HUD Publishes Interim Rules on DPA, Reverses

The Department of Housing and Urban Development has published two interim final rules to jump-start its new downpayment assistance program and reduce the cost of refinancing federally insured reverse mortgages.Last year, Congress approved the American Dream Downpayment program, which provides up to $6,000 in downpayment assistance to low-income families buying their first home. The funds, which will be distributed by state governments, can also be used to pay for closing costs and renovations. The interim rule to implement the new $200 million-a-year program goes into effect April 29. The comment period ends June 1. HUD has also published an interim rule that reduces the cost of refinancing reverse mortgages insured by the Federal Housing Administration, which are called home equity conversion mortgages. Currently, HECM borrowers trying to tap more equity in their homes have to pay a 2% upfront insurance premium on the entire amount of a new HECM loan. Under the interim rule, seniors only have to pay the premium on the difference between the original loan balance and the new balance. "This will result in cost savings to seniors," said Jim Brodsky, counsel for the National Reverse Mortgage Lenders Association. Mr. Brodsky is with the Washington law firm of Weiner, Brodsky, Sidman & Kidder. The interim rule has an April 26 effective date, but it is unclear whether it applies to closings or applications. NRMLA is trying to get a clarification from HUD.