Articles Tagged With: FHA HECM

January 14, 2016

FHA HECM Loan Facts

The FHA single-family loan program includes reverse mortgages–a loan program where a borrower can apply for a loan that requires no monthly payments, offers cash back to the borrower, and is based on the value and equity in the home. If you are looking for a reverse mortgage, the FHA program might be just what you need. Here are some basic facts about the FHA reverse mortgage loan option: FACT: FHA reverse mortgages are known as Home Equity Conversion Mortgages or HECM for short. These two terms refer to the same thing when it comes to FHA reverse mortgages. FACT: FHA HECM loans are for borrowers aged 62 or older who either own their home outright or are very close to doing so. HECM loans are declared due when the | more...

December 14, 2015

FHA HECM Loan Limits For 2016

By Joe Wallace

The FHA has published the new mortgage loan guaranty limits for FHA Home Equity Conversion Mortgages for 2016. According to FHA Mortgagee Letter 2015-29, the new limits take effect for all FHA HECM loans with FHA case numbers assigned on or after 1 January 2016. According to the Mortgagee Letter, the 2016 limits are as follows: “For the period January 1, 2016 through December 31, 2016, the maximum claim amount for FHA-insured HECMs will remain $625,500 (150 percent of Federal Home Loan Mortgage Corporations (Freddie Mac) national conforming limit of $417,000). This maximum claim amount of $625,500 is also applicable to Freddie Macs special exception areas: Alaska, Hawaii, Guam, and the Virgin Islands.” FHA publishes new loan guaranty limits every year, making adjustments where necessary for housing market changes and | more...

When Is An FHA Loan Better Than A Conventional Loan?

October 27, 2015

FHA HECM Loans And Mandatory Counseling

By Joe Wallace

FHA HECM loans–home equity conversion mortgages, sometimes known as “reverse mortgages”–come with a requirement for all borrowers to be obligated on the FHA HECM to go through HECM loan counseling. This is not a requirement for other types of FHA mortgages, which leads some to wonder why FHA HECMs have this feature. Why do the borrowers have to complete FHA required counseling sessions as a condition of the loan? There are many reasons. Since HECM loans feature no monthly payments, cash back to the borrower, and specific requirements for that cash back, counseling is necessary for the applicants to know exactly what they can and cannot get with their HECM loans. This FHA loan program has changed a great deal in the last two years, and the terms and | more...

August 3, 2015

FHA Reverse Mortgages and the FHA Back To Work Progam

By Joe Wallace

A reader got in touch with us recently about the FHA’s Back To Work program, which was announced in 2013 as a way for lenders to offer FHA mortgage loans to people who have had financial hardship in the past that might otherwise disqualify them from a home loan. Back To Work requires the borrower and lender to work together to document the causes of a pre-foreclosure sale, foreclosure, bankruptcy or other financial hardship to show that the issue was circumstantial and not representative of a borrower’s actual credit worthiness. The following guidance to lenders is from FHA Mortgagee Letter 13-26: “As a result of the recent recession many borrowers who experienced unemployment or other severe reductions in income, were unable to make their monthly mortgage payments, and ultimately lost | more...

May 13, 2015

FHA Loan Rules, Reverse Mortgages and Seasoning Periods

By Joe Wallace

A reader asks, “I had a foreclosure in 9/12/2012. I have applied for a reverse mortgage several months ago. The loan officer told me that I would have to wail until sept 2015 to re-apply. Is there any way I can overcome this dead line.” There are some vagaries with this reader question that require addressing, but we’ll answer the basic query first. FHA loan rules state that exceptions are possible to the minimum “seasoning period” or mandatory waiting time to apply for an FHA loan, but this requires the borrower to meet certain criteria. It would also require the willingness of the lender, which in the case of this particular reader question, does not sound possible with that particular financial institution based on what was shared above. In order | more...

