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Posts Tagged ‘mortgagee letter’
Thursday, October 22nd, 2009
 After already announcing a delay of the implementation of Mortgagee Letter 2009-19 to case numbers assigned on or after November 2, 2009, the Reverse Review reported today that HUD has delayed the implementation further. Guidance is expected from HUD in the next two weeks clarifying Mortgagee Letter 2009-19 and offering additional leniencies to address the difficult current market conditions. The changes will then go into effect on December 7, 2009.
For those who forgot, Mortgagee Letter 2009-19 changed the condominium approval process and condo unit eligibility for reverse mortgages. The Mortgagee Letter can be found at Mortgagee Letter 2009-19.
Tags: condo, condominium, HUD, mortgagee letter, reverse mortgage, reverse mortgages
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Wednesday, September 23rd, 2009
 HUD just announced today that effective October 1, 2009, the principal limit factor (PLF) on reverse mortgages will be reduced by 10%. The new PLF table can be found at: http://www.hud.gov/offices/hsg/sfh/hecm/hecmhomelenders.cfm. This PLF table will go into effect for all loans taken on or after October 1, 2009.
These changes to the principal limit are not a large surprise, given the appropriations bills now going through Congress. The reverse mortgage program was not designed to be supported by a credit subsidy, and since the appropriations bill is also unlikely to grant a subsidy, program changes are the only way to keep the reverse mortgage program operating in the new fiscal year (which begins October 1, 2009). Nonetheless, these changes are not likely to be embraced by the reverse mortgage community, as they will prevent some seniors from receiving the amount of money from their homes necessary to be eligible for the program. A reverse mortgage was designed to help as many seniors as possible. This is likely to reduce their ability to do so.
The mortgagee letter can be found below:
Mortgagee Letter 09-34
Tags: appropriations bill, breaking news, FHA, HUD, mortgagee letter, October 1, principal limit, principal limit factor, reverse mortgage, reverse mortgage program, reverse mortgages
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Tuesday, September 22nd, 2009
 The FHA released four new mortgagee letters late last week that will have a significant impact on the way appraisals will be conducted in the future. Although the mortgagee letters will not go into effect until January 1, 2010, they will cause some of the following significant changes to occur:
- Reduce the amount of time an appraisal remains valid to four months from six months.
- Clarify rules regarding what happens to an appraisal when the borrower changes lenders.
- Reaffirm rules regarding appraiser independence, while adding some new requirements, including the lender’s responsibility for ensuring the correct appraiser is listed in FHA connection, and preventing the lender from using any appraiser who is selected, retained, or compenstated in any manner by the mortgage broker or any member of the lender’s staff who is tied to the loan on a commission basis.
The fourth mortgage letter, while not directly relating to reverse mortgages or appraisals, requires all FHA mortgagees to submit an annual audited financial statement.
Copies of all the letters can be found below. While reducing the amount of time an appraisal is valid to four months from six months could add an expense to borrowers when a loan gets held up in processing, hopefully the change will add some urgency to processing reverse mortgage loans in a timely fashion and will allow borrowers to get a more realistic appraisal in a rapidly changing housing market.
Mortgagee Letter 09-28
Mortgagee Letter 09-29
Mortgagee Letter 09-30
Mortgagee Letter 09-31
Tags: appraisal, appraisals, appraiser, breaking news, FHA, lender, mortgagee letter, mortgagee letters, reverse mortgage, reverse mortgages
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Tuesday, September 15th, 2009
 In June, HUD released new guidelines for condominium approval for reverse mortgages. The guidelines were supposed to go into effect on October 1st. However, HUD has now announced that the new guidelines will only apply to case numbers assigned on or after November 2, 2009.
The mortgagee letter can be found at Mortgagee Letter 09-19ml, in case anyone needs a reminder as to the new HUD guidelines. The delay in implementation makes one wonder whether, if the new co-op eligibility requirements are ever announced, they will go into effect as scheduled.
Tags: condo, condominium, guidelines, HUD, mortgagee letter, reverse mortgage, reverse mortgages
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Tuesday, August 25th, 2009
 HUD announced that a new mortgagee letter will be coming in the next 60 days. The mortgagee letter will likely be about advertising, as HUD is apparently not pleased with advertisements that promote borrowers using the proceeds from a reverse mortgage for a vacation or expensive personal items.
