HUD lowers principal limit factors for HECMs

The Federal Housing Administration has released Mortgagee Letter 2009-34, that announces a new set of principal limit factors (PLFs) for the FHA's Home Equity Conversion Mortgage (HECM) program, to assist with the viability of the program. The new principal limit factors must be used for all HECMs for which the FHA case number is assigned on or after Oct. 1, 2009. FHA is making the new factor table available on HUD’s web site, to assist lenders, counselors, and others involved in FHA’s reverse mortgage program with immediate implementation of this program change. The new table may be uploaded or copied from the site directly into any reverse mortgage technology systems or tool used to support the HECM program.  All loans for which the FHA case number has already been assigned as of Sept. 30, 2009 may be processed as usual. The lender need not change any of the calculations of principal limit or re-disclose to borrowers any changes in the HECM proceeds that the borrower will receive. For more information, visit www.hud.gov.