Reverse Mortgage Borrowers Will Benefit From New Housing Bill

7/30/2008

posted by N. Sioris

Stumble It!

Hooray! The landmark housing bill (H.R.3221) has finally passed and was signed by the President earlier today. The Housing and Economic Recovery Act of 2008 has provisions in it that will improve the federally insured reverse mortgage program and will benefit senior homeowners that want to access home equity to help finance retirement.

The long awaited housing bill allows for a National loan limit for HECM (Home Equity Conversion Mortgages) of $417,000. and up to a maximum of $625,000. in high cost areas. Currently, loan limits vary between counties and range from a low of $200,160. to a maximum of $362,790.

This is welcome news for seniors that will benefit from higher loan amounts and access to more of their home equity.


Other amendments included in the bill that will affect reverse mortgages are:

* The ability to use an FHA insured reverse mortgage to purchase a home.

* Co-op properties are now eligible for a HECM.

* Reduced origination fees.

* Prohibitions on requiring the purchase of annuities and other financial products.

* Restrictions around cross selling other financial products.

* Requirements on counseling protocols, funding and practices that promote independence and quality in counseling.


It is estimated that HUD will take approximately 60 days to provide detailed interpretation of the changes and that the changes will more than likely not take place until January, 2009.