A Department of Housing and Urban Development spokesman confirmed today that HUD plans to release guidance on loan limits, including those for reverse mortgages, by the end of the month. The loan limit extension has been an item of debate in Washington and beyond, involving players such as the Federal Housing Administration, members of Congress and vested industry groups.
The loan limits for the Federal Housing Administration’s HECM program were raised from $417,000 to $625,000 in February 2009 and were extended last year, with an expiration date of Oct. 1, 2011.
Congress, which has the authority to intervene and could prevent the higher loan limits from expiring, is in recess through September 5. Other policymakers have weighed in on the issue in recent weeks including two congressmen, John Campbell (R-Calif.) and Rep. Gary Ackerman (D-N.Y.), who introduced a bill aimed at extending the current conforming loan limits for two years. Also in July, HUD Secretary Shaun Donovan told Bloomberg News that the loan limits could return to their pre-crisis levels without taking a toll on the housing market.
While it remains to be seen whether the loan limits will be extended or will expire, the HUD spokesman confirmed to RMD that the guidance will come by the end of the month.
Many in the reverse mortgage industry have speculated that the loan limit expiration would have a negative impact on lending in areas such as California where many homes are valued above the lower loan limit of $417,000. The National Reverse Mortgage Lenders Association and other trade groups have supported an extension of the loan limits.
Written by Elizabeth Ecker