However, reverse mortgage proceeds are for the borrower to spend at their discretion. While HUD has been very suspicious of borrowers using reverse mortgage proceeds for annuities or other insurance products, there is nothing to keep them from doing so. Further, a recent article actually promoted seniors putting money from a reverse mortgage into life insurance policies so as to be able to pass the money to their heirs tax-free–an interesting way to use a reverse mortgage for estate planning.
Ads in other countries with similar reverse mortgage programs also use advertising focusing on a vacation or luxury item. The philosophy is that the money is the senior’s to use at their discretion. These are some ways a senior might choose to do so. As a result, it will be very interesting to see what (if any) guidelines on advertising HUD releases with the next round of mortgagee letters. While a reverse mortgage is a loan like any other and does need to be taken seriously as a financial investment, one hopes seniors are still free to take out a reverse mortgage– regardless of whether they take it out for something serious (medical expenses, home repairs) or something more luxurious (yacht, vacation, car).
Tags: advertising, financial investment, hecm, HECMs, HUD, mortgagee letter, mortgagee letters, reverse mortgage, reverse mortgages, senior
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Friday, June 12th, 2009
 The US Department of Housing and Urban Development (HUD) released a new Mortgagee Letter 2009-19 on Friday afternoon, detailing new changes in the condominium approval process. The letter covers the two processing options for condominiums: HUD Review and Approval Process (HRAP) and the Direct Lender Review and Approval Process (DELRAP). The letter can be found at: 09-19ml.
Check back next week for more information.
Tags: condo, condominium, DELRAP, Direct Lender, HRAP, HUD, mortgagee letter, reverse mortgage, reverse mortgage industry, reverse mortgages
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Friday, May 22nd, 2009
 HUD just released a new mortgagee letter, Mortgagee Letter 2009-16, which provides guidance on the manufactured housing eligibility requirements for FHA mortgage insurance. The changes addressed in the letter are only those that can be implemented immediately.
The main gist of the letter seems to be that manufactured homes must now meet the following requirements to be eligible for FHA mortgage insurance/a reverse mortgage:
1. Floor area of 400 sq. ft. or more
2. Constructed after June 15, 1976 in conformance with the Federal Manufactured Home Construction and Safety Standards, with the proper certification label affixed.
3. Classified as real estate
4. Mortgage must cover both the manufactured unit and its site, and cannot have a term of more than 30 years after the ammoritization begins
5. Built and remains on a permanent chassis
6. Designed to be used as a dwelling with a permanent foundation built to FHA criteria
7. The finished grade elevation beneath the manufactured home (or, if a basement is used, the grade beneath the basement floor) shall be at or above the 100-year return frequency flud elevation. If the manufactured home is located in a coastal high hazard area, all new constructions must meet FEMA regulations and existing constructions must have met FEMA’s elevation and construction standards as required by HUD regulations in 24 CFR 55.1.
Additional mortgagee letter topics include the underwriting eligibility, loan closing, warehouse lines-of-credit, and data quality, again for manufactured homes.
The original letter can be downloaded here.
Tags: data quality, FHA, FHA mortgage insurance, HUD, loan closing, manufactured homes, mortgagee letter, reverse mortgage, reverse mortgage eligibility, reverse mortgages, underwriting eligibility, warehouse lines-of-credit
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Tuesday, December 9th, 2008
According to a posting from NRMLA regarding HUD Mortgage letter 2008-38, “Clarification Regarding Borrower’s Recourse for Repayment of HECM Loan Debt and Termination of Hecm Mortgage”:
For years, FHA-insured Home Equity Conversion Mortgages (HECMs) generally have been characterized by the FHA, lenders and consumer advocates alike as “non-recourse” loans where the borrower can never owe more on the HECM loan than what the house is worth at the time the loan is paid back.
HUD states in the mortgagee letter that non-recourse only applies to situations where the property is sold to pay off the debt. If the heirs wish to retain ownership, the mortgage balance must be paid in full.
If the home is sold, “the property may be sold for at least the lesser of the unpaid mortgage balance or 95% of appraised value,” the letter adds.
The Department further clarifies that the sale of the home must be an arms-length transaction, defined as follows: (1) the absence of a relation between the buyer and seller; (2) a selling price and other conditions that would prevail in an open market environment; (3) transaction costs paid by the seller that are considered both reasonable and customary for the market in which the property is located; and (4) the adherence to ethical standards of conduct by all parties involved in the HECM short sale transaction, including the borrowers (or the estate), mortgagees and appraisers.
Tags: mortgagee letter, non-recourse, reverse mortgage
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