Are reverse mortgages eligible for increased interest payments, and is the cost to create such a loan on a replacement property eligible for payment of incidental costs?
A reverse mortgage, such as a Federal Housing Administration (FHA) home equity conversion mortgage (HECM) is a first mortgage lien. A property owner who has an HECM is entitled to be placed in similar circumstances. Therefore, payments to enable an in-kind replacement, including costs to create another HECM, are eligible expenses. The agency may be required to supplement the equity position on the replacement home to the degree necessary for a comparable reverse mortgage to be written to provide the same monthly payment that the displacee was receiving at the displacement dwelling. Or the agency may be required to supplement the equity position to provide a similar “net available cash” position. Agency procedures should be developed to address how a reverse mortgage will be handled should one be encountered. To date very few reverse mortgages have been written 94. ยง24.401(d) and in appendix A. How is the mortgage interest differential payment (MIDP) computed in instances where the disp
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