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Posted September 21st, 2016

Extension of Effective Date for Home Equity Conversion Mortgage Servicing Fee Set-Aside Growth Rate

Today, the Federal Housing Administration (FHA) is announcing that it plans to issue guidance that would extend the October 3, 2016, effective date for revisions to the Servicing Fee Set-Aside compounding interest rate (growth rate) for the Home Equity Conversion Mortgage (HECM) program.

Mortgagee Letter 2016-10, published on July 13, 2016, established the use of the Note Rate to calculate the growth rate (compounding interest rate) for HECM Servicing Fee Set-Asides, effective for HECM case numbers assigned on or after October 3, 2016. An upcoming Mortgagee Letter will supersede the references to the Servicing Fee Set-Aside growth rate effective date only. This extension will allow both mortgagees and FHA to complete technology updates needed to operationalize this change.

Mortgagees should note that all other provisions contained in Mortgagee Letter 2016-10 will remain in effect.