It appears that there will be some real positive changes over at HUD in the near future. In the wake of the subprime problems, the usage of the program has seen an increase. However, the artifically low loan limits have hampered people in some areas of the country in using the program. It looks like a higher national limit will be approved. That limit will be $417,000--the same limit that Fannie Mae & Freddie Mac have established for conventional loans for single family homes.
The benefit is far reaching. HECM Reverse Mortgages use the county limits to establish available balances to seniors. And for many, the full value of their homes cannot be taken under consideration. A home worth more than 200,160 in many areas of the country has excess equity discarded in the formula for determining a Reverse Mortage limit. That will change for the better once the new legislation is approved.
Another benefit is the lowering of the origination fee to 1.5% of the appraised value from the present 2%. A floor of $2000 will still exist. Closing costs will be affected in that a $300,000 home will not have a $6000 origination fee, for example, it would be only $4500. While these changes are not set in concrete, it appears that these are the result of a lot of hard work by AARP and the National Reverse Mortgage Association.