Articles in Category: Reverse Mortgage or HECM

December 6, 2018

Are FHA Cash-Out Refinance Loans The Only Option For Older Home Owners?

There are many kinds of homeowner; there’s the young couple just starting out looking for their first home, there are mid-career professionals who need to relocate or upsize their living conditions, and there are older home owners looking to cash in on equity they have worked hard to build up in the home. What kind of FHA loan options are open to the older home owner who wants to keep their home but cash in on the increased value of their property? FHA Cash-Out Refinance Loans For Older Home Owners Before we start discussing the FHA cash-out refinance loan option for seniors, it’s important to point out that FHA cash-out refinance loans are for any financially qualified borrower; these loans are NOT restricted to older home owners. FHA cash-out refi | more...

October 25, 2018

FHA Reverse Mortgage Policy Changes Explained

By Bruce Reichstein

In a recent blog post we discussed recent changes to FHA Reverse Mortgage loan policies. Here are some explanations of some of those policy changes and how they affect mortgage loan processing for FHA Home Equity Conversion Mortgages, also known as reverse mortgages. Evidence of Current Hazard Insurance FHA reverse mortgages require the lender to verify the existence of hazard insurance where required and to make sure that insurance is current, not delinquent. According to the 2018 HECM policy updates, participating FHA lenders who issue reverse mortgages are now allowed to accept alternative documentation of hazard insurance: “In lieu of a current hazard insurance declaration page, HUD will accept a document from the hazard insurance provider (i.e., hazard insurance company underwriting the property and responsible for paying a claim) on | more...

October 23, 2018

FHA Announces Revisions To FHA Reverse Mortgage Policies

By Joe Wallace

The Federal Housing Administration has issued a press release with revised FHA requirements for Home Equity Conversion Mortgages. Effective immediately, when processing FHA Reverse Mortgages, also known as Home Equity Conversion Mortgages, alternative supporting documentation is permitted as an alternative to “previously required materials that, in many instances, delayed claim processing” according to the FHA official site. FHA Commissioner Brian Montgomery is quoted in the press release saying that the rule changes would help keep the FHA Reverse Mortgage program on a “more financially viable path”. Montgomery says, “Streamlining the HECM claim payment process makes us more responsive to participating lenders…” FHA’s new HECM guidelines are intended to keep lenders from being “unduly burdened when seeking claims payments when the HECM reaches 98 percent of its maximum claim amount”. It | more...

July 2, 2018

Should I Consider An FHA Reverse Mortgage?

By Bruce Reichstein

Should I consider an FHA reverse mortgage? Many qualified borrowers are asking that question now in light of recent housing market stats indicating rising property values well into 2019. A Zillow.com report (through May 2018) indicates that housing is on an upward trend at the time of this writing. Home values have increased more than eight percent according to the Zillow report, and the same report says values could go up another 6.5% in the next year. Rising home values in U.S. housing markets means that borrowers applying for appraisal-required refinancing or FHA Reverse Mortgages (also known as FHA HECM loans) may discover their home is worth more than they realized. Naturally, this won’t apply in every single housing market, trends vary nationwide and your experience may vary based on | more...

February 12, 2018

Who Can Apply For FHA Reverse Mortgages?

By Joe Wallace

Who can apply for an FHA reverse mortgage? Borrowing money to take advantage of the value in the home is not a new concept, but the reverse mortgage is a type of loan that’s quite different than a standard FHA refi loan. What Is The FHA Reverse Mortgage? A reverse mortgage is a loan that obligates the borrower without requiring monthly mortgage payments. FHA reverse mortgages, also known as Home Equity Conversion Mortgages or HECMs for short, offer the borrower cash or a line of credit in an amount agreed upon between the borrower and lender. That amount is determined in part by the value of the home, so FHA HECM loans will require a new appraisal to see what the current fair market value of the property might be. | more...

