Below are links to two Mortgagee Letters regarding HECM Reverse Mortgages that were just issued. Click on the links to view the entire Mortgagee Letter or call your local Reverse Mortgage Lender.
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HECM Mortgage Limits
The Housing and Economic Recovery Act of 2008 (HERA) established a national mortgage limit for all Home Equity Conversion Mortgages (HECM), insured under Section 255 of the National Housing Act, to be set in conformance with section 305(a)(2) of the Federal Housing Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)). Effective for all HECMs insured on or after the date of this Mortgagee Letter, the national mortgage limit is $417,000.
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HECM Origination Fee
The Housing and Economic Recovery Act of 2008 established new limits on the loan origination fee that may be charged for a Federal Housing Administration (FHA) Home Equity Conversion Mortgage (HECM). Therefore, for all HECMs where the FHA case number is assigned on or after the date of this mortgagee letter, the loan origination fee limit will be the greater of $2,500 or two percent of the maximum claim amount of the mortgage, up to a maximum claim amount (MCA) of $200,000, plus one percent of any portion of the maximum claim amount that is greater than $200,000. Lenders may accept a lower origination fee when appropriate. The total amount of the loan origination fee may not exceed $6,000.
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Download Quick Reference
TriFold Reverse Mortgage Brochure
The following is a short description of HECM Reverse Mortgages.
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What is a HECM Plan?
A HECM Plan is a special type of Plan that enables Seniors to tap into the equity in their home and receive cash, a tax-free monthly income, and/or a line of credit, or combinations of these. There are no income, asset or credit qualifications and there are no monthly payments to make. The Plan is not repaid until the Seniors permanently leave their home. Reverse Mortgage of America's HECM Plans are backed by the U.S. Government (HUD/FHA) and Seattle Mortgage a 62 year old major financial institution.
How Do I Qualify?
A HECM Plan is easy to obtain, provided that: (1) The Seniors (and/or their spouse) one of them is at least 62 years of age or older. (2) they occupy the home as their primary residence, and (3) they have equity in their home (proceeds of the reverse mortgage can be used to pay off existing liens or mortgages.)
What Can I Do With the Money?
The Senior can use the money (and are entitled to) from their HECM Plan in any way they choose. For instance:
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Supplement their income
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Home improvements
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Pay off a current mortgage
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Medical expenses
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Pay off debt
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Buy a new car
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Travel
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College tuition or gifts to family
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or even stop a foreclosure.
The possibilities are endless. And, the funds are all tax-free.
How Much Money Can I Receive?
The amount of money you receive from a HECM Plan is determined by the home value, the number and age of the homeowner(s) and the current interest rate from HUD. A representative from Reverse Mortgage of America will assist in evaluating their options and calculating the maximum amount of money that will be available to them.
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How Do I Receive My Money?
With a HECM Plan, the Senior has five (5) payment options to choose from:
(1) Tenure Option or Lifetime Payment - Receive equal monthly payments for as long asthey occupy their home as their primary residence
(2) Line of Credit - Draw cash from their HECM Plan whenever and in whatever amount their choose up to the available limit. Interest is only charged on the funds drawn from the line of credit.
(3) Lump Sum Cash Advance - They can receive all of their money in a lump sum upon the closing of the HECM Plan.
(4) Modified Tenure - Set aside a portion of the loan proceeds as a line of credit in addition to monthly payments.
(5) Term - Receive equal monthly payments for a fixed period of time they select. For instance - five (5) or ten (10) years.
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Download Quick Reference
TriFold Reverse Mortgage Brochure
Wow I didn't know about the payment options that was a great extra.