Page 10 - WSAAG098_WS Booklet

2015 FINANCIAL ASSESSMENT:
To reduce borrower defaults, HUD implements Financial Assessment,
requiring lenders to conduct a thorough analysis of borrowers’ income
sources and credit history to ensure they can meet the loan’s ongoing
obligations, such as the upkeep of the property and payment of property
taxes and homeowners insurance. HUD also clarifies the 2014 rules that
allow eligible non-borrowing spouses to stay in the home after the
borrower passes away, provided they continue to maintain their home,
pay property taxes and homeowners insurance, and otherwise comply
with all loan terms.

2016 THE FHA INSURES ITS 1,000,000 HECM
TH

2017 THREE ESSENTIAL INNOVATIONS ARE
IMPLEMENTED TO STRENGTHEN THE LOAN:

New Upfront Insurance Premiums: The new rate of 2% is an
increase from 0.5% for borrowers who took 60% or less of their loan
proceeds upfront and 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, the
home’s appraised value, and prevailing marketing 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
property valuations. This new action further strengthens the financial
foundation of the FHA-insured reverse mortgage loan, which is
contingent upon an accurate determination of the value and condition
of the borrower’s property being used as collateral for the loan.