A 1-million dollar HECM limit?!

Will we see a $1 million HECM limit in 2023?

Rocket Mortgage reports their estimated 2023 baseline conforming loan limit for FHA-insured loans in 2023 will be $715,000, That’s 10% higher than $647,200 last year’s conforming loan limit which we covered here on HECMWorld.  Consequently, all HECM loans with case numbers in 2022 saw a HECM limit of $970,800. If Rocket Mortgage’s estimate is correct, then the  2023 HECM Limit, or what many in our industry refer to as the lending limit, will likely exceed one million dollars! To be honest, that’s not a huge jump from our present lending limit but notable nonetheless.

So how did we arrive at such a number or more importantly how is the HECM limit set in the first place?

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John Stephen Mitchell November 7, 2022 at 9:50 am

This may help with those who are getting pushed out of the Jumbo RM loans by some lenders.

Shannon Hicks November 7, 2022 at 10:01 am

Excellent point!

James E. Veale, MBT November 10, 2022 at 6:07 pm

In notifying the industry of the new limit for calendar 2021
in Mortgagee Letter 2021-29, posted and dated 11/30/2021,, HUD explains the process differently. The amount is 150% of the Freddie Mac limit for 2021. There is no mention of FHFA..

James E. Veale, MBT November 13, 2022 at 2:45 am

HUD officially told us in ML (Mortgagee Letter) 2021-29, dated and posted 11/30/2021, how it calculated the MCA (Maximum Claim Amount) Limit for calendar year 2022 and although similar to what was presented, it is not the same.

In HUD ML (Mortgagee Letter) 2021-29, posted and dated 11/30/2021, HUD states that the HECM MCA Limit for 2022 was 150% of the 2022 national conforming limit for Freddie Mac of $647,200. (Note that neither the FHFA nor Fannie Mae are even mentioned.)

There is no law requiring HUD to increase the HECM MCA Limit in the manner that it is now being done. In fact in the 2009 Obama Stimulus Act established the current method to
raise the Freddie Mac national conforming limit, HECMs were supposedly, unintentionally omitted. Later in 2009, the omission was officially recognized and it was decided that HUD could raise the HECM MCA Limit in the manner described n HUD ML 2021-29.

It should be pointed out that it is generally believed that the HUD Secretary could change the methodology under the general power granted to her under.the 2013 Reverse Mortgage Act. That power is restricted to changes that the Secretary believes will fiscally improve or protect the HECM program.


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