With the changes to the HECM reverse mortgage recently, applications and counseling appointments are up. Many people need the higher lending amounts to pay off existing mortgages and get rid of monthly payments or want the maximum line of credit or monthly tenure payments so they are filling up the reverse mortgage counseling appointments fast. We must get the FHA Case number by September 26th to lock in to the current program. A counseling list is posted at the bottom of this blog post.
To summarize the changes, after September 28th, there will only be one “HECM”. There will not be a standard or saver, and the new HECM will have reduced principal limits of approximately 15% compared to the current Standard program.
There will be restrictions to the initial draws and mortgage insurance premium will be different based on the draw.
Here is a primer on the draws and mip charges:
a) Borrowers could access up to 60% of the available principal limit in the first year and have an Initial MIP charge of .50% (of the maximum claim amount or home value - example: Value $400,000, MIP: $2,000)
b) Borrower’s could also access an additional 10% of the available principal limit for a total of 70%, but anytime they take more than 60% their Initial MIP jumps to 2.5% (example: Value: $400,000, MIP:$10,000)
c) If borrowers have mandatory obligations, including closing costs, payoffs and liens, they could access up to 100% of the available principal limit and the initial MIP would be 2.5%
For the fixed rate loans, there will be no subsequent draws available. What is taken at close will be all that can be drawn. For adjustable loans, the balance after the initial draw, not exceeding 100% of the available principal limit can be accessed after the first 12 months.
Financial assessment is coming in January and will result in some borrowers having required property tax and homeowner’s insurance set asides or impound accounts.
Reverse Mortgage Counseling list:
Credit Card Management Service (800) 920-2262
Money Management International (877) 908-2227
SurePath Financial Solutions (877) 615-7873
Consumer Credit Counseling Services of San Francisco (CCCS) (800) 777-7526
National Counseling on Aging NCOA (800) 510-0301
National Foundation for Credit Counseling (NFCC) (866) 698-6322
Open Door Counseling (866) 640-6689
Springboard Non-Profit Consumer Credit Management Inc. (800) 947-3752
CCCS of the East Bay, a Division of MMI (800) 308-2227
CCCS of San Francisco (800) 777-7526
Avenidas Senior Center (650) 289-5433
Legal Services of Northern CA – Senior Legal Hotline (916) 551-2140
Quick Cert 888-383-8885