The US Department of Housing and Urban Development issued Mortgagee Letter 2010-07 to update loan documents for the Federal Housing Administration’s reverse mortgage product. In addition, FHA will no longer permit the use Freddie Mac Form 65/Fannie Mae Form 1003, Uniform Residential Loan Application, for HECM loan transactions.
ML 10-07 updates the following documents
- Home Equity Conversion Mortgage (HECM) Loan Agreement
- Revisions to the model HECM Loan Agreement Exhibits
- Fannie Mae Form 1009
The new HECM Loan agreement now defines the maximum claim amount as the lesser of the appraised value, sales price of the property, or national maximum loan limit established under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act for a 1-family residence.
The guidance is effective August 1, 2010 for all HECM case numbers assigned on or after this date. However, lenders may use the revised forms immediately said HUD.