How will the new changes to the Home Equity Conversion Mortgage (HECM) affect new borrowers?

With the implementation of the new Home Equity Conversion Mortgage (HECM) policies, a borrower may pay a higher initial mortgage insurance premium, but will pay lower annual mortgage insurance premiums over the life of the loan.  Additionally, borrowers may see a modest reduction in the amount of the loan proceeds available to them, but the full impact is dependent on the interest rates agreed upon by the borrower and lender. 
 
HUD reverse mortgage counselors should review the new HECM principal limit factor tables and the terms of the loan with each client to ensure they have adequate information to help them make informed decisions about the best options.
 
HQ Policy Determination

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-01496