New Reverse Mortgage Loan Limits Update

image The National Reverse Mortgage Lenders Association (NRMLA) just sent out an email confirming that the new HECM loan limit will be $417,000.  Right now the target date is November 1st, but this is not a set deadline, just a target date.  NRMLA also expects FHA to increase the floor on the origination fee to $2,500, up from $2,000. 

I’m being told from people at the MBA conference that one of the key reasons HUD didn’t raise the new loan limit to $625,000 is the private sector. HUD wants to leave a segment of the reverse mortgage business to private sector jumbo products.  Like it or not I think their reasoning behind the decision makes sense.  Right now the HECM has almost 100% market share and I’m sure HUD would like to see this come down over time.   

According to NRMLA, there will be a mortgagee letter published shortly to provide additional details.  Below is some more background provided in the announcement NRMLA sent out this morning:

There was some debate within HUD to consider area limits at 115% of area median home value, with a floor of $417,000 and a cap of $625,500. Ultimately, the interpretation was determined that the new legislation will be a $417,000 loan limit. As many of you recall, this was the original limit embraced by the industry. As NRMLA requested a more liberal interpretation to $625,500 in high cost areas, the complexity of the bill’s language created much debate and ultimately this final decision. Nonetheless, we are pleased with this major milestone for the industry.

A majority of U.S. counties have lending limits at the existing floor (currently $200,162), which has drastically reduced the amount of equity that seniors living in higher-valued homes could access. We believe these new limits will have a significant impact on the quality of life and provide more relief to those seniors who need the help especially in today’s turbulent economic environment.

These are all positive developments for the reverse mortgage industry and the clients we serve. And as HUD moves toward the implementation of many other important aspects of the housing bill including the new purchase product and co-op lending, we look forward to continuing to report on additional developments in these areas in the near future.


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