Page 7 - AAG Wholesale Booklet

2015 FINANCIAL ASSESSMENT: To reduce
borrower defaults, HUD implements Fi-
nancial Assessment, requiring lenders to
conduct a thorough analysis of borrowers’
income sources and credit history to ensure Improving with Age
they can meet the loan’s ongoing obliga-
tions, such as the upkeep of the property What started as an idea or an experiment 30
and payment of property taxes and home- years ago, and then became a demonstration
owners insurance. HUD also clarifies the that proved itself to Congress and the American
2014 rules that allow non-borrowing spous-
es to stay in the home after the borrower people, has since launched into a powerful
dies or leaves the home. and useful financial instrument for tens of
thousands of seniors seeking a responsible
way to tap into a portion of their home equity,
2016 The FHA insures its which has now reached over $7 trillion.
1,000,000th HECM
The HECM has continued to evolve and
improve, and while it won’t be the financial
2017 THREE ESSENTIAL INNOVATIONS ARE solution for every senior who wants to increase
IMPLEMENTED TO STRENGTHEN THE LOAN: their cash flow or simply have more money for
New Upfront Insurance Premiums: The their retirement—supplementing an income
new rate of 2% is an increase from stream such as Social Security or a retirement
0.5% for borrowers who took 60% or plan—it should be part of every financial
less of their loan proceeds upfront and planning discussion.
a decrease from 2.5% for borrowers
who took more than 60% of their loan
proceeds upfront.

Annual Insurance Premiums: The new
rate of 0.5% is a decrease from 1.25%.
Principal Limit Factors: The factors,
based primarily on age and prevailing
market interest rates, were adjusted,
leaving borrowers with more home
equity but fewer loan proceeds. These
adjustments further protect borrowers,
lenders, and the sustainability of the
FHA’s insurance fund.

2018 SECOND APPRAISALS: Lenders are
required to provide a second independent
property appraisal in cases where the FHA
determines there may be inflated prop-
erty valuations. This new action further
strengthens the financial foundation of the
FHA’s reverse mortgage program, which
is contingent upon an accurate determi-
nation of the value and condition of the
borrower’s property being used as collater-
al for the loan.