New Lending Limit Makes Reverse Mortgage More Attractive
By admin at 14 November, 2009, 7:42 pm
On February 24, 2009 The U.S. Department of Housing, & Urban Development (otherwise known as HUD) published Mortgage Letter 2009-07, which is telling of the official raising of the national limit for HECMS, otherwise known as Home Equity Conversion Mortgages. So for now at least until the finish of the year (December 31, 2009) the new limit is $625,500 up from the $417,000 that it was previously. So what does this mean, & exactly whom does it effect? Well in general it means that our seniors can now access more equity at a lower cost. “The new loan limit & other provisions will permit seniors to receive more benefits at a lower origination cost to meet their retirement needs.” Another thing is that this increase also includes all areas of the continental United States, as well as Alaska, Hawaii, Guam & the Virgin Islands. They will all operate under the $625,500 that is now in place.
That may not sound like much depending on where you live, but six in six seniors spend 30 percent or more of there monthly income on housing expenses. Another way this works is that Regulators are paying closer attention to what is going on, since it is not allowed for a person that originates a reverse mortgage loan to also sell you any other financial or investment product from the proceeds that you have obtained from your reverse mortgage loan. So part of the bill was that HUD mandated that a “firewall” be established between providers of reverse mortgage loans, & providers of insurance or other financial products. So a round of applause as they congratulate lawmakers that have wisely selected to make this mandate part of the HECM (HOME EQUITY CONVERSION MORTGAGE) reverse mortgage loan amendments.
How did this all come about? Well it is all part of a housing bill that was signed in to a law to try & boost the struggling housing market, as well as stabilize Fannie Mae, & Freddie Mac. That is it in a nutshell without getting to technical. Housing costs are a major issue for seniors, retirees on fixed incomes. As a result of our economy, retirees, & seniors whom are still working, have had to take a longer look at their retirement designs. It is a lot harder for Americans over 55 to recover from the crisis of financial loss. According to statistics, 70 percent of homeowners 65 & over own their homes outright. Which means the equity they have can actually become a new nest egg. That will bring some relief for senior homeowners. According to Census data $571 a month is the median amount for seniors & that is for housing expenses, as well as utilities, & taxes.
All efforts to protect seniors & safeguard this loan product so that it remains a viable financial planning tool, is welcome for those of us that wish to serve the senior community & their families over the long term. So paying closer attention & with the help of NRMLA, (The National Reverse Mortgage Lending Association) the combined efforts of the had a role in obtaining this higher loan limit of $625,500. With the passage of this program, those senior borrowers may now be able to receive much more money for whatever they need. The higher loan limit may generate an influx of new reverse mortgages.
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