What is the purpose of issuing the Home Equity Conversion Mortgage (HECM) guidance contained in Mortgagee Letter 2018-06?

To ensure the long-term viability of the Home Equity Conversion Mortgage (HECM) program and mitigate financial stress on the Mutual Mortgage Insurance Fund (MMIF), FHA must take additional measures, including confirming the valuation of the collateral at the time of origination.  This will be achieved through the use of FHA’s collateral risk assessment process.  Under the new requirements, where the FHA collateral risk assessment of the first appraisal (i.e.,the appraisal submitted for use in the HECM origination), concludes additional support for the valuation of the collateral is needed, a second appraisal will be required.

For additional information see Mortgagee Letter 2018-06 available at: https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee


All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: 2018-0022