HUD has issued Mortgagee Letter 2010-07, Revisions to Model Home Equity Conversion Mortgage (HECM) Loan Agreement (Loan Agreement) and Fannie Mae Form 1009, Residential Application for Reverse Mortgages (Fannie Mae Form 1009).

This Mortgagee Letter informs lenders and HECM counselors of

• Revisions to the model HECM Loan Agreement (HECM Loan Agreement);
• Revisions to the model HECM Loan Agreement Exhibits; and
• Revisions to Fannie Mae Form 1009, Residential Loan Application for Reverse Mortgages (Fannie Mae Form 1009).

This Mortgagee Letter also provides policy guidance for the

• Prohibit use of Freddie Mac Form 65/Fannie Mae Form 1003, Uniform Residential Loan Application; and
• Reaffirm use of Form 92900-A, HUD/VA Addendum to Uniform Residential Loan Application.

To view the entire Mortgagee Letter, please click Read more...

March 1, 2010

To:  All FHA-Approved Mortgagees

All HECM Counseling Roster Agencies

Subject

Revisions to Model Home Equity Conversion Mortgage (HECM) Loan Agreement (Loan Agreement) and Fannie Mae Form 1009, Residential Application for Reverse Mortgages (Fannie Mae Form 1009)

Purpose

This Mortgagee Letter informs lenders and HECM counselors of

• Revisions to the model HECM Loan Agreement (HECM Loan Agreement);
• Revisions to the model HECM Loan Agreement Exhibits; and
• Revisions to Fannie Mae Form 1009, Residential Loan Application for Reverse Mortgages (Fannie Mae Form 1009).

This Mortgagee Letter also provides policy guidance for the

• Prohibit use of Freddie Mac Form 65/Fannie Mae Form 1003, Uniform Residential Loan Application; and
• Reaffirm use of Form 92900-A, HUD/VA Addendum to Uniform Residential Loan Application.

Effective Date

This guidance is effective August 1, 2010 for all HECM case numbers assigned on or after this date.  However, lenders may use the revised forms immediately.

Revisions to Fannie Mae Form 1009, Residential Loan Application for Reverse Mortgages

Fannie Mae Form 1009 has been revised in the following manner:

A.  Section I.  Type of Mortgage and Terms includes data fields for

• HECM for Purchase
• Sales Contract Price
• Land Installment Contract Price
• Borrower's Investment
• Purpose of Loan
• Index Type
• Loan Origination Fee

B.  Section II.  Primary Residence Property Information includes data fields for:

• Irrevocable Trust
• Revocable Trust

C.  Section VI.  Liens Against the Property was updated by providing lien examples.

D.  Section VI.  Declarations was updated by adding items i. through k.

E.  Section VIII.  Information for Government Monitoring Purposes collects Loan Originator information.

The revised form can be downloaded from:
https://www.efanniemae.com/sf/formsdocs/forms/index.jsp

Revisions to 4235.1 REV-1, Appendix 7, Model HECM Loan Agreement

The model HECM Loan Agreement has been revised in the following manner:

Section 1.4 defines the maximum claim amount as the lesser of the

• Appraised value of the property;
• Sales price of the property; or
• National maximum loan limit established under Section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act for a 1-family residence.

Revisions to 4235.1 REV-1, Appendix 7, Model HECM Loan Agreement Exhibits

Exhibit 1 (Payment Plan) of the HECM Loan Agreement is amdended to:

A.  Indicate

• payment plan selection of the borrower; and

B.  Disclose the

• Expected average mortgage interest rate;
• Initial mortgage interest rate; and
• Margin used to originate the loan.

Exhibit 2 is revised to read:  "Schedule of Liens/HECM for Purchase Disbursements to Seller.  The heading "Schedule of Closing Costs" remains unchanged.

Important: Lenders must itemize each closing cost item and the amount charged under the "Schedule of Closing Costs" section of Exhibit 2.

Exhibit 3 (Repair Rider) of the HECM Loan Agreement remains unchanged.  Lenders may attach an addendum to the Repair Rider to spell out the repairs in clear and complete terms.

The revised model HECM Loan Agreement and Exhibits are attached to this Mortgagee Letter.

Freddie Mac Form 65/Fannie Mae Form 1003,  Uniform Residential Loan Application

FHA will no longer permit the use of Freddie Mac Form 65/Fannie Mae Form 1003, Uniform Residential Loan Application, for HECM loan transactions.

Effective Date

This policy guidance is effective August 1, 2010 for all HECM case numbers assigned on or after this date.

Form 92900-A, HUD/VA Addendum to Uniform Residential Loan Application

The completion of the HUD/VA Addendum to Uniform Residential Loan Application, Form 92900-A will continue to be required for every HECM loan transaction.

Click here to view a PDF of the Mortgagee Letter