Home Equity Conversion Loan limits set by the Department of Housing and Urban Development are likely to remain in place at their higher levels, FHA Acting Commissioner Carol Galante told reverse mortgage lenders on Tuesday. Appeasing concerns over the loan limit extension expiring on December 31, the acting commissioner stated that HUD does not have plans for loan limits to return to their pre-recession levels.
“I know there has been some conversation about loan limits for the HECM program,” Galante said in a presentation before attendees of the National Reverse Mortgage Lenders Association annual convention in Boston this week. “Because of what happened in the forward program, there’s perhaps some uncertainty as to where HUD is with respect to the HECM loan limits. We don’t have any immediate plans to make any changes with respect to loan limits at this time,” she said.
The loan limits, currently set at $625,500 for HECMs, were raised as a stimulus effort in 2009 and were recently extended through December 31, 2011 after a series of extensions. Lenders in areas with high home values say their business would be impacted seriously if the limits returned to their pre-recession levels as was done for forward lending.
“We have more to do in the HECM program,” Galante said. “At this point we want to focus on those things we really feel are important to focus on in terms of ensuring the book of business stays in a good place. Messing around with the loan limits is not something we need to do to address that issue.”
Set to expire at the end of the year, the higher loan limits can be extended through a mortgagee letter from HUD.
Ibis Software Corporation estimated in August that if the HECM loan limit returns to $417,000, as many as 10% of HECMs could be impacted by the change.
Written by Elizabeth Ecker