The FHA made a great many changes to the Home Equity Conversion Mortgage loan (HECM) program in 2014. There have been alterations to the way funds are paid, the rules covering fixed-rate HECMs versus adjustable rate HECM loans and much more.
One thing the FHA has also done is to make a list of what it calls “Mandatory Obligations” for HECM loans–basically a list of required fees and expenses that could affect the amount of money that comes to a HECM borrower from the initial disbursement.
This list is rather lengthy, but knowing these expenses is very important–borrowers should know that the items on this list are required to be factored in when the lender is trying to determine how much money comes to the borrower on that initial payout of the HECM loan.
Here’s the list, as printed in FHA Mortgagee Letter 2014-21:
–Initial Mortgage Insurance Premium;
–Loan origination fee;
–HECM counseling fee;
–Reasonable and customary amounts, but not more than the amount actually paid by the mortgagee for any of the following items:
–Recording fees and recording taxes, or other charges incident to the recordation of the insured mortgage;
–Survey, if required by the mortgagee or the mortgagor;
–Mortgagee’s title insurance;
–Fees paid to an appraiser for the initial appraisal of the property
–Delinquent Federal debt;
–Fees and charges for real estate purchase contracts, warranties, inspections, surveys, engineer certifications;
–The total amount of property tax and flood and hazard insurance charges scheduled for payment during the First 12-Month Disbursement Period from a Fully-Funded Life Expectancy Set-Aside. Mortgagees must use the actual insurance premium and actual tax amount;
–Property tax, flood and hazard insurance payments required by the Mortgagee to be paid at loan closing;
–The amount of the principal that is advanced towards the purchase price of the subject property;
–Other charges as authorized by the Secretary; and
–For adjustable interest rate HECMs:
–The total amount of property charge payments scheduled for payment for the mortgagor authorized option as set forth in §206.205 during the First 12-Month Disbursement Period; and
–The total amount of semi-annual disbursements scheduled to be made during the First 12-Month Disbursement Period to the mortgagor from a Partially-Funded Life Expectancy Set-Aside.
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