HUD ML Updates Debenture Interest Rates for HECMs

HUD recently issued Mortgagee Letter 2024-18, which, under authority provided in the Reverse Mortgage Stabilization Act, updates its regulations and policies on HECM debenture interest rates and describes the process for requesting a Debenture Interest Rate Adjustment (DIRA) for claims filed that became due and payable on or after September 19, 2017.  The ML becomes effective on September 28, 2024.

The ML modifies the debenture interest rate section of the regulation for HECMs endorsed for insurance after January 23, 2004.  It establishes different debenture interest rate calculations for mortgages, if an insurance claim is paid in cash, based on the due and payable date (here, date of default).  The three applicable time periods for calculating debenture interest rates are: due and payable before September 19, 2017; due and payable on or after September 19, 2017, and before September 28, 2024; and due and payable after September 28, 2024.

The ML also sets forth the corresponding Handbook 4000.1 policy changes regarding the debenture interest rate and details information about requesting DIRAs, which are requests from the holder for an adjustment of the debenture interest rate on filed claims that became due and payable on or after September 19, 2017, and were filed prior to September 28, 2024.  A DIRA may be requested from January 2, 2025, through July 1, 2025.  Note that only one DIRA and one corrective DIRA per FHA Mortgagee ID is permitted, and the corrective DIRA must be submitted within 30 days of the original DIRA request.