HUD In Their Infinite Wisdom Has Changed The Reverse Mortgage Procedures And Regulations Again
The easiest way to describe this is to post a letter that I wrote to DGE’s outstanding speakers about the changes. This is what I thought MLO CE instructors should cover with their students. Enjoy.
SOURCE: HUD MORTGAGEE LETTER 2017-12, Aug 29, 2017
EFFECTIVE: CASE NUMBERS ON OR AFTER 10/2/2017
Initial And Annual MIP Rates:
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
The PLFs have been updated. The PLF table may be uploaded or copied from HUD’s website directly into any reverse mortgage technology system or tool used to support the HECM program. The PLF tables are accessible from the following website:
The new initial MIP rate will be higher for some borrowers and lower for others. The new annual rate will save borrowers .75% a year so a higher rate at signing will be returned after about two years.
The new Principal Limit Factor will lower the maximum amount available by an average of around 10%.
The Stated Reason For The Change From HUD:
To help sustain the HECM program as a viable financial resource for aging homeowners and to strengthen the Mutual Mortgage Insurance Fund. FHA has made changes to HECM MIP rates and the PLFs.
So LIFE As We Know It Will Go On
If anybody is thinking about a RM, think hard now and move. You will have to have your counseling completed so that you can be processed and get a Case Number by Oct 1. As you might imagine, Counseling Appointments are going fast.
See you at the Counseling Office.