Unless Congress acts to extend or revise the temporary lending limits for Federal Housing Administration (FHA) loans, the current lending limits will revert back to those determined by the Housing and Economic Recovery Act (HERA), passed in July 2008.

Under HERA, the Federal Housing Finance Administration (FHFA) established the national conforming mortgage limit at $417,000.  HECM lending limits were set at the national conforming limit until the American Recovery and Reinvestment Act (ARRA) increased the HECM limit to $625,500 in 2009, officially established by Mortgagee Letter 2009-50.   The current limits are set to expire on October 1, 2011.

HUD announced in a Market Brief regarding FHA insured loans that loan limits for HECM loans are currently under review and additional guidance for borrowers and industry participants will be released when available.  Should the temporary increase be allowed to expired, the lending limit for HECMs would likely return to the $417,000 limit established by HERA.

In the brief, HUD analysis found that 3% of FHA loans by unit count and 6% by loan volume would have been affected in 2010 had temporary increases not been in place.  This analysis only examined forward FHA loans and did not include HECM loans.