NAMB submits testimony on increased FHA and GSE conforming loan limits
HUD issues Mortgagee Letter to remind mortgagees of HECM advisor limitationsMortgagePress.comHUD, Mortgagee Letter 2008-14, HECM, FHA requirements On May 16, the Department of Housing and Urban Development (HUD) issued Mortgagee Letter 2008-14 to remind lenders of FHA's policies regarding non FHA-approved entities that participate in HECM originations. Under current FHA requirements, FHA approved entities must complete the full origination process for FHA insured HECMs. However, non FHA-approved entities may support a HECM origination for compensation if such entities provide "educational-type" origination services. To comply with RESPA, a non-approved entity may receive market rate compensation for actual services performed, but to also comply with FHA rules, the entity must not perform any services during the HECM origination process that require FHA approval. For example, FHA requirements permit non-approved entities to: (i) educate prospective borrowers about the reverse mortgage lending process; (ii) advise the borrower about different types of loan products available; (iii) demonstrate how closing costs and payment options could vary under each product; and (iv) maintain regulator contact with the lender to keep the borrower apprised of the status of the loan application. Amongst other limitations, the non-approved entity must also "be 'engaged independently by the homeowner' and there must be 'no financial interest between the mortgage broker and the mortgagee.'" Moreover, the non-approved entity's compensation "must be 'included as part of the origination fee' paid to the mortgagee or loan correspondent" or paid directly from the borrower's own assets. For a copy of HUD Mortgagee Letter 2008-14, click here.