FHA Updates Initial MIP Formula for Reverse Mortgage Refinances

The Federal Housing Administration has updated and clarified its formula by which the initial mortgage insurance premium is calculated for refinanced Home Equity Conversion Mortgages (HECMs)

The agency notified lenders via an info notice dated December 29, which indicated the update for the Initial Mortgage Insurance Premium formula for refinance cases. The calculation applies for all case numbers assigned on or after September 19, 2017.

According to the notice, the change conforms with requirements set by the HECM Final Rule, which was implemented in September.


Since the rule implementation, industry sources have pointed to a discrepancy between the rule as written and its perceived intention, leading to some uncertainty about the upfront MIP calculation in the final rule.

Lenders can view the notice and new formula on the Department of Housing and Urban Development’s website.

Written by Elizabeth Ecker

Join the Conversation (7)

see all

This is a professional community. Please use discretion when posting a comment.

    • Odd is an understatement. I would say not well thought out, because most H2H refis aren’t going to generate new MIP funds for FHA. If a home increases by $100K or less in value, and it’s original value was at least $150K, then there will be no new MIP due (for loans with case numbers post 10/2).

      For the book of business that is originated with case numbers post 10/2, those loans are going to be very susceptible to refinancing due to this change. I think this will have a bigger impact than loans being originated with a wide variety of PLFs/margins.

      This change, more than many others, makes me wonder who is manning the ship at HUD.

      • After giving this some thought last night, I really think HUD must have intended to charge 3% of the spread between the old MC and the new MC. That would be 1% higher than the normal upfront MIP calculation and be in place to discourage refinancing. I’m guessing the credit for the previously paid upfront MIP was a mistake.

      • Matt,

        According to current 24 CFR 206.53(c), the 3% calc is a maximum, not the minimum amount to be collected. Why HUD did this is an open question.

  • We are all so privileged to be educated by you on reverse mortgages. If you are going to spend time lecturing us on this site, you should really have the fortitude to use your real name.

    If I wasn’t being clear, I’m discussing original HECMs with case numbers on or after 10/2/17 that won’t be eligible for refinancing until 4/2/19. If you aren’t aware, there will be very few HECMs refinanced with case numbers between 10/2/17 and 4/2/19, because they won’t meet the NRMLA H2H standards with the new PLFs.

    Bottom line is on 4/2/19, this industry is going to see H2H refinancing return in a big way, and it’s not going to drive any new revenue to FHA.

    • Matt,

      Why is it that you predict refinancing will return to the industry in a big way after 4/1/2019? Is this a seasoning requirement? If you have a regulatory requirement, please cite your source.

      But let us assume you are right. (I rarely look at refinancing.) What is so compelling about refinancing after 4/1/2019 that is not true today?

      As to your professed deep concern about knowing my name, you call yourself Matt Neumeyer but how does one really know if Matt is Matt? Even if they were sure, who is Matt Neumeyer in the scope of the industry? Just like who is The Positive Realist in the scope of the industry?

string(108) "https://reversemortgagedaily.com/2017/12/31/fha-updates-initial-mip-formula-for-reverse-mortgage-refinances/"

Share your opinion