The Department of Housing and Urban Development (HUD) announced last week that Home Equity Conversion Mortgage (HECM) loans with expected rates of less than 3 percent can now be set up in HUD’s systems after fixes were incorporated into the platform. This is according to update notes released on the Home Equity Reverse Mortgage Information Technology (HERMIT) System website.
In version 5.8 of the HERMIT system, HUD details that it has been modified to allow the entry of an expected average mortgage interest rate that is below 3 percent.
“In FY 2018, HUD lowered the effective interest rate floor for principal limit factor (PLF) determination from 5.00 to 3.00 percent,” the update notes say. “Thus, all interest rates of 3.00 percent or less will show the same, identical PLFs for each borrower age. HERMIT has been modified to allow the entry of an expected average mortgage interest rate (expected rate) that is below 3 percent.”
For HECM loans that were closed prior to July 15 of this year and that featured an expected rate of 3 percent that could not be entered in HERMIT, mortgagees will have the option to request a refund of the initial mortgage insurance premium (MIP) late charges and interest when performing a loan’s setup inside the HERMIT system. The update notes detail specific instructions that mortgagees must follow in order to request a refund of the initial MIP.
HERMIT was launched by HUD in October of 2012 after a protracted development cycle. Its creation aimed to improve the processes associated with the endorsement of HECMs, as well as the processing of servicing and claims within HUD.
HERMIT was developed through a contract with Reverse Mortgage Solutions, which partnered with QSSI on creating a service provider platform. Reverse Technology Group (RTG) acquired the software in early 2017.
To read the relevant instructions to request a refund of MIP late charges on relevant loans, visit HERMIT’s page on the official HUD website and download the system changes update 5.81 document.