August 2011

HUD Lending Limits and 2012

 Here is the remaining part of the article that discusses the continuation of the current HUD Lending Limits and their extension through 2012.  This is certainly very good news for the Real Estate market and any first time home buyers who would like to apply for an FHA loan.   Plus it is HUD Kespecially good news for seniors who will be able to take advantage of the higher limits when apply for a Reverse mortgage.

“The loan limits for the HECM program were raised from $417,000 to $625,500 in February 2009 and were extended last year. They were previously scheduled to expire on October 1.

Many in the reverse mortgage industry have speculated as to the negative impact a return to the previous, lower loan limit would have in areas with high-valued homes.

The loan limits could still change at the end of the calendar year 2011.  Prior to the emergency loan limits, HUD would routinely adjust loan limits on a calendar basis.

“The only reason we adjusted our loan limits [last week] is because of a statutory expiration date at the end of the fiscal year,” said Brian Sullivan, HUD spokesperson in an email to RMD.””

View ML 2011-29.

Written by Elizabeth Ecker

 

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Reverse Loan Lending Limit is Kept in Place

HUD has decided to extend the current lending limit of $625,250 for Reverse mortgages into the next fiscal year and that is very good news for everyone.   There has been a debate about reducing the limit to the previous  figure which was at $417,000 due to declining market conditions and if that had happened it would have had serious consequences for seniors and the Reverse loan industry.

If this had indeed occurred it would have been a serious blow to the senior community making it impossible for some to take advantage of the federal loan program because of the lower cap.   Appraised values would have been capped at $417,000 instead of the current lending limit and if a senior  has a large mortgage that needs  to be paid off and depending on how much they could qualify for  from a Reverse loan, they may not be able to do it and  that would mean they would have to continue making mortgage payments that they may not be able to afford and put them at risk for  foreclosure.

It is with a huge sigh of relief, to know that for at least another year we have the ability to continue to originate loans for seniors who need the higher lending limit to pay off  large mortgages they may have on their property and eliminate their loan payment.  And for the time being the higher limits will remain available but this could change next year and that’s why it’s important for seniors to explore this option now and not continue to wait and see what happens.

Following is an article that discusses this good news:

HUD  Extends $625,250  HECM Loan Limit Through 2011

The mortgage loan limit and max claim amount for for HECM loans will remain unchanged through December 31, according to a mortgagee letter issued today by the Department of Housing and Urban Development. ML 2011-29 specifies that the HECM loan limit of $625,500 will remain for all areas, including high-cost areas such as Alaska, Guam and the U.S. Virgin Islands.

“We’re glad to see FHA take this interim step. It eliminates uncertainty for loan applicants who might have been concerned about not getting their loans before the limits possibly dropped,” Peter Bell, National Reverse Mortgage Lenders Association president told RMD in an email. “Now, we need to focus on persuading HUD and/or Congress to retain this limit beyond calendar 2011.”

For forward mortgages, HUD states that the Federal Housing Administration will implement new single-family loan limits on October 1, which will reduce forward loan limits in the highest cost areas in the U.S., and will maintain current loan limits in most parts of the country.”

Part II on 8/27/11

 

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