Possible $625,500 Reverse Mortgage Limits, NEW HUD Secretary
NRMLA (reversemortgage.org) 1/14/09 11:12pm
02/25/2009 - Official $625,000 Reverse Mortgage Loan Limit
The U.S. Department of Housing and Urban Development published Mortgagee Letter 2009-07, which officially raises the national limit for Home Equity Conversion Mortgages from $417,000 to $625,500 for the balance of 2009.
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02/17/2009 - Implementing the New $625,500 HECM Loan Limit
As most NRMLA members know, the economic stimulus bill signed into law by President Obama today raises the single national loan limit for HECMs to 150% of the Freddie Mac loan limit. Currently, that would create a HECM limit of $625,500. This is the direct result of a successful joint effort by NRMLA and AARP to obtain this higher loan limit. Under this new law, the higher limit is only applicable for loans made during the balance of 2009. We must go back to Congress to get the higher loan limit extended beyond this year.
is unclear, from both a legal and practical standpoint, whether or
not HUD can place further origination fee limitations on HECM
transactions, but it is a topic of discussion.
02/12/2009 - Stimulus Bill Compromise includes $625,500 HECM Limit
NRMLA is pleased to announce that we have learned that the compromise package emerging from the House-Senate conference committee includes the House language setting the HECM loan limit at 150% of the Freddie Mac limit, which would put it at $625,500 -- for the balance of 2009 only. (Congress would have to act on it again before this year is out to extend it beyond '09.)
both houses of Congress approve the conference report, it will be sent
to President Obama for his signature. After the President signs the
bill, HUD will have to issue a Mortgagee Letter to implement the
change. From our previous experience, we have learned that there is no
telling exactly how long it will take for them to get this done, but
with the temporary nature of this provision, I hope that they will
act expeditiously. We are still waiting to verify that this is correct
by seeing the actual conference report.
-Peter H. Bell, President
Jan 29th, 2009
House Passes Stimulus Bill with Loan Limit Increase!
are pleased to report that the economic recovery bill passed by the
U.S. House of Representatives last night includes the provision we
reported to you last week that would set the single national loan limit
for the HECM program at 150% of the Freddie Mac loan limit. Currently,
the Freddie Mac limit is $417,000, so this bill would establish the
Reverse Mortgage limit at $625,500.
January 16th, 2009
HECM Loan Limit Increase Included in Stimulus Plan
are pleased to announce that the draft of the economic recovery bill
released by the House of Representatives late yesterday contains a
provision, inserted in response to a request that came jointly from
NRMLA and AARP, that would set the single national loan limit for
HECM at a higher level than $417,000--for the balance of 2009.
January 14th, 2009 - Release from NRMLA
Back in early December, NRMLA President Peter Bell, submitted a Reverse Mortgage issues paper to key officials from the Presidential Transition Team working on HUD matters and then was invited to provide a briefing two weeks later.
Bell briefed the research team, which is charged with developing briefing materials and issuing background documents, priorities and policy recommendations for presentation to the incoming Secretary and his team, on a few areas on which NRMLA believes HUD should focus. These include:
The Transition Team thanked NRMLA for being concise, specific and targeted in our briefing and appeared to agree to including our agenda in their final report. The briefing paper is available for viewing by NRMLA Members on our industry website
Confirmation Hearing Held for HUD Secretary Nominee
The Committee emphasized during questioning their desire that HUD play a more active role in the nation’s economic recovery. The hearing focused primarily on HUD’s role in stemming foreclosures, the housing crisis, economic stimulus and discrimination and segregation in housing.
Mr. Donovan’s testimony emphasized a number of issues, including:
Budgetary issues regarding the renewal of expiring Section 8 rental subsidies
Strengthening HUD to foster a culture of excellence and innovation
Oversight of TARP and the Government-Sponsored Enterprises
"Greening" the HUD portfolio and encouraging sustainable development
Chairman Dodd indicated the committee could vote on recommending Mr. Donovan as soon as the end of this week. There is not expected to be opposition to his nomination.
"I'm so happy to see a smart, experienced housing professional, like Shaun, who has had previous experience at HUD, step into the leadership role at HUD. I don't think President-elect Obama could have made a better choice for this cabinet position," says NRMLA President Peter Bell.
Legislative Fix Pending in Washington State
As a result of legislation passed last year, all non-exempt lenders doing business in Washington must now be licensed by the Department of Financial Institutions (DFI). Shifting the lending requirements from the purview of the Mortgage Brokers Practices Act to the Consumer Loan Act (CLA) has created significant consequences to certain lenders that wish to originate reverse mortgage loans.
To calculate interest, the CLA requires licensees to use the “simple interest” method and expressly prohibits the compounding of interest, or negative amortization.
This conflicts with the FHA’s Home Equity Conversion Mortgage program, where interest that accrues during the life of a Reverse Mortgage is not paid as it accrues, but instead compounds over the life of the loan until repayment occurs.
Initially, we thought the DFI was going to draft a simple legislative fix. However, state officials chose instead to craft a more comprehensive consumer protection bill. NRMLA has been actively involved in providing feedback and suggestions throughout the process. A bill could be formally introduced in the coming weeks.
NRMLA Meets With GAO Again
NRMLA met with officials from the Government Accountability Office (GAO)—the watchdog arm of Congress—as it completes work on a Congressionally-mandated report on the status of the federal Home Equity Conversion Mortgage program.
In response to a provision calling for a study of consumer protections in the Reverse Mortgage program that was enacted as part of the Housing and Economic Recovery Act (HERA) in July, GAO has three broad questions to address:
NRMLA’s Board of Directors met with same group from GAO in June while in Washington, DC, to answer questions on these issues. We expect the final report to be published later this year.
In a separate meeting, NRMLA President Peter Bell met with GAO researchers to review several samples of advertising, direct mail solicitations and web sites that concerned the study team. GAO was seeking Bell's input on whether or not some of the ads were compliant. Several of the pieces were designed to look and feel like they were "official" notices from a government entity or appear to be agency websites. Others touted "a government benefit" that Congress created for seniors or "no repayment" requirements.
large majority of the advertising examples that GAO presented to
me were, in my opinion, inappropriate and threaten the credibility of
the reverse mortgage industry," Bell said. "I don't know why some
lenders can't just be a bit more straightforward and honest in their
advertising. Their actions harm the reputation of all lenders who
are doing the right thing."
Compliance Committee Working on Best Practices
With the adoption of new higher loan limits and the Reverse Mortgage for Purchase program, NRMLA’s Compliance Committee has been busy developing new Best Practices focusing on appropriate refinance and appraisal practices.
The Best Practices will further enhance NRMLA’s Code of Ethics & Professional Responsibility by clarifying appropriate behavior during the appraisal process and when assisting a client in a refinance transaction. The Best Practices will be made available to members in the coming weeks.
Can the $625,500 Reverse Mortgage Limit help you?
If you would like a complete, no-obligation personal analysis including amortization schedules and costs associated please call Toll Free (888) 801-2762 Ext. 1 or request reverse mortgage analysis
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