The HECM for purchase seems to be on everyone’s mind these days. As we wait for HUD’s guidance on the program I thought I’d pass along some information that Financial Freedom issued about the HECM for purchase documents.
For the most part, the documents will be the same documents as the non-purchase
HECM standard application package, except for the following revisions/additions:
The HECM Application Truth-in-Lending Important Terms Disclosure contains purchase specific language such as:
“We can terminate your HECM and immediately require payment of the entire outstanding balance in one payment if a Borrower does not physically occupy, establish and use the Property as Borrower’s principal residence within sixty (60) days after the execution of the Security Instrument and the Property does not become the principal residence of at least one other Borrower within that 60-day period”.
The HECM Loan Agreement contains purchase-specific sections such as:
1.8. “Principal Residence” means the dwelling that the Borrower physically occupies, establishes and uses as the Borrower’s permanent place of abode within sixty (60) days after the execution of this Loan Agreement and continuously thereafter, except as otherwise expressly provided in this Loan Agreement. A Borrower typically spends the majority of the calendar year at his or her Principal Residence. A person may have only one principal residence at any one time. The Property shall be considered to be the Principal Residence of any Borrower who is temporarily or permanently in a health care institution as long as the Property is the Principal Residence of at least one other Borrower who is not in a health care institution.
2.2.4 Initial advances required by this Section 2.2 shall be made as soon as such advances are permitted by the applicable law.
2.2.5 Loan Advances may be used to purchase property
You’ve got to give FF some credit for being the first one to put this information out there. If anyone has closed a HECM for purchase, let me know how it went.
