HUD issued Mortgagee Letter 2014-22 on November 10, 2014, signaling the confirmation of the long anticipated Home Equity Conversion Mortgage (HECM) Financial Assessment and Property Charge Requirements. The financial assessment requirements will be effective for all case numbers issued on or after March 2, 2015. The purpose of the new requirements is to evaluate the mortgagor's (borrower) willingness and capacity to timely meet his or her financial obligations and to comply with the mortgage requirements. The mortgagee (lender) must also consider to what extent the proceeds of the HECM could provide a solution to any financial difficulties the borrower may be currently having. The borrower's income and credit history will be reviewed with the possibility of establishing an escrow account from the reverse mortgage proceeds to pay for future property tax and homeowner's insurance premiums. Stay tuned for additional information as it becomes available.
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