Reverse Mortgages

Baby boomer's are closing in on retirement and many haven't saved nearly enough. One bright spot for many is the home equity they've built up. Reverse mortgages are growing in popularity as a tool that let's senior homeowners tap their... [more]

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HECM Reverse Mortgages Suffer Big Blow From HUD

Written by sioris on

From: letyourhomepayyou.com

HECM (Home Equity Conversion Mortgage) reverse mortgages have suffered a big blow by Congress and HUD this week. HECM loan limits will be slashed by 10%, effective October 1, 2009.

In the face of declining home values nationwide, decimated stock market portfolios, and the weakest economy since the Great Depression, HUD announced that they are cutting loan limits on all HECM reverse mortgages by 10%. The announcement was made September 23, 2009 in their mortgagee letter 2009-34.

This is highly disappointing news for senior homeowners that are barely eligible to qualify for HECM reverse mortgages, due to property values versus outstanding mortgage debt. If you happen to be one of those people that is boarder line on having sufficient equity in your home to qualify, it's quite possible that after October 1st, you will no longer be eligible for a HECM loan, unless you have the ability to contribute some of your own money to the closing.

Leaves Us Scratching Our Heads

It's puzzling to many of us, how Congress and HUD could embrace a 10% reduction in lending limits to senior citizens during such a vulnerable economic time. There is abundant evidence that many closed HECM reverse mortgages have rescued countless seniors from foreclosure and saved their homes through the use of HECM reverse mortgages.

This move, will no doubt be devastating for many senior homeowners that were in the process of considering a reverse mortgage loan, but simply had not made the commitment to act on it in time.

Combine the 10% reduction in lending limit with the expiration of the temporary HECM maximum loan amount of $625,500. reverting back to $417,000. at the end of this year, and once again, we are witnessing a perfect storm in the making.

If you need more information about how this effects your eligibility, please feel free to contact us today.

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