United States General Accounting Office

GAO Report to the Ranking Minority Member,

Committee on Banking and Financial

Services, House of Representatives

March 1999 FHA LOAN LIMITS

Finance Board Data

Are a Reasonable

Source of Home Sales

Prices

GAO/RCED-99-78

GAO United States

General Accounting Office

Washington, D.C. 20548

Resources, Community, and

Economic Development Division

B-281434 

March 29, 1999

The Honorable John J. LaFalce

Ranking Minority Member

Committee on Banking

 and Financial Services

House of Representatives

Dear Mr. LaFalce:

Purchasing a home is one of the most significant financial undertakings for

most families. For many of those seeking to do so for the first time, the

Department of Housing and Urban Development’s (HUD) Federal Housing

Administration (FHA) often helps make home ownership possible. FHA does

this by insuring mortgages so that lenders will make loans to borrowers

who might be unable to otherwise get a mortgage. FHA also sets limits on

the dollar value of individual loans it will insure. The maximum

FHA-insured mortgage a borrower may obtain varies throughout the

country depending on local housing prices, resulting in hundreds of

different loan limits. To measure local house prices and determine these

loan limits, FHA largely relies on data from a Federal Housing Finance

Board (Finance Board) survey that collects house purchase prices and

other related data on non-government-insured mortgages from mortgage

lenders.

Because the FHA loan limits for some areas seemed high, you asked us to

collect and analyze data about house prices from sources other than the

Finance Board. This report (1) compares data on house prices from the

Finance Board with data HUD’s Office of Federal Housing Enterprise

Oversight collects to measure house price changes;1

 (2) presents the views

of officials of the agencies involved on the results of this analysis;

(3) analyzes the effect on median prices of supplementing the Finance

Board’s and the Office of Federal Housing Enterprise Oversight’s data with

information each does not already include on lower-priced homes with

government-insured mortgages; and (4) provides information on FHA’s

1

Neither of these sources collects information on purchase prices for all home loans or all home sales.

The Federal Housing Finance Board collects home price data for mortgages that are not insured by the

federal government and that are not for the purpose of refinancing an existing loan. The Office of

Federal Housing Enterprise Oversight collects data on loans—few of which are government-insured

and none of which may exceed a statutory limit—purchased by the Federal National Mortgage

Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). While the

Finance Board publishes data on house prices as well as price changes, the Office of Federal Housing

Enterprise Oversight publishes only data on house price changes, not the house price data it provided

us for the analysis in this report. Both Fannie Mae and Freddie Mac consider these data on house

prices proprietary and confidential.

Page 1 GAO/RCED-99-78 FHA Loan Limits
B-281434 

recent efforts to explore alternative sources of data for measuring median

home prices. The data we analyzed cover 42 selected metropolitan areas

for which the Finance Board publicly reports data annually (see app. I for

a list of these areas).

Results in Brief The Finance Board and the Office of Federal Housing Enterprise

Oversight’s estimates of 1997 median home sales prices were similar in

about two-thirds of the metropolitan areas we reviewed. That is, in 27 of

the 42 areas, the two agencies’ estimates were within 5 percent of each

other. Therefore, loan limits based on either set of data would be similar in

these areas. For the remaining 15 areas we reviewed, the Finance Board

estimated a higher median home sales price in 10 of the areas, while the

Office of Federal Housing Enterprise Oversight’s estimate was higher in 5

areas.

Officials familiar with these data, including officials from the Finance

Board as well as the Federal National Mortgage Association (Fannie Mae)

and the Federal Home Loan Mortgage Corporation (Freddie Mac), cited

the low number of substantive differences in our analysis as an indicator

of the validity of the Finance Board’s data. Because no substantive

difference existed between the two sets of data in about two-thirds of the

areas we reviewed, the officials indicated the Finance Board’s data are a

reasonable measure of an area’s median sales price for homes without

government-insured financing. In those areas for which substantive

differences did exist, officials from the different agencies involved agreed

the reason was that the Finance Board includes larger loans, and thus

higher home purchase prices, in its survey than does the Office of Federal

Housing Enterprise Oversight. The Finance Board’s 1997 data include loan

amounts up to $500,000 and house purchase prices up to $750,000. The

Office of Federal Housing Enterprise Oversight’s data for 1997 include no

loans greater than $214,600. These officials also cited normal variations

associated with surveys and statistical sampling as a reason for some

differences between the two sets of data.

