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Requirements Announced for HCEM Home Purchases
The Department of Housing and Urban Development recently outlined its requirements for persons who are at least 62 years old to use a Home Equity Conversion Mortgage, or HECM, to purchase a home.
The Housing and Economic Recovery Act of 2008, which was enacted earlier this year, allows HECMs to be used to buy homes after Jan. 1, 2009.
For further details on the new rules, click here to read FHA Mortgagee Letter 2008-33.
An HECM can provide cash for a borrower under several options:
- Tenure — equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence
- Term — equal monthly payments for a period of months selected by the borrower
- Line of Credit — unscheduled payments or in installments, at times and in amounts of the borrower's choosing until the line of credit is exhausted
- Modified Tenure — a combination of a line of credit and monthly payments for as long as the borrower remains in the home
- Modified Term — a combination of a line of credit and monthly payments for a fixed period of months selected by the borrower
Only properties where construction is completed before the closing of the HECM are eligible. In addition, the home must serve as the principal residence of the borrower and the borrower must occupy the home within 60 days of the loan closing.
Real estate that is used to secure the HECM can be held in fee simple or by leasehold, provided that the lease meets certain requirements.
At closing, HECM borrowers must provide cash that will be applied to satisfy the difference between the HECM principal limit and the sales price for the property, plus any HECM loan-related fees that are not financed or offset by other allowable FHA funding sources. Lenders will be required to verify the source of the home buyer’s funds prior to closing.
Click here for information on HUD’s Web site for prospective HECM borrowers, including various investment/cash flow scenarios.
For further information, e-mail Bill Renner at NAHB, or call him at 800-368-5242 x8597.
 Construction Forecast Conference Webcast Available
An on-demand webcast of the 2008 Fall Construction Forecast Conference is available for purchase.
The webcast fee includes access to the webcast archive and electronic copies of the conference handout and presentation materials. Multiple viewers in one office can purchase the webcast for one fee.
The on-demand webcast also gives viewers complete flexibility in their viewing experience — pause, skip forward and backward, or jump directly to your topics of interest.
To purchase and download the webcast, click here.
 Want to Know the Housing Forecast for the Top 100 Metros?
Find out in HousingEconomic.com’s 2008 to 2009 Metro Forecast (free preview).
Get the metro forecast with in-depth analysis, overviews and downloadable Excel tables.
To learn more, visit www.HousingEconomics.com.
 Free NAHB Kit Gives Builders Back-to-Basics Tips to Navigate the Slowdown
What was once expected to be a relatively mild housing slump following three years of record new home construction and sales has given way to a significant downturn.
To help members navigate the uncharted waters of this slowdown, NAHB has compiled a comprehensive “Back to Basics” online toolkit — the best of the basics, the tried and true and the truly new. To access the toolkit, click here.
To access the “Back to Basics” toolkit, you must be an NAHB member and have a login to www.nahb.org. To create a login, go to www.nahb.org/login or click on the log-in button on the main menu bar.
For assistance, call the NAHB Member Service Center at 800-368-5242.
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