Reverse Mortgage Articles
|Reverse Home Equity Conversion Mortgage Financial Assessment Worksheet
Mortgagee Letter 2015-09 (Effective April 27, 2015) [Download Chart/Checklist, HECM Assessment Worksheet (effective 4-27-2015)]
A revised version of the model HECM Financial Assessment Worksheet was included in the HECM Financial Assessment and Property Charge Guide, which was an attachment to Mortgagee Letter 14-22, dated November 10, 2014. Mortgagees may use this document or a worksheet that they have developed to capture key data elements from the financial assessment of the mortgagor. (Mortgagee Letter 2015-09, Home Equity Conversion Mortgage (HECM) -– Life Expectancy Set-Aside Growth Rate and Clarification to Section 3.98 of the HECM Financial Assessment and Property Charge Guide, March 27, 2015.)
|CFPB Report Highlights Consumer Frustration Around Reverse Mortgages [Download Mortgage Talking PointsTM flyer, How to Create More Sales with Reverse Mortgages]
Reverse Mortgages can be used on Purchase transactions March 2015|
The CFPB has released a report that highlights the frustrations and concerns of borrowers who have obtained HECM-Reverse Mortgage financing. They are also releasing an advisory with tips on how to plan ahead to protect loved ones from financial hardship brought on by a reverse mortgage. Download the Mortgage Talking Points™ article about creating more revenue with reverse mortgages. (CFPB Report Highlights Consumer Frustration Around Reverse Mortgages – Dated February 9, 2015 )
|Reverse Mortgage – Delaying Home Equity Conversion Mortgage Financial Assessment & Property Funding Requirements (HECM) – Mortgagee Letter 2015-06 (Effective 4-27-2015)
FHA has delayed the effective date for Financial Assessment and Property Charge Funding Requirements for the HECM loan. Originally, these were slated for March 2, 2015, but will now go into effect April 27, 2015. This allows lenders an additional 6 weeks to implement the changes. Please refer back to the Mortgage Currentcy posting in the link below for complete program details as this is an implementation date change only. (Mortgagee Letter 2015-06, Home Equity Conversion Mortgage (HECM) – Delay in Effective Date for Financial Assessment and Property Charge Funding Requirements for the Payment of Certain Property Charges, February 26, 2015 )
|MC HECM Eligible and Non-Eligible Non-Borrowing Spouses ML 15-02 (Effective March 9, 2015)
This new Mortgagee Letter ensures full disclosure and explanation to both the borrower and non-borrowing spouse regarding non-borrowing spouse status as well as additional protections for the Eligible Non-Borrowing Spouse when it comes to curing defaults and being eligible to extend Deferral Periods and remain in the home. Sample disclosure forms included in ML. (FHA Mortgagee Letter 2015-02, Home Equity Conversion Mortgage (HECM) Program: Policy Guidance and Certifications for Eligible and Ineligible Non-Borrowing HECM Spouses and Seasoning Requirements Guidance, January 9, 2015 )
|FHA HECM Financial Assessment and Property Charge Requirements, Mortgagee Letter 2014-22 – Various Dates
This new 87-page guide along with the guidance in ML 2014-21 is your new HECM origination world. This guide provides all of the criteria underwriters must use when performing the financial assessment. Bottom line: On page 82 of the guide, you will find a model worksheet form. You will need to create your own form based on this model.
|HECM: Special Instructions for Case Number Cancellation to Allow Borrowers to Choose New Policies – FHA INFO #14-43 (Effective 8-4-14)
It will be important that you document your current HECM pipeline files to reflect that you have informed your borrowers of their right to utilize these new policies to either remain with current policy or exercise their right to change. (Yes, I’m suggesting a form, and no, there isn’t a standard one provided by FHA.)
|FHA Home Equity Conversion Mortgage (HECM) Program - New Principal Limit Factors, June 27, 2014 Mortgagee Letter 14-12
FHA Home Equity Conversion Mortgage HECM Program New Principal Limit Factors July 2014|
HEMC Loans – you will need to document compliance with the requirements regarding cost vs benefit of the loan and borrower counseling, as well as provide the option to a borrower of using the new principal limit tables. Lenders will have to determine the best way to accomplish this, but may want to consider developing a form for borrowers to sign. (Great…more paperwork, I know, but this is a CYA issue I wouldn’t want to ignore.)
|FHA HECM - New Limits on Insurability of Fixed Interest Rate Products – ML 2014-11 (Effective June 25, 2014) [Download Chart/Checklist - HECM Mortgage Loan Agreement - All Borrowers] AND [Download Chart/Checklist - HECM Mortgage Loan Agreement - Non-Borrowing Spouse]
Updates to FHA Reverse Mortgage Program July 2014|
Changes to HEMC program have been made to eliminate some abuses with the program. As with most major changes, work closely with your staff to assess pipelines and prevent the closing of an uninsurable loan. Verify that your closing document provider has everything in place, including the proper forms.