Supplementing the data from either the Finance Board or the Office of

Federal Housing Enterprise Oversight with data on homes financed with

government-insured loans would lower the estimated median home sales

price in any given area by 2 to 31 percent. This is true because neither the

Finance Board’s nor the Office of Federal Housing Enterprise Oversight’s

data include homes financed with government-insured loans. The

purchase prices of homes financed with mortgages insured by FHA and the

Page 2 GAO/RCED-99-78 FHA Loan Limits
B-281434 

Department of Veterans Affairs2 are, on average, lower than those of

homes bought with privately insured financing. These lower prices result

from the limits on the size of individual loans FHA may insure and because

government-insured financing tends to be focused on first-time

homebuyers, who typically purchase less expensive homes.

FHA is engaged in an effort to use additional sources of data, such as the

Office of Federal Housing Enterprise Oversight, to improve its

measurement of median home sales prices. In part, this is due to recent

legislative changes that make it necessary for FHA to know the median

price for each county within a metropolitan area as well as for the entire

area when setting loan limits.3

 Currently, FHA relies heavily on the Finance

Board’s survey for the data it needs to set its loan limits, but to a limited

extent it has also supplemented that survey with data its field offices

gather on local home sales prices. In addition to exploring the use of the

Office of Federal Housing Enterprise Oversight’s data, FHA is considering

using data on loans that neither Fannie Mae nor Freddie Mac has

purchased.

Background One of FHA’s primary goals is to assist those households that are unable to

meet the requirements of the private market for mortgages and mortgage

insurance or that live in underserved areas where mortgages may be

harder to obtain. In doing so, FHA applies more flexible underwriting

standards than the private market generally allows. Borrowers seeking

FHA-insured loans may make smaller down payments (as a percentage of

the purchase price) than the private market requires and may also include

in the amount they borrow most costs associated with closing the loan,

rather than using cash for those expenses, as private lenders generally

require. FHA is required by statute to set limits on the dollar amount of

individual loans it will insure. These limits are based, in part, on local

median home prices.

The Finance Board surveys major mortgage lenders each month,

collecting information on the terms and conditions (including the sales

prices of homes) of conventional single-family home loans closed during

2

Although the Department of Veterans Affairs guarantees mortgages for U.S. veterans and their

families rather than insuring them, this report refers to these loans as government-insured.

3

P.L. 105-276 sec. 228(b) mandates that the highest loan limit of any county within a metropolitan

statistical area must apply to loans insured in all the counties in that area.

Page 3 GAO/RCED-99-78 FHA Loan Limits
B-281434 

the last 5 business days of the month.4 The Finance Board may not require

that lenders participate in its survey. Those doing so participate

voluntarily. Fannie Mae and Freddie Mac, both government-sponsored

enterprises, are parts of the secondary mortgage market, through which

many single-family home mortgages are ultimately sold.5

 Federal law

requires that Fannie Mae and Freddie Mac use information from the

Finance Board’s survey on the year-to-year change in house prices to

annually adjust the conforming loan limit (currently $240,000), which is a

legislative restriction on the size of any individual loan that either may

buy.6

FHA also uses information from the Finance Board to set limits on the

dollar value of loans it will insure, which are based on the conforming loan

limit and median home prices. That is, FHA sets an area’s loan limit at the

greater of 48 percent of the conforming loan limit or 95 percent of the

median home sales price for the area, but no greater than 87 percent of the

conforming loan limit.7

 Consequently, FHA loan limits vary depending on

the location of the home and the median home sales price there but are no

lower than $115,200 and no higher than $208,800—48 percent and

87 percent, respectively, of the conforming loan limit.

FHA is not required by statute to use a particular source of information on

home prices to determine the median price of homes in an area and,

consequently, the loan limit for the area. However, FHA has chosen to use

the Finance Board survey for this purpose. FHA relies heavily on the survey

to measure median home sales prices because it is the most

comprehensive source of published house price data readily available to

the agency.

The Office of Federal Housing Enterprise Oversight (OFHEO) also collects

information on home sales. Specifically, both Fannie Mae and Freddie Mac

4

Conventional loans are all home loans not insured or guaranteed by the government. The survey also

excludes refinancings.

5

The Congress created the enterprises to enhance the availability of credit to qualified borrowers by

purchasing mortgages from lenders, who can then use the proceeds from those sales to make

additional mortgage loans.

