Reverse Mortgage Update - Purchase, Limits, Coops

12/17/2008 Update from NRMLA (National Reverse Mortgage Lenders Association)

As part of our ongoing conversations with HUD, we want to alert you to a few new developments.HUD is indicating that new Mortgagee Letters (Mortgagee letter) regarding the HECM program are expected to be released soon. We applaud the extra efforts and hard work underway at HUD to deliver these very positive developments and we caution members to await the final Mortgagee Letters before taking any action.

�

1)Purchase Reverse Mortgage Clarification: This Mortgagee letter is expected by the end of next week and will encompass clarification on requiring that the maximum claim amount be the “lower” of actual sales price, appraised value or FHA loan limit.  In addition, properties with substantial repairs will be required to have these repairs completed before the loan is closed.  There will also be additional Q&As to clarify a few points based on inquiries from the industry.

�

2)Reverse Mortgage Loan Limits: This Mortgagee letter is also expected by the end of next week and clarify those parts of Hawaii, Guam, and the U.S. Virgin Islands where loan limits will increase beyond the 7,000 single national loan limit.This will be effective January 1, 2009.  HUD indicated that these limits can be seen in the online loan limit look-up factors.

�

3)Reverse Mortgage Refinance:  This Mortgagee letter is expected late next week and will address cases where a refi transaction is being processed on loans that were assigned to HUD. The HUD systems were not prepared to deal with these refis and so this Mortgagee letter will provide guidance on working these cases through HUD’s IACS system. Our understanding is that this would include cases where the MIP is eligible to be reduced as part of the refi transaction.

�

4)Reverse Mortgage for Manufactured Housing (in condos):  This is a forward mortgage Mortgagee letter that will permit FHA loans, including HECMs, on manufactured housing communities set up as condominiums.  HUD expects the Mortgagee letter to be published within the next week with an effective date of February 1.

�

5)Reverse Mortgage for Coops:  The goal is to publish an Mortgagee letter in January but HUD is still working through servicing and claim issues internally. There will be a 90-day effective date to allow adequate time for implementation.  There could be some delay here to the magnitude of some of the issues which would impact the marketability of the program, therefore we do think any more wait to resolve these key issues is worthwhile.

�

�

From all of us at National Reverse Mortgage Lenders Association, best wishes for happy holidays and a great New Year. 
We value your membership and the opportunity to serve you. - NRMLA