The Department of Housing and Urban Development is making more details available regarding the reverse mortgage Life Expectancy Set Aside (LESA) and financial assessment, to take effect April 27.
Through Mortgagee Letter 2015-09, the agency has established a monthly growth rate for the life expectancy set aside, which will apply to certain borrowers as determined by the application of the financial assessment.
The mortgagee letter also clarifies a discrepancy introduced in former mortgagee letter 2014-22, which outlined the financial assessment and property charge guide along with the Home Equity Conversion Mortgage Financial Assessment Worksheet. The new mortgagee letter provides an updated worksheet and deems the former work sheet no longer applicable.
In establishing the set aside growth rate, HUD specifies that the mortgage interest rate plus the Mortgage Interest Premium will serve as the monthly growth rate for the LESA.
The financial assessment is scheduled to take effect on April 27 after an initial delay postponed the original implementation date of March 2.
Written by Elizabeth Ecker