2. Principal Limit Reduction: On October 1st, 2009 HUD implemented a 10% reduction in principal limits for its Federal Housing Administration (FHA) insured reverse mortgage product, the first ever reduction. FHA may consider a second reduction October 1, 2010.
3. Increase in the Mortgage Insurance Premium (MIP) from .5 to 1.25%. What this means to homeowners that get their Reverse Mortgage after this change is an overall increase in the cost of the loan.
4. Reverse Mortgage Appropriation? Included in the Obama Administration’s FY 2011 budget is a $250 million appropriation request to offset projected losses for the Federal Housing Administration’s reverse mortgage program. If congress does not provide the $250 million, FHA will be forced to reduce the amount of money available to seniors through the program by 21% according to testimony from Commissioner David Stevens earlier this year.
5. FHA Lending Limits are temporary through the end of 2010. Homeowners with homes valued between $417,000.00 and $625,000.00 would lose significant proceeds if the $625,000.00 limit goes away.
Even I have heard that effective from October 1st, 2010, HUD will be making certain adjustments to the reverse mortgage program. However, it has been noted that most of these changes will not be beneficial to the seniors. So, if a senior citizen is contemplating doing a reverse mortgage, then he or she should not wait further and contact the lender immediately regarding the same.
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