HECM Reverse Mortgage Changes

HECM Reverse Mortgage Changes

As of October 2nd 2017, Reverse Mortgage experienced some drastic changes creating fear for many individuals who specialize specifically in Reverse Mortgage. Lenders received a letter from the U.S. Department of Housing and Urban Development on August 29th, 2017 stating that the program would be experiencing changes. With only 30 days notice, many Reverse Mortgage Loan Officers were scrambling to encourage their potential borrowers to hurry up and pull the trigger before the new regulations impact them negatively (noting every lenders situation being different). Feel free to view the official letter by clicking on: (Reverse Mortgage Changes Letter).

Here are a few important highlights from the HECM Reverse Mortgage Guidelines:

*Affected Programs: This guidance applies to all FHA HECMs.

*Initial and Annual MIP Rate: The initial MIP rate is changed to two percent (2.00%) of the Maximum Claim Amount (MCA). The initial MIP rate is applicable to all borrowers and is no longer associated with disbursements made to or on behalf of the borrower at closing or during the First 12-Month Disbursement Period. The annual MIP rate is changed to one-half of one percent (0.50%) of the outstanding mortgage balance. This guidance supersedes the Initial and Annual MIP Structure section of Mortgagee Letter 2014-21.

*PLF Table: The PLFs have been updated. The PLF table may be uploaded or copied from HUD’s web site directly into any reverse mortgage technology system or tool used to support the HECM program. The PLF tables are accessible from the following web site: https://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm. This guidance supersedes the PLF Table section of Mortgagee Letter 2014-12.

Also here is a copy you can download for yourself: Reverse Mortgage Changes Letter

Let me know how these changes have effected your business. How has it impacted your clients? Do you think the changes will bring about more stability to the program increasing longevity?

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