HUD finally raises HECM/Reverse Mortgage Limits to $417,000

Posted by Charles D

October 12, 2008

FHA homes

In a move long overdue, dispite recent nationwide home declines, the FHA, has finally raised reverse mortgage rates past 400,000 dollars. This is welcome news to many cash strapped seniors.

The Federal Housing Administration has adjusted the nationwide cap on reverse mortgage lending to $417,000, up nearly 15 percent from the previous limit, which was about $362,790.

The increase was enacted as part of the Housing and Economic Recovery Act, which passed in July to help homeowners ward off foreclosures.

Prior to this law, which creates a nationwide standard, lending limits were determined on a county-by-county basis.

The Federal Housing Administration had considered increasing the lending limit to as high as $625,000, as some reverse mortgage lenders wanted. But it chose the lower figure instead and also capped origination fees at $6,000.

A reverse mortgage is a loan that allows homeowners aged 62 or older to convert the equity in their home into cash without the monthly payment typically associated with an equity line of credit or second mortgage.