HUD’s January 19, 2017 HECM rule did not adopt every feature of its May 19, 2016 proposal. One conspicuous distinction concerned adjustable interest rates: the final publication explicitly postponed its determination on proposed cap changes. Its separate disclosure requirement called for potential borrowers to hear about all FHA-insured HECM products, features and options, not just the originating lender’s selection. [2016-11631][2017-01044]

The proposal supplies the details of the unresolved design. Annually adjustable HECMs would have had increases and decreases limited to one percentage point per adjustment and five percentage points over the loan’s life. For monthly adjustable HECMs, the proposed lifetime bound was five percentage points in either direction. These were proposed changes, not new limits adopted by the January action. [2016-11631][2017-01044]

The final rule also described financial assessment requirements already introduced through a mortgagee letter. Lenders considered credit history, cash flow and residual income before loan approval. An assessment could lead to a Life Expectancy Set Aside, or LESA, for certain property charges. Where a fixed-rate loan required that reserve, it could only be fully funded; the description was not a promise of additional spendable funds. [2017-01044]

September 19, 2017 was the final publication’s scheduled effective date. Disclosure, existing assessment policy and deferred rate changes therefore occupy different legal positions. The records document HUD’s policy choices, not subsequent implementation or borrower outcomes. They belong to the same proceeding rather than providing independent corroboration of the policy’s success. [2016-11631][2017-01044]

Source documents

  1. Federal Housing Administration: Strengthening the Home Equity Conversion Mortgage Programhttps://www.govinfo.gov/content/pkg/FR-2017-01-19/html/2017-01044.htm
  2. Federal Housing Administration (FHA): Strengthening the Home Equity Conversion Mortgage Programhttps://www.govinfo.gov/content/pkg/FR-2016-05-19/html/2016-11631.htm