HECM Counseling Grants Approved

Counseling agencies will use $8 million to help assist senior citizens seeking reverse mortgages or Home Equity Conversion Mortgages (HECM). These agencies will provide counseling for the rapidly growing number of elderly homeowners who seek to convert equity in their homes into income that can be used to pay for home improvements, medical costs, and other living expenses.

The organizations that provide housing counseling services help people become or remain homeowners or find rental housing, and assist homeless persons in finding the transitional housing they need to move toward a permanent place to live. Grant recipients also help homebuyers and homeowners realistically evaluate their readiness for a home purchase, understand their financing and downpayment options, and navigate what can be an extremely confusing and difficult process.

HUD/FHA Reduces Benefits for Seniors

Effective today, October 1, the amount of money available for seniors applying for a HUD/FHA insured reverse mortgage dropped significantly. With HUD's Mortgagee Letter 2009-34 issued on September 23, there was a mandated 10% reduction in the gross dollar amount available. As a result, thousands of seniors in the past 7 days have had their loans locked in under the old HUD formula. Lenders successfully scrambled to obtain the required FHA case numbers before the deadline.

For a 72 year old having a home valued at $400,000, the client would be entitled to approximately $213,000 today using the 5.56% fixed rate option offered by a number of lenders. Yesterday, September 30, the amount available would have been $239,000. This $26,000 difference amounts to approximately11% less money.