The Department of Housing and Urban Development this week proposed changes to its regulations governing its Reverse Mortgage program, known as Home Equity Conversion Mortgages or “HECMs.” HUD has classified the new rules as “technical changes” excepted from normal notice and comment procedures under the Administrative Procedures Act. The rules relate to changing the date for calculating Maximum Claim Amounts under the HECM program, and correcting a flaw that prohibited certain refinances from qualifying for a discounted Initial Mortgage Insurance Premium.
Following is the Summary from HUD’s Federal Register notice:
This rule makes two technical changes to HUD’s Home Equity Conversion Mortgage (HECM) program. First, the rule extends the date for calculating the maximum claim amount in the HECM program from the date of the underwriter’s receipt of the appraisal report to the date of closing. This change provides a more easily verifiable and more easily identifiable date. Second, this rule corrects an unintended consequence that results in a situation where HECM loans that are not in default but have been assigned pursuant to regulatory provisions, and remain in effect, are not eligible to be refinanced with a discounted initial mortgage insurance premium (MIP). This rule would permit such HECM loans to be eligible for the discounted initial MIP upon refinancing, in accordance with the purpose of the HECM program, which is to improve the financial situation of elderly homeowners.
The new rules become effective February 7, 2008. However, HUD is accepting public comments until March 10, 2008.
For more information about HECMs, visit the HUD website.