FHA Disallows Lender-Paid IPCs in H4P Transactions

FHA Disallows Lender-Paid IPCs in H4P Transactions

The Federal Housing Administration announced that it will not allow mortgagees and third-party originators (TPO) to make Interested Party Contributions in HECM for Purchase transactions, nor will it allow premium pricing to qualify as an eligible funding source to meet the borrower’s minimum required investment.

The policy — announced in the Federal Register and Mortgagee Letter (ML) 2024-06 — took effect on Monday, April 29.

What’s next: FHA will move forward with its proposal that permits contributions by the property seller, real estate agent, builder, or developer to HECM for Purchase borrowers’ closing costs.

  • NRMLA, and its members, are disappointed that HUD has had to pull back on certain specific H4P features which would have better aligned the product with the way things are done on the forward side of the mortgage business,” said NRMLA President Steve Irwin.
  • “We also understand that we must ensure there is clarity for the consumer in how these product features work, and the consumer impacts of these features.
  • NRMLA will devote itself to identifying any concerns regarding these features and work to resolve those concerns.”

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Darryl Hicks

Darryl Hicks is Vice President of Communications for the National Reverse Mortgage Lenders Association. In this capacity, Hicks writes for NRMLA's publications, manages the association's web sites and social media accounts, assists committees and the Board of Directors, and manages the Certified Reverse Mortgage Professional designation. Prior to joining NRMLA in 1999, Hicks spent three years in the Washington, D.C. bureau for National Mortgage News.