The Upfront Mortgage Broker

More Money For Seniors

Could You Benefit From A Reverse Mortgage?
If you would like more information or would like to consult with me about how a Reverse Mortgage can help you, please contact me today.

Before I begin, I’d like to give you a list of all the acronyms I am using in this post because there are quite a few.
HECM – Home Equity Conversion Mortgage aka Reverse Mortgage
HERA – Housing and Economic Recovery Act
FHA – Federal Housing Administration
NAMB – National Association of Mortgage Brokers
NRMLA – National Reverse Mortgage Lenders Association

For the seniors that qualify for a reverse mortgage, there is good news coming and its more money will be available. The lending limit changes to the HECM program are governed by Section 2122 of the Housing and Economic Recovery Act (HERA). Like most (but not all) provisions of the act, the new lending limits took effect on October 1, 2008. However, according to the National Association of Mortgage Brokers (NAMB), there was considerable debate within FHA as to whether the special high cost area provisions of HERA apply to HECM loans. FHA was unsure if the maximum HECM lending limit would vary by the area median housing price, as it did prior to HERA, or if the limit would be set at a flat $417,000 nationwide. The National Reverse Mortgage Lenders Association (NRMLA) recently sent out an email confirming the new reverse mortgage HECM loan limit will be $417,000. The target date is November 1st, but this is not a set deadline, its just a target date.
I’ve heard from people at the MBA conference that one of the reasons HUD didn’t raise the new loan limit to $625,000 is the private sector. HUD wants to leave a segment of the reverse mortgage business to private sector jumbo products. Their reasoning makes sense because at present, the HECM is at almost 100% market share & I am sure HUD would like for that to come down soon.

According to NRMLA, there will be a mortgagee letter published shortly providing more details. Below is some background provided in the announcement NRMLA sent out recently:

There was some debate within HUD to consider area limits at 115% of area median home value, with a floor of $417,000 and a cap of $625,500. Ultimately, the interpretation was determined that the new legislation will be a $417,000 loan limit. As many of you recall, this was the original limit embraced by the industry. As NRMLA requested a more liberal interpretation to $625,500 in high cost areas, the complexity of the bill’s language created much debate and ultimately this final decision. Nonetheless, we are pleased with this major milestone for the industry.

These are all positive developments for the reverse mortgage industry and the clients we serve. And as HUD moves toward the implementation of many other important aspects of the housing bill including the new purchase product and co-op lending, we look forward to continuing to report on additional developments in these areas in the near future.

If you have any questions about this post or need to talk about a specific situation, I encourage you to contact me today.

The Florida Upfront Mortgage Broker
No Charge Mortgage Consultations
Residential, Commercial & Reverse Mortgages
Direct 407.340.0220
Joe (at) the upfront mortgage broker (dot) com
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