*UPDATE* Huge Reverse Mortgage Industry Change March 2 – DELAYED

9 Feb

UPDATE:

February 12, 2015, the Department of Housing and Urban Development (HUD) announced its decision to delay implementation of the long-heralded Financial Assessment rule just weeks before its effective date.

Citing a delay in the delivery of “certain system enhancements” required to support policies published in Mortgagee Letters 2014-21 and 2014-22, HUD said in an email notice to lenders that the Federal Housing Administration (FHA) will publish a Mortgagee Letter in the coming weeks announcing a new effective date for the policies detailed in those letters.

The new effective date is expected to be within 30 to 60 days of the original March 2, 2015 effective date announced in those previous Mortgagee Letters.

Financial Assessment Is Coming
Financial Assessment requirements will be in effect for all loans having case numbers assigned on or after March 2, 2015. The purpose of the financial assessment is for Lenders to review a borrower’s financial status including income, expense and credit history, to ensure the borrower has the willingness and financial means to continue meeting ongoing obligations, such as but not limited to, property taxes, home owner’s insurance, credit card debt and household utilities. These changes are designed to help senior homeowners benefit from a reverse mortgage, while determining if borrowers meet HUD’s minimum financial criteria to ensure that all of the borrower’s financial obligations can be met, including the reverse mortgage obligations. For borrowers who do not meet HUD’s minimum financial criteria, borrower’s may still qualify by having a portion of the available proceeds set-aside to cover ongoing property taxes and home owner’s insurance obligations.

For more information and further details, please Click Here to refer to the Mortgagee Letter 2014-22

 

And in case you missed it:

Non-Borrowing Spouse

 

There have been several updates this year to Non-Borrowing Spouse (NBS) requirements on HECM loans. ML 2015 02 defines a new type of NBS termed “Ineligible Non-Borrowing Spouse”.  An ineligible NBS does not live in the property and their age will not be a factor used to determine the Principal Limit Factors. The ML also revises the NBS related application and closing disclosures.  These requirements must be in effect no later than March 9,2015. Click Here to read the full ML 2015-02.

ML 2015 -03 addresses past NBS loans where the NBS had no deferral rights (loans with case number prior to August 4th 2014). This creates a process for an NBS to remain in the home if they meet certain criteria when the borrower passes.  Click Here to read the full ML 2015-03.

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