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National Reverse Mortgage Lenders Association
NEWS RELEASE
January 9, 2001
FOR IMMEDIATE RELEASE
Larger Reverse Mortgages Available Because of Higher Loan Limits
WASHINGTON, DC – WASHINGTON, DC – Seniors can obtain larger reverse mortgages in 2001 because of higher new loan limits, according to a
senior lenders’ organization, the National Reverse Mortgage Lenders Association
(NRMLA).
The increases, effective for loans made on or after January 1, 2001, are for two
different reverse mortgage product: the federally insured Home Equity Conversion Mortgage
(HECM) and the Fannie Mae Home Keeper loan.
Fannie Mae recently announced that the loan limit for its Home Keeper reverse mortgage
loan product will rise in 2001 to $275,000, from the prior limit of $252,700 in 2000. The
loan limit is 50 percent higher for Alaska, Hawaii, and the U.S. Virgin Islands.
Fannie Mae is a private company that invests in home mortgages, including reversemortgages.
The loan limits also increased in 2001 for the HECM product, a reverse mortgage insured
by the Federal Housing Administration, a part of the U.S. Department of Housing and Urban
Development (HUD). The HECM loan limit, which is pegged to increases in the Fannie
Mae/Freddie Mac loan limit, varies by geographic area. In 2001, the highet of the loan
limits – applicable generally to metropolitan areas – is $239,250, up from
$219,849 in 2000. The smallest loan ceiling, which generally applies to rural and
non-metropolitan areas, is $132,000, up from $121,296 in 2000. HUD announced the new
limits in FHA Mortgagee Letter 00-45, dated December 19, 2000. (Find the
FHA Loan Limit for Your Area.)
These increases in the loan limits for the HECM and Home Keeper products mean that a
great product – the reverse mortgage – will be even more beneficial to
America’s seniors,” said Peter H. Bell, president of NRMLA. “For senior
homeowners getting a HECM or Home Keeper loan in 2001, the new limits will enable them to
tap even more of the equity in their homes to enhance their retirement.”
A combination of the higher loan limits and today’s dropping interest rates will
allow many existing HECM borrowers to obtain more money as well.
A reverse mortgage is a unique loan that enables senior homeowners to convert part of
the equity in their homes into tax-free income without having to sell the home, give up
title, or take on a new monthly mortgage payment. Reverse mortgages are available to
individuals 62 or older who own their home. Funds obtained from the reverse mortgage are
tax-free.
Borrowers can choose to receive the reverse mortgage funds as a lump sum, monthly
income (for up to life), or line of credit, or as a combination of monthly income and line
of credit. No mortgage payments are due during the life of the loan. Borrowers can use the
funds anyway they wish – for home repairs and improvements, medical costs, in-home
care, education, and supplemental retirement income. Borrowers make no monthly payments on
a reverse mortgage during its term. The loan becomes repayable when the borrower sells the
home or permanently moves out. In addition, the repayment amount can't exceed the value of
the home.
Reverse mortgages are originated largely by private lenders. The most popular is the
Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing
Administration, an arm of the U.S. Department of Housing and Urban Development
(HUD). More than 40,000 HECMs have been made since 1989. Other types of reverse
mortgages are the Fannie Mae Home Keeper loan and two jumbo reverse mortgage products
developed by Financial Freedom Senior Funding Corporation of Irvine, CA. The HECM and Home
Keeper loans are available in every state.
To educate consumers about reverse mortgages, NRMLA has created the Guide to Reverse
Mortgages. This free booklet answers frequently asked questions, provides detailed
information on the loan origination process, and includes a Code of Conduct for
lenders, so that consumers can know their rights when working with a lender. The booklet
may be obtained by calling NRMLA at 1-866-264-4466 (toll-free) or 202-939-1792.
NRMLA is a nonprofit trade association, based in Washington, DC, whose mission is to
support the continued evolution of reverse mortgages as an important financial option for
senior homeowners while educating both its members and consumers about the varied
applications of this unique loan. Members sign a Code of Conduct pledging to abide by
guidelines that assure fair, ethical, and respectful practices in offering and making
reverse mortgages to seniors. Details on NRMLA, reverse mortgages, and a list of reverse
mortgage lenders in each state are available on NRMLA’s Web site, at http://www.reversemortgage.org.
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