The National Reverse Mortgage Lenders Association has updated its ethics guidelines relating to reverse mortgage-to-reverse mortgage refinance transactions following new rules implemented this fall by the Department of Housing and Urban Development.
The association recently re-distributed its ethics guidance around Home Equity Conversion Mortgage (HECM)-to-HECM refis following principal limit updates announced by HUD. In July, NRMLA stressed that a HECM-to-HECM refinance may not take place unless it occurs after six months of the closing of the loan being refinanced. Further, NRMLA noted at the time the “need to assure that the loan products it offers to consumers provide to them a ‘bona fide advantage.’”
Now, NRMLA is restating that many of the guidelines remain in effect, and is updating some of its guidance as well, in particular as it relates to non-borrowing spouses who are today afforded additional protections not previously made available under the HECM program.
Further, in determining the “5 to 1” cost limitation established by NRMLA in 2010, the association notes that “the Additional Principal Limit amount included in that calculation should reflect and include only that portion of any Available Principal actually available to a borrower to draw.”
Written by Elizabeth Ecker