Here are some upcoming changes for Reverse Mortgages in 2017
All counselors seeking HUD certification will be required to demonstrate competency in six topic areas, including financial management; property maintenance; homeownership and tenancy responsibilities; fair housing laws; housing affordability; and avoidance, and responses to, rental and mortgage delinquency as well as avoidance of eviction and mortgage default.
Through October 2016 this year, Home Equity Conversion Mortgage (HECM) endorsements total 40,192 units, down 16.5% from the same period a year ago, when volume tallied 48,114 loans through October, according to a recent analysis of industry data by Reverse Market Insight.
After several years of stagnant reverse mortgage lending limits, the Federal Housing Administration will raise limits “slightly” in 2017, the agency announced Thursday via Mortgagee Letter 2016-19.
For Home Equity Conversion Mortgages, the maximum claim amount will rise to $636,150, up from $625,500. The amount is 150 percent of the national conforming limit of $424,100, the Department of Housing and Urban Development noted in a press release detailing the changes.
In response to changing conditions in the condominium market, the Federal Housing Administration (FHA) today proposed new rules that would allow individual condo units to become eligible for FHA financing, including Home Equity Conversion Mortgages (HECMs), an agency spokesman confirmed to RMD.
FHA is currently seeking public comments on the 43-page proposed rule that seeks to reinstate a process similar to “spot approvals” in unapproved condo developments, as well as create a range of thresholds required for FHA approval, including the minimum owner-occupants in approved condo projects and limits on commercial/non-residential space, the agency stated in a release.
And the biggest changes in 2016
These changes include making certain that required 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 HECM adjustable rate mortgages (ARMs) to 5%; reduce the cap on annual interest rate increases on HECM ARMs from 2% to 1%.
FHA is also proposing to require lenders to pay mortgage insurance premiums until the HECM is paid in full, foreclosed on, or a Deed-in-Lieu (DIL) is executed rather than until when the mortgage contract is terminated.
Additionally, the proposal would include utility payments in the property charge assessment; and create a “cash for keys” program to encourage borrowers to complete a (DIL) and “gracefully” exit the property versus enduring a lengthy foreclosure process.