Articles Tagged With: FHA Reverse Mortgage

April 3, 2013

New FHA Home Equity Conversion Mortgage Rules Take Effect

In January of 2013, the FHA announced pending rule changes to its Home Equity Conversion Mortgage program (FHA HECM for short). Those changes were scheduled to take effect on 1 April 2013 and are now in full effect. In the FHA Mortgagee Letter HUDNo.13-010, the agency announced, “…the consolidation of the Federal Housing Administration (FHA) Home Equity Conversion Mortgage (HECM) Standard and HECM Saver initial mortgage insurance premium (MIP) and maximum principal limit factors for fixed interest rate mortgages.” The announcement states that the HECM Saver program is, as of 1 April 2013, the “only initial MIP option available to mortgagors who seek the predictability of a fixed interest rate mortgage and lower upfront closing costs.” The announcement adds, “Mortgagees shall designate HECM Saver as the initial MIP and use | more...

March 6, 2013

FHA HECM Deadline Approaching

By Joe Wallace

Earlier this year, the FHA and HUD issued new guidelines regarding the FHA Home Equity Conversion Mortgage Loan program also known as HECM. Important changes are coming to this home loan program which is designed for those age 62 or older. According to FHA Mortgagee Letter 2013-01, the changes are effective for all HECM fixed-rate case numbers assigned on or after April 1, 2013. What are these changes and why are they occurring? According to the mortgagee letter, “To help sustain the HECM program as a viable financial resource for aging homeowners and to strengthen the Mutual Mortgage Insurance Fund, the HECM Saver will be the only initial MIP option available to mortgagors who seek the predictability of a fixed interest rate mortgage and lower upfront closing costs”. This means | more...

February 13, 2013

FHA HECM Loan Changes: When and How

By Joe Wallace

On January 30, FHA issued guidance about pending changes to the FHA Home Equity Conversion Mortgage or HECM loan program. The changes affect all FHA HECM loans for fixed rate mortgages with case numbers assigned on or April 1, 2013. According to the FHA official site, “To help sustain the HECM program as a viable financial resource for aging homeowners and to strengthen the Mutual Mortgage Insurance Fund, the HECM Saver will be the only initial MIP option available to mortgagors who seek the predictability of a fixed interest rate mortgage and lower upfront closing costs.” This, according to FHA Mortgagee Letter 2013-01, requires the lender to “designate HECM Saver as the initial MIP and use the HECM Saver principal limit factors to determine the amount of funds available to | more...

February 5, 2013

FHA Announces Changes To HECM Loan Program

By Joe Wallace

The FHA has issued a press release and Mortgagee Letter describing changes to the FHA Home Equity Conversion Mortgage (HECM) program. According to the FHA official site, the FHA will merge certain options associated with the HECM program and the FHA HECM Saver program as described below: “…FHA will consolidate its Standard Fixed-Rate Home Equity Conversion Mortgage (HECM) and Saver Fixed Rate HECM pricing options. This change will be effective for FHA case numbers assigned on or after April 1, 2013. The Fixed Rate Standard HECM pricing option currently represents a large majority of the loans insured through FHA’s HECM program and is responsible for placing significant stress on the MMI Fund.” The FHA press release adds, “To help sustain the program as a viable financial resource for aging homeowners, | more...

October 17, 2012

FHA Warns About Home Equity Mortgage Loan Scams

By Joe Wallace

The FHA official site includes a page about reverse mortgages and Home Equity Conversion Mortgages. On that page, you’ll find a warning from the FHA and HUD about scam artists who take advantage of some loan applicants who don’t know enough about the FHA’s free information on HECM loans and reverse mortgage loans. “Reverse mortgages are becoming popular in America” the FHA site says, “Reverse mortgages are a special type of home loan that lets a homeowner convert the equity in his/her home into cash. They can give older Americans greater financial security to supplement social security, meet unexpected medical expenses, make home improvements, and more. If you are interested in a reverse mortgage, beware of scam artists that charge thousands of dollars for information that is free from HUD!” | more...

April 18, 2012

Prison Time For Reverse Mortgage Scammers

By Joe Wallace

From time to time, we report news of housing scams that can affect FHA borrowers. It’s a way of raising the awareness that such scams exist, a reminder of the necessity of being careful in the loan process. The latest news from the FHA and HUD includes a report of three loan officers and a title agent who have been barred from doing business with the FHA/HUD following their convictions on fraud charges. The action was announced in a press release at HUD.gov, HUDNo.12-069: “The U.S. Department of Housing and Urban Development (HUD) today announced the indefinite debarment of three South Florida mortgage loan officers and a Pittsburgh title agent following their criminal convictions on charges they defrauded elderly borrowers, mortgage lenders and the Federal Housing Administration (FHA). Marcos Echevarria, | more...

September 1, 2011

FHA Updates Rules for HECM Loan Counseling

By Joe Wallace

FHA Home Equity Conversion Mortgages, also known as HECM loans, are for qualified borrowers 62 or older who want to apply for a loan on their home using the equity in the home to secure the mortgage. This type of loan features cash out to the borrower and is not paid back until the borrower dies or sells the property. FHA HECM loans are unique because they offer money to the borrower as a monthly installment, a line of credit or other arrangements as permitted by FHA rules. The FHA requires applicants to get HECM-specific loan counseling before they can commit to the mortgage due to the terms and conditions of the mortgage loan. Some of those terms and conditions require the borrower to meet all loan obligations (including staying | more...

August 24, 2011

New FHA Loan Limits: How Do They Affect HECM Loans?

By Joe Wallace

Recently the FHA issued a press release announcing new FHA limits which take effect October 1, 2011. On that day, single family loan limits in high-cost counties would be lowered, but the majority of the country would see no change to FHA loan limits, according to the FHA official site. The new loan limits were originally implemented in 2008 as part of the Housing and Economic Recovery Act, but those limits were delayed under the Economic Stimulus Act of 2008. Under the new FHA loan limits, “The current standard (floor) loan limit for areas where housing costs are relatively low will remain unchanged at $271,050 for one-unit properties.

July 26, 2011

Can FHA HECM Loans Become Delinquent?

By Joe Wallace

In troubled economic times, FHA borrowers can get into trouble on their mortgages because of reduced income, higher prices and other issues. FHA and conventional borrowers know that missing one payment isn’t necessarily the road to foreclosure, but such problems should be addressed quickly to avoid going into loan default and/or foreclosure proceedings. Those with Home Equity Conversion Mortgages wouldn’t seem to be affected in the same way, since a HECM loan is designed to give the borrower access to funds supplied using the equity in the property as the security for the loan. There are no monthly payments and the loan is satisfied once the borrower dies or sells the home–once the home is sold, the loan is paid off in full, So how is it possible that an | more...

July 19, 2011

FHA HECM Loan Interest Rate Lock-Ins

By Joe Wallace

One frequently asked question about FHA Home Equity Conversion Mortgages has to do with the interest rate on the loan. Can the borrower get an interest rate lock-in on an FHA HECM? On HECM loans, the borrower’s principal loan limit could be affected if interest rates change between the time the loan is applied for and the time the loan closes. Do FHA rules allow a lender to fix the interest rate on these mortgages? According to the FHA official site, HECM loans are permitted to feature an interest rate lock-in at the time the loan application is submitted. “FHA will allow for mortgage lenders to set the expected interest rate for HECMs at the time the loan application is signed by the borrower rather than on the date of | more...