More money for older HECM borrowers, substantially less when younger non-borrowing spouse present

Today HUD released new PLFs (Principal Limit Factors) which now include a table for younger co-borrowers.  Jerry Wagner, the President & owner of IBIS Software which provides  origination software and information for both HUD and HECM Lenders released a very helpful comparison chart (see downloads below) which helps identify the impact of the new lending ratios.

Here is a summary of the changes:

• HUD made the changes via Mortgagee Letter 2014-12
• Younger primary borrowers will see a modest increase in their PLFs until the Expected Rate reaches 5.37% and higher (see inset below).
• Older borrower will see a substantial increase in proceeds until the Expected Rate nears 7% and higher
• The new Principal Limit Factors go into effect for FHA case numbers assigned on or after August 4th, 2014
• Borrowers who have not closed their loans and have FHA case numbers prior to August 4th may opt to use the new PLFs (see ML 2014-14 for requirements)
• The table for younger non-borrowing spouses (18-61 years old) only applies if at least one borrower meets the minimum HECM age requirement of 62. Proceeds will be based on the age of the youngest spouse.

 DOWNLOADS:

NEW 2014 PLF Table     PLF Change Analysis (IBIS Software)   Mortgagee Letter 2014-14