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This positive increase represents 150 percent of the Freddie Mac national conforming limit of $453,100.

Comparison of Principal Limit

This is good news for higher home value homes, especially since October 2nd changes have caused a reduction in principal limits. As you can see in the chart above, a 72 year old homeowner with a $680,000 home would receive about $22,142 additional proceeds over the prior limits (assuming a rate of 4.25%).

Brief Look at the HECM Lending Limit History

Prior to 2006, the HECM lending limit or MCA varied from county to county. In 2006, a national lending limit of $417,000 was established. Later, in 2009, Congress increased the HECM loan limit to $625,500. Then in 2017, the lending limit was increased to $636,150. Now, starting 2018, the new limit will be $679,650.

If you have questions on how the new reverse mortgage limit affects you, please don’t hesitate to call us toll free at 1-888-888-4834 or Apply Online!

The post 2018 Reverse Mortgage Limit Increased to $679,650 appeared first on MLS Reverse Mortgage.

For 2017, the reverse mortgage limit or maximum claim amount (MCA) for FHA-insured Home Equity Conversion Mortgages (Reverse Mortgage) has increased from the prior limit of $625,500 to the new limit of $636,150, according to Mortgagee Letter 2016-19. The Mortgagee Letter was published December 2, 2016 by the Department of Housing and Urban Development.

The new MCA is equal to 150% of Fannie Mae and Freddie Mac’s national conforming limit of $424,100. It’s important to note that the $636,150 limit is a national limit and is applicable to all HECM loans, including loans in special exception areas such as Alaska, Hawaii, Guam and the Virgin Islands.

For clarification purposes, the maximum claim amount (MCA) is the amount used to determine the principal limit and mortgage insurance for a HECM. So, if a home appraises for $640,000, the reverse mortgage comparison numbers will be based on a value of $636,150 because the MCA would be less than the appraised value. Any home that appraises for less than $636,150 would use the actual appraised value as the MCA or lending limit.

Comparison of Principal Limit

The new limit allows a little more borrowing power than previously. This is important to those senior homeowners who may have attempted to do a reverse mortgage, but possibly had a shortfall due to the $625,500 cap in the lending limit. In our example above, a 72 year old homeowner with a $640,000 home can now get an additional $6,294 in proceeds with the 2017 reverse mortgage limits. That may not sound like a lot, but we come across people nearly every day who have a payoff that is just a little too large for their reverse mortgage and they don’t have the funds available to come up with the shortfall.

A Brief Look at the HECM Lending Limit History

Prior to 2006, the HECM lending limit or MCA varied from county to county. In 2006, a national lending limit of $417,000 was established. Later, in 2009, Congress increased the HECM loan limit to $625,500 and had remained at that level until the most recent change to $636,150, effective January 1, 2017.

If you have questions on how the new reverse mortgage limit affects you, please don’t hesitate to call us toll free at 1-888-888-4834 or Apply Online!

The post 2017 Reverse Mortgage Limit Increased to $636,150 appeared first on MLS Reverse Mortgage.

• 64 and older will be eligible for more funds.
• between the ages of 62 and 63 will be eligible for slightly lower funds. The chart below reflects  the dollar change in Available Funds based on different home values and borrowers ages using a 5% interest rate (PLF Tables Effective 8/4/2014)

The next chart shows the percentage change from the old limits to the new limits, also assuming a 5% interest rate. At age 90 and beyond, there has been an increase of 9% over what was previously available. This is great news especially for someone who may have tried for a reverse mortgage previously and was short to close.

Why was the change made?

HUD recently updated it’s policy regarding non-borrowing spouses on a reverse mortgage loan. With the new change, non-borrowing spouses receive additional protections, allowing them to remain in the home, even if the borrowing spouse passes away, as long as certain conditions are met at the close of the loan and throughout the life of the loan.

What do all these changes mean to you?

If you are in the process of obtaining a reverse mortgage or have been considering a reverse mortgage and you are 64 years or older, it’s good news as you will qualify for more proceeds than previously allowed.To find out exact details on how the changes will impact you, please call MLS Reverse Mortgage toll free at 1-888-888-4834 or apply online.

The post Reverse Mortgage Policy Changes Increase Principal Limits and Protect Non-Borrowing Spouses appeared first on MLS Reverse Mortgage.

The language in the bill is as follows:

SEC. 12004. FHA REVERSE MORTGAGE LOAN LIMITS FOR2009.

For mortgages for which the mortgagee issues credit approval for the borrower during calendar year 2009, the second sentence of section 255(g) of the National Housing Act (12 U.S.C. 171520(g)) shall be considered to require that in no case may the benefits of insurance under such section 255 exceed 150 percent of the maximum dollar amount in effect under the sixth sentence of section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)).

This would bring our loan limit to 150% of the Freddie Mac limit, or $625,500. If the Freddie Mac limit changes, the HECM limit would change commensurately.

This change is being offered as a temporary measure, thru 2009 only, because it is part of an emergency economic stimulus package. A permanent change would have to be enacted through a more appropriate housing bill.

This bill must still be marked-up in Committee, then brought to the House floor for debate and a vote. After that, it must go through the Senate, so it still has a way to go.

In the Senate, we have previously faced some opposition to higher HECM loan limits. We are working to try to overcome this reluctance, so we can keep our provision intact as deliberation on this bill continues.

In any case, this is an important first step in the process. We thank House Financial Services Committee Chairman Barney Frank and his staff for their assistance in seeing this HECM provision included in the stimulus bill.

Source: Peter H. Bell (President, NRMLA)

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