While must attention has been paid to the efforts of the Federal Reserve to lower short-term rates, mortgage rates have soared in the past two weeks.

Freddie Mac reported yesterday for the week ending Feb. 28th that 30-year fixed-rate mortgage averaged 6.24% with an average 0.5 point

That’s up 20 basis points from the week before, an increase of .2 percent in just seven days. (a basis point is equal to 1/100th of a percent).

To give some perspective regarding what is going, consider that about a month a go, on Jan. 24th, Freddie Mac said that same 30-year fixed-rate loan could be had for 5.48% with .4 points.

For all the chatter in Washington about helping homeowners with mortgage problems, the worst possible event is now unfolding. If mortgage interest rates continue rising then millions of ARMs will go into overdrive with stiffer payments looming in the future.

For those who are considering a reverse mortgage, you really need to consider that current interest rates are at the very low end of the scale when compared with rates during the past half century. If you’re thinking about a reverse loan, either fixed or adjustable, you surely remember when mortgage rates were in the 8 percent and 9 percent range — and you also remember when they were in the teens.

No one knows where rates will be in the future, but it’s not realistic to believe that they can stay at or around 6 percent eternally.

The Los Angeles Times has published an interesting article entitled Reverse mortgages provide more seniors with a safety net.

“With traditional home equity credit lines increasingly difficult to get in a time of declining home values and tight underwriting standards, eligible seniors older than 62 are finding that one benefit of reverse mortgages — other than no pre-payment penalties and no credit or income qualifications — is the ability to get rid of the sub-prime and other adjustable loans facing payment increases.”

The article also says that “In general, eligible properties for the FHA program must be a principal residence and can include single-family homes, condominiums, manufactured homes built after 1976 or even two- to four-unit multifamily properties. Besides borrowers retaining ownership of the home for the duration of the loan, cash advances can be used for any purpose and don’t count as income against Social Security or Medicare benefits — although it can affect Medicaid and other state or federal assistance, so it’s definitely best to check details with an attorney or local expert.”

Another point is that “As promising as they sound, however, reverse mortgages do have limitations. Since borrowers need to be at least 62, it can get complicated when one spouse is younger than that. Although some borrowers have solved this problem by transferring the ineligible spouse’s interest in the home into a trust, such a plan can backfire when the eligible spouse dies, which would require the original loan amount, all interest charges and fees to be repaid.

Actually, there are some reverse mortgage programs which allow borrowers who are age 60.

“Homeowners who are currently in bankruptcy do not qualify, neither do owners of most mobile homes, co-ops or homes on leased land. And even for those owning eligible property types, there has to be sufficient equity remaining in the home after other mortgages and home-equity lines are paid off to close the deal, in which case a traditional home-equity line may suffice. Consequently, experts often counsel applicants to discuss options with their extended families before moving forward.”

This article is well done, with examples, pros and cons.

For the full story, see: Reverse mortgages provide more seniors with a safety net.

You probably know some of the reverse mortgage basics: All borrowers must be 62, own the home and have counseling before they can get a loan. Got it? Good. Now let’s test your reverse mortgage smart quotient by examining four fact patterns.

Case #1: Husband and wife are each 62. Both own the home. Wife lives in the home. Husband lives in a different residence. Can this couple get a reverse mortgage?

Answer: No. The property securing the loan must be the primary residence of each.

Case#2: Husband and wife are each 62. Both own the home. Wife lives in the home. Husband resides in a nursing home. Can couple get a reverse mortgage?

Answer: Yes. There is a “nursing home” exception to rule #1

Case #3: Wife is 62. Wife owns the home. Husband and wife reside in Home. Can wife get the reverse mortgage?

Answer: This is a little tricky.

Yes, if husband gets counseling and signs non borrowing spouse docs.

No, if husband does not do as above noted.

Case #4: Husband has a life estate. Wife has a remainder interest. Each is at least 62. Can they both obtain a reverse mortgage?

Answer: Yes. They both have a recognized interest in the property.

Attorney Dennis Haber is the author of the just-published, ground-breaking book, Piggy Bank Your Home: Tap Into The Power Of A Reverse Mortgage.

