Reverse Mortgage Loan Limits Could Fall Without Support from Congress

With Congress expected to consider a Continuing Resolution to fund government operations until it returns in November this week, the extension of higher loan limits for the Federal Housing Administration, Fannie Mae, and Freddie Mac remain up in the air.

“These limits continue to be a key component of our economic recovery and should be extended until there are signs of sustained strength in the nation’s housing markets,” said the Mortgage Bankers Association in a statement.  “If the loan limits are allowed expire at the end of the year, it will negatively impact nearly every community in the country.”

Both the House of Representatives and the Senate Appropriations Committee have approved bills that extend the higher conforming loan limits through September 30, 2011.  However, an extension to the end of 2011 is important in order to synchronize with the statutory requirement that loan limits be set on an annual basis.


The loan limits were temporarily increased beyond the conforming loan limit as part of the Economic Stimulus Package in 2008, which included raising the HECM loan limits to $625,500.

According to our sources in Washington, there is some opposition to extending the limits but they’re confident it will be resolved.  Without a resolution, the HECM loan limit would likely fall from $625,500 to $417,000 next year.

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  • To be clear the current lending limit of $625,500 will expire on December 31, 2010. Once again no one expects Congress to pass a HUD Appropriations Bill for the coming fiscal year despite overwhelming numbers in the Congress and a President of the same political party. There may be more understanding of the situation this year with only 59 Senators in that camp compared to 60 last year but the Senate is composed of just 100 Senators.

    Why no bill can be passed or why Congress would choose wrong dates in both bills for the extension of lending limits is odd at best. Again this is not a situation where the party opposing the President wrote these bills to embarrass him; these are products of his own political party. So why are things going so badly?

  • It is September 27th and the MBA is just speaking out? Do they really think Congress will do anything before election recess? If the Republicans do not gain control of either the House or the Senate after the election, the likelihood of a productive lame duck session of Congress is nil and none.

    Last year there were some real disputes over the MBA becoming the champions of the reverse mortgage industry. Yet look at the situation today. The MBA is not showing much spunk even about FHA forward loans. Of course, there could be much going on behind closed doors but if there is, it certainly is not effective for such a supposedly strong organization. It is no tiger. Well, OK may be a paper tiger.

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