Expand Your Education with These Courses from
A Consumer Advocate Approach to Real Estate: Course 1.
Effective Presentation Skills for Sales Professionals: Skills for Sales Success: Part Five.
Territory Management: Skills for Sales Success: Part Eight.
Expand your education through NAR's REALTOR® University: A Consumer Advocate Approach to Mortgages: Course 2.
ACE: Purchase Reverse Mortgage Course.

Economic Stimulus Bill Raises Reverse Mortgage Loan Limit, More Older Americans Served

Have a comment on this article? Share on Facebook!

economy-web1RISMEDIA, February 26, 2009-The Economic Stimulus Bill signed recently by President Obama expands the opportunity to benefit from a reverse mortgage to even more American seniors. The new bill will raise the HECM loan limits to 150% of the Freddie Mac loan limit. Currently, that would create a HECM loan limit of $625,500, helping older Americans access even more of the equity available in their homes to augment retirement incomes or offset investment losses.

“The past six months have been very important ones for the reverse mortgage industry and seniors in particular,” said Bart Johnson, a reverse mortgage pioneer and current co-chair of the National Reverse Mortgage Lenders Association. “During that time, the federal government has raised lending limits twice and reduced and capped origination fees.”

Online financial resource Golden Gateway Financial shared the average home values of individuals using its online reverse mortgage calculator to research reverse mortgages in the fourth quarter of 2008. This data demonstrates which areas could benefit the most from this new lending limit. According to Golden Gateway Financial, seniors in five states have a self-reported average home value between the most recent HECM loan limit of $417,000 and the new limit of $625,500. Those states include California, Massachusetts, New York, Washington and South Carolina.

Unfortunately, the data also reveals that many states with large populations of seniors have experienced significant self-reported drops in home values over the past year. This means that many seniors who previously stood to benefit from these new limits, no longer can realize the full potential of their home’s equity. For example, seniors in Oregon, a relatively stable real estate market, reported a decrease of nearly five percent over the course of 2008 to finish at $410,765 for the fourth quarter – just under the previous loan limit of $417,000.

“It is encouraging that the government is moving quickly to provide seniors with even greater access to the equity that exists in their homes,” continued Bachman. “But this data shows that falling home values are quickly outrunning new lending limits.”

State Q4 Average Home Value*

New York – $550,065
Massachusetts – $535,620
California – $506,850
Washington – $482,518
South Carolina – $418,533
Colorado – $416,803 **
Oregon – $410,765 **
New Mexico – $366,348 **
Florida – $377,879

* Self-reported home values by seniors, 62+ in Golden Gateway Financial’s reverse mortgage cash calculator for Q4 ’08
** Indicates states that were previously above prior lending limit of $417,000 during 2008 but declined in Q4 ’08

For more information, visit www.goldengateway.com.

Have a comment on this article? Share on Facebook!

Join RISMedia on Twitter and Facebook to connect with us and share your thoughts on this and other topics.

Copyright© 2016 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.

Content on this website is copyrighted and may not be redistributed without express written permission from RISMedia. Access to RISMedia archives and thousands of articles like this, as well as consumer real estate videos, are available through RISMedia's REsource Licensed Content Solutions. Offering the industry’s most comprehensive and affordable content packages. Click here to learn more! http://resource.rismedia.com

Our Latest News >>