HUD Announces New Reverse Mortgage Program Requirements

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On September 3, HUD announced changes to the reverse mortgage program that are intended to strengthen the FHA Mutual Mortgage Insurance Fund and to ensure that it provides a financially sustainable option to senior citizens. Changes reflected in Mortgagee Letter 2013-27 affect the following aspects of the program: (i) initial disbursement limits, (ii) initial mortgage insurance premiums, (iii) initial mortgage insurance premium calculations for refinance transactions, (iv) principal limit factors, (v) financial assessment requirements, and (vi) funding requirements for the payment of property charges based on the financial assessment. In addition, it creates a new single disbursement lump sum payment option. The requirements for preparing the financial assessments are specified in Mortgagee Letter 2013-28 and an Attachment also released on September 3.

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HUD

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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