For all HECM reverse mortgage loans origination on or after January, 2018, the reverse mortgage limit or maximum claim amount (MCA) for has increased from the prior limit of $636,150 to the new limit of $679,650, according to Mortgagee Letter 2017-17. The Mortgagee Letter was published December 7, 2017 by the Department of Housing and Urban Development.
This positive increase represents 150 percent of the Freddie Mac national conforming limit of $453,100.
Reverse Mortgage Final Rule (HECM Final Rule)
The purpose of this bulletin is to summarize the key changes to the HECM program in accordance with HUD’s Final HECM Rule. This bulletin summarizes the key changes affecting the origination of HECM loans. Additional guidance on how to implement and apply the below changes is forthcoming.
2017 HECM Changes
In a move that shocked the entire reverse mortgage industry, HUD released Mortgagee Letter ML 2017-12, which will have a huge impact on the reverse mortgage program. The Mortgagee Letter indicates that in order for FHA to continue to endorse the HECM loan program, changes were needed which would increase the upfront Mortgage Insurance Premium (MIP) for many, lower the annual MIP for all as well as reduce the amount borrowers will be able to receive under the program for all new Case Numbers assigned on or after October 2, 2017. Continue reading
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
Many of you may not be aware that MLS Reverse Mortgage has a celebrity in it’s midst. Check out our first reverse mortgage commercial starring Mike Borba.
MLS Reverse Mortgage Commercial from MLS Mortgage on Vimeo.
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