The Home Equity Conversion Mortgage (HECM) is the only reverse mortgage insured by the federal government.
HECM loans are insured by the Federal Housing Administration (FHA), which is part of the U.
S.
Department of Housing and Urban Development (HUD).
To qualify and continue to qualify for an HECM the loan must be maintained over the years.
As a government insured loan, HECMs must follow particular servicing guidelines established for the protection of the homeowner who is taking out a reverse mortgage.
Since different types of loans and lenders are abundant, HUD maintains and updates a set of guidelines to streamline the standards for HECM reverse mortgages.
Previously, when a mortgagor fails to pay taxes or insurance, the servicer adjusts the existing payment plan to allow them to be reimbursed for any advances made.
After March of 2006, servicers in Texas can't make unauthorized changes to a line of credit without the borrower's approval.
The Texas Constitution prohibits lenders from unilaterally amending the terms of the document administering the extension of credit.
Normally, HUD will approve a third extension to allow more time for an estate to sell the property only when a sale is pending on the property.
However, due to the current market and economic conditions, HUD will temporarily consider third extensions on HECM loans where there is not a sale pending.
These requests will be reviewed on a case-by-case basis to determine if it is in the best interest of HUD to grant additional time for the property to be sold.
Because of the nature of the third extensions, additional documentation will be required to justify the approval of additional time.
Another recent change due to the poor economic climate is that, though HUD will not usually consider allowing the mortgagee to sell an acquired property for an amount less than the appraised value, for now they will review requests to accept an amount that is less than the appraised value on a case-by-case basis as well as determine if the sale is in the best interest of all parties involved.
Mortgagees are required to obtain appraisals of a property no later than 30 days after the mortgagor is notified that the mortgage is due and payable, or no later than 30 days after the mortgagee becomes aware of the mortgagor's death, or upon the mortgagor's request in connection with a pending sale.
The property must be appraised at least 15 days before a foreclosure sale.
A servicer may not be reimbursed more than 100% of the maximum claim amount for any reason.
The servicer should allow the estate time to sell the property if an HECM is called due for reasons other than death and then the mortgagor passes away.
But, if the estate does not demonstrate interest in selling the property or paying off the loan within a reasonable time after death of the last surviving mortgagor, the foreclosure should continue.
Servicers are required to notify HUD of the death of the last surviving mortgagor no later than 60 days from the date of the mortgagor's death.
HECM loans are insured by the Federal Housing Administration (FHA), which is part of the U.
S.
Department of Housing and Urban Development (HUD).
To qualify and continue to qualify for an HECM the loan must be maintained over the years.
As a government insured loan, HECMs must follow particular servicing guidelines established for the protection of the homeowner who is taking out a reverse mortgage.
Since different types of loans and lenders are abundant, HUD maintains and updates a set of guidelines to streamline the standards for HECM reverse mortgages.
Previously, when a mortgagor fails to pay taxes or insurance, the servicer adjusts the existing payment plan to allow them to be reimbursed for any advances made.
After March of 2006, servicers in Texas can't make unauthorized changes to a line of credit without the borrower's approval.
The Texas Constitution prohibits lenders from unilaterally amending the terms of the document administering the extension of credit.
Normally, HUD will approve a third extension to allow more time for an estate to sell the property only when a sale is pending on the property.
However, due to the current market and economic conditions, HUD will temporarily consider third extensions on HECM loans where there is not a sale pending.
These requests will be reviewed on a case-by-case basis to determine if it is in the best interest of HUD to grant additional time for the property to be sold.
Because of the nature of the third extensions, additional documentation will be required to justify the approval of additional time.
Another recent change due to the poor economic climate is that, though HUD will not usually consider allowing the mortgagee to sell an acquired property for an amount less than the appraised value, for now they will review requests to accept an amount that is less than the appraised value on a case-by-case basis as well as determine if the sale is in the best interest of all parties involved.
Mortgagees are required to obtain appraisals of a property no later than 30 days after the mortgagor is notified that the mortgage is due and payable, or no later than 30 days after the mortgagee becomes aware of the mortgagor's death, or upon the mortgagor's request in connection with a pending sale.
The property must be appraised at least 15 days before a foreclosure sale.
A servicer may not be reimbursed more than 100% of the maximum claim amount for any reason.
The servicer should allow the estate time to sell the property if an HECM is called due for reasons other than death and then the mortgagor passes away.
But, if the estate does not demonstrate interest in selling the property or paying off the loan within a reasonable time after death of the last surviving mortgagor, the foreclosure should continue.
Servicers are required to notify HUD of the death of the last surviving mortgagor no later than 60 days from the date of the mortgagor's death.
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