The Palm Beach Post published an interesting letter from a reverse mortgage lender.

Jeffrey Melcer writes that “as a reverse mortgage broker, I feel compelled to comment on some of the points made in ‘Congress looks into reverse mortgages as abuses begin to occur,’ (Feb. 18, Business ). Demographics suggest that the reverse mortgage will have enormous growth over the next decade as Baby Boomers retire, so it is crucial that potential borrowers understand exactly how these loans work and how to protect themselves from unscrupulous brokers.”

Melcer goes on and says:

“There is nothing wrong with the reverse mortgage itself. For many seniors, it is truly a lifesaver and a way for them to stay in their homes and retain financial independence. A good broker has a fiduciary and moral responsibility to see that the proceeds received from the reverse mortgage are used as intended, and not speculated or ‘conned’ away.”

Why does only a “good” broker have a “fiduciary and moral responsibility to see that the proceeds received from the reverse mortgage are used as intended”?

In other words, why shouldn’t all loan officers — just like all lawyers, all doctors and virtually all real estate brokers — have a fiduciary obligation to borrowers? I’m not worried about the “good” ones….

For the full letter, go to: Reverse mortgages aren’t the problem; rogue brokers are

While typically a reverse mortgage is done on a single-family detached residence, several other property types may be eligible. This little known fact can allow many more senior homeowners to reap the benefits of a reverse mortgage.

The important thing to remember is that no matter what type of property, in nearly every case it must be the primary residence of the borrower(s). For example, townhomes (attached units) often qualify for FHA HECM financing. In many instances, condominiums are eligible for FHA reverse mortgage financing, provided they meet certain criteria.

Two-to-four unit properties are allowed under the FHA HECM program if they meet zoning regulations and at least one unit is occupied by the borrower(s).

Manufactured housing and modular homes can secure reverse mortgages, providing they meet the criteria set by FHA and of course, are the primary residence of the borrower(s).

Even a mobile home could possibly qualify, although the borrower must own the land (no lot leases allowed) in addition to meeting other criteria established by FHA.

On a case by case basis, some proprietary products (those where the lender sets the rules) a second home (not an investment property) may qualify, but the lender will set the parameters for that type of home.

Be sure to check with your reverse mortgage consultant during your initial conversation to assure that your property qualifies for reverse mortgage financing — most do, some don’t and it’s crucial to know if your property is acceptable security for reverse financing.

Contributor Sue Haviland — based in Baltimore, MD — has been a reverse mortgage specialist for more than five years.

It’s a win for seniors — and other humans.

The Supreme Court has ruled unanimously that pension managers have a fiduciary obligation to follow lawful instructions from individual savers. The pension industry had argued that individuals could not sue pension managers.

The matter is important in terms of reverse mortgages because a successful pension plan can be combined with a reverse loan to create a comfortable lifestyle.

The case involved James LaRue, a participant in a defined contribution pension plan. He alleged “that the plan administrator’s failure to follow petitioner’s investment directions ‘depleted’ his interest in the plan by approximately $150,000 and amounted to a breach of fiduciary duty,” said the Court.

The plan operator said that ERISA provides remedies only for entire plans, not for individuals.

The Court disagreed, overruled a lower court and said that individuals can take plan operators to court.

“This is a common-sense decision, one that is consistent with the law, and with the realities — and hazards — of today’s retirement savings world,” said Rebecca Davis, staff attorney with the Pension Rights Center. “With today’s ruling, the Supreme Court affirms the right of participants and beneficiaries in 401(k) plans and other defined contribution plans to sue plan trustees whose improper actions caused losses to their individual accounts.”

Former Labor Department Associate Solicitor Marc Machiz, now with Cohen, Milstein, Hausfeld & Toll, PLLC, and David Preminger of Rosen, Preminger & Bloom, wrote the brief on behalf of the Center.

“The Pension Rights Center had contended that the lower court’s decision flew in the face of Congress’ intent that plan assets be protected from losses caused by mismanagement, regardless of whether only some or all of the plan’s participants were injured by that misconduct,” said Mr. Machiz. “We are gratified that the Court agreed with our position.”

