FHA Issues Instructions for Lenders regarding the Modification of Initial Mortgage Insurance Premium for HECM Refinance Cases

On December 29, 2017, FHA posted on its website, Home Equity Conversion Mortgages (HECM) for Lenders, the formula for calculating the new Initial Mortgage Insurance Premium (IMIP) amount for HECM refinance cases.

The IMIP formula was modified on November 14, 2017, and affects only HECM refinance cases with FHA case numbers assigned on or after September 19, 2017. This formula change complies with the requirements set forth in the Federal Register Final Rule FR-5353-F-03, Federal Housing Administration: Strengthening the Home Equity Conversion Mortgage Program, dated January 19, 2017.

FHA announced further that the IMIP guidance is in the Release Notes document dated December 28, 2017, available in the FHA Connection (FHAC). It provides the new IMIP formula and processing instructions for lenders in calculating the IMIP for HECM refinances.

The HECM Refinance IMIP Formula: FHAC Release Notes (changes and processing instructions for lenders) is available at: https://www.hud.gov/program_offices/housing/sfh/hecm.

The Final Rule FR-5353-F-03 is available at: https://www.gpo.gov/fdsys/pkg/FR-2017-01-19/pdf/2017-01044.pdf.