Reverse Refinancings Doubled in Fiscal Year

Refinancings of Federal Housing Administration-backed reverse mortgages doubled in the past fiscal year as the loan limit jumped to $625,000 and interest rates fell. Seniors refinanced 8,985 FHA-insured home equity conversion mortgages in fiscal year 2009 (which ended September 30), compared to 4,435 refinancings in FY 2008. Refinancings became more attractive because Congress established a nationwide HECM loan limit of $417,000 in November 2008 and then raised it to $625,500 in February 2009. Overall, lenders originated $29.9 billion in HECMs in FY 2009, compared to $24.7 billion in FY 2008. In terms of the number of loans insured, HECM originations rose just 2.3%. Congress also passed legislation last year making it possible for seniors to purchase a home with a HECM for the first time. The new purchase option went into effect January 2009. During the first nine months of the year 550 seniors used a HECM to purchase a home.