Reverse Mortgage

FHA Provides Revised Reverse Mortgage Program Steering to Single Household Drafting Desk


The Federal Housing Administration (FHA) announced Wednesday that it has released the Draft Home Equity Conversion Mortgage (HECM) Origination through Servicing sections of its Single Family Housing Policy Handbook 4000.1 for Program Participant Review and the agency a review for the proposed consolidations . This is according to FHA INFO # 21-81 which is being distributed directly to FHA stakeholders.

The material made available today on the portal for the design table for single family homes will be until the 15th. The administration spoke publicly about the HECM program earlier this year.

Section drafts available for review

The draft sections published in the Drafting Table include a proposed “major consolidation of HECM requirements,” according to the FHA, which aims to include approximately 150 mortgage letters (MLs) and other policy documents currently used by mortgage holders in issuing or servicing HECM Reverse mortgage loans can be used.

“This release is a continuation of the FHA’s progress towards a consolidated, authoritative manual 4000.1 that will make it easier to do business with FHA,” the agency said in its announcement of the availability of the material. “When the final version is finally released, the HECM Origination through Servicing sections will provide a comprehensive policy resource for mortgage takers, servicers, appraisers and other stakeholders[.]”

Among the main guidelines that the new material aims to consolidate, FHA has identified four specific points: origination through post-closing and endorsement; Appraiser and property requirements; Maintenance and mitigation; and reference glossary and acronyms.

The FHA also advises in its briefing that some of the changes will be made to the relevant sections in order to make the program “future proof” for future changes.

“Similar to other sections of Manual 4000.1 that have been provided for feedback, the draft HECM Sections for Emergence from Maintenance include policy language revisions to improve clarity and consistency, proposed new guidelines, and to conform to the organizational structure of Manual 4000.1” , it says in the message. “These draft sections do not provide guidelines for HECM non-assignment claims; however, these non-assigned claim sections will be published for feedback at a later date. “

Review and analysis, upcoming stakeholder briefing

A 45-day review period will begin on Wednesday, during which all interested stakeholders will be “strongly encouraged” to review the content of the new draft sections and provide relevant feedback on the proposed changes by November 15.

“For instructions on how to view the drafting sections and provide feedback, see the drafting table,” explains FHA. “FHA will carefully examine all responses received.”

To further understand the proposed changes for anyone interested in learning more, including direct stakeholders such as mortgage holders, as well as any other interested party, the FHA will open on Thursday, October 21st from 2:00 p.m. EST / 11 12:00 AM PST to 3:00 PM EST / 12:00 PM PST.

“The FHA will hold an industry briefing to give those involved an overview of the organization and structure of the HECM drafts,” the FHA stated in the information release. “Although the content is primarily aimed at mortgage creditors, service providers and appraisers, everyone involved is cordially invited to take part.”

Industry reaction, recent history

When asked to comment on the new draft amendments, Steve Irwin, President of the National Reverse Mortgage Lenders Association (NRMLA) stated that while this incident was expected, it is welcome and the industry is ready to talk to the FHA about the proposed Communicate changes.

“The members of NRMLA appreciate the initiation of the review and feedback process for the HECM manual,” Irwin told RMD. “The industry has anticipated this part of the process for some time and our members are keen to seek feedback.”

In an email to the members of the association, the NRMLA stated that its US Department of Housing and Urban Development (HUD) Affairs Committee, led by Elly Johnson of All Reverse Pro, is preparing industry feedback for a later date will. Reaching for her perspective, Johnson described the association’s anticipation of providing feedback to the FHA.

“We are very excited about the draft Single Family Housing Policy Manual 4000.1 for the Home Equity Conversion Mortgage Program,” said Johnson. “NRMLA and the HUD Issues Committee will work diligently to review the FHA and provide timely feedback.”

The consolidation of the HECM program advice has been in development for some time and was already given a keynote speech at the NRMLA Virtual Policy Conference last April by Lopa P. Kolluri, Principal Deputy Assistant Secretary (PDAS) for the Office for Housing and the FHA Event.

“I was really surprised to learn that the HECM program is still governed by so many individual mortgage letter policy documents,” she said. “And I find it kind of confusing and, to a certain extent, inefficient. So we have to take this pretty seriously and make sure it works for both the program participants and the HUD. I hope this year we will have a consolidated set of guidelines that will be included in our single parent handbook. “

Bringing all of the guidance issued so far into a single place could be beneficial for existing and new entrants to the reverse mortgage industry in general, Kolluri said.

Read FHA INFO # 21-81 on the agency’s website.