“Our satisfaction with the Court’s decision, however, is tempered by a disturbing concurring opinion from Chief Justice Roberts,” Mr. Machiz continued. “In his opinion, the Chief Justice invites lower courts to consider similar cases under a different section of ERISA — a section that might not allow for appropriate remedies in these types of situations. The Chief Justice’s view might relieve the wrongdoer of responsibility, and potentially require money to be taken from other plan participants to pay for the individual’s loss.”

“If embraced by lower courts, this approach could negate the majority decision,” added Ms. Davis. “Interestingly, Justice Roberts’ argument was not made by the defendants, but by an industry group representing employers.”

For a summary, see: LARUE v. DEWOLFF, BOBERG & ASSOCIATES, INC.

The National Reverse Mortgage Lenders Association has an updated code of ethics, a 10-page document that is worth reading. There is also a one-page digest version for distribution to consumers.

If I were king I would like to see these documents re-written. The issue is not limited to reverse mortgage lenders, rather the concern is a generic matter that applies to all lenders: The Code in both the long and short version never mentions the term “client.”

A “client” is not a “customer.” A client is someone who goes to a professional  such as an attorney and knows that the lawyer must work on his or her behalf in a fiduciary capacity, a term which represents a list of requirements and obligations. A “customer” is someone you sell stuff too, without any obligation to act in their best interest.

The mortgage industry is vehemently opposed to the idea of a fiduciary relationship with borrowers, an obligation to get the best possible price and terms for every borrower.

“A lender underwrites, approves and funds the loan,” according to John Robbins, a former Chairman of the Mortgage Bankers Association. “The lender does not hold himself out as an agent of the borrower. While a lender must serve its customers fairly, and the industry has done much to assure high professional standards, a lender owes a duty to its shareholders and investors. A borrower knows a lender offers its own products and does not offer to shop for borrowers.”

Really? Do borrowers know that?

Here’s another one.

“Some have proposed,” saysHarry Dinham, a former president of the National Association of Mortgage Brokers, “that a fiduciary duty standard should be implemented and mortgage originators and their loan officers should act in the ‘best interests’ of the consumer. NAMB remains opposed to any proposed law, regulation or other measure that attempts to impose a fiduciary duty, in any fashion, upon a mortgage broker or any other originator.”

Until all lenders agree to act as agents for clients, borrowers will need to work diligently to find ethical lenders and loan officers. The good news is that such lenders and loan officers are out there. The bad news is that it may require a lot of searching to find them.

In the case of reverse mortgages, borrowers should always get independent advice and counsel from an attorney who specializes in elder law before signing any paperwork.

Speaking in Washington, Senator Herb Kohl (D-WI), Chairman of the Senate’s Special Committee on Aging said that “because foreclosure filings are public information, scammers target the already troubled homeowners, contacting them by phone or mail repeatedly with claims that they can help the homeowner stay in their home. These financial predators say that they can help “save” the home of a person or family experiencing foreclosure. They create a sense of urgency and say that there are no other options. They tell the homeowner not to contact their lender or seek legal advice. In the end, these predators walk away with both the title and equity of the home.

“Senior homeowners,” he continued, ”are particularly vulnerable to rescue scams because many of them are on fixed incomes and rely on the equity in their homes as their primary financial asset. They are also particularly attractive to financial predators because they tend to have a larger amount of equity in their homes. Older homeowners are also more likely to experience foreclosure in the first place because, according to a study conducted by AARP, seniors are three times more likely to have sub-prime mortgage loans than younger borrowers. The foreclosure rate for sub-prime loans is much higher than prime loans because they carry a much higher risk of default by the borrower.”

In the required ethics class I teach for Maryland real estate brokers, we had one broker who described a mortgage-rescue scam where the two owners of a property were duped out of equity worth hundreds of thousands of dollars. The gentleman was 79. His mother was 103.

Be careful out there. Before refinancing a home, speak with an attorney who specializes in elder law.

