There is cause for small celebration in the reverse mortgage industry. The U.S. Department of Housing and Urban Development increased the lending limit for federally-backed reverse mortgages to a maximum claim amount of $726,525 for 2019, according to a recent report.
“This increase can only help folks who have higher home values and a large mortgage. Now there will be more people who will qualify for a HECM since there will be enough Net Principal Limit to pay off their mortgages,” said industry expert Shelley Giordano of the Funding Longevity Task Force at the American College of Financial Services, according to Reverse Mortgage Daily.
“In addition, as our industry continues its outreach to Main Street America, a higher loan limit allows us to appeal to those who enjoy financial well-being and who will provide sound collateral for the HECM in the form of high value real estate.”
There isn't an overwhelming cause for celebration among the reverse mortgage crowd, though, originators are still welcoming the increase.
“The increased loan limit is welcome news. The change itself will not be overly significant but FHA making any positive change in the HECM program hopefully reveals their positive intentions for the program,” said Mac Tennant, CRMP at Access Reverse Mortgage in Clearwater, Fla., according to the report.
“From FHA’s perspective, higher priced homes give them more initial mortgage insurance premium (IMIP) and possibly more astute borrowers.”
To learn mire about the lending limit increase and what it means for the reverse mortgage industry moving forward, click on the image above.