Articles Tagged With: Home Equity Loan

February 2, 2015

HUD/FHA Alters HECM Foreclosure Options

The FHA and HUD have issued a press release announcing new options to avoid foreclosure on HECM homes in cases where the “last surviving borrower” dies but a non-borrowing surviving spouse still occupies the home. According to HUDNo.15-010, the FHA has issued a new policy, “under its Home Equity Conversion Mortgage (HECM) Program giving FHA-approved lenders the option to delay calling HECMs with eligible ‘non-borrowing spouses’ due and payable.” According to the press release, a delay would postpone foreclosure, “normally triggered by the death of the last surviving borrower. FHA’s new guidance will allow reverse mortgage lenders to assign eligible HECMs to HUD upon the death of the last surviving borrowing spouse, thereby allowing eligible surviving spouses the opportunity to remain in the home despite their non-borrowing status.” Last year, | more...

January 27, 2015

FHA Loans, Seasoning Requirements and Legal Assistance: A Reader Question

By Joe Wallace

A reader asks, “Have a question on issue of a legal settlement made on property ,, money to settle suit was borrowed on a promossory note and given to attorneys… few months later owner gave a lien to individual in case of untimely death , deed clearly states that it was NOT a home equity loan and title company agrees that the property is not subject to home equity rules etc,, A reverse mortgage lender tells me that it has to be seasoned as a home equity loan which kills the loan My attorney has shown lender that money borrowed from individual went to settlement funds and small attorney fee and was not an equity loan! There was no HUD or closing,, the lender gave me a clear deed! Surly there is | more...

January 21, 2015

FHA HECM Loan Origination Fees: What CFPB Says

By Joe Wallace

In our previous blog post, a reader asked us an important question about FHA Home Equity Conversion Mortgage (HECM) loan origination fees. Here’s that question: “Is there a cap on fees a broker can be compensated for their part on a HECM loan, and if the lender list origination fee that is clearly greater than the $6000 max, which includes the broker compensation paid by the lender. My question is is the lender in violation of the origination cap?” FHA HECM loan origination fees are indeed capped at a maximum of $6,000 for certain HECM loans above a specific dollar amount. The Consumer Financial Protection Bureau, a government finance watchdog organization, has this to say about FHA HECM loan origination fees: “An origination fee is what the lender or mortgage | more...

December 22, 2014

FHA Announces 2015 FHA Home Loan Guaranty Limits

By Joe Wallace

The FHA and HUD have announced the loan guaranty limits for 2015. FHA Mortgagee Letter 2014-25, which announces 2015 limits and policy for single-family “forward loans” for new purchases, FHA Streamline loans, and Home Equity Conversion Mortgages (HECMs). According to the mortgagee letter, “The minimum FHA national loan limit ‘floor’ is at 65 percent of the national conforming loan limit (which is $417,000 for a one unit property for the period January 1, 2015 through December 31, 2015). The floor applies to those areas where 115 percent of the median home price is less than 65 percent of the national conforming loan limit.” The FHA defines a high-cost area where the typical FHA loan guaranty rate may be different as follows: “Any area where the loan limit exceeds the floor is a high cost | more...

December 4, 2014

FHA HECM Loan Changes: MIP

By Joe Wallace

We have covered a great deal of information regarding the recent changes to the FHA’s Home Equity Conversion Mortgage (HECM) program. One crucial area borrowers should be aware of included in these changes? HECM MIP rules. The mortgage insurance premium rules for FHA HECM loans now reflects an MIP percentage that varies depending on how much the borrower’s initial disbursement amount is. FHA Mortgagee Letter 2014-21 states: “HUD charges an initial MIP of 0.50 percent (0.50%) of the Maximum Claim Amount (MCA) when the mortgagor’s Initial Disbursement Limit or the Borrower’s Advance is 60% or less of the Principal Limit. HUD charges an initial MIP of 2.50 percent (2.50%) of the MCA when a mortgagor’s Initial Disbursement Limit or the Borrower’s Advance is greater than 60% of the available Principal | more...

