodd, D-Conn. want a similar loan limit increase for Fannie Mae and Freddie Mac on a temporary basis. However, House leaders struck a deal with the White House to increase the GSE loan limit from $417,000 to $625,000. Sources suspect it is limited to high cost areas. But several housing trades, including the Mortgage Bankers Association and National Association of Realtors, want the $625,000 loan limit to be nationwide. Meanwhile, Rep. Frank told reporters the sticking points to reconciling the House and Senate FHA bills involve minimum FHA downpayment requirements, allowing mortgage brokers to substitute surety bonds for FHA net worth/audit standards and downpayment assistance provided by nonprofit groups.