FHA Proposes Changes to Reverse Mortgage Program

FHA Proposes Changes to Reverse Mortgage Program
On May 19, 2016, the Federal Housing Administration (FHA) published a proposed rulemeant to strengthen certain aspects of its reverse mortgage program, known as the Home Equity Conversion Mortgage (HECM). Comments on the proposed rule, titled “Strengthening the Home Equity Conversion Mortgage Program (FR-5353-P-01),” are due by July 16. The proposed rule would:

  • Codify previously implemented requirements;
  • Make certain that HECM counseling occurs before a mortgage contract is signed;
  • Require lenders to fully disclose all HECM loan features;
  • Cap lifetime interest rate increases on all adjustable rate HECM loans to 5%;
  • Reduce the cap on annual interest rate increases on adjustable rate HECMs from 2% to 1%;
  • Require lenders to pay mortgage insurance premiums until the HECM is paid in full, foreclosed on, or a deed-in-lieu is executed rather than until when the mortgage contract is terminated; and
  • Create a “cash for keys” program to encourage borrowers to complete a deed-in-lieu transaction and gracefully exit the property versus enduring a lengthy foreclosure process.

Source: Realtor.org; 5/20/2016

Courtesy of:

Steve Sisman

Designated Short Sale and Foreclosure Resource,

Certified Short Sale Master Default Intermediary,

Certified Real Estate Divorce Specialist,

Associate Leadership Counsel Alumnus,

a member of the Delaware County Chamber of Commerce,

a member of the Delaware Small Business Chamber,

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