Reverse Mortgage Loan Limits still trail their conventional bretheren

Posted by charles dennis

May 1, 2008

Is it a good idea to raise mortgage limits across the country during the same time when home values are falling? Depends on which side of the financial aisle you live on? While conventional rates have increased, reverse mortgage rates still lag behind. That could be a good thing in that it will afford seniors and their advisers to become better versed in reverse mortgages and their uses.

While loan limits for conventional mortgages recently were raised with the passage of the Economic Stimulus Act of 2008, those seniors hoping to tap into additional home equity via the nation’s most popular reverse mortgage are stuck with the same loan ceilings — at least for now.

The Federal Housing Administration (FHA), a branch of the U.S. Department of Housing and Urban Development, insures the Home Equity Conversion Mortgage program, which accounts for nearly 85 percent of the reverse market. The program has insured more than 240,000 reverse mortgages since 1990, while private jumbo reverse plans also have been available. Full Article.