December 18, 2017

FHA Announces Reverse Mortgage Loan Limits For 2018

By Joe Wallace

The FHA has announced reverse mortgage loan limits for 2018. The agency recently posted the forward mortgage loan limits for 2018, and the update for FHA reverse mortgages comes as no surprise given the overall increases posted for next year’s loan limits by county for new purchase loans. The FHA reverse mortgage is also known as the Home Equity Conversion Mortgage, or HECM for short. According to the FHA official site, the maximum “claim amount limits for Traditional HECM, HECM for Purchase, and HECM-to-HECM refinances are governed by the maximum claim amount limitation” are found in sections 25 5(g) and 255(m) of the National Housing Act. “FHA publishes updated limits effective for each calendar year” according to the most recent mortgagee letter at FHA.gov. The new limits are, according FHA | more...

August 28, 2017

HUD Issues Announcement On HECM Loan Policy Changes

By Joe Wallace

The Department of Housing and Urban Development has issued a mortgagee letter detailing changes to the FHA loan HECM program (also known as FHA Reverse Mortgage program) effective for all case numbers assigned on or after September 19, 2017. According to Mortgagee Letter 2017-11, the changes affect how participating lenders proceed in cases where there has been a loan default for “unpaid property charges” and the sale of property secured by an FHA HECM that has been declared due and payable. According to the FHA/HUD official site, for cases where unpaid property charges cause a HECM loan to go into default, new guidance to lenders includes the following: “If a Borrower is unable or unwilling to repay the Mortgagee for any Mortgagee funds advanced to pay property charges, the Mortgagee | more...

April 26, 2017

FHA Reverse Mortgages: An Appraisal Question

By Joe Wallace

A reader asked us a question in the comments section recently about FHA reverse mortgages and the appraisal process for them. “We have a detached garage with a 500 square foot “mother-in-law unit” on top. Will this structure be included in the appraisal in which the reverse mortgage is based on?” FHA loan rules for appraisals are found in HUD 4000.1. Before quoting the rules for appraising what the FHA loan rule book classifies as an “accessory dwelling unit” or ADU, it’s important to remember that state law, and certain building code requirements may also apply. FHA appraisals include determining whether an outbuilding is an ADU or not. The FHA definition of an ADU is as follows: “An Accessory Dwelling Unit (ADU) refers to a habitable living unit added to, | more...

March 13, 2017

FHA Refinance Loans: Cash-Out, Rehab

By Joe Wallace

Are you thinking about refinancing into an FHA loan from an existing non-FHA mortgage? Do you already have an FHA mortgage and want to refinance? There are options under the FHA loan program for both, including the possibility of applying for a refinance loan to repair the property or add improvements to it. FHA refinance loans are intended for all financially qualified borrowers regardless of their current loan, whether it is an existing FHA, conventional, VA, or other non-FHA mortgage. FHA refinance loan options include cash-out, no cash-out, rehab mortgages, and streamline refinancing. FHA Streamline Refinance loans are intended for those with existing FHA mortgages and have no FHA-required appraisal or credit check. The lender may require both, but the FHA loan rules in HUD 4000.1 allow participating lenders to | more...

March 1, 2017

FHA HECM Loans: A Reader Question

By Joe Wallace

FHA refinance loans include the FHA HECM loan option for qualified borrowers. A reader asked us a question recently on HECM loans; “How does the Non-Borrowing spouse prove or show legal ownership of the property to the lender after the last surviving HECM mortgagor has died?” The reader is referring to an FHA loan rule modification that came out in 2014 about the deferral period for FHA Home Equity Conversion Mortgages that involve a surviving, non-borrowing spouse. Mortgagee Letter 2014-07 states: “In the event the last surviving mortgagor predeceases a Non-Borrowing Spouse, the due and payable status will be deferred for as long as a Non- Borrowing Spouse continues to meet all the qualifying attributes stated in the above section. In addition, such Non-Borrowing Spouse must satisfy and continue to | more...