HUD Extends Deadline for HECMs in Default
October 23, 2015
HUD has announced that it is extending the deadline for reverse mortgage lenders to submit payable requests for home equity conversion mortgages (HECMs) that defaulted on or after April 23, 2015, due to unpaid property charges.
The Department made the announcement through Mortgagee Letter 2015-26 that HECM mortgagees would have until January 18, 2016, to submit due and payable requests, extending the timelines that were previously outlines in Mortgagee Letter 2015-11.
Representatives from HUD could not immediately be reached for comment.
According to ML 2015-26, the timeframe for the HECM mortgagee to take First Legal Action where the mortgagee is actively reviewing the borrower for loss mitigation in accordance with ML 2015-11 has also been extended until January 18, 2016.
The policies in ML 2015-26 affect the “effective date” section of ML 2015-11, and all other provisions spelled out in ML 2015-11 are unaffected by ML 2015-26, according to the letter.
Mortgagees are permitted by ML 2015-11 to implement loss mitigation options to help borrowers satisfy unpaid property charges or other obligations such as taxes or hazard insurance.
“For defaults occurring before the date of this Mortgagee Letter (April 23, 2015), mortgagees have 180 days from the date of publication to review their portfolio to bring HECM loans into compliance with the requirements herein,” ML 2015-11 stated. “For HECM loans currently subject to a repayment plan, such plans may continue so long as they remain current. In the event that they cease to remain current, mortgagees must comply with the requirements of this Mortgagee Letter.”
ML 2015-11 said that borrowers must satisfy any outstanding amounts within 30 days; in June, two months after that mortgagee letter was issued, the Federal Housing Administration said through a memo to HECM servicers that mortgagees were allowed an extension until October 20, 2015, to submit a due and payable request.
Source: DS News