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Updates to Support Assessment of FHA and VA Mortgages in Loan Prospector®December 12, 2008

To support the assessment of Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) mortgages, Loan Prospector® will be updated to:

Updates to Address New 2009 FHA Loan Limits

2009 FHA Loan Limits

The U.S. Department of Housing and Urban Development (HUD) announced the new FHA loan limits, based on the Housing and Economic Recovery Act of 2008 (HERA), in their November 7 Mortgagee Letter 2008-36. FHA's floor and ceiling loan limits for 2009 based on the limits set forth in HERA will remain at $271,050 for a one-unit single-family mortgage, but the loan limit ceiling in high-cost areas will be reduced from $729,750 to $625,500.

The loan limits described in the November 7 Mortgagee Letter 2008-36 are effective for those loans that have credit approval on or after January 1, 2009. The credit approval date is the date of the final Loan Prospector submission that is used to insure the loan or when the underwriter signs the mortgage credit worksheet. This date is used to determine the appropriate loan limit when a loan is submitted through FHA TOTAL Scorecard or manually underwritten.

New loans submitted to Loan Prospector after January 1, 2009, will be assessed using the revised maximum loan amount, based on the county name entered. Check the FHA mortgage limits to ensure a county is within the metropolitan areas. Please keep the following information in mind when submitting FHA loans:

  • There will be some areas where the loan limit will decrease.
  • A loan currently in the pipeline may no longer be eligible as a result of having a loan amount higher than the new loan limit for its area.

We recommend you not resubmit loans in your pipeline after December 31, 2008, prior to delivering the loans to FHA Connection; pipeline loans will be assessed using the new 2009 loan limits. The maximum loan amount will change on January 1, 2009, even if the loan transaction is already in your pipeline.

Please note Loan Prospector will be closed on New Year's day, January 1, 2009.

Updates to Address Recent VA Cash-Out Refinance Changes

On December 16, 2008, we will update Loan Prospector to align with the following changes the Department of Veterans Affairs (VA) announced in the October 16, 2008 VA Circular 26-08-19:

  • Cash-out refinance loans are now available for up to 100 percent of the appraised value of a home, which is an increase from VA's previous threshold of 90 percent. All other VA program requirements for regular refinancing loans remain the same.
  • Any pipeline loans that were greater than 90 percent LTV/TLTV and received a purchase restriction, should reassess without the purchase restriction on the VA feedback certificate on or after December 16, 2008.

Please note: All VA program requirements related to adjustable-rate mortgages (ARMs) and hybrid adjustable-rate mortgages (HARMs) remain in effect.

Additional Information on 2009 VA Changes Loan Limits

As announced in the October 16, 2008 VA Circular 26-08-19, there will be a temporary increase in the “maximum guaranty amount” for VA loans closed January 1, 2009, through December 31, 2011. During this period, the maximum guaranty amount should be substituted for the maximum guaranty amount specified in the July 30, 2008 VA Circular 26-08-11 and in the VA Lender's Handbook. Please note, if a veteran has previously used entitlement that has not been restored, the guaranty amount for that veteran must be reduced accordingly.

Please keep the following information in mind when submitting VA loans:

  • Loans for $417,000 or Less Are Unaffected: The guaranty amount for loans where the original principal loan amount is $417,000 or less remains unchanged.
  • Loans for More Than $417,000: If the original principal loan amount is greater than $417,000, VA will guarantee 25 percent of the original principal loan amount, up to the maximum guaranty amount. The maximum guaranty amount varies depending upon the location of the property. Review the list of 2009 county loan limits for VA.
  • A loan currently in the pipeline may result in less than a 25 percent guaranty as a result of having a loan amount higher than the new 2009 loan limit for its area.
  • The credit approval date is the date when the VA loan is closed.

For More Information

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