Reverse Cap Raised

Highest limit to reach $362,790
By COCO SALAZAR
12/8/2005

Reverse mortgage borrowers will be able to access more equity following an increase in reverse loan limits.

Starting next year, higher loan limits will apply to the federally-insured Home Equity Conversion Mortgage, which accounts for 90 percent of all reverse mortgages, and the Fannie Mae Home Keeper loan, according to an announcement Wednesday by the National Reverse Mortgage Lenders Association.

"A good chunk" of reverse mortgage ceilings will be bumped up 16 percent, Darryl Hicks, NRMLA associate director, told MortgageDaily.com.

Home equity conversion loan limits vary by geographic area, with greater limits generally applying to major metropolitan areas and lesser limits for rural and non-metropolitan areas.

The highest limit will be $362,790, up from $312,896, the association said, while the lowest limit will rise to $200,160 from $172,632. Lenders should soon receive a Mortgage Letter from the Department of Housing and Urban Development, as this must occur before the limits take effect.

Only 3.2 percent of the nation's 3,226 counties are at the current maximum reverse loan limit, while the floor applies to 79.8 percent, the trade group said.

The new Fannie single-family loan limit, which was recently increased to $417,000 from $359,650, includes the Home Keeper loan. The ceiling for this reverse mortgage will be 50 percent higher in Alaska, Hawaii, and the U.S. Virgin Islands, according to the announcement.

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