HECM - Home Equity Conversion Mortgage

As of July 2009, more than 545,000 Senior Citizens have benefited from the FHA insured Reverse Mortgage since the program began in 1990. In just the past 3 years, FHA has endorsed 300,000 Reverse Mortgages. This number represents more than HALF of all FHA backed Reverse Mortgages in the entire 20 year history of the program.

The Housing and Economic Recovery Act of 2008 (HERA) provides seniors with the opportunity to purchase a new principal residence with HECM loan proceeds.  Section 2122(a)(9) of HERA amends section 255 of the National Housing Act to authorize the Department of Housing and Urban Development (HUD) to insure HECMs used for the purchase of a 1- to 4-family dwelling unit.   Accordingly, eligible seniors now have the opportunity to purchase a principal residence with HECM loan proceeds. Please call us for more details.

On February 15th, 2009 it was announced that the economic recovery bill, released by the House of Representatives, contains a provision that would set the single national loan limit for HECM at a higher level than $417,000–for the balance of 2009. This change will allow seniors that have a reverse mortgage with larger home values to refinance and receive more money from these products, as well as offer those individuals who have not obtained a Reverse Mortgage, to be eligible to receive more money than the current limits allow.

This provision will bring the Reverse Mortgage loan limit to 150% of the Freddie Mac limit, or $625,500. When the Freddie Mac lending limit changes, the Reverse Mortgage limit will change commensurately.  This change is being offered as a temporary measure, thru 2009 only, because it is part of an emergency economic stimulus package. A permanent change would have to be enacted through a more appropriate housing bill.