Home Equity Conversion Mortgages

To enable elderly homeowners to convert equity in their homes to monthly streams of income or, except for Texas, lines of credit.



Agency - Department of Housing and Urban Development

The Department of Housing and Urban Development's mission is to increase homeownership, support community development and increase access to affordable housing free from discrimination. HUD fulfills this mission through high ethical standards, management and accountability, and by forming partnerships with community organizations.

Office - Persons are encouraged to contact the Homeownership Center serving their State(see http://www.hud.gov/offices/hsg/sfh/hoc/hsghocs.cfm) or the nearest HUD Office.

See Catalog Address Appendix IV for a list of Offices.


Program Accomplishments

In Fiscal Year 2006, 76,282 loans were Insured; in Fiscal Year 2007, 107,367 loans were insured.

Uses and Use Restrictions

HUD insures lenders against loss on reverse mortgage loans.

These loans may be used to provide monthly streams of income or, except for Texas, lines of credit for older homeowners, 62 years of age or older.

Eligibility Requirements

Applicant Eligibility

Eligible borrowers are persons 62 years of age or older and must complete counseling from a HUD-approved agency prior to obtaining the loan.

Eligible properties include Single Family one-to-four unit owner-occupied dwelling units, condominiums and Planned Unit Developments, if they meet FHA standards, and manufactured homes, if they meet FHA standards.

Beneficiary Eligibility

Individuals.

Credentials/Documentation

Documentation regarding the characteristics of the property and the qualifications of the mortgagor are assembled by the mortgagee. This program is excluded from coverage under OMB Circular No. A-87.

Aplication and Award Process

Preapplication Coordination

This program is excluded from coverage under OMB Circular No.

A-102 and E.O.

12372.

Application Procedures

The borrower is required to receive counseling from a HUD-approved counseling agency prior to application. Approved Direct Endorsement Lenders process all aspects of the loan application and submit it to HUD for insurance endorsement. This program is excluded from coverage under OMB Circular No. A-110.

Award Procedures

See Application Procedure.

Deadlines

None.

Authorization

National Housing Act, as amended; Housing and Community Development Act of 1987, Section 417, Public Law 100-242, 12 U.S.C. 1715z-20.

Range of Approval/Disapproval Time

Varies.

Appeals

Mortgagee will state the reasons for refusing an application. The applicant may reapply subject to concurrence of the lender.

Renewals

Not applicable.

Assistance Considerations

Formula and Matching Requirements

Payments that a borrower can receive from a reverse mortgage are determined by calculating the principle limit. This is determined at closing using a factor corresponding to the age of the youngest borrower, the interest rate, and the lessor of the value of the home or the FHA limits for the area. Mortgage insurance premiums will be collected including: (1) an up-front premium which may be financed and (2) a periodic premium which is paid monthly. The loan origination charge by the mortgagee varies, but the financed portion may not exceed the greater of 2 percent of maximum claim amount or $2,000. Mortgagors may be charged appraisal and inspection fees in accordance with fee schedules established by HUD. These charges may also be financed.

Length and Time Phasing of Assistance

The mortgage has no specified term. The mortgage is due and payable at the death of the borrower(s) or if the borrower sells, conveys, or moves from the property.

Post Assistance Requirements

Reports

Defaults in meeting the mortgage terms must be reported.

All approved mortgagees at any time upon request by HUD must furnish a copy of their latest financial statement.

Audits

The Department of Housing and Urban Development reserves the right to audit the account of the mortgagee to determine its compliance and conformance with HUD regulations and standards.

Records

Mortgagees are required to service and maintain records in accordance with acceptable mortgage practices of prudent lending institutions and the HUD regulations.

Financial Information

Account Identification

86-4077-0-3-371.

Obigations

(Mortgages insured) FY 07 $5,571,350,940; FY 08 est $4,225,354,720; and FY 09 est not available.

Range and Average of Financial Assistance

Payments that a borrower can receive from a reverse mortgage are determined by calculating the principle limit. This is determined at closing using a factor corresponding to the age of the youngest borrower, the interest rate, and the value of the home or the FHA limits, whichever is less. The average loan amount for FY 2006 is $235,634.

Regulations, Guidelines, and Literature

"Options for Elderly Homeowners: A Guide to Reserve Mortgages and Their Alternatives," no charge; 24 CFR 200 and 206, HUD Handbook 4235.1, Rev. 1.

Information Contacts

Regional or Local Office

Persons are encouraged to contact the Homeownership Center serving their State(see http://www.hud.gov/offices/hsg/sfh/hoc/hsghocs.cfm) or the nearest HUD Office. See Catalog Address Appendix IV for a list of Offices.

Headquarters Office

451 7th Street, S.W., Washington, DC 20410. Telephone: (202) 708-2121.

Criteria for Selecting Proposals

None.



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