Articles Tagged With: FHA HECM

December 18, 2017

FHA Announces Reverse Mortgage Loan Limits For 2018

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...

June 2, 2016

HUD Announces Housing Counseling Committee

By Joe Wallace

In many of our blog posts, we encourage borrowers to contact the FHA/HUD directly to seek a referral to a local, HUD-approved housing counselor. Pre-purchase counseling can be a very important part of the home loan application process, especially for borrowers who are new to the mortgage loan process. In some cases, as with FHA reverse mortgages/HECM loans, counseling is required as a condition of loan approval. Borrowers can contact the FHA/HUD directly to request housing counseling by calling 1-800 CALL FHA. And now, thanks to action by HUD in compliance with the Dodd-Frank Act of 2010, a new committee is looking into ways to expand and improve housing counseling. According to a press release at the HUD official site, on Wednesday June 1, 2016, “this advisory panel will help | more...

What happens to my FHA loan in a natural disaster?

May 25, 2016

FHA Reverse Mortgages: Payout Options

By Joe Wallace

Recently we wrote about proposed changes to strengthen the FHA Reverse Mortgage loan program and about basics of the FHA Reverse Mortgage program. We left off with a promise to discuss how the reverse mortgage, also known as an FHA Home Equity Conversion Mortgage (HECM), pays out once the loan has closed. A HECM borrower’s payout (also known as a disbursement) depends on the nature of the HECM loan. The rules for cash back to the borrower differ based on whether the borrower has a fixed interest rate HECM loan or an adjustable rate HECM. The FHA/HUD official site states that borrowers who have adjustable rate HECM loans are eligible for the following payment options: Tenure-equal monthly payments as long as at least one borrower lives and continues to occupy | more...

January 14, 2016

FHA HECM Loan Facts

By Joe Wallace

The FHA single-family loan program includes reverse mortgages–a loan program where a borrower can apply for a loan that requires no monthly payments, offers cash back to the borrower, and is based on the value and equity in the home. If you are looking for a reverse mortgage, the FHA program might be just what you need. Here are some basic facts about the FHA reverse mortgage loan option: FACT: FHA reverse mortgages are known as Home Equity Conversion Mortgages or HECM for short. These two terms refer to the same thing when it comes to FHA reverse mortgages. FACT: FHA HECM loans are for borrowers aged 62 or older who either own their home outright or are very close to doing so. HECM loans are declared due when the | more...

December 14, 2015

FHA HECM Loan Limits For 2016

By Joe Wallace

The FHA has published the new mortgage loan guaranty limits for FHA Home Equity Conversion Mortgages for 2016. According to FHA Mortgagee Letter 2015-29, the new limits take effect for all FHA HECM loans with FHA case numbers assigned on or after 1 January 2016. According to the Mortgagee Letter, the 2016 limits are as follows: “For the period January 1, 2016 through December 31, 2016, the maximum claim amount for FHA-insured HECMs will remain $625,500 (150 percent of Federal Home Loan Mortgage Corporations (Freddie Mac) national conforming limit of $417,000). This maximum claim amount of $625,500 is also applicable to Freddie Macs special exception areas: Alaska, Hawaii, Guam, and the Virgin Islands.” FHA publishes new loan guaranty limits every year, making adjustments where necessary for housing market changes and | more...

When Is An FHA Loan Better Than A Conventional Loan?

October 27, 2015

FHA HECM Loans And Mandatory Counseling

By Joe Wallace

FHA HECM loans–home equity conversion mortgages, sometimes known as “reverse mortgages”–come with a requirement for all borrowers to be obligated on the FHA HECM to go through HECM loan counseling. This is not a requirement for other types of FHA mortgages, which leads some to wonder why FHA HECMs have this feature. Why do the borrowers have to complete FHA required counseling sessions as a condition of the loan? There are many reasons. Since HECM loans feature no monthly payments, cash back to the borrower, and specific requirements for that cash back, counseling is necessary for the applicants to know exactly what they can and cannot get with their HECM loans. This FHA loan program has changed a great deal in the last two years, and the terms and | more...

August 3, 2015

FHA Reverse Mortgages and the FHA Back To Work Progam

By Joe Wallace

A reader got in touch with us recently about the FHA’s Back To Work program, which was announced in 2013 as a way for lenders to offer FHA mortgage loans to people who have had financial hardship in the past that might otherwise disqualify them from a home loan. Back To Work requires the borrower and lender to work together to document the causes of a pre-foreclosure sale, foreclosure, bankruptcy or other financial hardship to show that the issue was circumstantial and not representative of a borrower’s actual credit worthiness. The following guidance to lenders is from FHA Mortgagee Letter 13-26: “As a result of the recent recession many borrowers who experienced unemployment or other severe reductions in income, were unable to make their monthly mortgage payments, and ultimately lost | more...

May 13, 2015

FHA Loan Rules, Reverse Mortgages and Seasoning Periods

By Joe Wallace

A reader asks, “I had a foreclosure in 9/12/2012. I have applied for a reverse mortgage several months ago. The loan officer told me that I would have to wail until sept 2015 to re-apply. Is there any way I can overcome this dead line.” There are some vagaries with this reader question that require addressing, but we’ll answer the basic query first. FHA loan rules state that exceptions are possible to the minimum “seasoning period” or mandatory waiting time to apply for an FHA loan, but this requires the borrower to meet certain criteria. It would also require the willingness of the lender, which in the case of this particular reader question, does not sound possible with that particular financial institution based on what was shared above. In order | more...

April 29, 2015

FHA Updates HECM Loan Due And Payable Policies

By Joe Wallace

The FHA and HUD have announced more changes to the FHA Home Equity Conversion Mortgage (HECM) loan program. A recent FHA Mortgagee Letter, “Home Equity Conversion Mortgage (HECM) Due and Payable Policies”, and affects all FHA HECM loans that become due and payable on or after July 1, 2015. The updates affect a variety of areas including: –a requirement for mortgagees to provide HUD notice of a HECMs Due and Payable status;–a requirement for mortgagees to provide HUD notice of the initiation of foreclosure;–obtaining required appraisals;–sales of properties securing defaulted or performing HECM loans;–extensions available when marketing a HECM for sale and/or participating in Hardest Hit Funds programs;–curtailment of debenture interest for missed deadlines This mortgagee letter announces FHA’s position on when HECM loans (with case numbers issued before August | more...