New potential lending limit increase for HECM reverse mortgages.
The house yesterday passed the economic stimulus bill to help kickstart the economy. It included several measures, $550 billion in new spending (states get $200 billion), $275 billion in tax cuts. It now awaits a similar Senate bill that could get voted on as early as next week before it moves back to Congress for an agreed upon final version before it gets to the new President for approval or veto.
From a housing perspective it contains the makings of a safety net and opens opportunities to increase loan lending limits in parts of the country were the lending limit was lower than the median home price for that area. For reverse mortgages, it could mean an increase from $417,000 to somewhere in the neighborhood of $625,000 for some parts of the country. That spells relief for a very large majority of homeowners in those areas where $417,000 provided some relief but not enough for those that have seen their individual net worth decrease due to wholesale decreases in their retirement funds that are market based. In addition it provides for those whose homes were worth more than the current lending limit but where the current limit alloted small relief for those homeowners interested in tapping into their home equity to pay off higher adjusting mortgages or where a portfolio was too affected to provide suitable cash flow for the retired.
The language in H.R.1 of the American Recovery and Reinvestment Act of 2009 (Introduced in House) specifically recognizes reverse mortgages in SEC. 12004.
Since reverse mortgages are financial vehicles used to supplement cash flow for those 62 or older that same group may be interested in other parts of the bill such as the $87 billion provision increasing the federal contribution for Medicaid costs to help states close their budget gaps. As some of the most frequent uses for a reverse mortgage are healthcare related, this could help some potential homeowners.
Something not included in the stimulus bill is something that has already been put in place and should be “hitting the streets” shortly and that is the reverse purchase program featured on this and other websites. Some lenders are mentioning starting the program as soon as the first week of February. Read up on that program on earlier articles.
The next product in the wings is the co-op availability which will bring relief to owners of co-ops around the country as the credit crunch has all but curtailed available lending capabilities for that type of housing.
A Few More Related Articles of Interest:
February 3rd, 2009 at 2:19 am
Can they make it available for all seniors, those who had a house and can put down a big chunk of money and those who can rely on the appraised value of the house since we have so many short sales and a lot of times, the house would appraise at a value higher than those in the neighborhood.
February 7th, 2009 at 5:39 am
[...] New potential lending limit increase for HECM reverse mortgages. – The house yesterday passed the economic stimulus bill to help kickstart the economy. It included several measures, $550 billion in new spending. [...]