Articles in Category: Reverse Mortgage or HECM

September 12, 2013

FHA HECM Program Changes: Mandatory Obligations

Recently the FHA and HUD announced changes to the FHA Home Equity Conversion Mortgage, also known as HECM. Those changes include new guidelines for the maximum amount of HECM loan funds that can be transferred to the borrower at the time the HECM loan closes or within the first 12 months of the HECM loan, as well as “what fees and charges are considered Mandatory Obligations” according to the new rules. According to FHA mortgagee letter 2013-27, a new “Single Disbursement” lump sum payment may be possible for borrowers applying for both adjustable and fixed interest rate HECM loans applicable for all FHA HECM loan case numbers assigned on or after September 30, 2013. “This payment option will be limited to a single disbursement at loan closing which cannot exceed | more...

September 11, 2013

FHA Home Equity Conversion Mortgage Loan Program Changes

By Joe Wallace

Recently the FHA and HUD issued a press release announcing changes to the FHA Home Equity Conversion Mortgage (HECM) program. While the entire list of changes is far too extensive to cover in a single post, we want to list the most important ones over a series of posts. According to the FHA/HUD press release, the recent changes are, “part of the Department’s continuing effort to reform, strengthen and protect FHA’s Mutual Mortgage Insurance (MMI) Fund” that are intended to “realign the HECM program with its original intent which will aid in the restoration of the MMI fund and help ensure the continued availability of this important program,” according to Federal Housing Commissioner Carol Galante. “Our goal here is to make certain our reverse mortgage program is a financially sustainable | more...

September 10, 2013

HUD Announces Changes To FHA Home Equity Conversion Mortgage Program

By Joe Wallace

The FHA and HUD have announced changes to the FHA Home Equity Conversion Mortgage program designed to manage risks and make the program more secure. According to a press release issued recently, the new rules will, “manage risk associated with the Federal Housing Administration’s (FHA) reverse mortgage or Home Equity Conversion Mortgage (HECM) Program. This is part of the Department’s continuing effort to reform, strengthen and protect FHA’s Mutual Mortgage Insurance (MMI) Fund” “The changes being announced today will realign the HECM program with its original intent which will aid in the restoration of the MMI fund and help ensure the continued availability of this important program,” said Federal Housing Commissioner Carol Galante. “Our goal here is to make certain our reverse mortgage program is a financially sustainable option for | more...

August 2, 2013

FHA Reverse Mortgage Program To Get Changes

By Joe Wallace

A recent article published by American Banker observes that lawmakers in Washington D.C. have passed legislation authorizing the FHA and HUD to make changes to the FHA Home Equity Conversion Mortgage program, also known as FHA HECM. The changes have not yet been signed into law by President Obama. But according to the Reverse Mortgage Stabilization Act passed by the House in June 2013 and now by the Senate in July 2013, “the agency can make certain changes by mortgagee letter, such as requiring financial assessments of a borrower’s budget and limiting the amount borrowers can take out as a lump sum up front” according to the American Banker article, titled Congress Passes Narrow Bill to Fix Reverse Mortgages at FHA. “Carol Galante, the agency’s commissioner, implored lawmakers on | more...

April 3, 2013

New FHA Home Equity Conversion Mortgage Rules Take Effect

By Joe Wallace

In January of 2013, the FHA announced pending rule changes to its Home Equity Conversion Mortgage program (FHA HECM for short). Those changes were scheduled to take effect on 1 April 2013 and are now in full effect. In the FHA Mortgagee Letter HUDNo.13-010, the agency announced, “…the consolidation of the Federal Housing Administration (FHA) Home Equity Conversion Mortgage (HECM) Standard and HECM Saver initial mortgage insurance premium (MIP) and maximum principal limit factors for fixed interest rate mortgages.” The announcement states that the HECM Saver program is, as of 1 April 2013, the “only initial MIP option available to mortgagors who seek the predictability of a fixed interest rate mortgage and lower upfront closing costs.” The announcement adds, “Mortgagees shall designate HECM Saver as the initial MIP and use | more...

