NRMLA Seeks Higher HECM Loan Limits

High loan limits for Federal Housing Administration reverse mortgages could help refinance seniors out of subprime loans and enable them to stay in their homes free from monthly mortgage payments, according to the National Reverse Mortgage Lenders Association. "A significant proportion of subprime loans have been made to older homeowners," said NRMLA president Peter Bell. "As they look to refinance out of those onerous loans, a HECM should be an option for them." (The FHA's reverse mortgage is called a home equity conversion mortgage.) The FHA reform bill, currently stalled in conference, raises the HECM loan limit to $417,000 nationwide. But there are discussions about raising the FHA loan limit for single-family loans higher, and NRMLA wants HECMs included. The trade group also has reopened negotiations with AARP, a lobbying group for older Americans, on HECM origination fees. Last year the two parties agreed to reduce the 2% HECM fee to 1.5%, and it was written into the FHA reform bill. But the credit markets have changed since then, and NRMLA says it wants an adjustment because it is no longer profitable to make HECMs if the property value is less than $250,000. "We are in negotiations," Mr. Bell said.