Financial Assessment Coming for Hecm Loans

Posted by on Dec 30, 2014 in News | No Comments

Last Updated 11/18/2014

On November 10, 2014, the Federal Housing Administration (FHA) published its Home Equity Conversion Mortgage (HECM) Financial Assessment and Property Charge Changes Mortgagee Letter. This Mortgagee Letter announced a revised HECM Financial Assessment and Property Charge Guide (Guide) that provides additional guidance for lenders on various aspects of the HECM Financial Assessment.  These new rules go into effect on March 2, 2015.

Highlights

  • Credit assessment will be performed
  • Income and assets will be analyzed
  • Possible ifetime set aside for anticipated property charges

Purpose of the Financial Assessment

The lender must evaluate the borrower’s willingness and capacity to timely meet his or her financial obligations.  In conduction this financial assessment, lenders must take into consideration that some borrower’s seek a HECM due to financial difficulties, which may be reflected in the borrower’s credit report and/or property charge payment history.  The lender must also consider to what extent the proceeds of the HECM could provide a solution to any such financial difficulties.  The financial assessment and property charge guide is over 80 pages long and dictates how the calculations are to be made.  This is a big change upcoming to the program and will be implemented on all case numbers issued after March 2, 2015.  Call me to discuss your individual situation and whether or not you may be affected by this upcoming change.

These materials are not from HUD or FHA and were not approved by HUD or a government agency