• 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.

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The letter states that FHA-insured HECMs will remain at $625,500 through 12/31/11. However, if legislation is enacted to extend the current FHA-insured loan limits, the Department will publish a Mortgagee Letter which defines the most recent loan limits for both FHA-insured forward mortgages and HECMs.

Again, we always advice using our reverse mortgage calculator to determine the amount of proceeds available to you. Please check back periodically as we will update our blog as we learn more information.

The post HECM Limits Extended Through December 31, 2011 appeared first on MLS Reverse Mortgage.

The loan limits beginning on October 1, 2011 for HECM loans are currently under review by the Federal Housing Administration (FHA). FHA will provide guidance to the industry and consumers in the near future. We are unsure as to whether or not they will stay the same or will be lowered to previous levels. Currently the limit applies to the entire country. Previously, the limits were based on where the property was located, with higher value areas having a higher limit.

What does this mean to reverse mortgage consumers?

For those seniors who are on the fence and have higher home values and higher mortgage balances should consider starting their reverse mortgage sooner than later. By using our reverse mortgage calculator, you can determine the amount of benefit currently available.

When we refer to loan limit or lending limit being $625,500, we are referring to the maximum value that we will give a property when determining loan proceeds. For example, if your property appraises for $725,000, we will calculate your benefit using $625,500. Conversely, if your home appraises below $625,500, we will use the lower value. Now, if the loan limits are lowered to $417,000, for example, we will only assign that much value when determining benefit, even if your home does appraise higher than the new limit.

To find out more details or to apply ahead of the change call us toll free at 1-888-888-4834.

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I [Peter Bell] just got off a phone call with FHA Commissioner David Stevens and HUD Assistant Secretary for Congressional Relations Peter Kovar, who called to tell me that HUD has posted a Mortgagee Letter implementing the 10% haircut in principal limit factors, effective for all loans on which applications are taken on or after October 1, 2009.

In a nutshell, the Commissioner explained that from its enactment, the HECM program was intended to operate without any credit subsidy. While one might argue with OMB’s recent assessment, the fact is that OMB’s number is the “governing” number here and accordingly, there needs to be credit subsidy, or program changes, in order for the HECM program to continue operating once the new federal fiscal year begins on October 1. Since the appropriations process is unlikely to provide credit subsidy, program changes are the only viable route for keeping the program operating past September 30.

The Commissioner offered to attend a meeting, or series of meetings, with a delegation from NRMLA to discuss the future of the HECM program and reiterated that policy changes can be made as needed, so we can revisit the principal limit issue and other issues, such as re-engineering the MIP over the months ahead. However, he made clear that they needed to make the change that they are making right now and there is nothing else to be done about it.

You can download the mortgagee letter by clicking here.

Peter Bell, President
NRMLA

Any potential borrower who may be affected by this decrease and is sitting on the fence should consider proceeding with a reverse mortgage now. Several borrowers may now need to come in with cash to close due to the decrease. An analysis of year-to-date loan volume at some of the major lenders has indicated that a 10% reduction in principal limits would have left approximately 21% of borrowers with proceeds too short to cover their existing indebtedness on their homes. Many counseling companies are increasing staff and office hours to accommodate the potential influx in counseling requests due the short notice given by HUD. MLS Reverse Mortgage is available to answer your questions at 1-888-888-4834.

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The U.S. Department of Housing and Urban Development published Mortgagee Letter 2009-07, which officially raises the national limit for Home Equity Conversion Mortgages from $417,000 to $625,500 for the remainder of 2009.

The new limit took effect yesterday, 2/24/2009, the date of the Mortgagee Letter.

Home Equity Conversion Mortgage Section Of the Mortgagee Letter…

February 24, 2009

MORTGAGEE LETTER 2009-07

TO: ALL APPROVED MORTGAGEES

This will have a major impact for senior homeowners with higher value homes. Since jumbo reverse mortgages are nearly non-existent right now, seniors with higher value homes have been limited to the lending limit of $417,000 and before that $362,790. The additional $200,000 +/- increase will mean a large increase in the net benefit available to seniors in higher value homes.

For more information: Reverse Mortgage Lenders

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The post Final Version of Economic Stimulus Package Raises HECM Loan Limits to $625K appeared first on MLS Reverse Mortgage.

NRMLA is pleased to announce that we have learned that the compromise package emerging from the House-Senate conference committee includes the House language setting the HECM loan limit at 150% of the Freddie Mac limit, which would put it at $625,500 — for the balance of 2009 only. (Congress would have to act on it again before this year is out to extend it beyond ’09.) 

The conference report must still be voted on separately by the House and the Senate, so it is not yet entirely final.

The House adopted a non-binding motion on Tuesday that directs the conference report be posted on the Internet for 48 hours before the House votes. That would put the House floor vote the evening of Feb. 14, at the earliest, if the conference report is posted today.

Once both houses of Congress approve the conference report, it will be sent to President Obama for his signature.

After the President signs the bill, HUD will have to issue a Mortgagee Letter to implement the change. From our previous experience, we have learned that there is no telling exactly how long it will take for them to get this done, but with the temporary nature of this provision, I hope that they will act expeditiously.

We are still waiting to verify that this is correct by seeing the actual conference report.

Peter H. Bell, President

The post Stimulus Bill Compromise Includes Higher HECM Loan Limit 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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