For the full statement by Sen. Kohl, press here

Once again seniors are blazing new financial trails — this time with reverse mortgages. Before I tackle the subject of reverse mortgages, join me on a brief journey back in time. You will discover that many of today’s seniors and/or their parents also pioneered the concept of the thirty-year loan.

In the early 1900’s it was quite difficult for individuals to obtain mortgages. A down payment of 50 percent was usually required, and the mortgage was typically a five-year, interest-only balloon mortgage, what is known as a “term” mortgage.

During the Great Depression, many home owners could not repay their debt nor refinance their existing loans. Banks then lost the ability to lend when their depositors withdrew their funds. This great financial cataclysm marked the end of unregulated mortgage banking in this country.

Roosevelt’s New Deal helped to restore the public’s confidence in the mortgage banking industry. Soon the thirty-year amortized loan became available, along with standard interest rates and standard underwriting guidelines. Loans were securitized. This added liquidity to the mortgage financial markets.

Strenuous objections were being raised. Borrowers were doing things no one had done before. They were signing newly-created documents that were unfamiliar to most borrowers and loan professionals. Today, these same objections made back then are being made about the reverse mortgage. Back then, borrowers were taking on thirty years of monthly payments. At that time, this was unheard of. Today, the lender is paying the borrower instead of the borrower paying the lender. Again, a vastly different concept has been created.

Back then, the United States government insured these thirty-year loans. Today the government is insuring most reverse mortgages. Years ago, people were warned that they would lose their homes, that they would go broke if they signed these hard-to-understand mortgage documents. Today, some borrowers harbor the same fear about the reverse mortgage documents.

While reverse mortgages have been around since the early 1960’s, they were unregulated and took on many forms and were called by different names. Relatively few were done. It wasn’t until 1987 that Congress authorized the first government-insured standardize reverse mortgage. In some instances, seniors are again being told that if they get a reverse mortgage they will lose their home. Does this sound familiar?

The bottom line is this. A once new type of financing (thirty-year loan) permitted borrowers to raise their family in the home of their choosing. Together with many years of home value appreciation, another new type of financing (the reverse mortgage) is permitting borrowers (seniors) to stay in their home AND live the life they were heretofore only dreaming about living.

Years from now, when we look back on the evolution of this product, people who remember will say, “What was the fuss all about.” It changes for the better the lives of our senior citizens. Homes are often saved from mortgage and tax liens and from foreclosures. It enables seniors to better afford home care. It enables seniors to pay their bills. Because people are living longer, a reverse mortgage may insure that they will not outlive their money. And best of all, these pioneers twice made have shown us that financial innovation can have a profound effect upon American society.

Attorney Dennis Haber is the author of the just-published, ground-breaking book, Piggy Bank Your Home: Tap Into The Power Of A Reverse Mortgage.

There are strict age requirements for reverse mortgages. The FHA/HECM (Home Equity Conversion Mortgage) program requires that each homeowner/borrower be at least 62 years of age. The question becomes, what happens if one party is 62 or older and the other is not of reverse mortgage age?

The RIGHT answer to this question depends upon the knowledge of your loan officer. One answer you may get is that it CAN NOT be done. (This is a correct answer) Another answer you may receive is that it CAN be done providing the individual who is not 62 is taken off the title. (This is also a correct answer). So you say, “OK let’s do it”.

I say “not so fast”. While both answers are correct, we need to explore this issue further to determine which answer is RIGHT for our couple. You will discover how important this is as we unravel the consequences that can impact our surviving individual.

Assume for a moment that the younger individual is taken off title and imagine that this individual passes away first. This is a fortunate result in one respect: Since this person was not an owner of the property, the death of that person will not affect the reverse mortgage.

However, if the person who was the owner/reverse mortgage borrower passes first, then the loan becomes due. (The loan becomes due upon sale, death of the surviving borrower, or when the home is no longer the primary residence of each borrower). In this case, when our borrower passes, the loan has to be paid in full.

Usually, when a “maturity event” occurs, the home is sold. The lender receives the unpaid balance. The heirs receive the difference.

Our non-borrowing individual could be placed in a precarious position if their desire is to remain in the home after the death of their partner/spouse.

