HUD Provides Clarification of Interest Calculation for Reverse Mortgage Claims

image The US Department of Housing and Urban Development published Mortgagee Letter 09-44 to provide clarification of the of the debenture interest calculation for HECM foreclosure or deed-in-lieu of Foreclosure claims. 

Items addressed in ML 09-44 include:

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  • Clarification of the term “due date” as it relates to HECM Claim Type 21.
  • Identification of the additional information that must be provided for Claim Type 21, to ensure the proper calculation of debenture interest.
  • Reiteration of notification requirements related to the due date as provided in 24 CFR 206.27(c)(1) and (2). This requirement was previously addressed in Mortgagee Letter 2003-22, dated December 4, 2003, Home Equity Conversion Mortgages (HECMs) – Procedural Guidance, under Requirement for Notification of Death.
  • Clarification that 24 CFR §206.129(d)(2)(iii) incorporates the provisions of 24 CFR §203.405(a) and not subsection §203.405(b). The debenture interest rate for HECM claims is the debenture interest rate established by the Secretary in accordance with Section 224 of the National Housing Act but shall not exceed the Treasury 15-year Constant Maturity Rate in effect on the date the mortgage was endorsed for insurance.
  • Updated Claim Filing Instructions for HECM Claim Type 21 and Claim Type 24.
  • Clarification of appraisal requirements related to claim filing.

Mortgagee Letter 09-44

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  • What is the purpose behind this ML? Are these clarifications being provided because FHA is preparing to receive a mass inflow of these claims or is this being issued because of a recent realization that clarification needed to be made public? If the latter, is there anything in this ML that comes as a surprise?

  • What is the purpose behind this ML? Are these clarifications being provided because FHA is preparing to receive a mass inflow of these claims or is this being issued because of a recent realization that clarification needed to be made public? If the latter, is there anything in this ML that comes as a surprise?rnrn

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