Yesterday HUD published two new documents regarding the HECM for purchase and new mortgage limits to help clarify the changes. The HECM for purchase document is a Q&A with 25 questions and the mortgage limits document includes a table displaying the loan limit and origination fee changes.
A quick look through the questions and here are three that I thought were important for originators to know (they’re all important, so definitely read it yourself).
What activities can be performed prior to January 1, 2009?
A. Lenders may take application but they may not process or perform services that would result in a charge to a prospective mortgagor.
Can lenders refer clients, who are interested in a HECM for purchase transaction, to a HUD-approved housing counseling agency before January 1, 2009?
No. Counseling on HECM for purchase transactions will become available January 1, 2009. Counselors need time to adjust to the new provisions
What property types are ineligible?
- Cooperative units.
- Newly constructed residence where a Certificate of Occupancy or its equivalent has not been issued by the appropriate local authority.
- Boarding houses.
- Bed and breakfast establishments.
- Existing manufactured homes built before June 15, 1976; and
- Existing manufactured homes built after June 15, 1976 that fail to conform to the Manufactured Home Construction Safety Standards, as evidenced by affixed certification labels (e.g., data plate and HUD certification label) and/or lack a permanent foundation as required in HUD’s Permanent Foundations for Manufactured Housing Guide.
You can see each document at the links below.