Loans with an expected rate of less than three percent can now be set up in HUD’s system after the proper fixes were implemented this week. HUD also published HERMIT Release Notes 5.81 to help lenders resolve any outstanding issues with loans they had previously tried to set up.
In FY 2018, HUD lowered the effective interest rate floor for principle limit factor determination from five percent to three percent. Thus, all interest rates of three percent or less showed identical PLFs for each borrower age. HERMIT was modified to accommodate these lower rates.
For HECMs that closed prior to July 15, 2019 with an expected rate of less than three percent that could not be entered into HERMIT, mortgagees may request a refund of the initial mortgage insurance premium (MIP) late charges and interest when performing loan setup in the HERMIT system. To request a refund, download the release notes and follow the steps provided.