HUD Not Planning HECM Loan Limit Change

reverse mortgage loan limits

HECM Reverse Mortgage Loan Limits returning to pre-economic crisis levels, has been a worry for the reverse mortgage industry and senior citizens that own homes in high value areas, like New York, California, Massachusetts, and others.

Everyone wondered if HUD was going to revert back to the “old days” when each county had a different loan limit based on the average price of a home in that county, or if they were going to lower the national loan limit back to $417,000. which is what it was before the financial collapse in 2008.

FHA’s typical protocol is to keep everyone on the edge of their seat until we’re close to the expiration date or deadline, (so to speak,) which in this case was going to be December 31, 2011.

Fortunately, FHA announced that they are anticipating keeping the higher loan limit of $625,500. for the HECM reverse mortgage program in place going forward. BUT…..you should note the official announcement still needs to be formally pronounced through a “mortgagee letter” yet to be published.

Here is the story:

“Home Equity Conversion Loan limits set by the Department of Housing and Urban Development are likely to remain in place at their higher levels, FHA Acting Commissioner Carol Galante told reverse mortgage lenders on Tuesday. Appeasing concerns over the loan limit extension expiring on December 31, the acting commissioner stated that HUD does not have plans for loan limits to return to their pre-recession levels.

“I know there has been some conversation about loan limits for the HECM program,” Galante said in a presentation before attendees of the National Reverse Mortgage Lenders Association annual convention in Boston this week. “Because of what happened in the forward program, there’s perhaps some uncertainty as to where HUD is with respect to the HECM loan limits. We don’t have any immediate plans to make any changes with respect to loan limits at this time,” she said.

The loan limits, currently set at $625,500 for HECMs, were raised as a stimulus effort in 2009 and were recently extended [1] through December 31, 2011 after a series of extensions. Lenders in areas with high home values say their business would be impacted seriously if the limits returned to their pre-recession levels as was done for forward lending.

“We have more to do in the HECM program,” Galante said. “At this point we want to focus on those things we really feel are important to focus on in terms of ensuring the book of business stays in a good place. Messing around with the loan limits is not something we need to do to address that issue.”

Set to expire at the end of the year, the higher loan limits can be extended through a mortgagee letter from HUD.”

Click here to visit the original source of this post

Free Reverse Mortgage Quote