Bigger is Better: Reverse Mortgage Loan Limits Extended through 2012

The current maximum claim amount of $625,500 for Home Equity Conversion Mortgages (HECMs) has been extended through 2012, according to the Department of Housing and Urban Development (HUD).

When President Obama signed the Transportation, Housing, and Urban Development (THUD) spending bill into law on Nov. 18, effectively re-raising FHA-insured forward loan limits from $625,500 to $729,750, lenders were left wondering the plight of reverse mortgage loan limits.

Although they had previously been extended through the end of December 2011, the possibility remained that the limits would revert back to their former ceiling of $417,000.


Now, however, it looks like some lenders, especially those in high-cost areas, have gotten an early Christmas present. A Nov. 23 FHA update reminds lenders that the maximum claim amount for HECMs is not affected by the THUD spending bill (HR 2112), and says the limit remains at $625,500 as stated in Mortgagee Letters 10-40 and 11-29.

“This loan limit will remain the same for 2012 and will be included in the pending Mortgagee Letter,” says the update.

Written by Alyssa Gerace

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  • This is truly good news.  This is a real help to the industry as a whole and as noted specifically for those lenders doing business in those states where such homes are in more abundance.

    However, the bad part about this announcement is that the lending limit is subject to the whims of HUD.  We need a law which makes the $625,500 the permanent national lending limit.  The law should include mandated increases based on home price indices.

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