Popular reverse mortgage cuts loan limits

FHA takes action to keep HECM program operating

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.