Summary of FHA Mortgage Letter Regarding Lower Loan Limits Effective September 30

Mortgagee Letter 2011-29

  • Effective from October 1 to December 31 2011 (unless extension is passed)
  • Reverse mortgages will remain the same until December 31: $625,500
  • Exception to new loan limits for forward mortgages:
  1. Refis of existing FHA loans that exceed loan limits
  2. Purchase loans that are “credit approved” by September 30
  3. Loans that are closed by September 30, but not insured
  • New limits will be: One unit — $271,050  base  $625,500 high cost
  • Refis of existing FHA mortgages cannot exceed the original principal balance, no more than 12 year more than the unexpired term and the mortgage payment must be reduced.
  • Streamline refis that don’t close by September 30 must also meet above requirements.
  • Credit approval means sign-off by a DE underwriter, including the appraisal.  FHA/VA application addendum and transmittal summary must be signed by underwriter as well and terms can’t change after September 30.
  • New loan amounts available at http://www.hud.gov/pub/chums/file_layouts.htm
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