Washington Report

Advocacy Updates from Washington D.C.

FHA Proposes Changes to Reverse Mortgage Program

On May 19, 2016, the Federal Housing Administration (FHA) published a proposed rule concerning its Home Equity Conversion Mortgage (HECM) program, Strengthening the Home Equity Conversion Mortgage Program (FR-5353-P-01). The proposed rule would:

  • Codify previously implemented requirements;
  • Make certain that HECM counseling occurs before a mortgage contract is signed;
  • Require lenders to fully disclose all HECM loan features;
  • Cap lifetime interest rate increases on all adjustable rate HECM loans to 5%;
  • Reduce the cap on annual interest rate increases on adjustable rate HECMs from 2% to 1%;
  • Require lenders to pay mortgage insurance premiums until the HECM is paid in full, foreclosed on, or a deed-in-lieu is executed rather than until when the mortgage contract is terminated; and
  • Create a "cash for keys" program to encourage borrowers to complete a deed-in-lieu transaction and gracefully exit the property versus enduring a lengthy foreclosure process.

Comments are due by July 18, 2016.

Proposed HECM Rule

Notice: The information on this page may not be current. The archive is a collection of content previously published on one or more NAR web properties. Archive pages are not updated and may no longer be accurate. Users must independently verify the accuracy and currency of the information found here. The National Association of REALTORS® disclaims all liability for any loss or injury resulting from the use of the information or data found on this page.

Advertisement