February 13, 2013

FHA HECM Loan Changes: When and How

By Joe Wallace

On January 30, FHA issued guidance about pending changes to the FHA Home Equity Conversion Mortgage or HECM loan program. The changes affect all FHA HECM loans for fixed rate mortgages with case numbers assigned on or April 1, 2013. According to the FHA official site, “To help sustain the HECM program as a viable financial resource for aging homeowners and to strengthen the Mutual Mortgage Insurance Fund, the HECM Saver will be the only initial MIP option available to mortgagors who seek the predictability of a fixed interest rate mortgage and lower upfront closing costs.” This, according to FHA Mortgagee Letter 2013-01, requires the lender to “designate HECM Saver as the initial MIP and use the HECM Saver principal limit factors to determine the amount of funds available to | more...

February 6, 2013

FHA Loan Rule Changes

By Joe Wallace

The FHA has issued several rule changes recently including alterations to the FHA HECM and HECM Saver programs, new guidelines for mortgage insurance, and also the procedures for how some FHA loan applications must be processed with credit scores and debt-to-income ratios that exceed certain new guidelines. For example, FHA refinance loans for borrowers with negative equity in their homes have new guidelines which state, “Refinances of Borrowers in Negative Equity Position where the borrower has a decision credit score below 620 and the debt-to-income ratio exceeds 43.00% must be manually underwritten.” The same is true in cases of FHA Energy Efficient Mortgages. New FHA rules state, “While Energy Efficient Mortgages where the borrower has a decision credit score below 620 and the debt-to-income ratio exceeds 43.00% must be manually | more...

February 5, 2013

FHA Announces Changes To HECM Loan Program

By Joe Wallace

The FHA has issued a press release and Mortgagee Letter describing changes to the FHA Home Equity Conversion Mortgage (HECM) program. According to the FHA official site, the FHA will merge certain options associated with the HECM program and the FHA HECM Saver program as described below: “…FHA will consolidate its Standard Fixed-Rate Home Equity Conversion Mortgage (HECM) and Saver Fixed Rate HECM pricing options. This change will be effective for FHA case numbers assigned on or after April 1, 2013. The Fixed Rate Standard HECM pricing option currently represents a large majority of the loans insured through FHA’s HECM program and is responsible for placing significant stress on the MMI Fund.” The FHA press release adds, “To help sustain the program as a viable financial resource for aging homeowners, | more...

October 17, 2012

FHA Warns About Home Equity Mortgage Loan Scams

By Joe Wallace

The FHA official site includes a page about reverse mortgages and Home Equity Conversion Mortgages. On that page, you’ll find a warning from the FHA and HUD about scam artists who take advantage of some loan applicants who don’t know enough about the FHA’s free information on HECM loans and reverse mortgage loans. “Reverse mortgages are becoming popular in America” the FHA site says, “Reverse mortgages are a special type of home loan that lets a homeowner convert the equity in his/her home into cash. They can give older Americans greater financial security to supplement social security, meet unexpected medical expenses, make home improvements, and more. If you are interested in a reverse mortgage, beware of scam artists that charge thousands of dollars for information that is free from HUD!” | more...

October 3, 2012

Things You Should Know About FHA Refinance Loans: The Basic Details

By Joe Wallace

Refinancing an FHA mortgage is similar to refinance loan on other types of mortgages such as conventional loans or VA loans. Naturally the FHA has its own list of requirements and regulations that govern refinance loans; do you know the basics as well as you should? If you’re considering an application for an FHA refinance, here are a few general things you should know about going into the process. In the FHA loan rulebook under the section, “Purpose of a Refinance Transaction” we learn, ” A refinance transaction is used to pay off an existing real estate debt with the proceeds of a new mortgage; –for borrower(s) with legal title, and –on the same property”. The rules also state that an FHA borrower is “eligible to refinance the loan, as | more...