Work on new reverse mortgage handbook is progressing – ReverseMortgageDaily

August 18, 2022 By admin

Late final yr, the Federal Housing Administration (FHA) introduced that it had posted draft Residence Fairness Conversion Mortgage (HECM) Origination by means of Servicing sections of its Single Household Housing Coverage Handbook 4000.1 for the evaluate of program stakeholders, with the company requesting suggestions to offer for the proposed modifications.
Quickly afterward, the U.S. Division of Housing and City Improvement (HUD) punted the evaluate interval to the top of 2021, after which as soon as extra to the top of January, 2022. Whereas a brand new HECM Handbook has but to be launched, work has been progressing on the proposed modifications, with the Nationwide Reverse Mortgage Lenders Affiliation (NRMLA) offering trade suggestions by means of the efforts of its HUD Points Committee Co-Chair Elly Johnson of All Reverse Professional.
Final month on the NRMLA Jap Regional Assembly in Baltimore, Md., Johnson supplied an replace to assembly attendees concerning the work that has been performed on the Handbook evaluate, the work that continues to be, and whether or not or not there is a sign relating to when the brand new Handbook will likely be launched.
Whereas the brand new Handbook at present stays in draft format and there’s no indication about when precisely it is perhaps launched by FHA, Johnson advised attendees that the quantity of labor that has gone into each the brand new revisions and in NRMLA’s feedback to the company has contributed to progress for the trade’s objectives.
“I’ll inform you from my private expertise going by means of this handbook and dealing with these many fantastic folks in our trade who helped pull this collectively, that HUD has been telling us for a very long time that they wished to do the whole lot that they might to assist align the HECM with the ahead facet of the enterprise,” she mentioned. “It does seem within the draft handbook that they’re working in the direction of that effort.”
A sure space that the trade has been working towards for a while contains HECM for Buy, and Johnson explains that on this and different areas, there may be remaining work to do. Nonetheless, she appeared optimistic concerning the progress that has been made.
“I believe over time as we proceed to work straight with HUD and provides them our suggestions, I’m hoping we are able to align [H4P] as properly,” she mentioned.
On the finish of June, HUD issued an up to date 4000.1 Handbook and Johnson recalled receiving correspondences from folks throughout the reverse mortgage trade, celebrating the obvious arrival of a brand new HECM Handbook.
“These modifications had been strictly for ahead,” she mentioned. “There have been a number of ahead modifications that had been issued within the 4000.1. When the draft information is issued, will probably be integrated into the 4000.1 [into] a bit designated for [reverse].”
Johnson defined that the affiliation’s work reviewing the draft information commenced in early October, barely per week after the preliminary announcement of the posting to the drafting desk. Initially, the affiliation was given solely 45 days to evaluate the in depth doc, emphasizing the scope of the challenge by detailing what number of particular person items of steerage had been issued over the course of the HECM program’s existence.
“Initially, there have been over 156 HECM Mortgagee Letters (MLs) which have been issued because the product began [in 1989],” Johnson mentioned. “That’s a number of mortgagee letters.”
In August of 1989, the unique 4235.1 Handbook was revealed, and in 1994 the REV-1 was revealed at a time when solely 5 of the MLs associated to the HECM program had been issued. Since then, the HECM MLs haven’t been integrated into the Handbook, one thing which was beforehand famous by former Principal Deputy Assistant Secretary (PDAS) for the Workplace of Housing and the FHA Lopa P. Kolluri throughout a NRMLA occasion in 2021.
“I used to be really stunned to be taught that the HECM program continues to be ruled by so many particular person Mortgagee Letter coverage paperwork,” Kolluri defined in Might 2021. “And I discover it form of complicated and inefficient to some extent. And so, we want to check out that fairly significantly and guarantee that it really works for each program contributors and for HUD.”
In whole, Johnson and NRMLA submitted 183 feedback to FHA relating to the brand new draft steerage, and whereas Johnson didn’t want to exhaustively undergo all the submitted feedback, she did point out the matters of a number of points which have been highlighted.
“Mainly, [the draft currently] says any borrower who was granted a forbearance and is in any other case performing beneath the phrases of the forbearance is just not thought of delinquent for functions of analyzing credit score,” she mentioned. “That’s good. That’s one thing that we see and it’s a type of areas the place it falls according to what the ahead facet’s doing. So hey, allow us to do it too. We contemplate {that a} win for us.”
A provision additionally will permit mortgagees to make use of month-to-month mortgage cost historical past to ascertain that obligatory taxes have been paid.
“There have been some points making an attempt to really get documentation to show cost of taxes,” Johnson mentioned. “Properly, this provides us the power to have the ability to say ‘okay, if you realize that it’s being paid by means of that mortgage firm by means of the mortgage cost, then you need to use the standing on the credit score report for that.’ In order that’s one other win, too.”
Different matters that the feedback touched on included origination and counseling; closing, post-closing and endorsement; underwriting and the Monetary Evaluation; H4P and H2H; and servicing-related points.
Johnson additionally touched on the necessity for the mannequin HECM mortgage paperwork to be revised as a way to account for the in depth modifications made to this system over this system’s whole existence.
“The advice was for NRMLA to work along with HUD to help with updating these HECM mannequin paperwork in a fashion that greatest assures that lenders which might be utilizing the paperwork are, in FHA’s view, acceptable and in a fashion that may present the best diploma of consistency throughout varied lenders within the trade,” she mentioned.
This system that was created out of 2021’s American Rescue Plan Act has struggled to realize traction amongst ahead and reverse mortgage servicers.
A panel at a current commerce affiliation convention helps present an replace on the forthcoming HECM Handbook from FHA.
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