Notes:
At last the new HECM limit has been set at $417,000. While there has been discussion, and the FHA Modernization Bill has included wording with room for further increases in the limit to 115% of the area median home value with a cap of $625,00, in highh-cost areas, for now we will just have to wait for further developments.
FHA will/is already working on the program for using Reverse Mortgages for purchase, as well as allowing Co-Ops into the program, and we will have to wait for further announcements. Stay tuned.
Below is the letter from NRMLA announcing the loan limit changes to the industry.
Have a great day....
Gloria
NFHA Announces $417,000 HECM Loan Limit FHA
October 2, 2008
This morning, FHA Commissioner Brian Montgomery announced that the new HECM nationwide loan limit (maximum claim amount) will be $417,000. The target effective date is November 1.
This is a target date right now, not a set deadline.
We still expect FHA to increase the “floor” on the origination fee from $2,000 to $2,500. A mortgagee letter will be published shortly that provides additional details.
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.
A majority of U.S. counties have lending limits at the existing floor (currently $200,162), which has drastically reduced the amount of equity that seniors living in higher-valued homes could access. We believe these new limits will have a significant impact on the quality of life and provide more relief to those seniors who need the help especially in today’s turbulent economic environment.
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.
Darryl Hicks, Vice President,
CommunicationsNRMLA
--------------------------------------------------------------------------
AND....MORE INFORMATION ON REVERSE MORTGAGE INCREASE
New FHA Reverse Mortgage Lending Limit Clarified: Perfect storm of economic conditions and longer life expectancy necessitates need for deeper examination of financial options in retirement.
Oakland, Calif. - Oct. 02, 2008 -The Federal Housing Administration (FHA) clarified today that the new nationwide reverse mortgage lending limit is $417,000. The new lending limit will make reverse mortgages a viable option for many homeowners previously excluded from the market by the current economic environment.
With retirement budgets squeezed by the economy and falling home values eroding what is often a retiree's biggest asset, a reverse mortgage could be a viable way to unlock the equity that remains in a senior's home.
The new S&P/Case Shiller home price index is further evidence of this "Senior Squeeze." The most recent index for July 2008 illustrated a continued drop in home prices nationwide. Home prices have declined an average of 20% since the market's peak and continue to slide month to month. For seniors, they may never see their homes reclaim that value in their lifetime. There is no segment of the population hit harder then seniors when it comes to home value as an asset.
"What new lending limits provide to seniors, declining home values are slowly taking away," said Eric Bachman, founder and CEO of Golden Gateway Financial. "With the changes created by this legislation, the worsening economy, and the continued reduction in home values, it is more important than ever for seniors to educate themselves about the potential benefits of a reverse mortgage."
A reverse mortgage allows individuals 62-years or older who own their homes to secure up-front cash, ongoing monthly payouts, or a combination of the two from a lender. No credit evaluation is required for a reverse mortgage; the only stipulations are that the owner remain in the home, pay the property taxes, and properly maintain the property.
And because a reverse mortgage is a non-recourse loan, borrowers will never owe more than the current market value of their homes, (meaning the lender cannot go after any other assets of the borrower) effectively protecting their heirs from debt (and allowing them to inherit all other assets without worry.)
Published by Golden Gateway Financial, California
FHA will/is already working on the program for using Reverse Mortgages for purchase, as well as allowing Co-Ops into the program, and we will have to wait for further announcements. Stay tuned.
Below is the letter from NRMLA announcing the loan limit changes to the industry.
Have a great day....
Gloria
NFHA Announces $417,000 HECM Loan Limit FHA
October 2, 2008
This morning, FHA Commissioner Brian Montgomery announced that the new HECM nationwide loan limit (maximum claim amount) will be $417,000. The target effective date is November 1.
This is a target date right now, not a set deadline.
We still expect FHA to increase the “floor” on the origination fee from $2,000 to $2,500. A mortgagee letter will be published shortly that provides additional details.
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.
A majority of U.S. counties have lending limits at the existing floor (currently $200,162), which has drastically reduced the amount of equity that seniors living in higher-valued homes could access. We believe these new limits will have a significant impact on the quality of life and provide more relief to those seniors who need the help especially in today’s turbulent economic environment.
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.
Darryl Hicks, Vice President,
CommunicationsNRMLA
--------------------------------------------------------------------------
AND....MORE INFORMATION ON REVERSE MORTGAGE INCREASE
New FHA Reverse Mortgage Lending Limit Clarified: Perfect storm of economic conditions and longer life expectancy necessitates need for deeper examination of financial options in retirement.
Oakland, Calif. - Oct. 02, 2008 -The Federal Housing Administration (FHA) clarified today that the new nationwide reverse mortgage lending limit is $417,000. The new lending limit will make reverse mortgages a viable option for many homeowners previously excluded from the market by the current economic environment.
With retirement budgets squeezed by the economy and falling home values eroding what is often a retiree's biggest asset, a reverse mortgage could be a viable way to unlock the equity that remains in a senior's home.
The new S&P/Case Shiller home price index is further evidence of this "Senior Squeeze." The most recent index for July 2008 illustrated a continued drop in home prices nationwide. Home prices have declined an average of 20% since the market's peak and continue to slide month to month. For seniors, they may never see their homes reclaim that value in their lifetime. There is no segment of the population hit harder then seniors when it comes to home value as an asset.
"What new lending limits provide to seniors, declining home values are slowly taking away," said Eric Bachman, founder and CEO of Golden Gateway Financial. "With the changes created by this legislation, the worsening economy, and the continued reduction in home values, it is more important than ever for seniors to educate themselves about the potential benefits of a reverse mortgage."
A reverse mortgage allows individuals 62-years or older who own their homes to secure up-front cash, ongoing monthly payouts, or a combination of the two from a lender. No credit evaluation is required for a reverse mortgage; the only stipulations are that the owner remain in the home, pay the property taxes, and properly maintain the property.
And because a reverse mortgage is a non-recourse loan, borrowers will never owe more than the current market value of their homes, (meaning the lender cannot go after any other assets of the borrower) effectively protecting their heirs from debt (and allowing them to inherit all other assets without worry.)
Published by Golden Gateway Financial, California
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