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.