Tag Archives: HUD

HUD Issues HECM Non-Borrowing Spouse Guidelines

30 Apr

Important news in the reverse mortgage world:  Mortgagee Letter 2014-07 was released by HUD this week, to become effective for FHA case numbers assigned on or after August 4, 2014.

The spouses of HECM borrowers who are not on the loan documents may remain in those homes after the death of their borrowing spouse for a newly defined “deferral period.”

The letter clarifies to whom the new guidelines will apply, the obligations of the non-borrowing spouse, and new at-closing certification requirements. 

The letter itself consists of 14 pages of definitions plus several attachments containing the new loan documents.  It can be read in full at the link above.

 

Non-Borrowing Spouse Lawsuits Against HUD

3 Mar

Reverse Mortgage Daily has been reporting on these lawsuits:

“Four surviving spouses of reverse mortgage borrowers filed a lawsuit this week against Department of Housing and Urban Development Secretary Shaun Donovan claiming they faced undue harm due to reverse mortgage statute.

The lawsuit comes several months following a previous suit filed by AARP on behalf of non-borrowing spouses of reverse mortgage borrowers, in which a court ruled against HUD and granted relief to the plaintiffs, to be determined by the agency. HUD appealed the ruling, but the appeal was later thrown out.

The new suit seeks relief for a class of borrowers who faced situations similar to those detailed in the earlier lawsuit; namely those who faced foreclosure of their homes because they had been removed from the home title or were not named on the title prior to the closing of the reverse mortgage and had survived their borrower-spouses.”

Every reverse mortgage application contains disclosures warning against removing a homeowner from title.  Some of these non-borrowing homeowners claim that this was not made clear, or they were encouraged to change the title to “get more money”.

With HECMs, there is an additional wrinkle, where the Statute and the Regulation differ slightly:

The Statute:

The Secretary may not insure a home equity conversion mortgage under this section unless such mortgage provides that the homeowner’s obligation to satisfy the loan obligation is deferred until the homeowner’s death, the sale of the home, or the occurrence of other events specified in regulations of the Secretary.  For purposes of this subsection, the term “homeowner” includes the spouse of the homeowner. (12 U.S.C. § 1715z-20(j) (emphasis added))

The Regulation:

The mortgage shall state that the mortgage balance will be due and payable in full if a mortgagor dies and the property is not the principal residence of at least one surviving mortgagor.  (24 C.F.R. § 206.27)

Because of this, lenders are adding additional documentation requirements for a non-borrowing spouse:

•Valid ID for NBS
•Letter of Explanation signed by borrower and NBS
•Counseling
•Non-Borrower Certification
•Attorney Letter stating that upon a trigger event, the loan must be satisfied or the lender may foreclose on the property
•Credit authorization
•In community property states:  signed deeds and right to cancel, credit report

 

Final QM Definition Released By HUD

12 Dec

The Department of Housing and Urban Development on Wednesday released its final rule defining a “qualified mortgage” that is guaranteed or administered by HUD, effective Jan. 10, 2014, applying to all mortgages with case number assignments on or after that date.

HUD proposed a QM definition aligned with the Ability-to-Repay criteria contained in the Truth-in-Lending Act as required by the Dodd-Frank Act and the agency’s mission to promote affordable mortgage financing options for underserved borrowers.

Under HUD’s QM definition, mortgage loans must require periodic payments without risky features; have terms that don’t exceed 30 years; be insured or guaranteed by FHA/HUD; and limit upfront points and fees to no more than 3% with adjustments to facilitate smaller loans, with certain exceptions.

HUD’s rule also adopts the CFPB’s list of transactions that are exempt from the ability-to-repay requirements, including reverse mortgages.

HUD Changes to FHA Mortgage Programs

5 Nov

The Department of Housing and Urban Development recently announced two changed to their loan programs.

 

Yesterday at the NRMLA conference in New Orleans, Federal Housing Administration Assistant Secretary Carol Galante said that the January 13, 2014 implementation of a financial assessment for HECM reverse mortgage borrowers will be delayed by an unspecified time period. The extra time will allow FHA to make sure the change is implemented precisely and with budgetary health in mind, Galante said.

 

The Department of Housing and Urban Development (HUD) also recently updated the schedule of claimable attorney fees and reasonable diligence time frames for initiating foreclosure on FHA-insured loans, including Home Equity Conversion Mortgages (HECMs).

Changes were announced via Mortgagee Letter 2013-38 letter issued Oct. 28 and which applies to all cases in which the first legal action to initiate a foreclosure occurs on or after Nov. 1, 2013 and encompasses all federally insured mortgages.

HUD limits the amount of fees attorneys can claim and requires servicers to prosecute foreclosure in a specific time frame. The department hadn’t updated its guidance since 2005, presenting challenges for FHA servicers trying to meet reasonable diligence time frames and recoup the correct attorney fees when prosecuting foreclosures on FHA-insured loans.

 

RESIDENTIAL SALES UP IN JANUARY

27 Feb

A good indicator in the economic recovery and housing market:

Figures released yesterday in a joint press release from the US Census Bureau and the US Department of Housing and Urban Development show an increase in January from the previous month to the highest level since July 2008.

Read the press release at this link:

http://www.census.gov/construction/nrs/pdf/newressales.pdf