HUD Publishes New HECM Loan Limit Mortgagee Letter, Let The Apps Begin

image Today HUD published Mortgagee Letter 08-35 which establishes a new national loan limit of $417,000 for all HECM loans.  According to the ML, lenders must use the new national mortgage limit and calculate the loan origination fee using limitations established by HERA, and new policy guidance issued by FHA, when re-calculating HECM loans that did not close prior to October 13, 2008.

According to the ML, Section 214 of the National Housing Act permits mortgage limits for all areas of Alaska, Guam, Hawaii and the Virgin Islands to exceed the mortgage limit by up to 150%. The new HECM national mortgage limit of $417,000 effectively raises the mortgage limit in all of these areas except 1) Hilo, Hawaii; 2) Honolulu, Hawaii; 3) Kappa, Hawaii; and 4) Kahului-Wailuku, Hawaii. Enforcement of the new national mortgage limit would effectively reduce the mortgage limits in these areas; therefore, they will continue to operate under the current mortgage limits as shown below.

MSA Name MSA Code County Name County
Code
State One-Family
HILO, HI (MICRO) 25900 HAWAII 001 HI $470,250
HONOLULU, HI (MSA) 26180 HONOLULU 003 HI $544,185
KAPAA, HI (MICRO) 28180 KAUAI 007 HI $544,185
KAHULUI-WAILUKU, HI (MICRO) 27980 MAUI 009 HI $544,185

Mortgagee Letter 08-35

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  • Bank of America was taking apps and funding HECMs at the new limits as of 10/20/08. I feel sorry for anyone who missed out on two weeks of getting a jump on the competition!

  • Aloha RMD,

    Does this sentence in the 8-35 mortgage letter mean that these rates may increase or decrease SOON?

    “The rates shown for these areas are based on current mortgage limits and are subject to change upon publication of newly calculated mortgage limits which will be published in a new mortgagee letter in the near future.”

    Mahalo nui loa, Dawn Smith

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