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Popular reverse mortgage cuts loan limits

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While reverse mortgages have become a bigger part of the senior population's financial picture, the nation's most popular program has undergone a mandatory change that will reduce the total proceeds available to FHA-insured reverse mortgage borrowers. The move is in response to a projected $798 million shortfall in the Federal Housing Administration's budget for the Home Equity Conversion Mortgage in fiscal 2010. The fiscal year for the U.S. Department of Housing and Urban Development, the agency that oversees FHA, began Oct. 1.FHA is now shouldering a greater portion of the residential loan load and its insurance component has come under greater scrutiny because of it. In a letter to all reverse mortgage lenders dated Sept. 23, 2009, David H. Stevens, HUD's new assistant secretary for housing and federal housing commissioner, said changes in the agency's popular Home Equity Conversion Mortgage program were necessary "to assist with the viability of the program." ...