HECM / Reverse -- MLO Exam with 100% correct answers

HECM Home Equity Conversion Mortgage this is under the FHA Reverse mortgage -an umbrella term that can refer to multiple things 1) FHA / HECM (we are only talking about the FHAHECM) 2) Private companies 00:00 01:15 Details about the FHA HECM program -Its an FHA Program -allows for a one-time single-advance transaction. What is a single-advance transaction? -can be setting up a LOC (line of credit) Who qualifies? *all people on the note and title MUST be age 62 or older. -other people can live there but they cannot be on the note or title -it must stay the primary residence (where you live the majority of the year) What is HECM? -Collateral-only loan --- No ATR required -this is the only time that a collateral only loan is ok. -NO MIN. PAYMENT DUE EVER What is required to qualify for this program? -HUD counseling* -required before you can even apply -counselor has to sign off that the borrower is understanding and in sound mind in order to go through with it. (prevent elder abuse) When does this program end? 1) when you have been gone for a full year; a full year that it has not been your primary residence. 2) dead -- 1 year freeze What happens with the 1 year freeze? -This freeze allows the person who inherits the home to have 1 full year to figure things out. -refinance or sell What are some other important facts about HECM? -must have 60% equity in home [40% LTV; older you are = higher LTV you can get] -Must escrow -upfront mortgage insurance premium and mortgage insurance premium [UFMIP & MIP] -Only lien on property -these loans are assumable* -Non-recourse loan*