||October 19th, 2006|
Reverse Mortgages . . .
with Laura Strickler
Laura Strickler -
Your Reverse Mortgage Specialist
Since Reverse Mortgages are gaining in popularity with more and more seniors taking advantage of the program, FHA is trying to keep the program updated. With that in mind, there is a new development regarding the amount of time your Expected Rate can be locked.
Approximately a year ago, FHA allowed a 60 day lock on the Expected Rate issued at the time of application. This is called the Expected Principal Limit Disclosure. However, the clock didn't start ticking until your appraisal was ordered. With any FHA loan, a case number is issued, and that case number is used to order the appraisal. This usually happens on the same day.
The ability to utilize this "lock" was great news. What used to happen is that seniors would make their application and be at the mercy of the interest rates during the processing of their loans. So that resulted in some seniors having a lower interest rate when they made application than when their loan documents were drawn. Consequently, they lost money because the higher the interest rate, the less money they received.
With the introduction of the 60 day Expected Principal Limit Disclosure, all seniors were protected for 60 days. If the rates went up, they still received their lower application rate, as long as their loan closed in that time frame of 60 days. Most lenders would push a loan along if it was getting close to the expiration of their lock. However, with the popularity of the Reverse Mortgage program, still some seniors were losing out on the lower rate they had when they signed their application. The industry is trying to respond quickly to any issue that may adversely affect the senior population with regards to this loan program. That is why FHA has now increased the Expected Principal Limit Disclosure time frame from 60 days to 120 days!
This is great news for lenders who are having trouble processing their loans and for their seniors. I am happy to say that I have been able to keep my clients happy and they haven't had to worry about the 60 day lock. The length of time it usually takes for my clients to close their loans is between 30-40 days. I've had some of my clients close their loans in as little as two weeks!