FHA Loan Expert Blog

FHA Home Equity Conversion Mortgage (HECM) Counseling Services:  To clarify the previous message sent on 11/20/07 regarding HECM counseling, prospective HECM borrowers may not pay for HECM counseling services until FHA issues guidance.  Lenders may continue to pay for these services, either on a case-by-case basis or through a lump sum contribution to a HUD-approved housing counseling agency.

Find out more about FHA’s HECM program by visiting: fha.gov/reverse/index.cfm 

For more information on Housing Counseling please visit: hud.gov/offices/hsg/sfh/hcc/hcc_home.cfm

On September 28, 2007, a Final Rule was published in the Federal Register at 72 FR 55638 and codified at 24 CFR Part 214 establishing new regulations for the Department of Housing and Urban Development’s (HUD) Housing Counseling Program.  Included in the final rule is a provision authorizing housing counseling agencies to charge fees for counseling and education.

HUD is in the process of finalizing a mortgagee letter to clarify HUD policy regarding reverse mortgage counseling fees in light of these regulations.  Until the mortgagee letter is published, agencies must not charge fees for reverse mortgage counseling.

Agencies may charge fees for pre-purchase, non-delinquency post-purchase, and rental counseling and education, provided they conform to the criteria in the final rule. 

However, no fees may be charged for clients needing homeless counseling or default counseling.

If you have any questions please call your GTR or staff representative at the Homeownership Center in your jurisdiction. You can find a directory of states that are serviced by the four FHA Homeownership Centers (HOC) on the web at: hud.gov/offices/hsg/sfh/hoc/hsghocs.cfm

BrokerUniverse.com reports:

The Federal Housing Administration is reaching out to nearly “1.2 million at-risk American homebuyers” to inform them about the new FHA Secure refinancing program.  FHA commissioner Brian Montgomery told a congressional panel that his agency is using a direct-mail database to contact subprime borrowers with 2/28 and 3/27 ARMs that are due to reset by 0ctober 2008. Over 1,500 delinquent borrowers have already filed applications to refinance into a FHA Secure mortgage since the agency launched the new program Sept. 5. “Though still a very new program, 575 FHA-approved lenders are already using FHA Secure to rescue delinquent borrowers from the potential loss of their homes,” Mr. Montgomery testified. Meanwhile, FHA has received 74,000 applications by current conventional borrowers who want to refinance into a FHA loan since Sept. 5. FHA received 37,500 of these applications in September and another 36,500 in October.

There are many rumors swirling around the rule HUD issued to eliminate down payment assistance on FHA loans.  HUD has been ordered by a Federal District Court judge that they are not to enforce the rule, until the court has made a determination of whether the rule is legal and proper.