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Reverse Mortgage News for Seniors
Senior Citizens Could See Reverse Mortgage Limit
Jump to $600,000
Two million more senior citizens could use program if
Congress acts on HUD proposal
 July 19, 2007 - Two million older Americans could
tap into the equity they have built up in their homes by obtaining
reverse mortgages, if Congress passes legislation to raise the cap on
obtaining an FHA-backed reverse mortgage, according to a Department of
Housing and Urban Development estimate released Tuesday. The current
cap is $362.790 and HUD wants it bumped up to $600,000.
HUD Secretary Alphonso Jackson is urging Congress
to quickly enact The Expanding American Homeownership Act of 2007 to
change HUD's Federal Housing Administration (FHA) limits, which could
help more seniors access reverse mortgages and build nest eggs for
health care needs, home repairs and other emergencies.
"If you love your home, and want to stay in it for
years to come, then a reverse mortgage is your best and safest bet for
retirement security. Reverse mortgages offer seniors the financial
freedom they deserve, and this legislation could help two million more
older Americans turn their homes into retirement nest eggs," said
Jackson.
Many older Americans who have lived in their
current homes for several years or decades have seen the value of their
homes rise dramatically, especially in recent years.
However, in high cost areas, such as the Northeast
and West, home values have surpassed the Congressionally-mandated cap of
$362,790 for obtaining an FHA-backed reverse mortgage - leaving millions
of seniors without access to the financial security this critical
program offers, says HUD.
The Expanding American Homeownership Act of 2007
would make reverse mortgages available to an additional two million
seniors by raising the FHA's Home Equity Conversation Mortgage (HECM)
loan limit equal to the Fannie Mae/Freddie Mac conforming loan limit.
By increasing and simplifying the loan amount, this
change would help those seniors who have homes valued above the current
FHA loan limit of $362,790 but less than $600,000, obtain a reverse
mortgage through FHA.
Eligible seniors would still have to be 62 years of
age or older and have paid off their mortgages or have only a small
mortgage balance remaining. The loan amount depends on the value of the
home, the age of the homeowner and the expected interest rates.
The reverse mortgage does not have to be repaid
until the borrower moves out of the home permanently.
Last month, HUD announced that more than 308,000
seniors have used the federally-insured HECM loan program since 1990 to
convert the equity in their home into cash without having to move. The
volume of new reverse mortgages insured by the FHA's HECM program has
increased 10-fold over the past six years.
In addition to providing greater access to reverse
mortgages, The Expanding American Homeownership Act of 2007 would
address growing concerns about increasing home foreclosures and
high-risk mortgages.
The legislation would protect and preserve the
American Dream of homeownership by modernizing the FHA and giving
homebuyers access to a safe, fair and affordable alternative to exotic
subprime loans, according to HUD. The legislation is currently pending
before the U.S. House of Representatives.
To learn more about the FHA's HECM program, visit:
http://www.hud.gov/buying/reverse.cfm
Editors Notes:
HUD is the nation's housing agency committed to
increasing homeownership, particularly among minorities; creating
affordable housing opportunities for low-income Americans; and
supporting the homeless, elderly, people with disabilities and people
living with AIDS. The Department also promotes economic and community
development, and enforces the nation's fair housing laws. More
information about HUD and its programs is available on the Internet at
www.hud.gov and
espanol.hud.gov. For more
information about FHA products, please visit
www.fha.gov.
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