In one of its final acts of 2017, the Federal Housing Administration published FHA Connection (FHAC) Release Notes that updated and clarified its formula for calculating the initial mortgage insurance premium for refinanced Home Equity Conversion Mortgages.
The formula was modified on November 14, 2017, and affects only HECM refinances with case numbers assigned on or after September 19, 2017. The formula change conforms with requirements set forth in the Federal Register Final Rule FR-5353-F-03, Federal Housing Administration: Strengthening the Home Equity Conversion Mortgage Program. The FHAC Release Notes outline changes and processing instructions for lenders to calculate IMIP for HECM refinances.
NRMLA is working with FHA to determine how refinance cases that may have been over charged, or under charged, prior to this recent policy clarification will be handled, as well as how the loan documents for those cases will be treated. Additionally, FHA is working on updating its calculator so that the formulas will be correct. We will continue to provide further updates as they occur.