Those of us in the Reverse Mortgage industry have been waiting for quite some time for the new lending limits that would apply to Reverse loans. When the stimulus package was signed by Pres. Bush, the news media failed to address that within that package was the Home Modernization Bill that directly effected Reverse loans by reducing the origination fee and increasing the amount of money that a Senior can receive by using a Reverse Mortgage.
There was discussion as to what the new national lending limit would be; $417,000, $625,500 or possibly the lower one being the “floor” whereas the higher figure would apply to major metropolitan areas. My feeling was, due to the nature of declining home values, that HUD council would be conservative in their approach and play it safe by using the smaller amount.
And, I was right. The new lending limit throughout the United States, is $417,000. This was announced by FHA Commissioner Brian Montgomery on Oct. 2nd. and that the effective date would be November 1st. but is not to be considered a “set deadline”.
Borrowers who have already started their loan application as of October, will receive the benefit of the new, higher lending limits, because their loan will be closing after November 1st. It will be necessary to print out new loan disclosures for them to sign, which will reflect the new and improved figures, etc., but that should be all that would be required from the borrower.
All of this is very good news for the Senior community. Due to the current economic difficulties, Seniors are struggling more than ever each month with their financial obligations. This will also relieve any stress that the children of Seniors are experiencing as well, as so many of them are assisting their parents financially and finding it very difficult.
The rush will be on for those who have been waiting to apply for the Reverse Mortgage and counseling is still required by HUD. I suspect that the agencies handling the counseling will be inundated with requests, so don’t hesitate to move forward with your loan application and enjoy having peace of mind.
It’s all good!