HUD Mortgagee Letter Lowers Reverse Mortgage Proceeds By 10%

Last week, the U.S. Department of Housing and Urban Development announced a new set of principal limit factors for the Federal Housing Administration (FHA) HECM reverse mortgage program.  The changes will lower the principal limits for the HECM by 10%.   Set to go into effect for FHA Reverse Mortgages assigned on or after October 1, 2009, the new limits reduce the amount of proceeds that are available to eligible seniors for the current reverse mortgage program.  Industry participants are upset about the reduction and feel this will slow down the growth of the reverse mortgage product and hinder the availability of private mortgage lenders re-introducing non-FHA insured reverse mortgages.

Here is the link for the full Mortgagee Letter 09-43