The mortgage loan limit and max claim amount for for HECM loans will remain unchanged through December 31, according to a mortgagee letter issued today by the Department of Housing and Urban Development. ML 2011-29 specifies that the HECM loan limit of $625,500 will remain for all areas, including high-cost areas such as Alaska, Guam and the U.S. Virgin Islands.
“We’re glad to see FHA take this interim step. It eliminates uncertainty for loan applicants who might have been concerned about not getting their loans before the limits possibly dropped,” Peter Bell, National Reverse Mortgage Lenders Association president told RMD in an email. “Now, we need to focus on persuading HUD and/or Congress to retain this limit beyond calendar 2011.”
For forward mortgages, HUD states that the Federal Housing Administration will implement new single-family loan limits on October 1, which will reduce forward loan limits in the highest cost areas in the U.S., and will maintain current loan limits in most parts of the country.
The loan limits for the HECM program were raised from $417,000 to $625,500 in February 2009 and were extended last year. They were previously scheduled to expire on October 1.
Many in the reverse mortgage industry have speculated as to the negative impact a return to the previous, lower loan limit would have in areas with high-valued homes.
The loan limits could still change at the end of the calendar year 2011. Prior to the emergency loan limits, HUD would routinely adjust loan limits on a calendar basis.
“The only reason we adjusted our loan limits [last week] is because of a statutory expiration date at the end of the fiscal year,” said Brian Sullivan, HUD spokesperson in an email to RMD.
Written by Elizabeth Ecker