Date Set For Elimination OF HECM Fixed Standard

5 Feb

The FHA has finally set the date for the discontinuation of the Fixed Standard HECM (Home Equity Conversion Mortgage) reverse mortgage.

Per MORTGAGEE LETTER 2013-1 from HUD, all fixed interest rate case numbers assigned on or after April 1, 2013 can be SAVER products but no longer Standard HECMs.

Read the Mortgagee letter here:

http://portal.hud.gov/hudportal/documents/huddoc?id=13-01ml.pdf

All fixed interest rate mortgages that were assigned a FHA case number on or before March 31, 2013, may be processed as either a HECM Standard or HECM Saver as the initial MIP; but any fixed interest rate HECM Standard mortgage must close on or before July 1, 2013.

There has been much discussion in online reverse mortgage forums as to the value of this change.  Some applaud the move, while others question whether it will make a difference.  One motivation for the change was the depleted state of the FHA insurance reserves in a declining housing market.  But will depriving senior borrowers of one avenue for reverse mortgage financing hurt them?

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