|FHA HECM - Prohibition on Misleading or Deceptive Program Descriptions or Advertising and Prohibition on Restriction of Mortgagor’s Freedom of Choice – ML 14-10 (Effective June 18, 2014)
There is some crazy stuff going on out there when it comes to HECM originations and advertising practices. This ML serves as a reminder to go back through all your HECM advertising material and update it to comply with the changes AND make its information complete.
|HECM - Safeguarding the Non-borrowing Spouse: Mortgagee Letter 14-07, Home Equity Conversion Mortgage (HECM) Program - Non-Borrowing Spouse [Effective August 4, 2014]
FHA Loophole for Reverse Mortgage Program May 2014|
The declining home prices of recent years made this very difficult and put the Mutual Mortgage Insurance Fund in peril, along with the HECM program itself. But worse, it created homelessness for many non-borrowing spouses. So it’s important that you include those marital status certifications with your final docs at closing to protect all the parties involved.
|Delay in Effective Date Changes to the HECM Program Mortgagee Letter 2013-45 (12-20-13), Financial Assessment Requirements and Funding Requirements for the Payment of Property Charges,
Delay in Effective Date Changes to the HECM Program January 2014|
Major uprising from the lending community delayed the changes that FHA is eager to get into place. The changes included raising the UFMIP, reducing borrowing limits and putting an assessment process in place that determines whether a borrower can maintain their property taxes and insurance, a common reason for default.
|Home Equity Conversion Mortgage Program’s Mandatory Obligations, Life
Expectancy Set-Aside Calculation, and Purchase Transactions – ML 2013-33 (effective 9-30-13)
Talk about a lot of housekeeping! There are quite a few clarification and corrections – how I wish they had just rescinded the entire previous Mortgagee Letter (ML 13-27) and written a new one with the changes highlighted or something. It is such a pain to not have one resource to go to when looking for guidance.
|FHA HECM Program - Handling of Collections, Judgments, and Disputed Accounts. ML 2013-27 and 2013-28 (effective Sept. 30, 2013)
FHA and Reverse Mortgage September 2013|
HECM originators, this will be your new bible in a few weeks. And, the new Financial Assessment and Property Charge Guide will go into effect on January 13, 2014. We’ve taken 39 pages and condensed them for you. But, keep an eye out for another update as this major overhaul may warrant more direction and discussion from HUD.
|HUD Consolidates the HECM Saver and HECM Standard MI Premium for Fixed Interest Rate Mortgages – ML 2013-01 (Effective April 1, 2013)
FHA has adopted one MIP premium for fixed and ARM reverse mortgages. Since then HUD has decided that the Standard loan amounts were too high (read ‘too much risk’), and have decided to force the majority of the HECMs (fixed-rate loans) under the Saver umbrella. In order to discourage lenders who might be tempted to order case numbers too ‘early’ on their HECM loans so that they could use the higher loan amount, HUD restated their prohibited practices regarding case numbers.
|FHA HECM – Late Endorsement Certification Requirements – ML 2013-02 (Effective March 30, 2013)
This notice is for managers. Late endorsement requests have always required certifications for all loan types. This change means that HECMs now require different certification language than other loans. Read this article where we have compared the “before” and “after” language. (Mortgagee Letter 2013-02, HECM Program – Amended Late Request for Endorsement Procedures, January 30, 2013)
|FHA Issues Warning to HECM Lenders Regarding Mandatory Counseling- FHA Info #13-07
HUD issued this butt-chewing in the form of an email notice. In it they explain that there are three actions that are not acceptable and they provide the applicable guidance with instructions of what you “can’t” do!
