New Stimulus Bill To Increase HECM Loan Limit Passed By House
The House of Representatives recently passed an economic stimulus bill aimed at injecting new momentum into the economy. Among the provisions of the new bill is a provision that would see an increase in the national loan limit for reverse mortgages. The bill sets the increase at 150% of the Freddie Mac loan limit which currently stands at $417,000. Thus the new limit for HECM loans would now be set at $625,500.
Excerpts of that provision in the bill can be found below.
For mortgages for which the mortgagee issues credit approval for the borrower during calendar year 2009, the second sentence of section 255(g) of the National Housing Act (12 U.S.C. 171520(g)) shall be considered to require that in no case may the benefits of insurance under such section 255 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. 1454(a)(2)).
The Senate is also set to present their own version of an economic recovery bill for floor debate and the votes would be cast very soon. It is not sure that the provision for increasing the reverse mortgage loan limit will be included in the Senate bill.
The challenge is then to try to protect this provision of HECM loan limit increase from being removed during the reconciliation negotiations between the Senate bill and the House of Representatives Bill. After the reconciliation of both bills the final bill is expected to be passed and presented to President Obama, February 16th.
