203b Loan Limits Remain Largely Unchanged

203b Loan Limits Remain Largely Unchanged,

At the start of each year, HUD/FHA does a comprehensive update to the single-family mortgage limits that set the maximum amounts that can be loaned under the HECM reverse mortgage program. In 2007, 203b limits were,for the most part, left unchanged and this is again the case for 2008. Only 151 of 326 limits throughout the country were changed in 2008. The vast majority of 203b limits currently in effect date from 2006, as the following table shows:

According to the recently released HUD Mortgagee Letter 2008-02, the explanation for not changing 203b limits is as follows:

The National Housing Act provides that the mortgage limit for any given area shall be set at 95% of the median house price in that area, as determined by the Department of Housing and Urban Development, except that the FHA mortgage limit in any given area cannot exceed 87% of the Freddie Mac loan limit, nor be lower than 48% of the Freddie Mac loan limit for a residence of applicable size. As a result of Freddie Mac’s announcement that there is no change in their mortgage limits, FHA’s floor and ceiling loan limits will remain unchanged.

The bottomline for potential reverse mortgage borrowers is that, for now, many will continue to be limited in the amount of cash they can access via a HECM reverse mortgage. There is a push in Congress to set a higher national loan limit, but it is unclear when this might become a reality.

Full post here Reverse Mortgage Information

Written by News & Feeds on April 10th, 2008 with comments disabled.
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