Reverse Limits Bumped

Increase to $333,700 follows conforming loan adjustment
By MortgageDaily.com staff
12/5/2003

In January, seniors will be able to qualify for larger reverse mortgage loans, announced the National Reverse Mortgage Lenders Association (NRMLA).

The NRMLA said the new conforming loan limits recently announced by Fannie Mae and Freddie Mac will positively affect two reverse mortgage products -- Fannie Mae Home Keeper and the federally insured Home Equity Conversion Mortgage (HECM).

NRMLA says it is a nonprofit trade group and that its mission is to support the continued evolution of reverse mortgages as an important financial option for senior homeowners. Reverse mortgages allow seniors age 62 or older to convert part of their home equity into tax-free income without having to sell their home, give up the title, or acquire new monthly mortgage payments. The new loan limits will enable seniors to convert a greater portion of their home equity into cash.

Fannie's 2004 single-family loan limit will apply to its Home Keeper reverse mortgages, said NRMLA. The limit was set 3.4% higher, increasing from $322,700 to $333,700. In Alaska, Hawaii and the U.S. Virgin Islands, the limit will be 50% higher or $500,550.

NRMLA said the new loan limits for HECMs, tied to the new Freddie/Fannie conforming loan limits, will vary by geographic area. The maximum HECM loan amount the Federal Housing Administration will insure in high-cost living areas will be $290,319, up from $280,749 in 2003. In low-cost areas, the maximum loan amount currently at $154,896 will increase to $160,176.

Shortly after the new year, the FHA will issue a Mortgagee Letter to notify lenders about the HECM loan limit changes before they take effect, said the NRMLA.

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