Update: Today FHA Released Mortgagee Letter Keeping Lending Limits in place through 2011
[vimeo id=”27918788″ width=”601″ height=”338″]
October 1 is the day we will all learn what FHA reverse mortgage lending limits will be. Will we see them rolled back to $417,000? How can we prepare and who will be effected the most? How are you preparing? Leave your comments below.
3 Comments
Good news…short term. It appears that FHA has kicked the proverbial can down the road before determining final lending limits for fiscal year 2011. For now we stay at $625,500 through the end of this calendar year (December 31st).
The lending limits need to reflect the maximum Freddie Mac lending limits as permitted by law. While the temporary fix of ML 2011-29 is helpful, it puts the industry in exactly the same turmoil as befoe the posting of ML 2011-29 in three months.
Under the same 12 USC 1454(a)(2) provision which governs HECMs, FHFA permits much higher lending limits than $417,000 in many parts of the contiguous United States for a single family one unit home. The same limits should be applied by FHA to HECMs.
The FHFA lending limits after September 30, 2011 for Freddie Mac can be viewed at:
http://www.fhfa.gov/webfiles/21269/FullCountyLoanLimitList2011_HERA-BASED_FINAL_Z.xls
While under 12 USC 1715z-20(g), FHA is permitted to use a lower lending limit for HECMs than the maximum which FHFA is using for Freddie Mac loans after September 30, 2011, why is FHA doing something else for HECMs? Only the FHA executive staff can answer that question.
In a July 7th RMD article, it was noted that the three places a lower limit will impact the most are CA, NY, and DC. For California over 45% of all HECMs in 2009 had Maximum Claim Amounts (“MCAs”) greater than $417,000. From there it reached 55% in 2010 and is now around 50%. NY started at 40% in 2009 and has been at 43% ever since. DC went from 32% in 2009 and to 40% in 2010. DC is about 49% in 2011.
If California is stiffled after December 31, 2011, over 10% of endorsement production will evaporate in 2012. That would be a significant loss to an industry reeling from huge future reductions in endorsements over the next 18 months due to the loss of three major players in our market.
The Freddie Mac limits will give most of the crowded California coast the $625,500 lending limit. The industry needs that kind of long-term help.