HUD Provides Additional Guidance for New FHA Reverse Mortgages

After introducing the new Home Equity Conversion Mortgage Saver and principal limit changes, the Department of Housing and Urban Development provided additional guidance to ensure compliance with the agency’s requirements on Monday.

According to HUD, lenders closing HECM transactions after October 4, 2010 as HECM Standard loans with the prior mortgage insurance premiums and principal limits are not required to provide information on the new MIP options associated with the HECM Saver and Standard.

For loans pre-October 4th, HECM Standard transactions that are converting to a HECM Saver or 2011 HECM Standard, lenders may use separate comparison printouts to demonstrate both initial mortgage insurance premium pricing options for the new products.  A revised GFE or TILA, a new TALC, and Anti-Churning disclosure if applicable, should be provided by the reverse mortgage lender and included in the FHA case binder.


If lenders are not offering the HECM Saver − is anyone not? − they’re not required to provide comparison printouts for conversions to a 2011 HECM Standard.

Additional notes:

  • Lenders are prohibited from canceling case numbers and ordering new case numbers on conversions from pre- October 4,2010 Standard HECMs to HECM Saver and 2011 HECM Standard.
  • HUD has modified the Insurance Accounting and Collection System (IACS) by adding the “Annual MIP Rate” data field to ensure the correct amount of MIP is remitted on conversion cases.  IACS will serve as the system of record that will track all conversion cases for FHA reverse mortgages.

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  • While HUD can represent their position on what needs to be done for consumers, those originators in states with mortgage originator fiduciary responsibility need to wade through the situation far more carefully. HUD only provides the minimum standard under federal law. Those standards will in most cases have absolutely no bearing on more stringent state requirements. Unfortunately, the states do not provide any specific guidance. Lenders need to issue guidance to originators based on state standards with the federal standard “as the floor.”

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