April 29, 2015

FHA Updates HECM Loan Due And Payable Policies

By Joe Wallace

The FHA and HUD have announced more changes to the FHA Home Equity Conversion Mortgage (HECM) loan program. A recent FHA Mortgagee Letter, “Home Equity Conversion Mortgage (HECM) Due and Payable Policies”, and affects all FHA HECM loans that become due and payable on or after July 1, 2015. The updates affect a variety of areas including: –a requirement for mortgagees to provide HUD notice of a HECMs Due and Payable status; –a requirement for mortgagees to provide HUD notice of the initiation of foreclosure; –obtaining required appraisals; –sales of properties securing defaulted or performing HECM loans; –extensions available when marketing a HECM for sale and/or participating in Hardest Hit Funds programs; –curtailment of debenture interest for missed deadlines This mortgagee letter announces FHA’s position on when HECM loans (with | more...

February 2, 2015

HUD/FHA Alters HECM Foreclosure Options

By Joe Wallace

The FHA and HUD have issued a press release announcing new options to avoid foreclosure on HECM homes in cases where the “last surviving borrower” dies but a non-borrowing surviving spouse still occupies the home. According to HUDNo.15-010, the FHA has issued a new policy, “under its Home Equity Conversion Mortgage (HECM) Program giving FHA-approved lenders the option to delay calling HECMs with eligible ‘non-borrowing spouses’ due and payable.” According to the press release, a delay would postpone foreclosure, “normally triggered by the death of the last surviving borrower. FHA’s new guidance will allow reverse mortgage lenders to assign eligible HECMs to HUD upon the death of the last surviving borrowing spouse, thereby allowing eligible surviving spouses the opportunity to remain in the home despite their non-borrowing status.” Last year, | more...

December 15, 2014

FHA HECM Loan Changes: A Reader Question

By Joe Wallace

A reader asks, “I have been trying for a few years now to obtain a FHA reverse mortgage for my condo in Staten Island…We were told that “spot” reverse mortgages are no longer available. Since our condo association will not consider having our entire complex become an FHA approved complex..and it seems every other complex in Staten Island feels the same way, we cannot access our equity which we need to augment our retirement income. Do the recent changes in FHA policy offer us any hope?” The FHA changed the rules for HECM loans in 2014 to include sweeping alterations of the requirements–there are new rules for payments depending on the nature of the loan (fixed or adjustable rate HECM loans), mandatory financial obligations and mortgage insurance. However, the changes | more...

July 16, 2014

New FHA HECM Deferral Period Rules Take Effect August 4 2014

By Joe Wallace

Recently the FHA and HUD updated requirements to the FHA Home Equity Conversion Mortgage (HECM) program to include something known as a deferral period for surviving non-borrowing spouses of those with HECM loans. What does this mean? According to the FHA official site, “For any HECM with a case number issued after the effective date of this Mortgagee Letter, in order to be eligible for FHA insurance, the HECM must contain a provision deferring the due and payable status that occurs because of the death of the last surviving mortgagor, if a mortgagor was married at the time of closing and the Non-Borrowing Spouse was identified at the time of closing.” “Specifically, the HECM documents must contain a provision deferring due and payable status until the death of the last | more...

June 20, 2014

FHA Issues Clarifications On HECM Loan Rules

By Joe Wallace

FHA Mortgagee Letters are issued from time to time from the FHA/HUD to clarify policies, set up new rules, or prepare borrowers and lenders for changes in the FHA program as dictated by law or other means. Two new FHA Mortgagee Letters were issued recently that discuss changes to the rules and regulations covering the FHA’s Home Equity Conversion Mortgage loan program (HECM). There are some important changes that affect the HECM program’s basic design and options for qualified borrowers, plus clarification on how the HECM program may be marketed and warnings against deceptive advertising or marketing practices. One of the most important changes to the FHA HECM program announced by the recent Mortgagee Letters involves limitations to fixed interest rate HECM loans. According to FHA Mortgagee Letter 2014-11: “FHA | more...