NAR Calls for Changes to Appeals Process for FHA Loan Limits

On December 2, 2008, National Association of REALTORS President, Charles McMillan sent a letter to US Department of Housing and Urban Development (HUD) Secretary Steve Preston calling for changes to the process for appealing loan limits on Federal Housing Administration (FHA) and government sponsored enterprises (GSE) mortgages. NAR is urging HUD to restore the appeals process in Mortgagee Letter 2007-01 that was suspended as a result of the enactment of the Economic Stimulus Act of 2008. The 2007 letter authorized ongoing appeals throughout the year. The appeals process for 2008 was limited to 30 days due to the limited time the new loan limits were authorized by Congress and the need to have stability in the mortgage market. The loan limits for 2009 are not temporary and are not being implemented in a shortened time frame so continuing the suspension of the appeals process outlined ML 2007-01 is no longer necessary. Each request for appeals must still contain sufficient housing sales price data.

The 2008 Economic Stimulus limits expire on December 31, 2008. Accordingly, HUD and the GSEs published new loan limits for 2009. The new loan limits take into consideration the lower median home prices being experienced in communities across the country. Based on the permanent legislation passed in July, the new loan limits will fall to 115 percent of local area median from 125 percent. In addition, the high cost ceiling will drop to $625,500 from $729,750. NAR is working closely with Congress to make the higher loan limits permanent as part of its 4-point stimulus plan. However, there appears to be little consensus in Congress to enact stimulus legislation during the lame duck session. NAR is also working with Congress to encourage HUD not to use the new lower median home calculations. In the meantime, the new limits have been published, and those wishing to appeal those limits only have until early December 2008 to do so.