New Reverse Mortgage Loan Limits Update

image The National Reverse Mortgage Lenders Association (NRMLA) just sent out an email confirming that the new HECM loan limit will be $417,000.  Right now the target date is November 1st, but this is not a set deadline, just a target date.  NRMLA also expects FHA to increase the floor on the origination fee to $2,500, up from $2,000. 

I’m being told from people at the MBA conference that one of the key reasons HUD didn’t raise the new loan limit to $625,000 is the private sector. HUD wants to leave a segment of the reverse mortgage business to private sector jumbo products.  Like it or not I think their reasoning behind the decision makes sense.  Right now the HECM has almost 100% market share and I’m sure HUD would like to see this come down over time.   

According to NRMLA, there will be a mortgagee letter published shortly to provide additional details.  Below is some more background provided in the announcement NRMLA sent out this morning:


There was some debate within HUD to consider area limits at 115% of area median home value, with a floor of $417,000 and a cap of $625,500. Ultimately, the interpretation was determined that the new legislation will be a $417,000 loan limit. As many of you recall, this was the original limit embraced by the industry. As NRMLA requested a more liberal interpretation to $625,500 in high cost areas, the complexity of the bill’s language created much debate and ultimately this final decision. Nonetheless, we are pleased with this major milestone for the industry.

A majority of U.S. counties have lending limits at the existing floor (currently $200,162), which has drastically reduced the amount of equity that seniors living in higher-valued homes could access. We believe these new limits will have a significant impact on the quality of life and provide more relief to those seniors who need the help especially in today’s turbulent economic environment.

These are all positive developments for the reverse mortgage industry and the clients we serve. And as HUD moves toward the implementation of many other important aspects of the housing bill including the new purchase product and co-op lending, we look forward to continuing to report on additional developments in these areas in the near future.


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  • I am shocked at the limit. I cannot believe they made us wait two months for something that is absurdly simple and ridiculously unhelpful in any high-cost area where the limit was aleady $362,790. I am terribly dissapointed.

  • I am very disappointed in Brian’s decision to not help our seniors. 1/2 of the clients that were waiting for the LL increase, will not be able to be helped. I am not surprised by Brian’s decision however. When he made us all employee on 3-1-07, he was taking IRS’s job away from them and making the decision all on his own, so why wouldn’t he not listen to Congress and just interpret the Housing Bill as he saw fit. NRMLA was no help whatsoever in the negotiations, despite their bold advertising email today promoting themselves and explaining what a HECM is and the different ways you can take a distribution????

  • Where exactly are all these private sector jumbo loan options for borrowers in high cost areas like California? I could see this argument if these options were out there. Yet the jumbo market is all but dead with NO signs of life on the horizon. The problem is, many seniors in CA have traditional mortgages too large to fit the formula when the loan limit is $417k. These are not frivolous people. Just average folks trying to find any way they can to retire their debt so they can keep up with health care costs as their income and savings shrink.

    A very bad decision on the part of HUD and whoever was lobbying them.

    Chrys Barnes

  • I am disappointed the Department chose to wait more than two months after the legislation was signed by President Bush to announce the new HECM limit. Apparently, it will not take effect until three full months after the date on which the legislation was to take effect immediately. Either NRMLA was impotent in its efforts to secure the timely implementation of the higher, nationwide HECM limit, or it sought to serve the interests of a handful of large, HECM servicers who dominate its board of directors, who fear the portfolio runoff that will result from its implementation. I am further disappointed the Department has not yet published mortgagee letters implementing HECMs for purchase and financing for co-ops. Hopefully, the next Administration will implement the higher HECM limits that were passed by Congress.

  • That’s just NRMLA being NRMLA. Cancel your membership; maybe then and only then, will it lobby for the better ineterests of the senior population and not its board members, as stated above by Mr. King on 10/3/08 at 12:57PM.

  • I can’t believe that there is not more outrage amongst the Reverse Mortgage community. NRMLA had been saying that they didn’t want a quick response of a $417,000 national limit and they were working with HUD to get a better deal. We ended up with the worst possible interpretation and we waited two months for the bad news. It is absurd.

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