Fall 2018-Winter 2019 Federal Highlights

FHFA Announces GSE Conforming Loan Limits for 2019

The Federal Housing Finance Agency announced that the maximum conforming loan limit for first mortgages secured by one-unit properties acquired by Fannie Mae and Freddie Mac in 2019 will be $484,350.00, with the exception of several higher-cost areas where higher loan limits will be in effect.

The $484,350.00 amount represents a 6.9% increase from the current $453,100.00 limit that has been in effect since January 1, 2018. The loan limits will also increase in nearly all high-cost counties. Some states incorporate FHFA’s conforming loan limits into their “high-cost home loan” and other laws.

Revised Dollar Amount and Thresholds Under Federal High-Cost and Qualified Mortgage Provisions

The Consumer Financial Protection Bureau issued a final rule amending the high-cost mortgage thresholds and the qualified mortgage thresholds in Regulation Z. The amendments are effective
January 1, 2019.

HOEPA/High-Cost Mortgage Threshold

Under Regulation Z, certain loans with points and fees exceeding specified thresholds are considered “high-cost mortgages.” The thresholds are (1) five percent (5%) if the loan amount is $21,032 or more; and (2) the lesser of eight percent (8%) or $1,052 if the loan amount is less than $21,032. The $21,032 and $1,052 figures are adjusted annually on January 1st based on changes in the consumer price index.

Effective January 1, 2019, the $21,032 figure is adjusted to $21,549 and the $1,052 figure is adjusted to $1,077.

Ability to Repay/Qualified Mortgage Threshold

Regulation Z also provides that a loan is a “qualified mortgage” if, among other requirements, the total points and fees do not exceed certain thresholds. The points and fees thresholds for the “qualified mortgage” rule are also subject to annual adjustment based on inflation.

Effective January 1, 2019, the points and fees threshold is revised as follows:

• 3% of the total loan amount for a loan amount greater than or equal to $107,747;
• $3,232 for a loan amount greater than or equal to $64,648, but less than $107,747;
• 5% of the total loan amount for a loan greater than or equal to $21,549, but less than $64,648;
• $1,077 for a loan amount greater than or equal to $13,468, but less than $21,549; and
• 8% of the total loan amount for a loan amount less than $13,468.

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