Therefore it is critical to explore the financial wherewithal of the parties. It is necessary to examine the various scenarios with the concomitant options. And it is important that the parties understand the consequences of their actions.

Being correct is not enough.

Attorney Dennis Haber is the author of the just-published, ground-breaking book, Piggy Bank Your Home: Tap Into The Power Of A Reverse Mortgage.

A lot of attention is paid to national foreclosure rates, and properly so. That said, there are significant differences among major metro areas.

At first this does not seem like a reverse mortgage issue, but some an unknown number of senior homeowners the foreclosure numbers have great relevance: The reason? One way to stave off a foreclosure is to refinance with a reverse mortgage and exchange big and growing monthly payments for no monthly costs for interest and principal.

However, to make reverse mortgages work you need equity, the more the better. Thus, if you are in a community with a low foreclosure rate there is less pressure to push down home prices — and thus less pressure to push down equity.

RealtyTrac.com has now come out with a study of the 100 metro areas with the steepest foreclosure rates. This is one list you would like to avoid. That said, there is a substantial difference between foreclosure rates for the leading metro areas and those at the bottom of the list. Detroit, Stockton and Las Vegas are leading the list, but it’s important to say that an area can be on the list and still have a low foreclosure level — for instance, Greenville, SC is #100 and has a foreclosure rate that is about 1/6th of the Detroit level.

The full list can be found at:

RealtyTrac.com

This is one question I get very often and it’s one that requires a bit of explanation. The most direct answer is that you can spend the money any way you want! It’s your money. However, let’s explore the ways that the funds can be taken, since that impacts the cash available and thus spending choices.

Lump Sum: The first choice is to take all the available funds at once. This is the option chosen when there the mortgage amount owed on the property is close to the amount of reverse proceeds available. For many folks, just paying off that existing mortgage and putting that monthly mortgage payment back in their pocket is a life changing thing.

Line of Credit: The second option is a line of credit that remains within the reverse mortgage. This line is accessible any time the borrower needs it and in any amount. A significant benefit to the FHA HECM reverse mortgage is that the line of credit contains a “growth” factor. Simply put, the unused portion of the line of credit grows- that’s right- it actually increases each year. Think of it as a growing nest egg for future needs.

Monthly Draw: The third way to take reverse mortgage funds is by way of a monthly draw. Each month, a predetermined amount is disbursed to the borrower(s) as long as one of them lives in the home as the primary residence. This is called “tenure”. The borrower(s) may also opt for a “term” amount. Let’s say that the senior only plans to live in the home for 10 years. The funds are calculated so that at the end of 10 years, the disbursements will stop. Remember, just because the funds stop, the borrower does not need to vacate the home. It is still the residence and can continue to be occupied.

To top this all off, the funds can be taken in any combination of the above: small lump sum combined with line of credit, monthly amount combined with small lump sum, etc. And even better, at the borrower(s) request, the plan can be changed. Clearly the reverse mortgage is set up to allow the senior to have both the benefit of the funds and control of their distribution.

Contributor Sue Haviland — based in Baltimore, MD – has been a reverse mortgage specialist for more than five years.

IndyMac Bancorp, Inc., through its Financial Freedom subsidiary, is said to be one of the largest reverse mortgage originators in the country.

In a brutally-frank letter to shareholders, Michael W. Perry, the company’s Chairman and Chief Executive Officer, had several things to say which are of interest:

___”2007 was a terrible year for our industry, for Indymac and for you, our owners. The 4th quarter of 2007 marked the eighth quarter of the current housing downturn (as measured by housing’s contribution to GDP), making it already the fourth worst housing downturn in modern times, and many now predict that, before it turns around, it is going to be the longest and deepest since the Great Depression. Non-GSE mortgage lending (i.e., loans not sold to Fannie Mae and Freddie Mac or FHA/VA insured loans) has been devastated by the collapse of the private secondary market. This collapse in late summer was caused by significantly worsening mortgage credit fundamentals and tremendous uncertainty and fear among investors about declining housing prices and future credit losses. As a result of the housing bubble bursting, delinquencies and non-performing home loans increased rapidly in 2007. Importantly, as I write this note nearly all housing industry participants … from home builders and home buying and selling consumers, to lenders, to investors … are pessimistic about the near-term outlook for the housing and mortgage markets, and, as often happens, market expectations can become self-fulfilling.”

