HUD Announces HECM Principal Limit Reduction

HUD Announces HECM Principal Limit Reduction

HUD has just released Mortgagee Letter 2009-34, which will reduce principal limits for all HECM loans with FHA case assignments dated October 1, 2009, or later.
While this is an unexpected change, HUD has taken this step to protect the viability of the HECM program, and ensure the continued accessibility of HECM products to qualifying seniors. It is important to note that the principal limit reduction affects all lenders and all products.
We encourage you to speak with your clients as soon as possible to discuss how this principal limit change may affect their loan terms. As a reminder, the FHA case assignment date must be made prior to October 1, 2009. Remember, an FHA case assignment cannot be made until the HUD counseling requirement has been met.
Genworth is committed to working with brokers and their clients to ensure sufficient staffing to process every new application received as a result of this change.
We are currently making modifications to our Reverse Mortgage calculator to accommodate the principal limit factor changes. As more details become available, we will communicate them to you via our standard Broker Alert process.
http://www.hud.gov/offices/hsg/sfh/hecm/hecmhomelenders.cfm
Please contact Broker Care at (866) 871-1353 or brokerprogram@genworth.com with additional questions.