WASHINGTON — Fannie Mae and Freddie Mac, the largest sources of money for U.S. home loans, temporarily will be able to guarantee loans as high as $729,750 in 224 “high cost” counties in the continental U.S. as part of economic-stimulus legislation, their regulator said Thursday.
As many as 240,000 mortgage borrowers in California, New York, Florida and other states may gain a similar increase in the loan limit insured by the Federal Housing Administration, Department of Housing and Urban Development spokeswoman D.J. Norquist said.
Congress mandated the increases in a $168 billion stimulus package signed by President Bush last month. The legislation seeks to expand the number of borrowers eligible for FHA-insured loans. It also mobilizes Fannie Mae and Freddie Mac to reduce mortgage costs by increasing financing in areas with unusually expensive housing.
“Families in high-cost states have been priced out of FHA- backed loans,” HUD Secretary Alphonso Jackson said in a statement.
The higher FHA loan limits, raised to as much as $729,750 from the current cap of $362,790, started Thursday and will remain in effect until Dec. 31, Norquist said.
