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» VISIT US ONLINE @ DSNEWS.COM Compiled by the DS News Staff FIVE MINUTES WITH FOUNDER AND CEO OF FAY SERVICING Ed Fay PAGE 31 INSIDE THE JOURNAL // MOVERS & SHAKERS // ON THE WEB // THE APP SPECTRUM FHA LOWERS LOAN LIMITS FOR 2014 The Federal Housing Administration (FHA) is bringing down loan limits on singlefamily mortgages this year, HUD announced. According to Mortgagee Letter 13-43, FHA's revised ceiling for single-family loan limits will come down to $625,000 from $729,750. The change marks the first full implementation of loan-limit calculations under the Housing and Economic Recovery Act of 2008; the lower limits were originally scheduled to be put into place at the start of 2009, but Congress delayed any action "due to continuing strains in credit markets" at the time, HUD said. "As the housing market continues its recovery, it is important for FHA to evaluate the role we need to play," said FHA Commissioner Carol Galante. "Implementing lower loan limits is an important and appropriate step as private capital returns to portions of the market and enables FHA to concentrate on those borrowers that are still underserved." As a result of the changing law, HUD estimates about 650 counties will have lower maximum thresholds. As per usual, counties in Alaska, Hawaii, Guam, and the Virgin Islands will see higher limits to account for greater construction costs. The maximum limit for a single-family loan in those areas is $938,250. The loan limit floor for low-cost housing areas remains $271,050. Also left untouched were loan limits for FHA-insured reverse mortgages, which continue to have a maximum claim amount of $625,500. FHA also published new guidelines for lenders to use when manually underwriting loan applications. The federal mortgage insurer says the new guidelines are intended to "improve a lender's ability to objectively consider a borrower's risk and reduce additional credit requirements or 'overlays' that exceed FHA's own lending standards" and should restore security to the agency's depleted Mutual Mortgage Insurance fund without forcing lenders to over-tighten their standards. Chief among the changes is a set of "compensating factors" for lenders to use when considering borrowers whose debt-to-income percentages exceed established ratios, provided they have a credit scores above 580 (reduced from 620 previously). "Implementing lower loan limits is an important and appropriate step as private capital returns to portions of the market." A look at facts you didn't know you couldn't live without According to a December 11 public opinion poll conducted by Rasmussen Reports, 52% of American adults believe the U.S. is in a recession. TAKE A LOOK INSIDE THE NUMBERS D ATA BI T S MOST EXPENSIVE URBAN AREAS* Ranking Urban Area COLI** 1 New York (Manhattan), NY 221.3 2 New York (Brooklyn), NY 175.6 3 Honolulu, HI 167.5 4 San Francisco, CA 159.9 5 New York (Queens), NY 151.4 6 Hilo, HI 149.1 7 San Jose, CA 148.8 8 Stamford, CT 143.3 9 Washington, DC 141.6 10 Orange County, CA 140.7 LEAST EXPENSIVE URBAN AREAS* Ranking Urban Area COLI** 1 Norman, OK 82.4 2 Pueblo, CO 82.5 3 Harlingen, TX 83.4 4 Memphis, TN 84.9 5 Youngstown-Warren, OH 85.5 6 Covington, KY 85.7 7 Tupelo, MS 85.8 8 Augusta-Aiken, GA-SC 85.9 9 Birmingham, AL 85.9 10 Sherman-Denison, TX 86.2 *As of Q3 2013, out of the 306 urban areas that participated in the study. **The Cost of Living Index (COLI) measures regional differences in the cost of consumer goods and services. A reading of 100 represents the national average, so a COLI value of 86 means the local cost of living is 14% below the national average. Source: The Cost of Living Index is published quarterly by the Council for Community and Economic Research. Over the past three fiscal years, the U.S. Department of Justice has filed charges against more than 2,900 mortgage fraud defendants. 7