GOOD NEWS: Stimulus Bill May Improve Reverse Mortgage

REVERSE MORTGAGE LIMIT MAY BE RAISED TO $625,500

Hey all......good news. I just read that the Obama Stimulus Bill includes a provision for the reverse mortgage to have a top limit of $625,500...raising it from $417,000 for the rest of 2009. To make the increase permanent, it would have to be approved again, to be permanent, by the Congress later in the year.
But, it's a start...and it's in the right direction!

So, let's watch the stimulus bill closely and see what the Senate does with this boon to senior homeowners.

So many homeowners, because of the housing bubble, and in spite of the downturn in the market and lowering of home values, still need this higher limit in order to get enough equity out of their property to pay off current loans.

As an example... if you have a home that is worth $525,000 and you are 65 years of age, here's what you'd get on a Reverse Mortgage capped at $417,000 or at $625,500.

With the $417,000 loan cap, age 65, today's interest rate: A Gross Loan of $270,665. With a $625,500 cap your loan would be approximately $405,900, based on today's RM formulas. That's a huge difference! Huge. And it would provide for thousands and thousands of senior citizens being able to access financial security. Probably such a huge difference, that a letter to your senator (since the Stimulus Bill is now in the Senate Chamber) would definitely be in order.

Virginia Senators:


Warner, Mark R. - (D - VA) (202) 224-2023
B40C DIRKSEN SENATE OFFICE BUILDING WASHINGTON DC 20510

Webb, Jim - (D - VA) (202) 224-4024
144 RUSSELL SENATE OFFICE BUILDING WASHINGTON DC 20510



Here's the notice from the Reverse Mortgage Daily:

Yesterday the House of Representatives approved President Obama’s economic recovery plan with vote of 244-188. The text of the bill does include the reverse mortgage provision which was added in response to a request that came jointly from NRMLA and AARP. The provision would set the single national loan limit for HECMs at a higher level than $417,000–for the balance of 2009.

SEC. 12004. FHA REVERSE MORTGAGE LOAN LIMITS FOR 2009.
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)).

According to the email, it would bring the HECM 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.