Updates on New Reverse Mortgage Loan Limit

It’s official, the reverse mortgage loan limits are now at $625,500 for the remainder of 2009.  I’ve received a bunch of questions about it, so here is a quick summary of readers questions:

Q.  Will Alaska, Hawaii, Guam and the Virgin Islands operate under a single HECM loan limit of 625,500?

A. Yes.

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Q. When can we start closing HECMs with the new loan limit?

A.  Wholesalers are waiting on confirmation from Fannie Mae, but at this time the earliest they would be ready is March 4th.

Q. Does the higher loan limit apply to HECM for Purchase?

A. Yes.

Q. Is there any change to the fee structure for HECMs?

A. No, HUD will continue to collect a 2% MIP upfront and .5% annually and the maximum origination fee will remain at $6K.

Q. Is there a calculator that I can use to run a scenario with the new loan limits?

A. Yes, IBIS provided a calculator for RMD readers.  See here.

Hope this helps, have a great weekend!

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  • Closed on a reverse mortgage on Dec.15th under the $417000 limit. My house was appraised at 741,000 dollars. How can I take advantage of the 625,000 limit
    without reapplying all over again and incurring those charges??

  • Can you explain what is happening in Texas in reference to the HECM Purchase program. I was just advised Texas does not allow HECM purchase loans (something about conflicting with the Texas Constitution). Can you research this for your readers in Texas, and let us know when we can expect to close HECM purchase loans in the Lone Star State.

    Thanks in advance for any light you can shed on this subject – I really enjoy reading your column everyday.

  • Sieg, your appraisal is good for 6 months and so is your counseling, so you will save that amount. Your rep may be able to reduce some fees for you but he still has to do the same amount of work as before. Keep in mind you could see 33% increase in accessible equity, that may be well worth it.

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