Product Changes to HECM Program Clarified.
With any watershed event like HUD’s complete revamping of the reverse mortgage product, confusion can abound. This week I am going to attempt to demystify the latest changes to the program noting 10 take aways. In essence HUD has taken the program back to it’s original intent and early product design. Here we go. #1Borrower will be limited to using only 60% of the Gross Principal limit in the first year. The only exception is when mandatory payoffs exceed 50% of the Gross Principal limit. The clarify the gross principal limit is the Maximum Claim Amount (Homes Appraised Value or Lending Limit…whichever is less) times the new Principal limit factor. We are not looking at the Net Principal limit after closing costs, fees and payoffs are subtracted. #2.HUD has cut borrowers with high mortgage balances or mandatory payoff obligations some slack. When their mandatory payoff balances exceed 50% of the Gross Principal Limit the borrower can take an additional