FHA Tackles New HECM Changes
As part of an ongoing effort to strengthen the Mutual Mortgage Insurance Fund and preserve the financial soundness of the HECM program, the Federal Housing Administration (FHA) has announced new HECM program policies. Two Mortgagee Letters were published; a Mortgagee Letter announcing changes to the HECM program and a Mortgagee Letter announcing the HECM Financial Assessment and Property Charge Guide as described below.
Mortgagee Letter 13-27, Changes to the Home Equity Conversion Mortgage Program Requirements
The policies in Mortgagee Letter 13-27 include:
►Revised mortgage insurance premiums and principal limit factors;
►Restrictions on the amount of HECM funds that can be disbursed at closing and over the first twelve months following loan closing;
►Introduction of the new single distribution lump sum payment option;
►A required Financial Assessment for all HECM mortgagors focused on evaluating willingness and capacity to meet their financial obligations and the terms of the HECM;
►Required set aside of a portion of the loan proceeds or withhold of a portion of the Line of Credit or Term/Tenure payments for the payment of property taxes and insurance.
Mortgagee Letter 13-28, HECM Financial Assessment and Property Charge Guide
Mortgagee Letter 13-28 and the HECM Financial Assessment and Property Charge Guide attached to this Mortgagee Letter provides parameters for the required financial assessment that mortgagees must complete prior to approval of an FHA-insured HECM as announced in Mortgagee Letter 2013-27.
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