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New MIP Rates and Principal Limit Factors |
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| Purpose |
| The purpose of this bulletin is to announce changes occurring to the HECM program as a result of HUD Mortgagee Letter 2017-12. |
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| Implementation |
In an effort to ensure the continued viability and sustainability of the HECM program, HECM Principal Limit Factors have been reduced and Mortgage Insurance Premiums have been adjusted.
These changes are effective for all HECMs with FHA Case Numbers assigned on or after October 2, 2017. |
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| Principal Limit Factors |
| The new Principal Limit Factor Table is accessible from the HUD website, and will be updated in Reverse Vision for case numbers assigned on or after October 2, 2017. |
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| Initial and Annual MIP Rates |
The Initial Mortgage Insurance Premium rate has changed to 2.0% of the Maximum Claim Amount regardless of the percentage of initial draw. Currently, this rate was 0.5% for borrowers drawing 60% or less of their Principal Limit and 2.5% for borrowers drawing greater than 60% of their Principal Limit.
The Annual Mortgage Insurance Premium rate has been reduced from 1.25% to 0.50% of the outstanding mortgage balance.
ReverseVision will be updated to reflect these changes based on the case number assignment date entered into the LOS. |
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| REMINDER |
As a reminder, case numbers may not be assigned and processing of the loan may not begin (including ordering the appraisal or title search) until the borrower attends counseling and executes both the loan application and counseling certificate. Ordering the case number prior to receiving the executed documents will place the loan out of compliance.
California: FHA case numbers cannot be ordered until after the Cooling off period, on the 8th day following the date of counseling. |
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| IMPORTANT |
| LHFS's team will do its best to assign all case numbers requested prior to the October 2nd deadline. However, we request that all case assignment requests be sent in by 3PM PST on Friday, September 29th to ensure appropriate time for our team to process the case number and for the case number to clear hold tracking. |
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| Resources |
| HUD Mortgagee Letter 2017-12 |
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For more information,
contact your Account Executive: |
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