HUD issues HECM for purchase program guidanceMortgagePress.comHUD, HECM, Mortgagee Letter 2008-33, Housing and Economic Recovery Act
On Oct. 20, the U.S. Department of Housing and Urban Development
(HUD) issued Mortgagee Letter 2008-33 (ML 08-33) to address the
Home Equity Conversion Mortgage (HECM) for Purchase Program.
The Housing and Economic Recovery Act (HERA) allows HECM
mortgagors to purchase a new principal residence with HECM loan
proceeds. Section 2122(a)(9) of HERA amends section 255 of the
National Housing Act to authorize HUD to insure HECMs used for the
purchase of a 1-4 family dwelling unit. Accordingly, eligible
mortgagors now have the opportunity to purchase a principal
residence with HECM loan proceeds. HUD requires lenders to ensure
that:
• The property, when used as collateral for the HECM, will
serve as the principal residence of the HECM mortgagor;
• Construction is complete and a certificate of occupancy or
its equivalent has been issued
• Any construction loan financing for the property is
satisfied; and
• The HECM liens will be in a first and second lien position
and, at the time of closing, there are no other liens against the
property.
For a copy of ML 08-33, click
here.
