When must tax and insurance payments be made under a HECM fully-funded Life Expectancy Set-Aside?

Payments must be made on a timely basis to avoid any penalties and to take advantage of any discounts for early payments that would benefit the borrower.

The lender must pay from the set-aside the actual amount of property taxes and insurance premiums directly to the taxing authority and insurance carrier.

For additional information see Mortgagee Letter 2014-21 available at https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee

ML 14-21; HQ Policy

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: KA-01115