Yesterday HUD published a final rule which adopts an interim rule that makes two technical changes to the HECM. First, the rule extended the date for calculating maximum claim amount in the HECM from the date of the underwriter’s receipt of the appraisal to the date of closing. According to HUD, this change provides an easily verifiable and identifiable date.
Second, the interim rule corrected an unintended consequence that results in a situation where HECM loans that are not in default but have been assigned pursuant to regulatory provisions, and remain in effect, are not eligible to be refinanced with a discounted initial mortgage insurance premium (MIP). The interim rule permitted such HECM loans to be eligible for the discounted initial MIP upon refinancing, in accordance with the purpose of the HECM program, which is to improve the financial situation of elderly homeowners.
This has been adopted officially by HUD and becomes effective October 6, 2008. To read a full copy of the document which was posted to the Federal Register click the link below.