|HECM-Rescission of ML 2008-38 – Borrower’s Recourse for Repayment of HECM Debt- Replaced with ML 2011-16
Reverse Mortgage May 2011|
In an attempt to derail a pending lawsuit by the American Association of Retired Persons (AARP), the Department of Housing and Urban Development (HUD) rescinded ML 2008-38. AARP claims that foreclosing on a property encumbered by a HECM loan and displacing a non-borrowing spouse who can’t pay the loan amount in full due to a market value decline, is a violation of HUD’s “Safeguard to Prevent Displacement of Homeowner” statute. HUD will lose a ton of money if they lose the lawsuit. It’s a no-win dealio. (Mortgagee Letter 2011-16, Home Equity Conversion Mortgage-Rescission of Mortgagee Letter 2008-38-Borrower’s Recourse for Repayment of HECM Debt, April 5, 2011)
|FHA HECM (Reverse Mortgage) HUD-1 Revises Closing Certification – ML 2010-39. [Download Charts/Checklists: Addendum to HUD-1 Settlement Statement HECM Refinance & Purchase Form]
This affects processing & closing. Print out the attachment for verbiage required and find out whether your closing document software will update to this language automatically, or whether it will have to be a manual function. Notice of Rejection will be issued if this new certification isn’t used. (Home Equity Conversion Mortgage (HECM) – HUD-1 Settlement Statement Closing Certification, Mortgagee Letter 2010-39, November 19, 2010)
|FHA HECM - Clarification of Policies When Providing HECM Borrowers List of Counseling Agencies – ML 2010-37 (Effective 2-1-11)
HECM lenders must complete the FHA Connection screen entitled HECM Referral List Update prior to loan insuring. HUD asks that this screen be completed within one day after the FHA case number has been ordered. Recommend that you take a screen shot for your files. (Home Equity Conversion Mortgage (HECM) Program: Clarification of Policies Regarding the Requirement that HECM Lenders Provide Prospective HECM Borrowers a List of HECM Counseling Agencies, Mortgagee Letter 2010-37, November 8, 2010)
|FHA Reverse Mortgage - HECM Saver – More Affordable MIP – ML 2010-34 (Effective 10-4-10)
The new HECM Saver option will substantially reduce the MIP costs to borrowers. This is a whole new marketing opportunity for this program—both purchase and refis. (Mortgagee Letter 2010-34, HECM Program – Introducing HECM Saver; Mortgage Insurance Premiums and Principal Limit Factor Changes for HECM Standard)
|FHA Revisions to Model Home Equity Conversion Mortgage (HECM) Loan Agreement – ML 2010-07 – [Download 5 Updated HECM Forms.] (Effective 8-1-2010)
If you haven’t been using Form 1009 as your HECM loan application now is the time to get into the habit. Just don’t “throw the baby out with the bathwater” and forget you still have to include the FHA/VA Addendum Form 92900-A that we normally associate with the URLA Form 1003. [Download 5 Updated HECM Forms.] (Mortgagee Letter 2010-07, March 1, 2010)
|Home Equity Conversion Mortgage Program: Subordinate Liens – ML 2009-49 Clarifies ML 2006-20
I had to shake my head at the fact that 2006-20 was written as “clarification” guidance. Now we have a new ML that “clarifies” the “clarification”. Outside of the exceptions listed, you can’t create a NEW lien during the process of obtaining a HECM. (Home Equity Conversion Mortgage Program: Subordinate Liens, Mortgagee Letter 2009-49, November 18, 2009)
|Reverse Mortgage: Home Equity Conversion Mortgage (HECM) - Limits Principal Balance Withdrawals.
New factors reduce the amount of loan proceeds available to HECM borrowers. Its HUDs attempt to pull the HECM program out of a free-fall of losses due to declining home values. (FHA Mortgagee Letter 2009-34)
|Reverse Mortgage Application Form 1009 Updated (Effective January 1, 2010)
Suggest that you read the new form in its entirety, as there are some major legal changes—including the “investment question”. At this time, it’s not known what HUD plans to do with the info when the application answers Declaration # J. (Fannie Mae Legal Document Updated Form 1009 – July 20, 2009)
|FHA Clarifies & Corrects - Home Equity Conversion Mortgage (HECM) Refinancing of Existing Loans (Includes: HECM Anti-Churning Disclosure & “How to Calculate Total Cost of Refinancing HECM)
Okay HECM folks. There you have it. Out of the 5 pages of info in this Mortgagee Letter the stuff I outlined is the NEW stuff. The rest is a repeat of ML 2004-18. Print out the ML and all the attachments. This is your new refinance bible. (Mortgagee Letter 2009-21 – Home Equity Conversion Mortgage Refinancing of Existing Loans)
|FHA Home Equity Conversion Mortgage Program: Clarification of Counseling Issues (Effective March 27, 2009)
HUD ‘s not happy that borrowers are being pressured by lenders into pursuing the HECM, especially since the borrowers are older and possibly more susceptible to unscrupulous tactics. (FHA Mortgagee Letter 1009-10, March 27, 2009)
|FHA HECM for Purchase Program: Guidelines Clarified (Effective March 27, 2009)
This is a summary of everything that is different from the original ML 2008-33. If you have anything to do with purchase HECMs you will want to print out this new ML and the attachment and keep it for reference. It is your only guideline reference specific to purchase HECMs. (FHA Mortgagee Letter 2009-11, March 27, 2009)
|The New Niche: Purchasing a Home Using a Reverse Mortgage (HECM) (Mortgage Talking Points® Flyer Included)
Talk about an untapped niche - this just might be your ticket to staying in the business for the long haul! If you offer FHA, re-read the 2 previous articles (listed in this article), print the Mortgage Talking Points® Flyer "How to Create More Sales With Reverse Mortgages" and get your rear out there and be the first on your block to teach Realtors® how to build (or re-build) their businesses! (ML2007-06: Home Equity Conversion Mortgage Program - Existing Property Eligibility Requirements / ML2008-34: All FHA Approved Mortgagees, All HUD-Approved Housing Counseling Agencies)