Reverse Mortgage Guide

The just-passed Senate version of the American Housing Rescue and Foreclosure Prevention Act of 2008 (H.R. 3221) provides for a new origination fee limitation.In basic terms, the new arrangement will be a max of 2 percent on the first $200,000 plus 1 percent of any claim amount above $200,000 up to a max of $6,000. The $6,000 will be adjusted for inflation each year.

The Senate and House will next try to work out differing versions of the measure.

The actual language from the bill is below:

(k) Limitation on Origination Fees — The Secretary shall establish limits on the origination fee that may be charged to a mortgagor under a mortgage insured under this section, which limitations shall–

(1) be equal to 2.0 percent of the maximum claim amount of the mortgage up to a maximum claim amount of $200,000 plus 1 percent of any portion of the maximum claim amount that is greater than $200,000, unless adjusted thereafter on the basis of an analysis of (A) costs to mortgagors, and (B) the impact on the reverse mortgage market;

(2) be subject to a minimum allowable amount;

(3) provide that the origination fee may be fully financed with the mortgage;

(4) include any fees paid to correspondent mortgagees approved by the Secretary or to mortgage brokers;

(5) apply beginning upon the date that the maximum dollar amount limitation on the benefits of insurance under this section is first increased pursuant to the amendments made by section 219(a)(3) of the Expanding American Homeownership Act of 2008; and

(6) be subject to a maximum origination fee of $6,000, except that such maximum limit shall be adjusted in accordance with the annual percentage increase in the Consumer Price Index of the Bureau of Labor Statistics of the Department of Labor in increments of $500 only when the percentage increase in such index, when applied to the maximum origination fee, produce dollar increases that exceed $500.

This entry was posted on Monday, July 14th, 2008 at 7:43 am and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.