House passes national reverse-mortgage loan limit

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One of the chief knocks against reverse mortgages is that the most popular program does not go far enough in extending seniors the funds they need. The Home Equity Conversion Mortgage, or HECM, is insured by the Federal Housing Administration, a part of the U.S. Department of Housing and Urban Development, and makes up more than 80 percent of all the reverse mortgages written in the country. The maximum loan limit is pinned to the homeowner's age, home value and home location. The location dictates the maximum claim amount, which varies by county. These amounts can range from $200,160 in rural areas to $335,800 in urban areas. Last month, the U.S. House of Representatives took a giant step towards eliminating the geographical barrier by passing the Expanding American Homeownership Act of 2006 (H.R. 5121), which would create a single national loan limit for the HECM program equal to the conforming Freddie Mac loan limit of $417,000 for 2006. A reverse mortgage is a loan that enables ho...