HECM loan limits are likely to remain at their higher level of $625,500 through 2012, a Department of Housing and Urban Development official told attendees of a Texas Mortgage Bankers Association conference on Thursday. The loan limit issue, which was raised in several sessions of the Texas MBA’s Reverse Mortgage Day 2011, has been a topic of industry-wide concern in recent weeks and months.
Currently extended through December 31 of this year, the higher loan limit came into effect as a stimulus effort in 2009 and was initially scheduled to expire on September 30. The limit, which was set previously at $417,000, has had a greater industry impact in areas with relatively higher home values.
With respect to the loan limits announced in November, barring any dramatic change, “We expect that the loan limits will continue into next year,” Karin Hill, director of the Office of Single Family Program Development at HUD, told conference attendees on Thursday.
National Reverse Mortgage Lenders Association President and CEO Peter Bell also made note of the current HECM loan limits, explaining that the extension through December 31 was an effort by HUD to get back on schedule of a year-end expiration. While HUD has the authority to extend the loan limits for the HECM program, it does not possess the same authority to extend the limits for forward loans, which will expire in most areas on September 30.
A recent report from Ibis Software Corporation indicated that as many as 10% of future HECM loans could be impacted if the limit falls back to $417,000.
Written by Elizabeth Ecker