New Rules for Reverse Mortgages

<h1>New Rules for Reverse Mortgages</h1>Author: <a title="Leon Cote" href="http://www.articlesbase.com/authors/leon-cote/181851.htm">Leon Cote</a> A new House Appropriations Committee's bill could lower the amount of money available to seniors using the HUD reverse mortgage product but the 162 page bill looks like it will extend the increased lending limit of $625,500 through FY 2010. SEC. 235. FHA Reverse Mortgage Loan Limits for fiscal year 2010. For mortgages for which the mortgagee issues credit approval for the borrower during fiscal year 2010, the second sentence of section 255(g) of the National Housing Act (12 U.S.C. 1715z-20(g)) shall be considered to require that in no case may the benefits of insurance under such section 255 exceed 150 percent of the maximum dollar amount in effect under the sixth sentence of section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)). The House Appropriators instructed the Federal Housing Administration to cut the proceeds seniors receive when taking out a home equity conversion mortgage in fiscal year 2010. REP. LATHAM: Okay. Just another item that's kind of popped up - you're proposing to continue the reverse mortgage program for seniors, even after it's been shown to be a huge drain - on the taxpayer. And the program is not part of the basic mission of FHA, has never been implemented by the private sector. Moreover, many warned since the conception that the program was doomed to fail; now a lot of people believe it has failed and the department wants to continue it anyway. Why would you ask the taxpayer to incur $800 million - on top of all the other long-term liabilities, -- SEC. DONOVAN: Well, first of all, I would say that particularly during this time in the economic crisis that the country is facing, which has been particularly difficult for our seniors, that the reverse mortgage continues to be an important opportunity for seniors to face these difficult economic times and to do longer range planning to support their health care and other needs. And we looked carefully at this and felt that it made sense to continue to support seniors during these difficult times. Having said that, I would also note that the proposal that we've put forward was dependent on not changing the underwriting terms for the HECM program. There are some relatively simple changes that we could make which would limit participation in the program but that could offset that request for credit subsidy. Again, we're not advocating those, but there are options, whether it's around the premiums or around effectively the loan values that seniors could take, which would enable the program to be credit-subsidy neutral in 2010. The bill still needs to be passed by the House and then Senate must pass its version of the Transportation-HUD appropriations bill. When Congress returns in September, a conference committee would negotiate any differences between the two versions. Why wait and risk getting less or nothing from a <a href="http://www.reversemortgage4u.com/">reverse mortgage</a>, get the facts today and get a free quote.About the Author: Over 5 years in the mortgage business and hundreds of loans closed. Speaker at over 500 seminars on mortgages.Article Source: <a href="http://www.articlesbase.com/">ArticlesBase.com</a> - <a href="http://www.articlesbase.com/mortgage-articles/new-rules-for-reverse-mortgages-1074561.html" title="New Rules for Reverse Mortgages">New Rules for Reverse Mortgages</a>

A new House Appropriations Committee's bill could lower the amount of money available to seniors using the HUD reverse mortgage product but the 162 page bill looks like it will extend the increased lending limit of $625,500 through FY 2010.

SEC. 235. FHA Reverse Mortgage Loan Limits for fiscal year 2010. For mortgages for which the mortgagee issues credit approval for the borrower during fiscal year 2010, the second sentence of section 255(g) of the National Housing Act (12 U.S.C. 1715z-20(g)) shall be considered to require that in no case may the benefits of insurance under such section 255 exceed 150 percent of the maximum dollar amount in effect under the sixth sentence of section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)).

The House Appropriators instructed the Federal Housing Administration to cut the proceeds seniors receive when taking out a home equity conversion mortgage in fiscal year 2010.

REP. LATHAM: Okay. Just another item that's kind of popped up - you're proposing to continue the reverse mortgage program for seniors, even after it's been shown to be a huge drain - on the taxpayer. And the program is not part of the basic mission of FHA, has never been implemented by the private sector. Moreover, many warned since the conception that the program was doomed to fail; now a lot of people believe it has failed and the department wants to continue it anyway. Why would you ask the taxpayer to incur $800 million - on top of all the other long-term liabilities, --

SEC. DONOVAN: Well, first of all, I would say that particularly during this time in the economic crisis that the country is facing, which has been particularly difficult for our seniors, that the reverse mortgage continues to be an important opportunity for seniors to face these difficult economic times and to do longer range planning to support their health care and other needs. And we looked carefully at this and felt that it made sense to continue to support seniors during these difficult times.

Having said that, I would also note that the proposal that we've put forward was dependent on not changing the underwriting terms for the HECM program. There are some relatively simple changes that we could make which would limit participation in the program but that could offset that request for credit subsidy.

Again, we're not advocating those, but there are options, whether it's around the premiums or around effectively the loan values that seniors could take, which would enable the program to be credit-subsidy neutral in 2010.

The bill still needs to be passed by the House and then Senate must pass its version of the Transportation-HUD appropriations bill. When Congress returns in September, a conference committee would negotiate any differences between the two versions.

Why wait and risk getting less or nothing from a reverse mortgage, get the facts today and get a free quote.

Over 5 years in the mortgage business and hundreds of loans closed. Speaker at over 500 seminars on mortgages.

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Article Tags: Reverse Mortgage, Reverse Mortgage Calculator, Reverse Mortgages, Hecm

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