New Reverse Mortgage Product Available from FHA

The Federal Housing administration (FHA) has announced a new and modified version of its Home Equity Conversion Mortgage (HECM) product today. Effective October 4, 2010 borrowers will have the option of choosing the HECM Saver or the HECM Standard.
The HECM Saver is a second reverse mortgage option that will allow lowering upfront loan closing costs. The upfront Mortgage Insurance Premium (2% of the appraised value) has been essentially eliminated. Homeowners will qualify for a smaller amount than with the HECM Standard loan. The loan option is available for all HECM case numbers that are or will be assigned on October 4, 2010.

Congress Extends Higher HECM Loan Limits

Congress, last night, passed a continuing resolution that keeps the federal government funded through early December and extends the current maximum HECM loan limit of $625,500 through September 30, 2011.

The current maximum FHA single-family mortgage limit of $729,750 was also extended. Had the extension not been approved, the HECM loan limit would have reverted back to $417,000 after December 31.

FHA Raises Annual Premiums Charged to Reverse Mortgage Borrowers

The Department of Housing and Urban Development announced new changes to the mortgage insurance premiums for the Federal Housing Administration’s reverse mortgage program on Wednesday.

For all Home Equity Conversion Mortgages (HECM) with a case number assigned on or after October 4th, 2010, FHA will raise the annual mortgage insurance premium (MIP) charged to borrowers from 0.5% to 1.25%.