Will lower loan limits hurt FHA borrowers?
September 28th, 2011
Unless there’s a surprise turn of events on Capitol Hill, the FHA loan limits for high cost areas will be reduced as of October.
Let’s assume that the new and lower limits become the law of the land as scheduled. Just who will be impacted?
“Congress must act now to prevent the loan limits from reverting to lower levels,” Bob Nielsen, chairman of the National Association of Home Builders, said in a statement. “A drop in mortgage loan limits would reduce housing demand, and place downward pressure on home prices in major markets. This would exacerbate the current housing downturn, trigger more foreclosures, impede job growth and endanger the fragile economic recovery.”
Because of these concerns, the NAHB said it’s “engaged in a major grassroots push and association members are being urged to contact their members of Congress and seek their support for immediate efforts to extend the current loan limits.”
Actually, neither home builders nor anyone else has much to worry about regarding real or imagined terrors from reduced loan limits.
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