6

12 U.S.C. 1717(b)(2) and 12 U.S.C. 1454(a)(2). Loans greater than the conforming loan limit are called

jumbo loans.

7

Alaska, Hawaii, Guam, and the Virgin Islands may have even higher loan limits because the Congress

has designated these states and territories as special high-cost areas, allowing FHA to set its loan limits

there up to 50 percent higher than the limits applicable elsewhere. Also, FHA permits its field offices to

use non-Finance Board data to adjust loan limits. Any interested party who does not believe that the

FHA loan limit for a given area accurately reflects the median house prices there may appeal for an

increase. Anyone doing so must submit to FHA sufficient house sales price data to justify granting an

increase.

Page 4 GAO/RCED-99-78 FHA Loan Limits
B-281434 

provide data to OFHEO on all of the mortgages they purchase in order for

OFHEO to construct a house price index.8 OFHEO uses the house price index

to account for changes in the values of the homes securing the mortgages

that the enterprises have purchased and their potential impact on credit

risk. By definition, the index includes only conforming loans—those with

values less than the conforming loan limit—because neither enterprise

may purchase loans that exceed the conforming loan limit. In addition, the

index excludes all government-insured loans.9

 In 1997, Fannie Mae and

Freddie Mac purchased 37 percent of all conventional loans originated

that year for single-family homes.

The Finance Board

and the Office of

Federal Housing

Enterprise Oversight

Usually Estimate

Similar Median Prices

In about two-thirds of the 42 metropolitan areas we reviewed, no

substantive difference existed in the 1997 median house prices calculated

with Finance Board and OFHEO data. As figure 1 shows, in 27 of these

areas, the difference between the higher and lower estimates of median

prices according to the two sets of data was 5 percent or less. In an

additional 10 areas, the two agencies’ estimates were within 10 percent of

each other. For the 15 areas where the two estimates differed by more

than 5 percent, the Finance Board estimated a higher median home sales

price than OFHEO in 10 areas, while OFHEO estimated a higher median in 5

areas.

8

The house price index measures changes in home values over time, using the home’s appraised value

from a refinancing and either the home’s appraised value or sales price from purchases. OFHEO

estimates a value for each home with a repeat transaction and compares that to the home’s previous

sales price or appraised value, with any difference between the two becoming the basis for the index.

Although OFHEO publishes the index, it does not publish the data that Fannie Mae and Freddie Mac

provide it that form the basis for the index. Fannie Mae and Freddie Mac consider those data to be

proprietary and confidential.

9

Fannie Mae and Freddie Mac can and do purchase government-insured loans, but they buy very few,

and OFHEO screens these out of its house price index as well as the data it provided us. The

Government National Mortgage Association (Ginnie Mae) securitizes nearly all government-insured

mortgages, guaranteeing the timely payment of principal and interest on privately issued securities

that are backed by pools of government-insured mortgages.

Page 5 GAO/RCED-99-78 FHA Loan Limits
B-281434 

Figure 1: Degree of Difference

Between 1997 Median House Prices in

42 Metropolitan Areas Using the

Finance Board’s and OFHEO’s Data

64% • Less than or equal to 5% (27

areas)

•24%

Greater than 5% and less than or

equal to 10% (10 areas)

•12%

Greater than 10 percent (5 areas)

Sources: GAO’s analysis based on median house price data from the Federal Housing Finance

Board and the Office of Federal Housing Enterprise Oversight.

Because one basis for measuring the median price—the Finance Board’s

data—does not result in a substantively different price than

another—OFHEO’s data—for about two-thirds of the areas we reviewed, FHA

loan limits in those areas would be similar using either source of data. The

median price determines whether FHA sets its loan limit at a percentage of

the conforming limit or at 95 percent of the median home price.

Officials See Data

Sources as Mutually

Supportive, With

Differences Largely

Due to Jumbo Loans

The Finance Board’s data were a reasonable measure of an area’s median

home sales price (for homes with conventional financing), according to

officials at the Finance Board, Fannie Mae, and Freddie Mac. As support

for this position, they cited the similarity in the median prices that the

Finance Board and OFHEO calculated in about two-thirds of the areas we

reviewed. Given the differences in the nature of the data the Finance

Board collects through a survey of lenders versus OFHEO’s data, which

Page 6 GAO/RCED-99-78 FHA Loan Limits
B-281434 

represent all the conforming loans Fannie Mae and Freddie Mac

purchased, these officials stated that they viewed each data set as

supportive of the other. Regardless of the similarities and differences in

the median home prices derived from these two sources, the different

methods by which the Finance Board and OFHEO collect home price data

could explain some variation between them. For example, while the

Finance Board survey is intended to estimate house prices at the national

level, estimates at the local level are likely to be less representative of all

non-government-insured home sales for that area. These officials added

that there would be even fewer differences between the two if we analyzed

trends in median price data over a number of years.

