Conforming loan limits have been restored to as much as $729,750 in 250 counties around the U.S. as the regulator of Fannie Mae and Freddie Mac implements a policy change in last week’s $787 billion economic stimulus bill.

H.R. 1, the American Recovery and Reinvestment Act, restores the higher limits in place for Fannie and Freddie during much of 2008, allowing the companies to buy or guarantee loans of up to 125 percent of the median home price in high-cost areas.

Conforming loan limits have been restored to as much as $729,750 in 250 counties around the U.S. as the regulator of Fannie Mae and Freddie Mac implements a policy change in last week’s $787 billion economic stimulus bill.

H.R. 1, the American Recovery and Reinvestment Act, restores the higher limits in place for Fannie and Freddie during much of 2008, allowing the companies to buy or guarantee loans of up to 125 percent of the median home price in high-cost areas.

Congress instituted temporary increases in the $417,000 conforming loan limit in high-cost areas last year. A sunset provision brought the limit back down to 115 percent of median home price, with a cap of $625,500, on Jan. 1

While lawmakers had hoped that the secondary market for mortgage loans would be restored to health by now, problems continue, making jumbo loans costlier than those eligible for purchase or guarantee by Fannie and Freddie.

The new stimulus bill stipulates that loan limits are to be the higher of the 2008 limits or those put in place Jan. 1. In most high-cost markets, the 2008 limits are higher and loan limits are reverting back to last year’s levels. In releasing a list of loan limits by county, the Federal Housing Financing Agency said 43 counties in Virginia, North Carolina and California will keep increases originally instituted for 2009.

The stimulus bill also restored the floor for FHA loan guarantee programs in "normal" markets to $271,050, and gave the Department of Housing and Urban Development leeway to allow FHA to guarantee loans of up to $729,750 in high-cost markets, as it did in much of 2008.

A HUD spokesman told Inman News that the Department will allow FHA to guarantee loans up to the $729,750 limit in high-cost areas, and that a list of loan limits in various markets will be posted on the Web Tuesday.

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