The Department of Housing and Urban Development is issuing clarifications to new reverse mortgage rules in advance of their September 30 implementation. A mortgagee letter published Wednesday provides additional guidance for lenders in complying with the new program specifications.
Under Mortgagee Letter 2013-33, HUD provides additional guidance on several issues, many of which were brought up by the National Reverse Mortgage Lenders Association (NRMLA) in a recent letter to the agency seeking clarification following the publication of the rules in early September.
The new mortgagee letter defines mandatory obligations for traditional and refinance transactions, specifies how lenders should calculate the insurance premium and tax amounts as well as treatment of mandatory obligations and the life expectancy set-aside calculation
In addition, the agency has clarified that for HECM for purchase transactions that are in progress, some exceptions may apply to allow for transactions to close after the changes are implemented.
The mortgagee letter also points to several small unintentional errors introduced in the former mortgagee letter and their appropriate corrections.
Written by Jason Oliva