Later, the Perry letter says:

___”While I said that we made mistakes, we also got some big things right: (1) we converted our entire business into a Federal thrift structure, saving us from the liquidity event risk of our previous mortgage REIT structure and what Countrywide and other mortgage industry participants experienced; (2) we raised $676 million of equity capital at better terms than many major banks and investment banks before the crisis period worsened, and we did not repurchase any shares despite significant pressure to do so; (3) we bought Financial Freedom, the largest reverse mortgage lender in the nation, for $85 million in 2004, and this entity earned a record $53 million in 2007; and (4) we largely avoided subprime lending and laid off the bulk of our Alt-A and option ARM credit risk into the secondary market, including structuring most of our non-GSE transactions so that we have limited warranty exposure. In addition, our mortgage backed securities portfolio has no CDOs and no exposure to bond insurers. And, importantly, to date not one Indymac AAA Alt-A bond has been downgraded by any of the rating agencies, and we estimate that less than one-tenth of 1% of all AAA Alt-A bonds in the industry have been downgraded.”

Perry adds that:

___”As most of you know, throughout 2007, we cut products and production channels that contributed to our credit losses and, with respect to products, where there was no longer a secondary market into which to sell them. In 2007, we permanently discontinued two production channels, our mortgage banking conduit group and our homebuilder division, and one product, subprime loans not eligible to be sold to the GSEs. Entering 2008, we have made the decision to (1) eliminate all limited documentation lending above a 75% LTV and below a 680 FICO and all ARM loans with negative amortization as an option and (2) temporarily halt new consumer construction and lot financing, our jumbo reverse mortgage product for correspondent and non-core wholesale customers and virtually all new second and home equity lending programs (except for a de minimis amount produced in our deposit branch network). You may ask, “What does that leave you with in 2008?” It leaves us still with a pretty substantial and solidly profitable production model that we expect will produce over $40 billion in home loans (or roughly a 2% share of the USA market) in 2008. We will be a national lender to mortgage brokers, bankers and community financial institutions (combined, we call this our Mortgage Professionals Group) and a national retail home lender, with both channels offering FHA/VA, GSE and prime jumbo home loan products. In addition, we will still be one of the largest reverse mortgage lenders to seniors in the USA (if not the largest) via Financial Freedom.”

Perry also says:

___”The next part of our plan is to continue to maintain our status as a fundamentally safe and sound financial institution, and the key to that is staying well-capitalized (above 5% core and 10% total risk-based capital). Our capital levels clearly have declined as a result of the losses we have taken in establishing significant reserves for future credit losses, but we still have a solid cushion above the well-capitalized levels. Since we want to try to avoid diluting our existing shareholders by issuing new stock at a price well below book value per share, the key way for us to “raise” additional capital and increase our capital cushion is to suspend the dividend and shrink our balance sheet. By suspending our annual dividend of $1 per share, or roughly $81 million per year, and shrinking our balance sheet by roughly $4.6 billion, or 14%, from December 31, 2007 via the production cuts discussed above, some modest AAA MBS sales, increasing the speed at which we sell loans to the GSEs and normal portfolio runoff, we project that we can “raise” / “free up” roughly $400 million of additional capital (an amount that is substantial in relation to the current market value of the entire company today), and we believe we can accomplish this without “fire-selling” either the entire company or our reverse mortgage business, which should be a tremendous long-term asset for our shareholders. Based on these strategies and assuming our current financial projections for 2008, we expect our capital ratios to grow to over 7.25% core and 12.00% total risk-based by year-end.”

Give Mr. Perry credit, he tells it like it is.

One of the big hurdles to reverse mortgage acceptance are the up-front fees, including with HUD-backed loans a bloated insurance premium and a generous origination fee.

These are real costs and there are strong arguments for their reduction. That said, there is another cost issue which does not emerge with much frequency that ought to be discussed.

