FEDERAL HOUSING FINANCE AGENCY

FEDERAL HOUSING FINANCE AGENCY

NEWS RELEASE
For Immediate Release
Contact: Corinne Russell (202) 414-6921
February 23, 2009 Stefanie Mullin (202) 414-6376

2009 CONFORMING LOAN LIMITS INCREASED BY
AMERICAN RECOVERY AND REINVESTMENT ACT

WASHINGTON, DC – The American Recovery and Reinvestment Act (ARRA), which was signed into law on Tuesday, increased the maximum conforming loan limit for
mortgages originated in 2009. The increase affects 250 counties across the United States. For these areas, identified in the attached table, Fannie Mae and Freddie Mac loan limits
will return to their late-2008 levels, which were up to $729,750 for one-unit properties in the continental United States. Loan limits in other areas are not changed by the
legislation.

Conforming loan limits for 2009 were originally announced in late 2008 and had been calculated under terms set forth in the Housing and Economic Recovery Act of 2008
(HERA), passed in July. The new ARRA legislation stipulates that, for loans originated in 2009, the loan limit is to be the higher of the 2008 limits and those originally calculated
for 2009 under HERA. Where the 2008 and 2009 limits differ, the 2008 limits tend to be higher and thus, in most cases, loan limits are reverting back to last year’s levels. For the
relatively few counties where 2009 limits actually increased (43 counties in Virginia, North Carolina, and California), the new limits will remain at the higher level.

Notable elements of the new legislation:
1. The Director of FHFA is given the authority to increase loan limits levels for “subareas” under provisions in ARRA. Given the implementation difficulties associated
with establishing multiple limits for any given county, FHFA’s Director currently has no plans to use this discretion.

2. The loan limits established under ARRA apply to all loans originated in 2009. For loans purchased in 2009 that were originated from July 1, 2007 through December
31, 2008, the same limits will apply. For loans purchased in 2009, but originated before July 1, 2007, the limits previously announced by FHFA on November 7 ,
2008 and updated in December will apply. For example, a $700,000 mortgage originated in 2006 would not be eligible for purchase this year, even if the
applicable local limit under ARRA is $729,750.

Several lookup tables are available at http://www.ofheo.gov/Regulations.aspx?Nav=128 that provide detailed information about local area loan limits. A full county listing is provided
showing loan limits for every U.S. county and county-equivalent. Also provided is a table showing those metropolitan areas where the new 2009 loan limits exceed the baseline
$417,000 level for one-unit properties.

Rates going to 4.5%?

There have been recent rumors of interest rates being brought down towards 4.5% by the Treasury. Rates are not going to 4.5% with the wave of a wand by Hank Paulson or Ben Bernanke. As a matter of fact, the massive borrowing to fund the TARP program has a negative effect on rates. This irresponsible release included no definitive plan, no indication of who might qualify, or what the restrictions would be. Remember, it may make sense for you to act now, and take advantage of current historically low rates…with the possibility of refinancing should rates decline further. Waiting for rates to fall to 4.5% may leave people sorely disappointed.

Mortgage bonds are trading low

Hope you had a safe and fun Halloween! Check out this week’s newsletter. I’d like you to focus on the bond graph below. Mortgage bonds are trading low right now, which means rates are higher than we want, I would recommend to float interest rates for the next few days. I’m thinking about 10 days into middle of next week. If you have deals in progress or offers just accepted advise your clients to hold off on locking until the bond market comes back after the elections next week. There’s lots of volatility right now; however, I will keep you up to date with the latest mortgage news!