Alleviating fears in some corners of the reverse mortgage community, the Federal Housing Administration has put it in writing that the loan limit and maximum claim amount for the Home Equity Conversion Mortgage program will remain unchanged come Oct. 1.
On Oct. 1, barring any action from Congress, the FHA ceiling for higher cost areas for forward mortgages will fall from $729,750 down to $625,500, according to Department of Housing and Urban Development mortgagee letter 11-29.
However, that same mortgagee letter says HECMs will continue to have a maximum claim amount of $625,500. This limit will remain in effect for the rest of this year. The letter notes it also applies to reverse mortgages originated on properties in the special exception areas of Alaska, Hawaii, Guam and the U.S. Virgin Islands.
Worries about where the HECM limits could be moving to was expressed in at least one social media posting. In July on LinkedIn, there was a post stating HUD was considering cutting the HECM limit to $417,000 and that those applying for a reverse mortgage should do so prior to Sept. 15 in order to maximize loan proceeds.
The mortgagee letter adds that if Congress does act to extend the current loan limits, a new mortgagee letter will be issued to update the HECM and forward mortgage limits.
By law HECM amounts cannot exceed 150% of the $417,000 conforming loan limit.
