Reverse Mortgage Loan Limit Increase Included In New Stimulus Plan

image Last week the National Reverse Mortgage Lenders Association announced that the draft of the economic recovery bill released by the House of Representatives contains a provision, which was inserted in response to a request that came jointly from NRMLA and AARP, that would set the single national loan limit for HECM at a higher level than $417,000–for the balance of 2009.


For mortgages for which the mortgagee issues credit approval for the borrower during calendar year 2009, the second sentence of section 255(g) of the National Housing Act (12 U.S.C. 171520(g)) shall be considered to require that in no case may the benefits of insurance under such section 255 exceed 150 percent of the maximum dollar amount in effect under the sixth sentence of section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)).


According to the email, it would bring the HECM loan limit to 150% of the Freddie Mac limit, or $625,500. If the Freddie Mac limit changes, the HECM limit would change commensurately.  This change is being offered as a temporary measure, thru 2009 only, because it is part of an emergency economic stimulus package. A permanent change would have to be enacted through a more appropriate housing bill.

This bill must still be marked-up in Committee, then brought to the House floor for debate and a vote. After that, it must go through the Senate, so it still has a way to go.  NRMLA needs everyone support in getting this done, so I encourage everyone to support the organization if you’re not a member.  

NRMLA’s members have access to information about its recent meeting with the Presidential Transition Team, the Government Accountability Office (GAO), and other important reverse mortgage policy issues that are important to your business.

National Reverse Mortgage Lenders Association

Join the Conversation (0)

see all

This is a professional community. Please use discretion when posting a comment.

  • Not trying to be negative and I hope I am wrong but this sounds very familiar. We just went through all of this for the November bill and it took over a year to finally go through. Still today not all the issues passed in that bill are in place (Co-ops). Now we have to beg again…why couldn’t AARP and NRMLA get it right the first time? Then it would be a permanent limit of 625K now? Sounds to me they have realized they screwed it up and are scrambling to correct it. Even though it would only be a temporary increase.

  • Yeah, I think I’ll run right out and notify all the borrowers I just refinanced about this. Took over a year to get it all done last time. And the NRMLA/AARP partnership really worked out well for us last time, right? AARP is still trashing us every chance they get.

  • In response to John Doe he is right on the money with the first part of his statement but AARP & NRMLA getting it right the first time had nothing to do with it. The 625K limit was in the bill but I remember a statement by FHA (and correct me if I’m wrong) that they did not want the higher limit because they wanted the lenders to have their proprietary products for the higher value homes. (laughable)
    Also, I’m am speaking to loan officer’s who are actually having customers go through counseling in anticipation of the higher limit. We must have short memories. The first time around the reverse mortgage provision was taken out of the stimulus package because we were in such dire need that they just wanted to get a bill passed.
    Today we are beyond dire need and don’t be suprised if this provision is taken out again to push a bill through quickly!

  • I’m one of those ” Seniors ” caught between a rock and a HECM place. I have not trusted AARP since their endorsement of Hillarycare back in the early 80’s.

    We are sitting on that bubble of home value depreciation combined with market share loss with retirement investment. We lost 30% home value and 20% retirement funding. I’m not whining, many folks my age ( 70+ ) are getting hit like this, some much worse.

    An increase in the reverse mortgage limit will probably save our home, which we have worked all our lives to retire in. We were not given a free ride to purchase the home, no shortcuts or creative financing. Our credit rating was 766 and still is. We took out an equity loan and put every cent back into the home. With refinancing we paid off the equity loan and settled in with a comfortable 30 year fixed @ 6.25%. A year later our home had decreased in value to where we are barely keeping our heads above going upside down. Our retirement income dropped 30% and selling our home at a loss was not an option.

    So you tell me…where did I go wrong..? I wasn’t greedy, I wasn’t biting off more than we could handle…I had no warnings from the government, financial advisor, folks in real estate…nobody. So if I sound pissed, its probably because I am. I know this forum is for people in the reverse mortgage business…I just wanted to let you know how some of us out here are looking to a reverse mortgage as their last option to keep their home.

  • what about reverse mortgage purchase whic has now come in effect we are capped at 6000. Realtors can charge 6 or 7% commission. so on a 625,000=36, 6% we are capped at 6,000 some thing Nrmla dosen’t figuer. We do the be the work on the pruhhrchase they find the property,
    Plus interest changes daily it seams and we end up paying to close a loan,after we quoted a rate and thereare times we have to eat cost because, with higher margins less money for borrowers. We are now at 3.25% margin which end up a hopa loan.

  • Good day,

    I look at this artical and it makes me wonder why our legislators make everything so complicated. Now they are talking about using a 150% times the Freddie Mac limit, maxed out at $625,000. No, $417,000 flat limit (Easy to understand)was to simple for our legislators screwed up minds. Instead of increasing the $417,000 in high caost area’s like California with a max of $625,000, our great legislators have to put everyone in a tizzy again. When will it ever stop?

    Have a good day,

    John A. Smaldone

  • will they rasie our cap 6000 for all the extra work we do going back for redisclosures, Loans falling off do to apprsail value . We ar earning less and cost us more. MIP fees going up, appcoming in low. Apprsailes fees higher all 3rd party fees going going up except our fees.

string(111) ""

Share your opinion