The Federal Housing Administration (FHA) has announced a second option for the agency's reverse mortgage program. The new Home Equity Conversion Mortgage Saver (HECM Saver) is a second initial mortgage insurance premium (MIP) option whose purpose is to provide lower up-front loan closing costs for homeowners who want to borrower a smaller amount than what would be available with the HECM Standard product.
Starting with HECM case numbers assigned on or after Oct. 4, borrowers may select either the HECM Saver or the HECM Standard as an initial MIP.
For HECM Saver, the initial MIP will be 0.01% of the maximum claim amount. The HECM Standard's initial MIP will continue to be 2% of the maximum claim amount. The initial MIP is to be collected at the time of loan closing, regardless of the HECM chosen.
Details on the HECM Saver can be found in FHA's Mortgagee Letter 2010-34.
SOURCE: Federal Housing Administration