![](media/image1.png){width="0.9583333333333334in"
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**U. S. Department of Housing and Urban Development**

Washington, D.C. 20410-8000

June 2, 1995

**Mortgagee Letter 95-27**

TO: ALL APPROVED MORTGAGEES

**SUBJECT:** Single Family Production\--Revised Procedures for

Requesting Increases in the FHA Single Family Maximum

Mortgage Limits

This Mortgagee Letter reflects several recent changes

related to processing and establishing maximum mortgage amounts

under the National Housing Act, as amended, including the

redelegation of the authority to increase maximum mortgage limits

to local HUD offices. Mortgagee Letter
[[94-15]{.underline}](http://www.hudclips.org/sub_nonhud/cgi/nph-brs.cgi?d=MLET&s1=94-15%5Bno%5D&SECT1=TXTHLB&SECT5=MLET&u=&p=1&r=1&f=G)
is hereby

superseded.

Public Law 103-327, signed by the President on September 28,

1994, amended Section 203(b)(2) of the National Housing Act

\[12 U.S.C. 1709(b)(2)\] by indexing the FHA mortgage limits to the

Fannie Mae/Freddie Mac loan limits. This legislation established

the maximum limit for non-high cost areas as 38 percent of the

Fannie Mae/Freddie Mac loan limits. The maximum mortgage limit

for high cost areas was established as 75 percent of the Fannie

Mae/Freddie Mac loan limits. HUD\'s new basic nationwide mortgage

limits are \$77,197, \$98,700, \$119,350, and \$148,300 for one-,

two-, three-, and four-family dwellings, respectively. The new

ceilings in most high cost areas for one- two-, three- and four-

family dwellings are: \$152,362, \$194,850, \$235,550, and \$292,800,

respectively.

Increases in an area\'s maximum mortgage limits will be based

on the lesser of: (A) 95 percent of the median one-family house

sales price in the area, or (B) the ceiling for high cost areas.

Pursuant to statutorily established criteria, HUD will consider

mortgage limit appeals for Metropolitan Statistical Ares (MSAs)

or individual counties, including counties within MSAs. HUD will

not consider appeals for areas smaller than a county.

Any interested party may submit a request to HUD for the

mortgage limits to be increased in a particular area. Any

request for an increase must be accompanied by sufficient housing

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sales price data to justify higher limits. These data should be

in the form of a listing of all, or nearly all, the one-family

properties sold in the area for a period of time that will vary,

depending on the volume of sales, as follows:

Sales Volume Revised Data Period

500 per month 1 month

250 to 499 per month 2 months

less than 250 per month 3 months

Where the volume of sales for one month is less than 250,

but the average for a two month period is 250 or more, sales data

for the two month period is sufficient.

This listing should include:

\(1\) a brief address of the property, including county

location (city, town, etc.);

\(2\) month and year of sale;

\(3\) sales price; and

\(4\) whether the property was new or existing.

These sales should be listed in order from the lowest sales

price to the highest sales price. Using these data, we will

establish the median sales price.

Only arm length transactions should be listed. Paper

transactions, distressed sales, foreclosure sales, lot sales, and

refinancings should be omitted.

The Department recognizes that in certain instances, the

application of this approach may not reasonably reflect the sales

price of newly constructed homes because of an existing stock

whose value is static or declining. Therefore, greater weight

may be given to the sales prices of new homes in determining the

median house price in such areas. Where new home sales

constitute 25 percent or less of an area\'s total sales, and the

parties requesting an increase provide evidence that the value of

the existing stock is static or declining, the Department may

consider an increase based on 95 percent of the average of the

median sales price for new homes and the median sales price for

existing homes. Separate median sales prices for both new and

existing homes in these areas may be submitted with the other

required documentation.

The authority to determine median area house prices and the

resulting maximum mortgage amounts is redelegated to specific

officials in the local HUD Offices. Effective April 27, 1995,

requests for increased limits, along with the accompanying sales

data, should be sent to the local HUD Office serving that

jurisdiction. A copy should not be sent to HUD Headquarters.

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The cognizant local HUD Office will verify the housing sales

data, review the request for compliance with Departmental

requirements, and revise the limits, as appropriate.

Approved increases in mortgage limits will become effective

on the date designated by the approving official when the

increase is announced. The local HUD Offices are to ensure the

widest possible dissemination when announcing increases.

If a request for an increase is denied by the local HUD

Office, the submitting party may appeal the decision to the

Federal Housing Commissioner or his designee. The appeal must be

in writing and must set forth the basis for the appeal. It must

be forwarded through the local HUD Office.

Questions concerning HUD single family mortgage limits

should be directed to the local HUD Office.

Sincerely yours,

![](media/image2.png){width="2.5944444444444446in"
height="0.6236111111111111in"}

Nicolas P. Retsinas

Assistant Secretary for Housing-

Federal Housing Commissioner