Articles Tagged With: FHA Reverse Mortgage

October 25, 2018

FHA Reverse Mortgage Policy Changes Explained

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...

August 17, 2017

What Kind Of FHA Loans Are Available?

By Bruce Reichstein

What kind of FHA loans are available? This is an important question because it’s good to know what is not possible with an FHA mortgage as well as the options available to you. For example, some ask if an FHA loan can be used like a personal loan-is it possible to buy a home with an FHA mortgage but apply for more money than you need to complete the transaction? The answer in this case would be no, because FHA loan rules do not permit cash back to the borrower in that way at closing time, refunds excepted. So what can you do with an FHA mortgage loan? FHA Loans For Single Family Residences FHA home loans are intended for owner-occupiers. That means if you buy a property with an | more...

July 10, 2017

When Is An FHA Loan A Good Idea?

By Bruce Reichstein

When is an FHA loan a good idea? The answer depends on what you’re looking for from a home loan. Some borrowers are exactly right for an FHA mortgage, others may need another alternative. Is an FHA loan right for you? FHA Loan Occupancy Requirements Most FHA single family home loans require occupancy. The lender will ask you to certify in writing that you intend to occupy the property as your primary residence and not as a vacation home or other occasional occupancy type situation. Borrowers are free to purchase homes with up to four units and rent out the unused living units, but at least one borrower must occupy the home as her or his primary residence (usually within two months of loan closing). So if you are looking | more...

July 6, 2017

Who Should Get An FHA Loan? Part Two

By Joe Wallace

Who should get an FHA Loan? There are many reasons why you might want to explore your FHA loan options, and not all of them involve the need to purchase a new home. FHA loans are for both house hunters and those who are looking to refinance. The options you choose will depend on your financial needs and goals. FHA Loans Are For Refinancing, Too FHA refinance loans are an excellent choice for those who want to refinance. FHA loans can refinance existing FHA mortgages, but also non-FHA loans such as VA or conventional mortgages. Refinancing into an FHA mortgage has an even bigger advantage if you are currently in a non-FHA mortgage with an adjustable rate. You can refinance into a fixed-rate FHA home loan and get the benefit | 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...