NRMLA Expects Mortgagee Letter For New Reverse Mortgage Loan Limits Soon

No Mortgagee Letter yet for the new single national loan limit for HECMs, but according to NRMLA’s latest alert we are getting close.  Yesterday, NRMLA sent an email stating that the Office of Single Family Housing hopes to complete drafting the Mortgagee Letters (one for loan limits and one for origination fee caps) and place them into the “departmental clearance” process this week.  The goal remains to send them out in time for a November 1 effective date or possibly a few days earlier.  

See below for other things NRMLA has learned:

  • The 150% multiplier used to calculate loan limits in Alaska, Hawaii, Guam and the U.S. Virgin Islands still applies. The Mortgagee Letter should provide that info.
  • Borrowers in the pipeline will be able to take advantage of the new loan limits, but the paperwork on their loans will have to be redone and a new application taken, dated after the effective date of the Mortgagee Letter.
  • Loans to borrowers in the pipeline for which new applications will be taken to utilize the new loan limits will, of course, be subject to the new origination fee limitations.

I’m also hearing that we are working with HUD to allow lenders to re-disclose new loan limits and fees instead of requiring them to sign all new loan documents.  If I hear anything else I will let you know.

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  • My question concerns the $625,000 limit for higher value areas. Because this law was passed by congress and signed by the president why doesn’t HUD implementing it? It seems to me HUD is not following the law. Thanks, Tom

  • While the new lending limits will be helpful, what is happening with the other parts of this bill that will effect the HECM program? Namely the purchase component of the bill. There is never any talk about this and I’m wondering when will this take effect.


  • I agree, the implementation and sometimes even the underlying law can actually hurt more than it helps. At our counseling agency we do a lot of counseling for seniors who either can’t afford to pay upfront or who don’t even own a credit card. They are totally frustrated because they have been shut out of most counseling options. I totally understand why Congress thought broker-paid counseling was a conflict but the unintended consequence has been to make things much more difficult for the senior.

  • Patty,

    Is there an organization that represents the counseling industry, like NRMLA represents lenders? I am sure your agency is not the only one experiencing this problem. A concerted and coordinated appeal to Senator McCaskill to find a solution would be helpful, especially if that appeal came from counsellors and counseling agencies. It would be helpful to make the same appeal to both HUD and NRMLA.

  • Jim, I don’t believe there is a formal organization that could take the lead on this but perhaps a few of our organizations that do a good deal of HECM counseling could send letters. Anybody who has an interest in doing this, please give me a call. My number is (312) 404-4346 our go on our website and drop me a note on there: Thanks

  • Adrian,

    You are not by yourself. However, with all of the work and stress of the current financial crisis, it is surprising how responsive HUD and FHA actually are. Unfortunately not only does HERA 2008 contain issues related to HECMs, it is loaded with other loan provisions.

    I know that Meg Burns has been very busy on several HECM provisions and getting them approved. One of them is the purchase provision. Here’s hoping to see more HECM Mortgagee Letters on HERA 2008 issued yet this month.

  • I’ve got to agree with Mr. Veale regarding HUD and FHAs reaction to HERA 2008. While I wish they would’ve done a few things different, reverse mortgages are such a small piece of the Bill they can only dedicate so much time to it.

  • Patty –

    Does your counseling agency accept payment on the HUD-1? Many of my clients are having problems with counseling agencies asking for payment up front. Also, what is the typical turn time with your agency?

  • Joe, we do accept payment on the closing statement of course we are happy to take it upfront too. We strive to keep our turnaround to 24 hours.sometimes seniors want a family member on the call so that can take a bit longer depending on their schedule.

  • Please check Mortgagee Letter 2008-35
    Please tell me if this is the authorization letter for reverse mortgage in Los Angeles California
    Lender’s Mortgagee to submit and fund reverse mortgages

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