I got an email asking me about the HECM limits and I thought my response might be helpful to some of you:
Sylvia - Do you have any idea when the national loan max is going to be applied to Reverses? Also, do you have any info on the applicable percentage that will be applied against this amount based on the customers' ages? Clearly, we can't use the calculator for this so I was hoping you had that info or a way to get it. I have two clients now looking at the reverse product and I cannot tell what they will have available. One couples' ages are 67 and 64 and the others' are 70 and 67. FHA is no help at all, and as much as I know about this product I still cannot find a good referral source that I can trust. Both clients are in New York and the property values will each exceed the $417k. Many thanks,___
My response:
Hi ____: Yes, this is SO frustrating! The national limit could be at least $417,000. As NRMLA stated, HUD's lawyers have not resolved whether the bill creates a single national loan limit at $417,000 or $625,500; or area limits at 115% of area median home value, with a floor of $417,000 and a cap of $625,500. There is also mixed information regarding how long it will take HUD to issue a Mortgagee Letter to implement the increase, ranging from October 1, 2008 to January 1, 2009. Even if the limit increases to $625,000, the county where the subject property is located will need to qualify for this increase. With recent drops in home values, many counties will not benefit from the increase. I don't know your market, but I imagine most of NY will be considered a higher valued area.
Did you know that you can run scenarios up to home values of $544,185 by entering a Hawaiian zip code such as 96746 into your RM calculator? Just remember to adjust the origination fee. For values higher than the $544,185, you will need to manually calculate. As for the percentage, who knows what HUD will do. I am manually basing the amount on the same percentages that exist now. But, I suspect that the formula will adjust the percentage down with higher values.
I hope that helps!
Sylvia
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