The Federal Housing Administration has updated and clarified its Formula by which the Initial Mortgage Insurance premium is calculated for refinanced Home Equity Conversion Mortgages (HECMs)
The agency notified lenders via an info notice dated December 29, which indicated the update for the Initial Mortgage Insurance Premium formula for refinance cases. The calculation applies for all case numbers assigned on or after September 19, 2017.
According to the notice, the change conforms with requirements set by the HECM Final Rule, which was implemented in September.
Since the rule implementation, industry sources have pointed to a discrepancy between the rule as written and its perceived intention, leading to some uncertainty about the upfront MIP calculation in the final rule.
Lenders can view the notice and new formula on the Department of Housing and Urban Development’s website.
Written by Elizabeth Ecker
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