The Finance Board’s survey included some higher-priced homes that

would not be reflected in OFHEO’s data, sometimes resulting in a higher

calculated median price than OFHEO’s data reflected. In fact, in 26 of the

areas we reviewed, the Finance Board data showed higher median home

sales prices than did the OFHEO data. According to officials from Fannie

Mae and Freddie Mac, including these jumbo loans is the primary reason

for that difference. Specifically, the Finance Board’s data included

purchase prices up to $750,000 and loan amounts up to $500,000.10

Conversely, OFHEO’s data excluded all jumbo loans because they exceed

the conforming loan limit ($214,600 in 1997), meaning neither Fannie Mae

nor Freddie Mac could have purchased them.

Median House Prices

Are Lower When They

Are Based on

Conventional and

Government-Insured

Loans

Supplementing the Finance Board’s or OFHEO’s data with information on

prices of homes financed with government-insured mortgages reduces the

estimates of median prices across the board and within all of the

metropolitan areas we reviewed. Homes financed with

government-insured mortgages typically cost less than homes financed

with conventional mortgages, but the Finance Board and OFHEO (with few

exceptions) collect data only on homes financed with conventional

mortgages. Hence, including data on government-insured mortgages in the

calculation for a given area results in a lower median price of homes.

As table 1 shows, the effect of adding data on homes with

government-insured mortgages to the Finance Board’s and OFHEO’s median

price estimates is not uniform across all of the metropolitan areas; that is,

it does not reduce the median in each area by the same amount. When we

added data on homes with government-insured loans to the Finance

10The Finance Board excludes purchase prices and loan amounts above these thresholds to control for

possible data entry errors on the part of the lenders participating in its survey. In 1998, the Finance

Board raised these thresholds to $856,000 for purchase prices and $571,000 for loan amounts.

Page 7 GAO/RCED-99-78 FHA Loan Limits
B-281434 

Board’s data, median prices in individual metropolitan areas were 2 to

30 percent lower. When we added these data to OFHEO’s data, median

prices were 6 to 31 percent lower.

Table 1: Effect of Adding Data on

Government-Insured Loans to Finance

Board and OFHEO Median House Price

Data in 42 Metropolitan Areas

Number of areas Percentage drop in

estimated median

house price when

government-insured

loans are added

Median based on

Finance Board data and

government-insured loansa

Median based on

OFHEO data and

government-insured loans

5 percent or less 5 0

6 to 10 percent 12 1

11 to 15 percent 12 16

16 to 20 percent 7 16

More than 20 percent 3 9

aFinance Board data were not available for this analysis in three metropolitan areas.

Sources: GAO analysis based on data from the Federal Housing Finance Board, the Office of

Federal Housing Enterprise Oversight, FHA, and the Department of Veterans Affairs.

The effect that including government-insured loans has on the estimated

median price of homes in any given area depends on how much

government-insured lending (relative to all other types of lending) was

taking place in that area. Where government-insured lending was a

relatively higher percentage of home loans, median prices decreased by a

greater degree than the decrease for the 42 areas taken as a whole.

Conversely, where there was relatively less government-insured lending in

any given area, median prices also decreased—but to a lesser degree than

in metropolitan areas with more government-insured lending.

FHA Plans to Use

Additional Data

Sources, Including

OFHEO, to Improve

Its Measurement of

Median Home Sales

Prices

FHA is exploring additional data sources to supplement the Finance

Board’s data and to improve its own measurement of median house prices.

In part, this is in recognition of the importance and value of timely and

comprehensive data on house prices at the local level for its own purposes

as well as larger, research-oriented uses. Also, recent legislative changes

have made it more important for FHA to have accurate local-area measures

of house prices on which to base loan limits. However, FHA has found no

source that systematically collects house price data on an ongoing basis in

all of the areas—metropolitan areas and counties—for which FHA must set

loan limits. As a result, FHA has stepped up its efforts to determine the

availability of, and any limitations associated with, additional data sources

on home prices.

