Reverse Mortgage (HECM) New Principal Limit Factors
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Yesterday, FHA released Mortgagee Letter 2014-12, Home Equity Conversion Mortgage (HECM) Program: New Principal Limit Factors in which it has revised the Principal Limit Factors (PLF). This letter provides guidance which supersedes that contained in Mortgagee Letter 2014-11 released just last week.
The effective date of the new guidance is August 4, 2014.
When I attended the FHA condominium project approval roundtable in March 2014, the facilitator had mentioned that FHA would be working to overhaul the HECM program this year. Four of the last six Mortgagee Letters have been dedicated to HECM program changes.
The new Principal Limit Factors tables have been revised to address HECM borrowers with non-borrowing spouses under age 62. The tables are currently in Microsoft Excel spreadsheet format which allows for the importation into lenders’ technology or tools. The revised version of FHA’s HECM Calculation Software will be available for the effective date of the Letter on 8/4/14.
The Letter also states that lenders must allow borrowers the option of using the new Principal Limit Factors in cases where the Case Numbers have been assigned prior to 8/4/14 but have not yet closed.
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