A look at Biden’s first week in office

This episode reviews last week’s inauguration of President Joe Biden, examining which housing issues the new administration has already taken action on.

Biden’s executive order will extend foreclosure moratorium

President Biden revealed his plan to sign 17 executive orders his first day in office, including am extension of the eviction and foreclosure moratorium to at least March 31.

If consumers aren’t holding lenders back, then who or what is?

The challenge for lenders and investors is understanding how to meet borrowers where they are without layering on risk or getting bogged down in third-party intermediation.

HomeBridge’s Brian White on diversity at a practical level

HomeBridge's Brian “Woody” White discusses ways to increase diversity within the housing finance industry.

Mortgage

FHA reverse mortgage limit set to rise in 2020

HECM limit increases for 4th straight year

Just as it did with forward mortgages, the Federal Housing Administration is increasing its maximum claim amount for reverse mortgages for 2020.

According to the FHA, the HECM limit will increase in 2020 to $765,600 from 2019’s level of $726,525.

This marks the fourth straight year that the FHA has increased the HECM limit. Just two years ago, the loan limit was $675,650, meaning the HECM limit has increased by almost $100,000 since 2018.

The HECM limit is based on 150% of the Federal Housing Finance Agency’s conforming loan limits for Fannie Mae and Freddie Mac, which were recently raised to more than $510,000.

But unlike Fannie and Freddie’s loan limits and FHA’s forward mortgage limit, there is no geographic variation for the HECM loan limit.

The reverse mortgage limit is $765,600 for all parts of the U.S., including the high-cost areas and the special areas of Alaska, Hawaii, Guam, and the U.S. Virgin Islands, where forward mortgage limits far exceed the rest of the country.

By definition, a reverse mortgage – also known as a Home Equity Conversion Mortgage, or HECM – is a financial product for homeowners 62 and older that allows borrowers to convert a portion of the home’s equity into cash without incurring monthly payments.

While the loans are made by private mortgage lenders, they are insured by the federal government, which guarantees that borrowers will never owe more than the house is worth.

And, for as long as the borrower lives, he or she can remain in the home so long as they make property tax and insurance payments, keep the home in good repair, and retain it as their primary residence.

The increase of nearly $40,000 over last year’s HECM limit means that borrowers will soon be able to extract more equity from their homes using a government-insured reverse mortgage.

It also might mean that more consumers could qualify for the loan.

Because the HECM requires borrowers to pay off an existing mortgage before obtaining the loan, some borrowers with high mortgage balances may not have been able to secure enough proceeds to qualify. Now, with a higher claim amount, there may just be enough money in the HECM loan to make it work.

According to the FHA, the new HECM limits are effective for case numbers assigned on or after Jan. 1, 2020, through Dec. 31, 2020.

Most Popular Articles

Biden’s executive order will extend foreclosure moratorium

President Biden plans to sign 17 executive orders his first day in office, including an extension of the eviction and foreclosure moratorium.

Jan 20, 2021 By

Latest Articles

Biden calls on HUD to address racial equity

President Joe Biden’s Tuesday orders include a memorandum that directs HUD to both mitigate racial bias in housing and advance fair housing laws.

Jan 26, 2021 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please