Below is some of the detail surrounding the change effective April 1, 2013 on the fixed rate Reverse Mortgage loan. In simple terms one can obtain a fixed rate loan today. After April 1 2013, what is called the Standard fixed rate product becomes replaced with the Saver fixed rate product which in the end, provides less proceeds. However, in the past, today and going forward, the upfront closing costs are lower with the Saver because the upfront mortgage insurance premium is pennies on the dollar. Proceeds while less, are often most adequate for realizing the borrowers goals. Each client of mine is so unique and the appropriate program is determined by their particular needs. If more loan proceeds are required the HECM Standard adjustable rate product does indeed address that concern and is available. The Reverse Mortgage program at large is growing, demand and interest continues and as always it is a privilege to serve you. The shifting of available product this year is all about FHA and the insurance fund. Rest assured it is going to be a great year for seniors 62 and over! Call or email me any time for refinance or purchase questions; I can help!
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Mortgagee Letter 2013-01 January 30,2013
To help sustain the HECM program as a viable financial resource for aging homeowners and to strengthen the Mutual Mortgage Insurance Fund, the HECM Saver
will be the only initial MIP option available to mortgagors who seek the predictability of a fixed interest rate mortgage and lower upfront closing costs. This
guidance is effective for all fixed interest rate case numbers assigned on or after April 1, 2013.
For HECM Saver, the initial MIP, which is collected at the time of closing, will remain at 0.01 percent (0.01% or 0.0001) of the maximum claim amount. The annual MIP for HECM Saver will remain at an amount of 1.25 percent (1.25%) of the outstanding loan balance.
Mortgagors may still use the HECM Standard initial MIP option, but only with adjustable interest rate mortgages.
HECM Saver is available for:
* Fixed interest rate mortgages;
* Adjustable interest rate mortgages (monthly and annual);
* All interest rate indices (Constant Maturity Rate and London Interbank Offered Rate);
* All HECM transaction types (traditional, purchase and refinance); and
* All five payment plans (tenure, term, line of credit, modified tenure and term).