This week, the Federal Housing Administration (FHA) published Mortgagee Letter 2016-10. This Mortgagee Letter:
- Announces and transmits an updated HECM Financial Assessment and Property Charge Guide;
- Revises the calculation of the growth rate (compounding interest rate) for HECM Servicing Fee Set-Asides to use the Note Rate; and
- Adds the Third Party Property Tax Verification Fee to the list of allowable fees and charges.
Based on additional insights gained into the practical application of its HECM Financial Assessment and Property Charge policies during the last year, FHA is making revisions to the HECM Financial Assessment and Property Charge Guide, including:
- Updates to reflect applicable forward mortgage policy changes that have been made to the Single Family Housing Policy Handbook 4000.1 subsequent to the Guide’s November 2014 publication;
- More specific guidance for several components of the Financial Assessment; and
- Additional criteria for evaluating Compensating Factors in completing the Residual Income analysis to ensure HECM borrowers can comply with HECM requirements and stay in their homes long term.
There is also an Industry Briefing Conference Call on July 21st at 2 PM EST, during which, FHA subject matter experts will provide an overview of the revisions contained in this Mortgagee Letter. You can dial in at 866-254-5935 with access code 397712.