Ruppersberger would raise limit on FHA-insured loan to $227,150 20% of county homes are currently excluded from FHA financing

Real estate

May 29, 1998|By Robert Nusgart | Robert Nusgart,SUN STAFF

A photo caption on Page 1C yesterday transposed the identifications for Baltimore County Executive C. A. Dutch Ruppersberger and Gilbert Marsiglia, president of the Greater Baltimore Board of Realtors. Mr. Marsiglia was on the left.

The Sun regrets the errors.

The embattled effort to raise the Federal HousinAdministration mortgage limit by more than $50,000 received strong support yesterday from Baltimore County Executive C. A. Dutch Ruppersberger as well as officials from the Greater Baltimore Board of Realtors and the federal Department of Housing and Urban Development.

"It is very difficult sometimes for individuals to borrow money, especially first-time homebuyers and single parents," Ruppersberger told members of the GBBR executive board at their offices in Lutherville.


"We have a lot of issues that relate to minorities who are not able to get the financing because they cannot put enough money down. In my opinion, this will have tremendous effect on what's happening in Baltimore County because revitalization is so important."

The Clinton administration proposes a single nationwide limit of $227,150 on loans FHA insures.

It would replace the 250 limits placed on loans the FHA currently underwrites. The limits range from $86,317 in most areas to $170,362 in the areas with the highest housing costs.

The $227,150 limit would put FHA on a par with conventional loan limits used by Fannie Mae and Freddie Mac, the two government-chartered organizations that supply mortgage money to most lenders.

FHA loan limits are based on 95 percent of the median home price in each county. FHA-insured loans typically require 3 percent down payments and allow closing costs to be financed.

"The FHA [mortgage] limit in this area is about $170,000, but the average price of a new detached home was $225,000," said Karen A. Miller, the HUD representative for the mid-Atlantic region. "Twenty percent of the existing homes in [Baltimore] county alone were excluded from FHA insurance because of the limit last year."

Expanding the FHA's limit would allow more buyers with credit problems -- who may be rejected by conventional lenders -- to purchase a home, Miller said.

"These are FHA's traditional clients. If they can meet the [FHA] underwriting standards, why should they be subject to arbitrary limits on how much house they can buy?" she said.

Miller also said an increase wouldn't cost taxpayers "a dime. The FHA insurance fund is supported entirely by premiums earned by homeowners using the program," she said.

The proposal, however, has had little support on Capitol Hill. Senate Majority Leader Trent Lott reportedly favors FHA reforms this year but not raising the loan limit.

Those in the Maryland delegation who support the proposal, according to GBBR President Gilbert D. Marsiglia, are Sen. Paul A. Sarbanes, and Reps. Albert R. Wynn, Steny H. Hoyer and Constance A. Morella. The rest of the delegation was either opposed or had not made a decision.

Another criticism of the proposal is that it takes FHA away from its original mission of serving low- and moderate-income buyers and puts it in direct competition with private lenders.

"FHA is in the business of expanding home ownership opportunities by serving borrowers not well served by the private mortgage industry," Miller says. "Simplifying the loan limits and making them more realistic is necessary to enable FHA to respond to changing conditions to meet today's housing needs."

Pub Date: 5/29/98

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