Articles Tagged With: Home Equity Loan

June 19, 2015

FHA Amends HECM Loan Policy To Help Non-Borrowing Spouses

After many changes to FHA Home Equity Conversion Mortgage (HECM) rules, another round of changes has been announced. The FHA HECM loan program has probably changed more in the last year or so than any other single-family FHA loan program, and many of the changes we’re seeing now address important issues related to what happens when the primary borrower dies and/or the HECM loan is about to be declared due in full. According to HUDNo.15-073, the FHA has “issued a revised policy under its Home Equity Conversion Mortgage (HECM) Program giving FHA-approved lenders expanded options to allow eligible non-borrowing spouses the potential to remain in their home following the death of the last surviving borrower.” In 2014 there were changes in FHA HECM policies, “to allow for the deferral of | more...

June 16, 2015

CFPB Reminds HECM Applicants To Read The Fine Print

By Joe Wallace

The Consumer Financial Protection Bureau (CFPB) has published a consumer advisory warning those in the market for a Home Equity Conversion Mortgage Loan to pay special attention to the terms and conditions of the HECM loan, adding that some lenders are allegedly using false or misleading language in advertising about such loans. The first thing CFPB wants borrowers to know is that a HECM loan is just that–it’s a mortgage loan with legally binding financial agreements, not a government benefit. FHA HECM loans, which are guaranteed by the government, are not and should not presented as a benefit and require mandatory counseling about the HECM program. And that’s important to think about when shopping for a lender for your reverse mortgage or HECM loan; a participating FHA lender is required | more...

May 29, 2015

FHA HECM Loans With Set-Aside Accounts For Property Taxes

By Joe Wallace

The FHA and HUD have been making a number of revisions to the FHA Home Equity Conversion Mortgage program (FHA HECM) including changing the nature of payouts based on the type of HECM loan (adjustable rate or fixed rate) and many other alterations. One of the most recent changes is how the FHA expects participating lenders to deal with unpaid property taxes on an FHA HECM, which technically can result in the loan being declared due and payable. Some lenders and borrowers go into a HECM loan with an arrangement to have a set-aside account created specifically for the purpose of paying property taxes to avoid problems later down the line. But what happens if a HECM borrower lets that set-aside account lapse? When the property taxes begin to go | more...

May 27, 2015

FHA HECM Loan Rules: When Can A HECM Loan Be Declared Due In Full?

By Joe Wallace

There have been many changes to the FHA HECM (Home Equity Conversion Mortgage) program in recent months. If you are a qualified HECM loan applicant exploring your options now after having researched them a year or two ago, it’s likely you will need to re-familiarize yourself with the FHA HECM rules and regulations as many have had important changes made. HECM loans still feature the usual conditions–failing to use the home as the primary residence, for example, can still result in the HECM loan being declared due in full. That hasn’t changed, but some other conditions that trigger a due-in-full demand have. One such change involves when a HECM loan can be declared due in full because of failure to meet HECM loan “property charge” requirements. Did you know that | 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...

May 5, 2015

FHA HECM Loans: Basic Details You Should Know

By Joe Wallace

If you are a qualified borrower aged 62 years or older and either own your home or are very close to doing so, you may be eligible for an FHA Home Equity Conversion Mortgage (also known as a HECM loan). HECM loans, also known as reverse mortgages, feature money back to the borrower and no mortgage payments. The HECM loan normally comes due and payable when the borrower dies or sells the home. According to the FHA official site, the type of homes eligible are strictly residential in nature with an occupancy requirement for the borrower: “To be eligible for the FHA HECM, your home must be a single family home or a 2-4 unit home with one unit occupied by the borrower. HUD-approved condominiums and manufactured homes that meet | more...

April 30, 2015

Recent Changes to FHA HECM Due And Payable Rules

By Joe Wallace

Recently the FHA and HUD announced further changes to the FHA Home Equity Conversion Mortgage or HECM loan program. There have been a number of alterations and adjustments to the FHA HECM loan program in the last year or so, and the new changes further clarify the rules for certain aspects of the HECM program. In this case many of the rule changes have to do with the procedures for declaring a HECM loan due and payable. According to FHA Mortgagee Letter 2015-10, “For HECMs that are due and payable, the Due Date is the date when: –the mortgagee notifies the Secretary that the mortgage became due and payable without HUDs approval; or –the Secretary approves the mortgagees request to call the mortgage due and payable. For HECMs with a | 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...

April 9, 2015

FHA Cash-Out Refinance Loans: A Reader Question

By Joe Wallace

A reader asks, “Our home is in trust, and my mother-in-law has signed a quit claim deed. My husband was in a hit and run motorcycle accident 3 years ago this coming June. Due to his inability to work for 4 months we struggled with payments and our credit is horrible. We would like to get a loan on our house so we can pay off a home equity loan, and multiple collections.” “Our home is valued at approx. $250,000, and we would like to get a loan for half of that so we can get out of debt and make some improvements to our home. My husband has credit scores of Experian 558, Equifax 517, and Transunion 491. Is it possible to find an FHA lender that would be | more...

March 31, 2015

FHA Clarifies Rules For FHA HECM Loans

By Joe Wallace

The FHA and HUD have clarified rules that govern how FHA Home Equity Conversion Mortgage Loans are handled with regard to “life expectancy set-asides” and calculation of property taxes as part of a borrower’s debt-to-income ratio. FHA Mortgagee Letter 2015-09, “establishes a monthly growth rate for Life Expectancy Set-Asides and clarifies a discrepancy between the HECM Financial Assessment and Property Charge Guide and the model HECM Financial Assessment Worksheet transmitted with Mortgagee Letter 2014-22.” What is a “life expectancy set-aside” and how does the new clarification affect it? According to the FHA, “The Life Expectancy Set-Aside (LESA) is used for the payment of property taxes, and hazard and flood insurance premiums, and will increase each month at a rate equal to one-twelfth of the sum of the mortgage interest rate | more...