Question about the 2009 Lower FHA High Balance Loan Amounts


Here's a question from a Mortgage Porter subscriber (not from King, Pierce or Snohomish counties, which is why the loan amounts are lower):

"My husband and I are presently in the process of buying a home. The closing is scheduled for Jan. 31st 2009. We have been approved for 302,500. We understand that the new FHA guidelines are changing to 271,050 as of Jan. 1st. 

We want to wait until the last minute to lock in our interest rate. Our mortgage banker wants us to lock in because "We may need to lock the rate to ensure that we have met all of the FHA requirements before year end, as the mortgage limits are changing on Jan 1.  The is only $271,050, so we must make sure that we are guaranteed the stimulus loan limit of $302,500."   Our loan commitment letter that we signed says we can lock in within 5 days of closing.

What do you think about this?"

HUD's guidelines state that the new FHA loan limits "are effective for those loans which have credit approval on or after January 1, 2009".  This sounds like you can continue to originate an FHA mortgage at the higher 2008 limits as long as the loan is fully credit approved by December 31, 2008.  However, it's just not that simple.  Various lenders will have their own guidelines to determine how long they'll accept the loans with the higher 2008 loan limits in order to stay compliant with HUDs guidelines and to have the ability to package or sell the mortgage.  The lower 2009 "high balance or FHA jumbo" loan limits has caused borrowers caught between the two loan amounts to be in an awkward position.

The cut-off time for accepting the 2008 loan limit may vary from lender to lender.  If your lender is telling you that you need to lock now and that it will guarantee the funding of your 2008 loan amount in 2009, I recommend you listen to her.    One lender we work with is requiring that all 2008 FHA loans over the 2009 limit be funded/closed and delivered to them by December 19, 2008.  Yet another lender will allow 2008 FHA Jumbo loan limits for credit approved loans locked by December 31, 2008 as long as they are purchased by February 13, 2009.  No lender or mortgage company wants to have a loan in their system that is above the loan limit. 

The loan commitment letter is probably a template that was not created considering that we might be dealing with lower loan limits in a new year.  Dealing with a higher loan limit is a much easier transition.

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