Page 8 GAO/RCED-99-78 FHA Loan Limits
B-281434 

FHA’s most pressing reason for developing additional data sources is a

provision in recent legislation mandating that the highest loan limit of any

county within a metropolitan area must apply to loans insured in all the

counties in that area. To implement this provision as part of a recent

comprehensive update of all FHA loan limits, FHA supplemented its primary

data source, the Finance Board survey, with data from the National

Association of Realtors and a private marketing firm that collects and sells

data from real estate transaction records. To a limited extent, FHA also had

its field staff work with local interested parties, such as realtors’

associations, to gather sufficient recent data on which to base an estimate

of an area’s median house price. Nonetheless, FHA officials told us that for

over half of those areas whose loan limits were not automatically indexed

to the conforming loan limit, the Finance Board’s survey was their primary

source of median house price data.11

FHA’s goal is to comprehensively update all of its loan limits annually and,

in doing so, to make use of additional data sources to broaden the extent

to which its estimates of median house prices cover more of the housing

market. To do so, FHA recently initiated preliminary discussions with OFHEO

about making use of its data (similar to the data OFHEO provided to us) in

its next comprehensive update. In addition, FHA is considering obtaining

data on jumbo loans as well as other loans that Fannie Mae and Freddie

Mac have not purchased. FHA has no specific timetable for including such

data, in large part because the sources of the data on some of these loans

do not include information on house sales prices, which makes using the

data much more methodologically complex and time-consuming than

using a database such as OFHEO’s.

Observations FHA has substantial discretion in choosing the source of median house

price data it will use to set loan limits because, unlike the conforming loan

limit, there is no statutory requirement for it to use a specific data source.

Lacking a nationwide source of data that systematically collects

comprehensive house price information in each and every area where FHA

must set loan limits, the agency is left with the challenge of assembling the

best data available to it. At present, its use of the Finance Board’s survey

appears reasonable given that the only more comprehensive source of

11For the recent comprehensive update, FHA used the Finance Board as its data source for 30 of the 42

areas discussed in this report; for 6 areas, FHA used data its field office staff gathered on local real

estate sales; and, in the remaining 6 areas, field office staff determined that one county in the area had

a higher loan limit than the others and invoked the recently enacted provisions applying that county’s

higher limit to the entire area.

Page 9 GAO/RCED-99-78 FHA Loan Limits
B-281434 

data that we found—HUD’s Office of Federal Housing Enterprise

Oversight—usually yielded a similar median price.

Nonetheless, while both the Finance Board and OFHEO offer measures of

median prices that capture one particular segment of the housing

market—homes with conventional financing—neither covers all of the

housing market. As a result, FHA’s efforts to broaden its coverage of the

housing market will be guided by a need to identify what its data sources

are not capturing and a need to consider the implications for its loan limits

and potential FHA borrowers of using any new data sources.

Agency Comments We provided a draft of this report to the Department of Housing and Urban

Development (HUD), the Federal Housing Finance Board (the Finance

Board), the Office of Federal Housing Enterprise Oversight, the Federal

National Mortgage Association, and the Federal Home Loan Mortgage

Corporation for their review and comment.

HUD agreed that the Finance Board’s survey is a reasonable source of home

sales price data even though neither the survey nor the Office of Federal

Housing Enterprise Oversight’s information on home sales covers the

entire housing market. HUD commented that the report effectively

describes the practices and resources it used to set FHA loan limits and

identifies the data collection obstacles associated with this activity. HUD

also provided technical corrections to the report, which we have

incorporated. HUD’s comments are included as appendix II of this report.

The Finance Board agreed that our analysis indicates its survey is a

reasonable measure of 1997 home sales prices in the areas we reviewed.

However, the Finance Board also commented that because its data come

from a voluntary sample of mortgage lenders, it cannot ensure that its

sample size in individual metropolitan areas or counties is large enough to

provide statistically reliable results. The Finance Board stated that if the

Congress wants HUD to use the survey, it should provide the Finance Board

with the authority to require lenders to participate in the survey. We have

reported in the past that users of the Finance Board’s data suggested the

sample size would need to be expanded to make the data more reliable for

measuring local housing prices.12 We have revised our description of the

Finance Board’s survey to clarify that lenders participate in it voluntarily.

The Finance Board’s comments are included as appendix III of this report.

