HUD Plans to Make Policy Changes for HECM Lenders

Due to Bank of America and Wells Fargo exiting the Home Equity Conversion Mortgages (HECM), Housing and Urban Development has been concerned about the health of the HECM. To address these concerns, HUD has started to develop some policy changes. These changes most likely would require lenders to better underwrite HECM for borrowers’ ability to meet tax and insurance payments associated with the loans.

“HUD is considering a number of ideas covering a range of issues,” National Mortgage news wrote. “Among other things, it is looking into requiring lenders to perform a full financial assessment of potential HECM borrowers, giving lenders wider latitude in requiring set-asides for property charges, and giving borrowers the option of allowing lenders to escrow for the taxes and fees.”

While there currently is no requirement for lenders to better underwrite these reverse mortgages, there is nothing stopping them from doing so now.


Your mortgage. Your way.

Get started on your Digital Mortgage!
All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Guaranteed Rate, Inc. does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Guaranteed Rate, Inc. Guaranteed Rate, Inc. its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action.