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No Change in FHA Loan Max in Chicago Area

By Peter Olson, Esq.

I hadn't been following the issue that closely but saw this today regarding FHA loan maximums being increased around the country in several high priced markets but not in good old Chicago. We're still at $417K. The move was part of the Economic Stimulus Act of 2008 passed by Congress in February. There's a lot of crying by real estate agents in the piece but the statistical basis put forth by the federal government seems legit.

HUD officials say the decision to exclude Chicago and most of the Midwest was simply about numbers.

They calculated the high-cost areas by looking at the median home costs for metropolitan statistical areas and smaller "micropolitan" areas outside them. Then they broke it down to the county level and took the highest median home price, multiplying it by 125 percent. If that number came out to more than $417,000, they raised the jumbo loan limit...

In Chicago, HUD looked at the 14 counties that make up the Chicago metropolitan statistical area and found that in 2007 DuPage County had the highest median cost, at $328,000. So they multiplied that by 125 percent and it came to $410,000, less than the old limit of $417,000.

I didn't hear any worries from the poor Realtors about government liability on loans that people default on and the resulting impact on taxpayers.

Full post as published by Closing Real Estate in Chicago on June 13, 2008 (boomark / email).