HUD Updates HECM for Purchase Requirements

HUD recently issued Mortgagee Letter 2024-06, which revises some of the HECM for Purchase requirements regarding permissible monetary investment sources and interested party contributions that HUD previously announced in October 2023, which WBK previously covered here.  The updates are effective for all HECM case numbers assigned on or after April 29, 2024.

Among other things, the ML states that premium pricing is an unacceptable monetary investment funding source for HECM for Purchase transactions.  The ML also revises the HECM for Purchase interested party contributions guidelines. Specifically, as of the effective date, discount points and interested party payments for permanent and temporary interest rate buy downs are not permitted.  Further, the ML provides that mortgagees and third party originators are not allowed to make any interested party contributions.

HUD states that these policy updates will be incorporated into a forthcoming update of the HUD Handbook 4000.1.