House Passes Bill, Senate Up Next

The House of Representatives passed HR 3288 late last week by a vote of 255-168, which made appropriations for the Departments of Transportation, HUD and related agencies for FY 2010.

The bill includes three provisions for reverse mortgages, one which extends the higher loan limit ($625,000)FY 2010.

Sec. 235. For mortgages for which the mortgagee issues credit approval for the borrower during fiscal year 2010, the second sentence of section 255(g) of the National Housing Act (12 U.S.C. 1715z-20(g) shall be considered to require that in no case may the benefits of insurance under such section 225 exceed 150 percent of the maximum dollar amount in effect under the sixth sentence of section 305(a)(2)of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1453(a)(2).

The bill also instructs HUD's secretary to adjust programs (ie HECM) to operate at a net zero subsidy rate:

That for new loans guaranteed pursuant to section 255 of the National Housing Act (12U.S.C. 1715z-20), the Secretary shall ajust the factors used to calculate the principal limit(as such term is defined in HUD Handbook 4235.1)that were assumed in the President's Budget Request for 2010 for such loans, as necessary to ensure that the program operates at a net zero subsidy rate:

http://www.jkaravas.com/uploads/House_Passes_Bill_Reducing_Reverse_Mortgage_Benefi.pdf

FHA HECM Counselor Website

HECM counselors will discuss program eligibility requirements, financial implications and alternatives to obtaining a HECM. They will also discuss provisions for the mortgage becoming due and payable. Upon the completion of HECM counseling, you should be able to make an independent, informed decision of whether this product will meet your needs. You can search online for a HECM counselor.


http://www.hud.gov/offices/hsg/sfh/hecm/hecmabou.cfm

HECM Fixed Rate 5.56%

Effective 7/1/2009 HECM fixed reverse mortgage rate dropped too 5.56%. Requires full cash draw at closing with no Line of credit available.