The plain purpose of a reverse mortgage is to free household equity, either as a lump sum or in the form of monthly payments or line of credit in a way that does not require monthly repayments.

The alternative to a reverse mortgage is to sell the property. Such an option would indeed end current mortgage payments on the property and would free-up household equity.

But such benefits are not somehow free. There are significant costs to selling a home.

First, there are marketing and closing expenses, costs which often equal 8 percent or more of the property’s market value. For a $500,000 home we’re talking about $40,000 in cash at closing.

Second, while the current mortgage is paid off, the homeowner has to live somewhere else. Will “somewhere” cost money in the form of a monthly rental payment or a new mortgage? Or, will “somewhere” mean a no-cost option such as moving in with an adult child?

The point is that there should always be a push for lower consumer lower costs but the alternative should be seen for what it is — not free and not cheap. A reasoned analysis should look at all options, and all costs.

As always with reverse mortgages, speak with a variety of reverse mortgage lenders and consult with an attorney who specializes in elder law before signing any paperwork.

Dennis has posted the precise wording from H.R. 5140, the stimulus bill. (See below)

“As you can see,” he says, “they kept out 255(g), the HECM’s. It sounds like they are waiting for the FHA Modernization Bill to increase the lending limit.”

The President is scheduled to sign the stimulus package today. It will raise conventional and FHA loan limits for the rest of the year, but have reverse mortgages been left out?

Let’s hear it from reverse mortgage loan originators and loan officers. What say ye?

Thank you, Dennis.

SEC. 202. TEMPORARY LOAN LIMIT INCREASE FOR FHA.

(a) Increase of High-Cost Area Limit- For mortgages for which the mortgagee has issued credit approval for the borrower on or before December 31, 2008, subparagraph (A) of section 203(b)(2) of the National Housing Act (12 U.S.C. 1709(b)(2)(A)) shall be considered (except for purposes of section 255(g) of such Act (12 U.S.C. 1715z-20(g))) to require that a mortgage shall involve a principal obligation in an amount that does not exceed the lesser of–

(1) in the case of a 1-family residence, 125 percent of the median 1-family house price in the area, as determined by the Secretary; and in the case of a 2-, 3-, or 4-family residence, the percentage of such median price that bears the same ratio to such median price as the dollar amount limitation determined for 2008 under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) for a 2-, 3-, or 4-family residence, respectively, bears to the dollar amount limitation determined for 2008 under such section for a 1-family residence; or

(2) 175 percent of the dollar amount limitation determined for 2008 under such section 305(a)(2) for a residence of the applicable size (without regard to any authority to increase such limitation with respect to properties located in Alaska, Guam, Hawaii, or the Virgin Islands);
except that the dollar amount limitation in effect under this subsection for any size residence for any area shall not be less than the greater of (A) the dollar amount limitation in effect under such section 203(b)(2) for the area on October 21, 1998; or (B) 65 percent of the dollar amount limitation determined for 2008 under such section 305(a)(2) for a residence of the applicable size. Any reference in this subsection to dollar amount limitations in effect under section 305 (a)(2) of the Federal Home Loan Mortgage Corporation Act means such limitations as in effect without regard to any increase in such limitation pursuant to section 201 of this title.

(b) Discretionary Authority- If the Secretary of Housing and Urban Development determines that market conditions warrant such an increase, the Secretary may, for the period that begins upon the date of the enactment of this Act and ends at the end of the date specified in subsection (a), increase the maximum dollar amount limitation determined pursuant to subsection (a) with respect to any particular size or sizes of residences, or with respect to residences located in any particular area or areas, to an amount that does not exceed the maximum dollar amount then otherwise in effect pursuant to subsection (a) for such size residence, or for such area (if applicable), by not more than $100,000.

(c) Publication of Area Median Prices and Loan Limits- The Secretary of Housing and Urban Development shall publish the median house prices and mortgage principal obligation limits, as revised pursuant to this section, for all areas as soon as practicable, but in no case more than 30 days after the date of the enactment of this Act. With respect to existing areas for which the Secretary has not established area median prices before such date of enactment, the Secretary may rely on existing commercial data in determining area median prices and calculating such revised principal obligation limits