This week Congress is expected to pass legislation championed by Congressman Brad Sherman (D-CA) to extend higher housing loan limits as part of a bill that will fund several agencies through 2012 and the rest of the government on a temporary basis. The bill, known as the "minibus conference report," includes a provision to extend higher Federal Housing Administration (FHA) loan limits for 2 years in high cost areas of the country.
Congressman Sherman praised the inclusion of higher FHA loan limits, which has received bi-partisan support.
"Higher FHA loan limits are critical to supporting current housing prices and our overall economic recovery, and it doesn't cost the federal government a dime," said Congressman Sherman. "This is the single most important provision in the minibus bill to prevent a collapse of housing prices in high cost areas like Los Angeles. I will continue to work with my colleagues to ensure that these loan extensions become permanent."
In 2008, Congressman Brad Sherman (D-Sherman Oaks) and Congressman Gary Miller (R-Brea) were successful in a bi-partisan effort to create a high-cost area conforming loan limit capped at $625,500 in high cost areas that have median home prices above $417,000. Those limits were later temporarily increased to $729,750, thanks to the ongoing advocacy of Reps. Sherman and Miller, and their partners in Congress from both sides of the aisle.
Unfortunately, the temporary $729,750 limits were allowed to expire on September 30, 2011, and the loan limits dropped overnight from $729,750 to $625,500 in high-cost areas. The compromise provision, which is expected to become law this week, will restore the $729,750 limit for FHA loans until December 31, 2013.
In May of this year Congressmen Miller and Sherman introduced H.R. 1754, the Preserving Equal Access to Mortgage Finance Programs Act, legislation that makes the higher conforming loan limits permanent for Fannie, Freddie and FHA loans. Sherman also introduced similar legislation in 2009.