November 25, 2014

“Mandatory Obligations” For FHA HECM Loans

By Joe Wallace

The FHA made a great many changes to the Home Equity Conversion Mortgage loan (HECM) program in 2014. There have been alterations to the way funds are paid, the rules covering fixed-rate HECMs versus adjustable rate HECM loans and much more. One thing the FHA has also done is to make a list of what it calls “Mandatory Obligations” for HECM loans–basically a list of required fees and expenses that could affect the amount of money that comes to a HECM borrower from the initial disbursement. This list is rather lengthy, but knowing these expenses is very important–borrowers should know that the items on this list are required to be factored in when the lender is trying to determine how much money comes to the borrower on that initial payout | more...

November 20, 2014

FHA HECM Loan Rule Changes: Credit Standing and Financial Assessment

By Joe Wallace

In 2014, the FHA changed many of the rules associated with Home Equity Conversion Mortgages or HECM loans. One of those rule changes involves a new requirement that lenders perform a financial assessment of potential HECM borrowers to insure the applicants are not only qualified for the program on a financial basis, but also to insure they are able and willing to abide by HECM loan requirements. According to the FHA Mortgagee Letter, “Revised Changes To The Home Equity Conversion Mortgages Requirement”, there were major reasons for the policy changes. “An increasing number of tax and hazard insurance defaults by mortgagors led FHA to establish in Mortgagee Letter 2013-27 a requirement for a Financial Assessment of a potential mortgagor’s financial capacity and willingness to comply with mortgage provisions.” As a | more...

November 19, 2014

FHA HECM Loan Changes: Disbursements

By Joe Wallace

Recently we wrote about FHA Home Equity Conversion Mortgage (HECM) loan rule changes that were announced in FHA Mortgagee Letter 2014-21. Those rule changes include alterations and clarification of policy related to a variety of HECM loan policies. One very important affected area of HECM loan regulation the borrower should know about is related to disbursement of HECM loan funds. Mortgagee Letter 2014-21 announces separate policy for fixed-rate HECM loans and for Adjustable Rate HECM loans. Here is the FHA policy for disbursement limits according to ML 2014-21: “Definitions only for Adjustable Interest Rate HECMs  Initial Disbursement Limit: The maximum disbursement to the mortgagor allowed at loan closing and during the First 12-Month Disbursement Period is the greater of 60% of the Principal Limit; or the sum of Mandatory | more...

November 14, 2014

More Revisions to FHA HECM Loan Rules and Guidelines

By Joe Wallace

The FHA has issue another set of revisions, clarifications, and consolidation to its Home Equity Conversion Mortgage Loan rules. An FHA mortgagee letter, 2014-21, adds a large number of changes and clarifications. Many of the new changes have to do with key parts of the HECM loan process including limits on the amount of funds that can be “advanced at loan closing and during the First 12-Month Disbursement Period after loan closing” and also explaining which fees and charges are “Mandatory Obligations” under the FHA HECM program. One change announced in the mortgagee letter affects those who are paying off a non-FHA HECM loan with funds from the HECM loan. According to the FHA, the new rules include the following instructions to the lender: “Mortgagees may only permit the payoff | more...

What you should know about FHA 203(h) Loans For Disaster Victims

August 1, 2014

Types of FHA Home Loans

By Joe Wallace

There are a wide variety of options when it comes to the FHA loan program. Did you know you can buy or refinance a home using an FHA mortgage? You don’t have to have an existing FHA mortgage in order to refinance into an FHA mortgage, and for qualifying borrowers aged 62 or older the Home Equity Conversion Mortgage loan offered under the FHA loan program can also be an option. For new purchase FHA home loans, borrowers have the option under the FHA single-family loan program to purchase a suburban home, a townhome, condo, duplex or other home classified as real property (no houseboats or motor homes). FHA loans for new purchases require a minimum 3.5% down payment. This is non-negotiable, though borrowers are free to make a larger | more...