12Housing Finance: Implications of Alternative Methods of Adjusting the Conforming Loan Limit

(GAO/RCED-95-6, Oct. 5, 1994).

Page 10 GAO/RCED-99-78 FHA Loan Limits
B-281434 

The Office of Federal Housing Enterprise Oversight provided technical

corrections and clarifications to the report, which we have incorporated as

appropriate.

The Federal National Mortgage Association and the Federal Home Loan

Mortgage Corporation also commented on the draft report. Both stated

that they consider the data they provide the Office of Federal Housing

Enterprise Oversight to be proprietary and confidential. We agreed to add

this information to the report. The Federal Home Loan Mortgage

Corporation also provided technical corrections to the report, which we

have incorporated as appropriate.

Scope and

Methodology

Our review covered homes sold in selected metropolitan areas in calendar

year 1997 (1) for which FHA insured or the Department of Veterans Affairs

guaranteed the mortgages on the homes; (2) about which the lenders

issuing the mortgages for the homes reported data on the loans in the

Federal Housing Finance Board’s monthly interest rate survey; or (3) that

had mortgages that Fannie Mae or Freddie Mac subsequently purchased,

reporting data on those loans to OFHEO.

13 For this analysis, we focused on

the 42 metropolitan statistical areas (MSA) for which the Finance Board

publicly reports data annually.14 By definition, MSAs have at least one city

with 50,000 inhabitants or are urbanized areas with a total metropolitan

population of at least 100,000. Most MSAs consist of more than one county.

For the 42 areas, we obtained (1) from FHA and the Department of Veterans

Affairs, data on the median price of all of the homes sold for which the

federal government insured or guaranteed the mortgages15 and (2) from

the Finance Board, the median purchase price of all the homes sold whose

mortgages were reflected in the Board’s monthly interest rate survey.

Using data on loan amounts and loan-to-value ratios, OFHEO calculated and

provided to us an estimate of the median price of all homes sold in these

areas that had mortgages that were subsequently purchased by Fannie

13See appendix I for a complete list of these 42 areas.

14The Finance Board also reports data on 18 consolidated metropolitan statistical areas (CMSA), which

are MSAs that have a population of 1 million or more, separate component areas that are identifiable

and meet certain standards for designation as a metropolitan area, and local support for the

component areas. Because the Finance Board and OFHEO were more readily able to provide data

arrayed by MSA (rather than also disaggregating each CMSA’s data into the component MSAs), we

focused our analysis on just the 42 MSAs.

15In 1997, the Department of Agriculture’s Rural Housing Service guaranteed $2.4 billion in rural

housing loans made by private lenders. However, because these loans are a relatively small part of the

mortgage market and are concentrated in rural—as opposed to metropolitan areas—we have excluded

them from our analysis.

Page 11 GAO/RCED-99-78 FHA Loan Limits
B-281434 

Mae or Freddie Mac. For this calculation, OFHEO used the data Fannie Mae

and Freddie Mac provide it for the calculation of its house price index

(unlike OFHEO’s house price index, the data it provided us for this review

are not publicly released). We then compared the median purchase prices

according to these sources of data. Because homes financed with

government-insured loans are typically lower priced and neither the

Finance Board nor OFHEO includes data on government-insured mortgages,

we also calculated median purchase prices that included data from FHA

and the Department of Veterans Affairs with the data from OFHEO and the

Finance Board.

Throughout our review, we discussed issues related to data sources for

measuring house price changes with officials from FHA, OFHEO, HUD’s Office

of Policy Development and Research, the Finance Board, Fannie Mae, and

Freddie Mac. We also supplemented this information by discussing these

issues with officials of private organizations having an interest or expertise

in this area, including the National Association of Homebuilders and the

Mortgage Insurance Companies of America. We also discussed the results

of our analysis comparing median prices from the various sources with

officials from the agencies that provided these data.

We did not directly assess the reliability of the data we obtained from FHA,

the Department of Veterans Affairs, OFHEO, or the Finance Board. To

assure ourselves that each data set was sufficiently reliable for our

purposes, we reviewed the procedures each agency had in place to ensure

its data are reliable and accurate.

We conducted our review from July 1998 through March 1999 in

accordance with generally accepted government auditing standards.

