An important and required step in obtaining a HECM reverse mortgage is going through an independent reverse mortgage counseling session. Did you know that the counselor must ask 10 questions throughout the session to make sure the senior understands the key elements of a reverse mortgage? It’s true. Counseling agents must determine the borrower’s level of comprehension of the HECM products by asking 10 questions throughout the counseling session. Should at least 5 of these questions be answered incorrectly, the counselor may withhold the counseling certificate and schedule a follow-up meeting. The following are a list of questions from which the counselor must choose ten to ask the client: Continue reading
2017 HECM Loan Limits
For 2017, the reverse mortgage limit or maximum claim amount (MCA) for FHA-insured Home Equity Conversion Mortgages (Reverse Mortgage) has increased from the prior limit of $625,500 to the new limit of $636,150, according to Mortgagee Letter 2016-19. The Mortgagee Letter was published December 2, 2016 by the Department of Housing and Urban Development.
The new MCA is equal to 150% of Fannie Mae and Freddie Mac’s national conforming limit of $424,100. It’s important to note that the $636,150 limit is a national limit and is applicable to all HECM loans, including loans in special exception areas such as Alaska, Hawaii, Guam and the Virgin Islands. Continue reading
To expand on our previous post about requirements for non-HECM lien seasoning, we have some frequently asked questions below:
1. If I took out a loan in the past 12 months but drew less than $500 at closing or through draws after closing, can the lien be paid off through closing?
Yes. Continue reading
Change is in the air. Mortgagee Letter ML 2014-21 spelled out a few new changes to the HECM reverse mortgage program. The one change garnering all of the attention has been financial assessment, which starts 3/2/15, however the change to the reverse mortgage seasoning requirement deserves some attention as well and it begins much sooner; 12/15/14.
Effective for case numbers assigned on or after December 15, 2014, the payoff of existing non-HECM mortgage liens using HECM proceeds is only permitted if the liens have been in place for more than 12 months or resulted in less than $500 cash to the borrower, whether at closing or through cumulative draws (e.g.., as with a Home Equity Line of Credit (HELOC)) prior to the date of the initial HECM loan application. Continue reading
After much anticipation, HUD has released guidance for reverse mortgage financial assessment. This new change will affect all borrowers whose case numbers are assigned on or after March 2, 2015. HUD states "the purpose of financial assessment is to evaluate a mortgagor's willingness and ability to meet his/her financial obligations and to comply with the mortgage requirements." In other words, which we will refer to frequently; willingness and capacity.
"The financial assessment will be used to determine whether, and under what conditions, the mortgagor meets FHA eligibility criteria and whether an allocation of HECM proceeds will be required for payment of property charges."
If you have been considering accessing the equity in your home with a Home Equity Conversion Mortgage (HECM) loan, now may be a great time to act. A recent policy change may mean that you can qualify for more loan proceeds. HUD recently released Mortgagee Letter 2014-12 which included new Principal Limits Factors (PLF) for non-borrowing spouses under the age of 62. As part of these changes, HUD has also revised the PLF tables for all HECM loans. Under the new Principal Limit, borrowers:
- 64 and older will be eligible for more funds.
- between the ages of 62 and 63 will be eligible for slightly lower funds. Continue reading
After much anticipation and speculation, the Department of Housing and Urban Development (HUD) has released a multitude of changes to the HECM program. "These changes to reverse mortgages will protect consumers," according to Carol Galante, Federal Housing Administration (FHA) Commissioner and Assistant Secretary for Housing.
After much speculation, HUD announced the future elimination date of the Fixed Rate Standard Home Equity Conversion Mortgage (HECM). For new case numbers assigned on or after April 1, 2013, any homeowner seeking a fixed rate reverse mortgage will be limited to the Fixed Rate Saver Program. HUD also notes that all fixed rate standard loans must close on or before July 1, 2013. Continue reading
You’d be hard pressed to do an online search for reverse mortgage information today without coming across an article about a recent landmark government report on the product and the lenders who offer it.
The CFPB reverse mortgage report spans more than 200 pages of research recently conducted by the Consumer Financial Protection Bureau and highlights several key areas that the Bureau presented to Congress. Here are three of those highlights noted by the CFPB and questions you can ask yourself to make sure you have all the necessary information before taking out this type of loan. Continue reading