October 2017 HUD Implements New Rules Affecting HECM Borrowers

An Important Update From Bob and Debbie Worley

We Can Be Reached at 972-388-3338 To Answer Any Questions You May Have

Under new rules set to go into effect October 2, insurance premiums on Home Equity Conversion Mortgages (HECM) will rise to from 0.5% to 2.0% of the maximum claim amount at the time of origination. Those figures will be the same for all loans regardless of the initial draw amount, according to HUD; the premium for loans with draws greater than 60% during the first 12 months will drop from 2.5% to the 2.0%. The annual premium will decline from 1.25% of the loan balance to 0.5%. In addition, the average amount of cash that seniors can access will decline from about 64% of the home’s value to 58% based on current rates. These changes are set to go into effect for all loans with case numbers assigned on or after October 2, one day after the start of the new fiscal year.

Example Using 5.0% Expected Rate
E.g., Age 62, Home Value $250,000
Old PLF 52.4% = $131,000 Available
New PLF 41% = $102,500 Available
PLF Difference $28,500

These changes are set to go into effect for all loans with case numbers assigned on or after October 2, one day after the start of the new fiscal year.

What Does This Mean For You If You Are Considering A Reverse Mortgage?

Total gross loan amounts available will decrease depending on borrower age and interest rate.  Borrowers who wish to avoid the lower loan amounts and higher initial costs must get their loan started under the old rules which means they must have their counseling completed, loan applications completed and submitted to their lender and the case number ordered by the lender before October 2nd when the new rules go into effect.

Because we believe these changes are significant and will reduce loan amounts available to HECM borrowers, we have decided to personally do a reverse mortgage on our home. We believe this is the right time to get the most proceeds. 

If you would like us to help you evaluate your specific situation please contact us for a no cost evaluation, with absolutely no obligation what-so-ever! If you decide a reverse mortgage is right for you, as we did for ourselves, we will work to get your information processed before the October 2nd changes go into effect. Please call us today at 972-388-3338.

To View HUD Guidance Letter Click Here:


Bob and Debbie Worley

Lone Star Reverse Mortgage, Inc.



Bob Worley – NMLS # 211905 – TX Lic.# 50404 • Debbie Worley – NMLS # 211059 – TX Lic. # 67929 Lone Star Reverse Mortgage NMLS # 769381
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Corporate Office: 207 Keel Way, Horseshoe Bay, Texas 78657

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Pursuant to the requirements of Texas administrative code, Title 7, section 81.200 ©, You are hereby notified of the following: consumers wishing to file a complaint against a Mortgage Banker or a licensed Mortgage Banker Residential Mortgage Loan Originator should complete and send a complaint form to the Texas department of Savings and Mortgage Lending, 2601 N. Lamar, Ste., 201, Austin, TX 78705. Complaint forms and Instructions may be obtained from the department’s website at 222.sml.texas.gov. A toll-free consumer hotline is available at 1-877-276-5550. The department maintains a recovery fund to make payments of certain actual out of pocket damages sustained by borrowers caused by acts of licensed mortgage banker residential mortgage loan originators. A written application for reimbursement from the recovery fund must be filed with and investigated by the department prior to the payment of a claim. For more information about the recovery fund, please consult the department’s website at www.sml.texas.gov.