Mar 08 2008
HECM Reverse Mortgage Loan Limit Stays Put For Now
The much-anticipated Economic Stimulus Act of 2008 that has allowed HUD, on March 6th, to increase the FHA loan limit has specifically excluded the Home Equity Conversion Mortgage (HECM reverse mortgage) from any increase. The FHA loan limit for reverse mortgages will remain at $362,790 for counties with high home values and as low as $200,160 for counties with lower home values. Most densely populated counties in California have a HECM reverse mortgage loan limit of $362,790.
The FHA loan limit is the amount of home value that FHA will recognize in calculating the amount of money that a senior will qualify for under the HECM reverse mortgage program. For example, if a senior’s home that is located in a high-value county, appraised for $400,000, they will qualify for the exact same amount of money as if their home appraised for only $363,000. But if the appraised value is below the county’s FHA reverse mortgage limit, then the senior will qualify for proportionally less money.
What does this mean for seniors? If you were waiting for an increase in the HECM loan limits, don’t hold your breath. The idea is still being kicked around in congress, and could be put into the FHA Modernization bill, but it does not seem to be high on any congressmen's priority list. I think they’re too concerned about saving all the homeowners who are facing foreclosure.
