HUD Delays Reverse Mortgage Financial Assessment

The Department of Housing and Urban Development (HUD) announced today that it is delaying the implementation of the financial assessment.

The announcement, issued Friday afternoon via Mortgagee Letter 2013-45, states HUD will be delaying the effective date for the financial assessment requirement for new Home Equity Conversion Mortgage (HECM) case numbers that are assigned on or after January 13, 2014. 

While HUD did not give a specific date as to when the financial assessment will take effect, it did indicate that it will issue new guidance that will be effective for HECM case numbers assigned no sooner than 90 days from the date of that mortgagee letter. 

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The delay arrives a month following an announcement from the Federal Housing Administration (FHA) saying it would grant an extension for lenders before the financial assessment would go into effect. 

The industry expects the guidance will require that lenders consider both a borrower’s willingness and capacity to pay his or her loan obligations, including tax and insurance associated with the property. 

Written by Jason Oliva

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  • I am glad to see this decision. The financial assessment rule takes in more than many may realize. One of the main problems will be the confusion that is going to be placed on the industry because of the lack of uniformity.

    Remember, each lender will be determining what course of action to follow and what set aside fee they feel will be needed from the borrower.

    It will be a natural tendency for lenders, especially in the beginning to take a very cautious and conservative approach. One lender will be underwriting the risk differently from another, this will create confusion in itself in the market place.

    HUD needs to think the whole process out much better than they have. I would rather see guidelines and a set financial assessment rule established by HUD where each lender will be on the same playing field!

    I realize there will be pro’s and con’s on my suggestion but look at it from the borrowers stand point as well as the loan officer’s, just think about that for a bit. That is my assessment for the day on the financial assessment rule delay.

    Merry Christmas to all and lets hope for a better 2014.

    John A. Smaldone

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