Stimulus Bill Compromise Includes Higher Reverse Mortgage Loan Limit


When the Senate passed its version of the economic stimulus bill earlier this week, people in the industry were concerned because it didn’t include a provision to raise the HECM loan limit.  Yesterday, members of the U.S. House and Senate participated in a conference committee to work out the compromise for the stimulus package.

According to an email that RMD received from Peter Bell, President of NRMLA, the committee saw fit to retain the House language which adjusts the maximum claim limit for HECMs to "150% of the Freddie Mac limit," currently that would be $625,500, for the balance of this year. 


Over the next few days the conference report must be accepted by votes in both the House and Senate.  Then, the bill can be sent to President Obama for his signature.

There are many questions about how this will be implemented; the most asked one, of course, being, "when?" There are no answers to this yet.   A lot has to be done to implement this new law. It is several hundred pages and affects every aspect of our economy, including many areas, besides HECM, that HUD will have to implement.

To ensure that your company is kept up to date on how the economic stimulus bill is implemented, make sure your company is a NRMLA member.  Its delegates are kept updated through timely and detailed memoranda at strategic points while policy decisions get made. All members of the industry are invited to become members and receive this information and insight. For info, check out

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  • NRMLA expends more than “political capital” on such items; we spend real capital! Those in the industry should know that we have worked on the single national loan limit for several years. We have expended countless hours of staff time and paid hundreds of thousands of dollars for assistance from our legislative consultants. While some readers of RMD occasionally gripe about dues and event fees at NRMLA, if we didn’t have that revenue to carry out our activities, your loan limits would still be $200,000-$362,000 (or less), not $417,000, and soon $625,500!

    As far as HUD’s implementation, they fully understand the importance of doing it quickly. However, they are also dealing with the overall foreclosure crisis, re-starting the multifamily affordable rental housing sector which has ground to a halt, implementing numerous emergency provisions in this new bill, etc., in addition to our HECM provision. So, they have a lot to do — plus brand new leadership that has to sign-off on everything.

  • One thing that was left out of the bill was the revision of the bankruptcy law allowing judges to adjust loan balances to reflect the real value of a seniors home.
    I have seniors who are facing foreclosure because the reverse mortgage amount will not cover the balance owed
    and the banks will not take a short payoff. The banks have sucked all the money the seniors had in savings and what they borrowed making payments. I think a lot of these loans were made by predatory lenders.

  • Good morning,

    I am happy to see the lending limit increase will still be part of the stimulus bill? However, what I don’t like is the fact it is tied to Freddie’s index and a multiplier is used. The main objection I have to the method they are using, is that it is temporary.

    Our legislators have a unique way of fleecing the American public. I see this unfolding as one of those we eventually will be fleeced on.

    If this was a sincere move on the part of our governmental officials to help our seniors, they would have had a permanent, non-formula based increase. Like everything else, our great politicians know all that their is to be known about everything. They think we, the people are naive and do not see through their motives!

    Thank you,

    John A. Smaldone

  • I think that comparing the implementation of the HERA provisions that impacted the HECM program (including the $417,000 loan limit) to the HECM provisions in this bill (an increase in the loan limit to $625,500, once passed) is flawed. The delay in implementing the HERA provisions was due to confusion over the language describing the new loan limits – in fact, three different interpretations came from HUD lawyers, and it was that reason alone that the loan limit increase (and the new origination fee formula) was delayed.

    While we have all learned that “anything is possible” with an over-worked and under-staffed FHA, I am very confident that this change will be implemented much more quickly.

    Peter, Liz, Darryl, and staff are working day and night (no exaggeration) on your behalf – if industry participants can assist, they will let us all know what we can do to help get these changes implemented.

  • John,

    The political reality here was simple: we would NEVER have been able to get a permanent increase in the loan limits this year. The only chance we had for 2009 was to have a temporary increase (although I am very confident that we will get an extension if not a permanent change before the sunset provisions kick in), and to link it to the Economic Stimulus legislation.

    Just wanted to make sure you (and all other RMD readers) are well informed on this issue.

  • Joe,

    I appreciate your feed back. Lets you and I visit this situation again in year 2010. I understand what you are saying, I also admire your confidence in the system. I hope I am wrong and you are right. Time will tell, that is why I say, lets you and I visit again in 2010. Have a great day Joe.


    John A. Smaldone

  • I’m certain there will be many seniors that will benefit from this temporary increase. I also think many will be offended by the cost to do the loan $12,500 for MIP $6,000 in origination and another $2,500 in third party fees adds up to $21,000 in closing costs.

    I appreciate that the MIP is directly associated with the value of the home and HUD need’s to collect enough funds to make sure the insurance “kitty” has plenty of dollars in it for potential future payout.

    But I think it’s time for this formula or the way that these funds get collected to get overhauled. Obviously the longer the loan is in place the higher the risk to HUD, perhaps adding more of this to fee to the rate would spread out cost to borrower and make it more realistic.

    Does anybody else have some viable solutions to this issue?

  • Just a note regarding Jim’s comment re: the failure to address “revision of the bankruptcy law allowing judges to adjust loan balances to reflect the real value of a seniors home.”

    The bankruptcy attorney groups have all been lobbying strongly for that inclusion and still have hopes of it being included in future legislation. This legislation is essential – not only for seniors – but for all home owners attempting to obtain a loan modification. We have no leverage at all against the companies who created the mortgage crisis unless we can promise that if the mortgage company will not modify the loan – the bankruptcy judge can and shall.

    It is now a matter of lobbying your federal legislators to promote the importance of the mandatory “cram-down.”

    Thank you, again, RM Daily for having this informative web site and newsletter. I will let you know if I hear of any updates on the bankruptcy issue.

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