HECM Limit Increased!



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EPISODE #751
2023 HECM Limit Increased

.The HECM limit or Maximum Claim Amount (MCA) has been increased for all Home Equity Conversion Mortgages with FHA case numbers assigned on or after January 1, 2023.

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  • [The Financial Post] A reverse mortgage by a different name?

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5 comments

James E. Veale, MBT December 6, 2022 at 4:09 pm

The rules on how the MCA limit is computed annually is briefly described in HUD’s Mortgagee Letter 2022-21 dated 12/1/2022. It states the following:

“For the period January 1, 2023, through December 31, 2023, the HECM maximum claim amount will be $1,089,300 (150 percent of Federal Home Loan Mortgage Corporation’s (Freddie Mac) national conforming limit of $726,200).”

Note that the FHFA is not mentioned. The reason is that the HECM was overlooked in the Obama Stimulus Act of 2009. HUD was informally instructed to increase the MCA Limit as provided above.

Reply
Shannon Hicks December 6, 2022 at 4:33 pm

Thank you, Jim. True indeed. FHFA’s HPI (Home Price Index) helps drive the conforming loan limit, which is turn is typically used by HUD for the HECM limit . https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Conforming-Loan-Limits-for-2023.aspx

Reply
The Cynic December 6, 2022 at 4:21 pm

It is important to realize that negatively amortizing mortgages are NOT reverse mortgages. Reverse mortgages have a specific definition that makes all reverse mortgage transactions nonrecourse while negatively amortizing mortgages do NOT. Google 15 USC 1602(cc) to see the specific US federal government’s legal definition of what a reverse mortgage is.

Reply
Shannon Hicks December 6, 2022 at 4:29 pm

Very true…the critics of the negative-amortizing loans called them a ‘reverse mortgage by another name’, likely a derisive comment.

Reply
The Cynic December 9, 2022 at 4:44 pm

Shannon,

Shannon,

Las month, I heard one of the top tier lenders say exactly the same thing. When I pointed out the difference, it was like it really did not matter. I am not on that level but it is sad when the people in charge of our industry speak like those who oppose this mortgage. I was not with Wells Fargo but I have known several who were and they were trained to know the difference. It is too bad that kind of training left when Wells Fargo did.

The hubris of the detractors is amazing. It is so strong that it blocks their ability to learn and perceive what a reverse mortgage is and what it is not. I do not mind criticism of a reverse mortgage if it is accurate. It is this inaccurate sniping and campaign of misinformation by the detractors that harms the most.

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