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What is HECM Saver?
The Home Equity Conversion Mortgage (HECM or "Heck-um") is the name that HUD uses for their reverse mortgage product. The HECM "Saver" program was a product that was previously available to borrowers who, for consideration of a much lower initial mortgage insurance premium, would receive a lower benefit amount under the program. While HUD had an initial charge for Up Front Mortgage Insurance Premium or UFMIP (now called Initial Mortgage Insurance Premium or IMIP) of 2.0% of the property value for a Standard HECM Loan, the Saver program offered borrowers lower amounts but at just .01% of the property value for the initial premium charge. So a borrower with a $400,000 property under the Standard Program might receive a lot less money on the program, but their fees for the initial mortgage insurance went from $8,000 down to just $40.00. Both programs carried the same annual renewal on the outstanding balance. The program was one that borrowers who only wanted or needed a small amount of funds favored because they could save so much on the initial fees charged by HUD because the initial charge is determined by the property value, not the amount of the funds the borrower was using
HUD completely changed the programs though when they issued Mortgagee Letter 2013-27 on September 3, 2013. Among other things, HUD changed the amount borrowers received under the programs, the amount of the MIP renewals, and the elimination of the HECM Saver Program (the Saver Program was only announced On September 21, 2010 in HUD's Mortgagee Letter 2010-34, just 3 years before). The 2013 Mortgagee Letter completely eliminated the Saver Program and raised the Initial Mortgage Insurance Premium (IMIP) from 2% to 2.5% on the surviving program for some borrowers who were eligible for higher initial draws. But at the same time, they the amount most borrowers could receive in the first 12 months based on the amount owed on the property. In consideration of the lowered immediately available funds, HUD lowered the IMIP to .50% for all borrowers who would now be limited to 60% maximum initial draw under the new guidelines (or for those who would agree to limit themselves to this amount even if they did qualify for a greater than 60% disbursement under the new rules) in the first 12 months. There were no longer Standard and Saver designations and just one HECM loan with various options for initial disbursement.
What other HUD Changes now affect borrowers
All borrowers who begin their loan and receive their HUD "Case Number" from HUD as of April 27, 2015 will be subject to HUD's new financial assessment guidelines. Along with the other changes HUD announced in the 2013-27 Mortgagee Letter, the Financial Assessment requirements are the most sweeping changes that HUD has made to the program to date. However, this is not a reason to stop seeking a reverse mortgage if that was something you were considering. HUD is concerned with borrowers who still do not have a way to pay for their living expenses and property charges (taxes, insurance, maintenance on the home, etc) even after obtaining a reverse mortgage and so they are implementing guidelines to be certain that a reverse mortgage is the correct solution, not just a delay of the inevitable loss of the home. Each borrower has to look hard at their circumstances and if the reverse mortgage will still not allow them to live comfortably in the home with their normal expenses, then each borrower should make that determination with the help of family and financial counselors as soon as possible. We see financial assessment as a tool to help borrowers ensure that they will be able to stay in their homes for life.
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With our *$0 Closing Cost reverse mortgage you can realize $10's of thousands more from your home's equity. Getting you more from your equity is just another way..."We Beat the Banks"
*$0 Closing Cost option does require a minimum loan amount and we do not encourage borrowers to take out any funds that they did not already intend to withdraw, but if you are looking pay off an existing loan or were looking for a cash withdrawal, why not find out if you quality to have your all of some of your closing costs paid for you (Excludes required counseling fee, when a fee is incurred; All State Taxes may not qualify for Lender Credit).
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