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Update on HECM Life Expectancy Set-Aside and HECM
Financial Assessment and Property Charge Guide

Dear Licensed Partner,

The Department of Housing and Urban Development (HUD), through its Mortgagee Letter 2015-09, has established a monthly growth rate for the Life Expectancy Set-Aside for HECM borrowers and issued updates to the HECM Financial Assessment and Property Charge Guide and the model HECM Financial Assessment Worksheet.

The new requirements and changes, effective for all HECM case numbers assigned on or after April 27, 2015, are as follows:

A) The balance of the Life Expectancy Set-Aside will be adjusted monthly, and will increase each month at a rate equal to one-twelfth of the sum of the mortgage interest rate (Note Rate), plus the annual mortgage insurance premium (MIP) rate (currently 1.25%), from the loan’s funding date.

B) A discrepancy between Section 3.98 of the HECM Financial Assessment and Property Charge Guide (Guide) and the HECM Financial Assessment Worksheet (Worksheet) in Appendix 1 of the Guide, which was released with Mortgage Letter 2014-22, has been resolved by HUD. 

Originally, Section 3.98 of the Guide required calculating Property Charges as a percentage of gross income while the Worksheet only allowed Property Taxes as a percentage of gross income to be entered. In Mortgagee Letter 2015-09, Section 3.98 of the Guide has been revised to require calculating Property Taxes, instead of Property Charges as a percentage of gross income in order to match what the Worksheet required.

C) An updated model HECM Financial Assessment Worksheet was released with Mortgagee Letter 2015-09 and replaces the version included in the HECM Financial Assessment and Property Charge Guide that was released with Mortgagee Letter 2014-22.

If you have any questions, please contact your Client Relations Manager at (855) OK-SUNWEST or (855) 657-8693.

Sincerely,

Sun West Mortgage Company, Inc.
18000 Studebaker Road, Suite 200
Cerritos, CA 90703
Phone: (800) 453-7884
SW-1: Our New No Overlays Program

 

Equal Housing Opportunity This information is provided to licensed brokers/lenders only and may not be copied or distributed to customers or potential customers. All loans are subject to approval. Certain restrictions may apply. Listed pricing is a morning indication only. Program rates, prices, guidelines, fees, costs, terms and conditions are subject to change without notice.




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