Articles Tagged With: FHA Reverse Mortgage

July 16, 2014

New FHA HECM Deferral Period Rules Take Effect August 4 2014

Recently the FHA and HUD updated requirements to the FHA Home Equity Conversion Mortgage (HECM) program to include something known as a deferral period for surviving non-borrowing spouses of those with HECM loans. What does this mean? According to the FHA official site, “For any HECM with a case number issued after the effective date of this Mortgagee Letter, in order to be eligible for FHA insurance, the HECM must contain a provision deferring the due and payable status that occurs because of the death of the last surviving mortgagor, if a mortgagor was married at the time of closing and the Non-Borrowing Spouse was identified at the time of closing.” “Specifically, the HECM documents must contain a provision deferring due and payable status until the death of the last | more...

July 9, 2014

FHA Reverse Mortgage Loan Rules For Occupancy: A Reader Question

By Joe Wallace

A reader asks, “My mother-in-law is sole owner of her home. she remarried and acquired a reverse mortgage. She is getting a divorce. unfortunately, she was force out of her house because of his violence. My question is how long can he live in the house if she is not there?” This situation calls for a lawyer–the laws of the reader’s state would definitely apply here. However, there is a very important FHA loan rule on HECM loans that borrowers need to be aware of and that definitely applies in this circumstance. FHA HECM loans require occupancy. A borrower who no longer occupies the home that secures an FHA HECM loan can and at some point definitely could have the entire loan declared due in full because failure to maintain | more...

June 23, 2014

New FHA HECM Rules: Determining The Principal Loan Amount

By Joe Wallace

Last week we reported on changes to the FHA Home Equity Conversion Mortgage loan program–changes announced by FHA and HUD that change the terms of the loan program for fixed rate HECMs and adjustable rate HECM loans. As of HECM loans with case numbers assigned on or after June 25, 2014, FHA HECM loans for fixed rate mortgages feature the following restrictions as per the FHA official site: “FHA will only insure fixed interest rate reverse mortgages where the mortgage limits the mortgagor to: –A single, full draw to be made at loan closing; and –Does not provide for future draws by the mortgagor under any circumstances.” The FHA also made changes to adjustable rate HECM loans–the FHA official site says: “The Single Disbursement Lump Sum payment option shall not | more...

June 20, 2014

FHA Announces Major Changes To HECM Loan Program Rules

By Joe Wallace

In our previous blog post we mentioned some big changes made by the FHA to the Home Equity Conversion Mortgage (HECM) loan program. HECM loans are for eligible borrowers age 62 or older, and feature no monthly mortgage payment for the borrower, who instead gets a lump sum or regular cash dispersal under the terms of the loan until the borrower either dies or sells the property. That’s when the loan becomes due in full. Among the new changes announced by the FHA to the HECM program? Limitations on fixed-rate HECM loans and how the money can be paid to the borrower. There’s also a change to adjustable rate HECM loans, and both of these changes are very important for borrowers to understand before committing to this type of mortgage | more...

April 30, 2014

FHA HECM Loan Changes: A Reader Question

By Joe Wallace

A reader asks, “I have reviewed the new changes regarding protecting the surviving spouse on a reverse mortgage. My husband and I took out a reverse mortgage in 2012 and was told that when I turn 62 in 2015, that I could be added to the loan and be safe.” “Since then I have found out that is not true. We would have to refinance, however, there may be a large amount of money needed to do this. Now we are worried that I may not get on this loan and I could be in danger if my husband dies before me. Will this new ruling protect me?” This reader question refers to our previous blog post about changes to the FHA HECM program which now offer non-borrowing spouses protection | more...

April 28, 2014

FHA Updates HECM Loan Rules

By Joe Wallace

The FHA has issued a new Mortgagee Letter updating the rules of the FHA Home Equity Conversion Mortgage (HECM) loan program. Mortgagee Letter 2014-07 announces rule changes for HECM loans that feature a non-borrowing spouse. “This Mortgagee Letter uses the authority granted HUD in the Reverse Mortgage Stabilization Act of 2013 to amend the Federal Housing Administration’s (FHA) HECM program regulations and requirements concerning due and payable status where there is a Non-Borrowing Spouse at the time of loan closing.” What are the rule changes? We’ll cover them in depth in another blog post, but essentially the HECM loan program has been modified to further protect the interests of a non-borrowing spouse in cases where the HECM loan borrower dies. “For many years, Non- Borrowing Spouses were able to refinance | more...

February 6, 2014

FHA Electronic Signatures Policy

By Joe Wallace

Recently the FHA announced it would accept electronic signatures or “e-signatures” on FHA home loan documents. These changes were announced in a press release and then described in greater detail in FHA Mortgagee Letter 14-03. The mortgagee letter explains that a wide variety of FHA loan products will accept e-signatures for many steps in the FHA loan process, though the actual sales contract will, at the time of this writing, continue to require a traditional signature. According to FHA Mortgagee Letter 14-03, “Unless otherwise prohibited by law or excepted below, FHA will accept electronic signatures on the documents referenced below (collectively referred to as “Authorized Documents”), provided that the mortgagee complies with standards outlined in this ML. –Mortgage Insurance Endorsement Documents: Electronic signatures will be accepted on all documents requiring | more...

September 12, 2013

FHA HECM Program Changes: Mandatory Obligations

By Joe Wallace

Recently the FHA and HUD announced changes to the FHA Home Equity Conversion Mortgage, also known as HECM. Those changes include new guidelines for the maximum amount of HECM loan funds that can be transferred to the borrower at the time the HECM loan closes or within the first 12 months of the HECM loan, as well as “what fees and charges are considered Mandatory Obligations” according to the new rules. According to FHA mortgagee letter 2013-27, a new “Single Disbursement” lump sum payment may be possible for borrowers applying for both adjustable and fixed interest rate HECM loans applicable for all FHA HECM loan case numbers assigned on or after September 30, 2013. “This payment option will be limited to a single disbursement at loan closing which cannot exceed | more...

September 11, 2013

FHA Home Equity Conversion Mortgage Loan Program Changes

By Joe Wallace

Recently the FHA and HUD issued a press release announcing changes to the FHA Home Equity Conversion Mortgage (HECM) program. While the entire list of changes is far too extensive to cover in a single post, we want to list the most important ones over a series of posts. According to the FHA/HUD press release, the recent changes are, “part of the Department’s continuing effort to reform, strengthen and protect FHA’s Mutual Mortgage Insurance (MMI) Fund” that are intended to “realign the HECM program with its original intent which will aid in the restoration of the MMI fund and help ensure the continued availability of this important program,” according to Federal Housing Commissioner Carol Galante. “Our goal here is to make certain our reverse mortgage program is a financially sustainable | more...

August 2, 2013

FHA Reverse Mortgage Program To Get Changes

By Joe Wallace

A recent article published by American Banker observes that lawmakers in Washington D.C. have passed legislation authorizing the FHA and HUD to make changes to the FHA Home Equity Conversion Mortgage program, also known as FHA HECM. The changes have not yet been signed into law by President Obama. But according to the Reverse Mortgage Stabilization Act passed by the House in June 2013 and now by the Senate in July 2013, “the agency can make certain changes by mortgagee letter, such as requiring financial assessments of a borrower’s budget and limiting the amount borrowers can take out as a lump sum up front” according to the American Banker article, titled Congress Passes Narrow Bill to Fix Reverse Mortgages at FHA. “Carol Galante, the agency’s commissioner, implored lawmakers on | more...