The Good News on Jumbo Reverse Mortgages -- HECM Reverse Mortgage Products to Allow Higher Loan Amounts
The good news is that by sometime in early 2009, the HUD HECM Reverse Mortgage product will allow a higher loan amount for high value homes - this change was part of the new housing bill that was passed by Congress in 2008.
The HECM has always been the most popular Reverse Mortgage because if offered the highest amount of money to homeowners of average-valued houses, it was a government backed loan with relatively low interest and regulated fees.
For homeowners of high value homes - usually homes valued at $400,000 or more - a Jumbo Reverse Mortgage usually offered significantly higher amounts of money to the homeowner. The HECM product could not offer higher loan amounts because they were legislated with loan limits - they could not lend more than pre-specified amounts. In fact, the HECM product was originally designed specifically for low and medium value properties.
However, in the summer of 2008, Congress passed the Enactment of the Housing and Economic Recovery Act (HERA). This law lowers fees and raises loan limits on the popular HECM Reverse Mortgage - which limits the need for Jumbo Reverse Mortgage products for homes with values beneath the new higher loan limits.
The maximum loan amounts for HECM Reverse Mortgages are still being finalized. However, by early 2009 high value homeowners should be able to get significantly higher loan amounts on a HECM Reverse Mortgage than have been available.
We need these loans for our baby Boomer generation!!!