Reverse Mortgage Loan Limit to Rise Again in 2018

For the second year in a row, the lending limit for federally backed reverse mortgages is increasing.

The Department of Housing and Urban Development on Thursday announced a maximum claim amount of $679,650 for calendar year 2018, up from $636,150 this past year.

HUD arrives at that figure by calculating 150% of the Freddie Mac national conforming limit of $453,100; the Federal Housing Finance Authority, which establishes conforming limits for Freddie Mac and Fannie Mae, announced that figure late last month.

Advertisement

HUD’s numbers also apply to certain areas that receive exceptions to Freddie Mac limits, including Alaska, Hawaii, Guam, and the U.S. Virgin Islands.

Under the Housing and Economic Recovery Act of 2008 (HERA), HUD and the Federal Housing Administration peg forward lending limits at 115 precent of median home prices, though the exact figures can vary by region — specifically in certain high-cost areas of the country. Under the National Housing Act, however, the lending limit for Home Equity Conversion Mortgages must remain uniform throughout the country.

On the forward side, loan limits are set to rise next year in 3,011 counties, with HUD and FHA citing increases in median housing prices.

HECM maximum claim amounts had remained flat for several years leading up to 2017, when HUD and FHA bumped them up to $636,150 from $625,500. The new figure will take effect for loans with case numbers assigned on New Year’s Day through December 31, 2018.

For more detailed information about the new limits, check out HUD’s Mortgagee Letter 2017-17 and its loan limits page.

Written by Alex Spanko

Join the Conversation (9)

see all

This is a professional community. Please use discretion when posting a comment.

  • BE CAREFUL — NOT ALL POST 2017 CLOSINGS ARE ELIGIBLE FOR HIGHER LENDING LIMIT OF $679,650

    As stated in the article, eligibility for the higher lending limit is based on the date that the case number is assigned, not the date the HECM closes. To protect eligibility, delays in processing apps may be required as will rescission on case numbers already assigned where the loan has not closed. Also be aware that canceling a case number that has an assignment date before 10/2/2017, means the borrower will be subject to the rules of Mortgagee Letter 2017-12; so in this case, be sure the borrower understands what is at stake.

    Originators may want to consider cancelling case numbers assigned before 1/1/2018 if the appraised value of the collateral is or could be above the present lending limit of $636,150. There are many reasons to rescind the number and many reasons not to rescind; the same reasons apply to delay obtaining a case number as well. These reasons need to considered with borrowers. If loans are near closing that could be favorably impacted by a $679,650 lending limit, delaying the closing while borrowers decide their next step, should be considered.

    Whatever decision is reached, a notation should be made to the file documenting consideration of the impact of Mortgagee Letter 2017-17.

  • This is great news for Christmas, however, as Jim veal pointed out, “Be careful, not all post 2017 closings are eligible for the higher lending limits”!

    In fact, none are. The new limits of $679,650 don’t even go into effect on any loans with case numbers pulled prior to January 1st, 2018! Only on loans with case numbers pulled after the date of January 1st, 2018!

    John A. Smaldone
    http://www.hanover-financial.com

    • John,

      Sometimes you lose me.

      I think James got it right. For the HECM to be eligible for a lending limit of $679,650, the HECM must close after 2017; however, there is a further requirement that HECM also have a case number assigned after 2017 as well.

      So I do not get how “none” closing after 2017 are eligible for the higher lending limit. If a HECM closes before 2018 there is no way it can qualify for the higher limit. It is only if it closes after 2017 that it will qualify and then it must also have received its case number after 2017 as well.

      Please explain what you mean by “in fact, none are.”

      • John,

        Again you don’t get it.

        That a HECM closes after any point in 2018 has absolutely nothing to do if that HECM qualifies for the higher limit.

        All the Mortgagee Letter requires is the following: “The HECM maximum claim amount limits transmitted by this Mortgagee Letter are effective for case numbers assigned on or after January 1, 2018.”

        You state: “”Be careful, not all post 2017 closings are eligible for the higher lending limits”! You follow it up with: “In fact, none are. The new limits of $679,650 don’t even go into effect on any loans with case numbers pulled prior to January 1st, 2018!”

        We disagree. All HECMs closing in 2018 will qualify for the higher lending limit UNLESS their case assignment is dated before 1/1/2018, period.

      • The Positive Realist,

        I got you finally, I have been brain dead on this for some reason. I appreciate you for pounding it to my head Bro!

        John

      • John,

        All the Mortgagee Letter requires is that the HECM have a case assignment date after 12/31/2017 and that is it.

        All HECMs closing after 12/31/2017 will receive the higher lending limit UNLESS the related case number was assigned BEFORE 1/1/2018.

        You seem to be playing mind games when a simple statement would do.

string(94) "https://reversemortgagedaily.com/2017/12/07/reverse-mortgage-loan-limit-to-rise-again-in-2018/"

Share your opinion