effect of owning a hugely appreciated home is the fact that selling the property to raise cash can trigger a taxable gain well in excess of the federal home sale gain exclusion break—up to $500,000 for joint-filing couples and up to $250,000 for unmarried individuals,” Bischoff said. “The federal and state income tax hit from selling could easily reach into the hundreds of thousands of dollars, and all that tax money would be gone forever.” Bischoff added, “In contrast, if you can get the cash you need by taking out a reverse mortgage, the only cost will be the fees and interest charges. If those fees and interest charges are a small fraction of the taxes that you could permanently avoid by continuing to own your home, the reverse mortgage strategy can make perfect sense.” Read the full article at on.mktw.net/3pcjjJc. In Washington, they’re talking about ... HECM Loan Limit Increased to $970,800 in 2022 The Federal Housing Administration increased the maximum claim amount for Home Equity Conversion Mortgages in calendar year 2022 from $822,375 to $970,800 effective for case numbers assigned on or after January 1. This new maximum claim amount applies to Freddie Mac’s special exception areas of Alaska, Hawaii, Guam and the Virgin Islands. Details were published in Mortgagee Letter 2021-29 and will be included in a future Single Family Housing Policy Handbook 4000.1 (Handbook 4000.1) release. NRMLA Submits Comments to HUD on LIBOR In comments submitted to the Department of Housing and Urban Development (HUD) on December 6, NRMLA provided answers to 14 questions posed by HUD in an October 5 notice pertaining to the ongoing transition away from the London Interbank Offered Rate (LIBOR) index. HUD will use the feedback it collects from the mortgage industry—both forward and reverse—to craft a proposed rule. In its comments, NRMLA recommended replacement indices and timelines that servicers will need to transition existing Home Equity Conversion Mortgages (HECMs) to a new index. Members can read the complete set of comments by logging into the Comment Letters section of www.nrmlaonline.org. Senate Testimony: Congress Should Explore Ways to Improve Reverse Mortgages Reverse mortgages offer a potentially useful tool to convert illiquid housing wealth into money to live on during retirement, according to congressional testimony provided by Shai Akabas, director of economic policy at the Bipartisan Policy Center, a Washington, DC, think tank. Testifying before the Senate Special Committee on Aging on October 28 at a hearing on retirement security, Akabas noted that, “Americans own $21 trillion in home equity, a sum that could significantly supplement the nation’s $35 trillion of retirement assets.” Despite its potential usefulness, the reverse mortgage market is currently quite small, Akabas testified. He recommended that policymakers “work to improve this market and make it a simpler, more useful and a more cost-effective tool for older, ‘cash poor’ Americans to utilize their home equity.” The hearing examined solutions to close retirement gaps and expand financial security and included testimony from witnesses who spoke to the effects that career disruptions can have on retirement security, especially for workers who must become family caregivers or take time off to deal with health-related issues. Watch the hearing at bit.ly/3H3EFid. And now you’re up to date. What’s News continued from page 10 Shai Akabas LET US KNOW WHAT YOU’RE TALKING ABOUT. This forum is the place for readers to share their opinions with fellow colleagues about the direction of the reverse mortgage business and other retirement trends. Submissions should be limited to 100 words or less and submitted to Associate Editor Darryl Hicks, at dhicks@dworbell.com. 10 REVERSE MORTGAGE / MARCH-APR I L 2022
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