Fannie to Buy Low-Cost HECM Refis

Fannie Mae has agreed to purchase refinancings of FHA-insured reverse mortgages that allow seniors to get a break on the upfront mortgage insurance payment.It has taken the government-sponsored enterprise seven months to implement the changes approved by the Federal Housing Administration in April. But reverse mortgage lenders are pleased that Fannie has finally agreed to purchase streamlined refinancings, which can reduce the upfront MI costs by $4,000 on a standard transaction. "It has taken a while," said Craig Corn, executive vice president of Financial Freedom, Irvine, Calif. But now reverse mortgage lenders can market the streamlined refinancing option to their customers. "If there is a positive benefit to refinancing, we definitely have a positive story to tell," he said. "The costs are going to be much lower." Previously, FHA borrowers paid a 2% upfront MI premium on the entire amount of the loan when refinancing. Now they pay the upfront premium only on the additional mount of the loan. Fannie Mae announced its requirements for buying streamlined refinanced Home Equity Conversion Mortgages (the FHA-insured reverse mortgage product) in a Jan. 14 memorandum to lenders.