We are sending copies of this report to the appropriate congressional

committees; the Honorable Andrew Cuomo, Secretary of Housing and

Urban Development; the Honorable Bruce A. Morrison, Chairman of the

Federal Housing Finance Board; the Honorable Mark Kinsey, Acting

Director of the Office of Federal Housing Enterprise Oversight; the

Honorable Franklin D. Raines, Chairman and Chief Executive Officer of

Fannie Mae; the Honorable Leland C. Brendsel, Chairman and Chief

Executive Officer of Freddie Mac; and the Honorable Jacob J. Lew,

Director of the Office of Management and Budget. We will make copies

available to others upon request.

Page 12 GAO/RCED-99-78 FHA Loan Limits
B-281434 

Please call me at (202) 512-7631 if you or your staff have any questions

about the material in this report. Major contributors to this report are

listed in appendix IV.

Sincerely yours,

Stanley J. Czerwinski

Associate Director, Housing and

 Community Development Issues

Page 13 GAO/RCED-99-78 FHA Loan Limits
Contents

Letter 1

Appendix I 

Metropolitan Areas in

Which GAO Compared

Median Home Sales

Price Data

16

Appendix II 

Comments From the

Department of

Housing and Urban

Development

17

Appendix III 

Comments From the

Federal Housing

Finance Board

18

Appendix IV 

Major Contributors to

This Report

20

Table Table 1: Effect of Adding Data on Government-Insured Loans to

Finance Board and OFHEO Median House Price Data in 42

Metropolitan Areas

8

Figure Figure 1: Degree of Difference Between 1997 Median House

Prices in 42 Metropolitan Areas Using the Finance Board’s and

OFHEO’s Data

6

Page 14 GAO/RCED-99-78 FHA Loan Limits
Contents

Abbreviations

CMSA consolidated metropolitan statistical area

FHA Federal Housing Administration

HUD Department of Housing and Urban Development

MSA metropolitan statistical area

OFHEO Office of Federal Housing Enterprise Oversight

Page 15 GAO/RCED-99-78 FHA Loan Limits
Appendix I 

Metropolitan Areas in Which GAO Compared

Median Home Sales Price Data

Albany-Schenectady-Troy, New York

Atlanta, Georgia

Austin-San Marcos, Texas

Birmingham, Alabama

Buffalo-Niagara Falls, New York

Charlotte-Gastonia-Rock Hill, North Carolina-South Carolina

Columbus, Ohio

Dayton-Springfield, Ohio

Fresno, California

Grand Rapids-Muskegon-Holland, Michigan

Greensboro-Winston-Salem-High Point, North Carolina

Greenville-Spartanburg-Anderson, South Carolina

Hartford, Connecticut

Honolulu, Hawaii

Indianapolis, Indiana

Jacksonville, Florida

Kansas City, Missouri-Kansas

Las Vegas, Nevada-Arizona

Louisville, Kentucky-Indiana

Memphis, Tennessee-Arkansas-Mississippi

Minneapolis-St. Paul, Minnesota-Wisconsin

Nashville, Tennessee

New Orleans, Louisiana

Norfolk-Virginia Beach-Newport News, Virginia-North Carolina

Oklahoma City, Oklahoma

Omaha, Nebraska-Iowa

Orlando, Florida

Phoenix-Mesa, Arizona

Pittsburgh, Pennsylvania

Providence-Fall River-Warwick, Rhode Island-Massachusetts

Raleigh-Durham-Chapel Hill, North Carolina

Richmond-Petersburg, Virginia

Rochester, New York

Salt Lake City-Ogden, Utah

San Antonio, Texas

San Diego, California

St. Louis, Missouri-Illinois

Syracuse, New York

Tampa-St. Petersburg-Clearwater, Florida

Tucson, Arizona

Tulsa, Oklahoma

West Palm Beach-Boca Raton, Florida

Page 16 GAO/RCED-99-78 FHA Loan Limits
Appendix II 

Comments From the Department of Housing

and Urban Development

Page 17 GAO/RCED-99-78 FHA Loan Limits
Appendix III 

Comments From the Federal Housing

Finance Board

Page 18 GAO/RCED-99-78 FHA Loan Limits
Appendix III 

Comments From the Federal Housing

Finance Board

Page 19 GAO/RCED-99-78 FHA Loan Limits
Appendix IV 

Major Contributors to This Report

Resources,

Community, and

Economic

Development

Division, Washington,

D.C.

Judy A. England-Joseph

DuEwa A. Kamara

Bill MacBlane

Mathew Scire

(385768) Page 20 GAO/RCED-99-78 FHA Loan Limits
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