Deadline Nears for Reverse Purchase Loans Closed Under Former Rules

The deadline is coming up for lenders to close reverse mortgage for purchase transactions that were originated before changes to the federally-insured Home Equity Conversion Mortgage program were implemented.

HECM for Purchase transactions with an initial Mortgage Insurance Premium designation of “HECM Standard” or “HECM Saver” must close on or before March 31, 2014, the Federal Housing Administration reminded lenders in a Wednesday email to agency-approved mortgagees. 

The deadline applies only to reverse mortgage purchase transactions where FHA received the case number prior to September 29, 2013, a Certificate of Occupancy has been issued, and the lender has obtained a copy of the borrower’s sales contract along with evidence that the earnest money deposit was executed and paid by the borrower prior to September 3, 2013.

All other FHA eligibility requirements must also have been met, the email states. 

The email was a reminder for Mortgagee Letter 2013-33, which also discusses other recent changes to the HECM program. 

Written by Alyssa Gerace

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