• National HECM loan limit of $625,500 extended throughout 2010.

UPDATE: On May 21, 2009 Governor Tim Pawlenty vetoed S.F. 489. In the next legislative session, the intent is for legislators, the Office of Attorney General, and Minnesota reverse mortgage professionals to work together to craft a better bill that will recognize the strengths of the current FHA HECM program, while addressing any inappropriate lending practices in the reverse mortgage arena.

ORIGINAL PROPOSAL:

• Minnesota S.F. 489

  Proposed 2009 Minnesota legislation intended to protect consumers duplicates some federal requirements for all reverse mortgages and changes others to Minnesota-specific restrictive rules. The federally-insured Home Equity Conversion Mortgage (HECM) will be affected, although the original target may have been any future “private or proprietary reverse mortgages.” Representatives from the Minnesota Mortgage Association (MMA), the National Reverse Mortgage Lenders Association (NRMLA), and local originators and counselors have testified at hearings, voicing concerns about potential unintended outcomes.

• American Recovery and Reinvestment Act of 2009 (ARRA)

  Recent 2009 stimulus legislation boosts the national loan limit for the federally-insured Home Equity Conversion Mortgage (HECM) from $417,000 to $625,500. The raised lending limit will enable borrowers with higher-valued homes to obtain a substantially greater benefit from a reverse mortgage and is scheduled to stay in effect until 2009 year-end.

• Housing and Economic Recovery Act of 2008 (HERA)
  • Sets single, higher national loan limit of $417,000 to replace county-by-county limits
  • Reduces maximum origination fee to 2% on the initial $200,000 home value and 1% thereafter and capped at $6000
  • Prohibits cross-selling of reverse mortgages and other financial products such as annuities and life insurance
  • Authorizes development of HECM program for home purchases
  • Improves independence and quality of HUD-approved counseling protocol, with a goal toward standardizing consumer reverse mortgage education