MAXIMUM PRINCIPAL LOAN OBLIGATION

MAXIMUM PRINCIPAL LOAN
OBLIGATION

MAXIMUM PRINCIPAL LOAN OBLIGATION

(A) not to exceed the lesser of--

(i) in the case of a 1-family residence, 110 percent of
determined by the Secretary; and in the case of a 2-, 3-,
or 4-family residence, the percentage of such median
price that bears the same ratio to such median price as
the dollar amount limitation in effect for 2007 under

section 305(a)(2) of the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1454(a)(2)) for a 2-, 3-, or
4-family residence, respectively, bears to the dollar
amount limitation in effect for 2007 under such section
for a 1-family residence; or

`(ii) 132 percent of the dollar amount limitation in effect
for 2007 under such section 305(a)(2) for a residence of
the applicable size (without regard to any authority to
increase such limitations with respect to properties
located in Alaska, Guam, Hawaii, or the Virgin Islands),
except that each such maximum dollar amount shall be
adjusted effective January 1 of each year beginning with
2009, by adding to or subtracting from each such amount
(as it may have been previously adjusted) a percentage
thereof equal to the percentage increase or decrease,
during the most recently completed 12-month or
4-quarter period ending before the time of determining
such annual adjustment, in an housing price index
developed or selected by the Secretary for purposes of
adjustments under this clause;

except that the dollar amount limitation in effect under
this subparagraph for any size residence for any area
may not be less than the greater of: (I) the dollar amount
limitation in effect under this section for the area on
October 21, 1998; or (II) 65 percent of the dollar amount
limitation in effect for 2007 under such section 305(a)(2)
for a residence of the applicable size, as such limitation is
adjusted by any subsequent percentage adjustments
determined under clause (ii) of this subparagraph; and

`(B) not to exceed 100 percent of the appraised value of
the property.'; and

(2) in the matter following subparagraph (B), by striking
the second sentence (relating to a definition of `average
closing cost') and all that follows through `section
3103A(d) of title 38, United States Code.'.