Home Equity Conversion Mortgage (HECM) Calculation ...

Last Updated 9.13.17

Home Equity Conversion Mortgage (HECM) Calculation Software Version 2.4 Test Scenarios

On September 18, 2017, the Department of Housing and Urban Development, Federal Housing Administration released Version 2.4 of the HECM Calculation Software to accommodate HECM final rule changes, and the mortgage insurance premium (MIP) and principal limit factor (PLF) changes announced in Mortgagee Letter 2017-12. Version 2.4 will also correct the Mandatory Obligations calculation error that existed in Version 2.2.

The chart below describes the modifications made to the software.

Effective Date

Data Field

HECM case number assigned on Initial Disbursement Limit

or after September 19, 2017

Servicing Fee Set Aside

Description of Change The Initial Disbursement Limit calculation was revised in accordance with 24 CFR ?206.25.

An output data field was added for the Servicing Fee Set Aside amount.

Amortization Type

HECM case number assigned on or after October 2, 2017

HECM Type

Principal Limit ? Shared Prem. Fac.

HECM case number assigned on Mandatory Obligations or after April 27, 2015

When the Amortization Type is Fixed, the data fields Monthly Payment Life of Loan and Line of Credit Life of Loan must be zero.

The dropdown field includes "Initial MIP FY 2018 ? 2%."

The new FY 2018 principal limit factors for interest rates ranging from 3% - 18.875% will be used to determine the amount of funds available to the borrower. Revised the Mandatory Obligations calculation to include Cash from Lender and Cash from Borrower to reduce the amount of financed closing costs.

Remaining Draw Allowed During Year 1

Revised the Remaining Draw Allowed During Year 1 calculation to exclude Cash from Lender and Cash from Borrower.

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Last Updated 9.13.17

IDL Scenario 1: Payment Plan: Line of Credit IDL Determination = Principal Limit less SFSA less Net LESA Mandatory Obligations > 60% of Initial Principal Limit ? Borrower requests a portion of the Additional 10%

Input Fields

Date of Closing

Borrower's Date of Birth (Software will round up to age 84 since Birthday is within 183 days of closing date)

Expected Interest Rate Property Appraised Value Maximum Claim Amount HECM Type Initial Premium Other Closing Costs Discharge of Liens Repairs Set Aside T&I First Year Payments Additional 10% IPL Usage Cash to Borrower at Closing Cash from Borrower Cash from Lender Monthly Servicing Fee Net Fully-Funded LESA Amount Net Partially-Funded LESA Amount Line of Credit Life of Loan Monthly Payment Life of Loan Length of Term

9/30/2017

12/17/1933

4.400% $615,000 $615,000 Initial MIP FY 2014 ? 2.50% Financed $14,157.11 $365,849.00

$0.00 $2,889.00 $21,159.00

$0.00 $0.00 $5,198.00 $30.00 $17,213.59 $0.00 Calculate $0.00 16 years = 192 months

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Expected Results

Last Updated 9.13.17

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Last Updated 9.13.17

IDL Scenario 2:

Payment Plan: Line of Credit IDL Determination = Principal Limit less SFSA less Net LESA Mandatory Obligations > 60% of Initial Principal Limit ? Borrower requests a portion of the Additional 10%

Input Fields

Date of Closing

Borrower's Date of Birth (Software will round up to age 84 since Birthday is within 183 days of closing date)

Expected Interest Rate Property Appraised Value Maximum Claim Amount HECM Type Initial Premium Other Closing Costs Discharge of Liens Repairs Set Aside T&I First Year Payments Additional 10% IPL Usage Cash to Borrower at Closing Cash from Borrower Cash from Lender Monthly Servicing Fee Net Fully-Funded LESA Amount Net Partially-Funded LESA Amount Line of Credit Life of Loan Monthly Payment Life of Loan Length of Term

9/30/2017

12/17/1933

4.400% $615,000 $615,000 Initial MIP FY 2014 ? 2.50% Financed $14,157.11 $365,849.00

$0.00 $2,889.00 $10,260.46

$0.00 $0.00 $5,198.00 $30.00 $17,213.59 $0.00 Calculate $0.00 16 years = 192 months

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Expected Results

Last Updated 9.13.17

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IDL Scenario 3:

Payment Plan: Line of Credit IDL Determination = 60% of Principal Limit Mandatory Obligations < 60% of Initial Principal Limit

Input Fields

Date of Closing Borrower's Date of Birth Expected Interest Rate Property Appraised Value Maximum Claim Amount HECM Type Initial Premium Other Closing Costs Discharge of Liens Repairs Set Aside T&I First Year Payments Additional 10% IPL Usage Cash to Borrower at Closing Cash from Borrower Cash from Lender Monthly Servicing Fee Net Fully-Funded LESA Amount Net Partially-Funded LESA Amount Line of Credit Life of Loan Monthly Payment Life of Loan Length of Term

Last Updated 9.13.17

9/30/2017 9/9/1945

4.650% $275,000 $275,000 Initial MIP FY 2014 ? 0.50% Financed $6,899.13

$0.00 $0.00 $1,605.00 $0.00 $85,160.87 $0.00 $0.00 $0.00 $0.00 $17,628.39 Calculate $0.00 28 years = 336 months

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Expected Results

Last Updated 9.13.17

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Last Updated 9.13.17

IDL Scenario 4: Payment Plan: Tenure IDL Determination = 60% of Principal Limit Mandatory Obligations < 60% of Initial Principal Limit - Monthly Payments are reduced the 1st Year

Input Fields

Date of Closing Borrower's Date of Birth Expected Interest Rate Property Appraised Value Maximum Claim Amount HECM Type Initial Premium Other Closing Costs Discharge of Liens Repairs Set Aside T&I First Year Payments Additional 10% IPL Usage Cash to Borrower at Closing Cash from Borrower Cash from Lender Monthly Servicing Fee Net Fully-Funded LESA Amount Net Partially-Funded LESA Amount Line of Credit Life of Loan Monthly Payment Life of Loan Length of Term

9/30/2017 9/9/1945

4.650% $275,000 $275,000 Initial MIP FY 2014 ? 0.50% Financed $6,899.13

$0.00 $0.00 $1,605.00 $0.00 $85,160.87 $0.00 $0.00 $0.00 $0.00 $17,628.39 $0.00 Calculate 28 years = 336 months

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