HUD: FHA INFO #19-48: HECM Policy Updates
September 23, 2019
The Federal Housing Administration today published multiple policy updates to its Home Equity Conversion Mortgage (HECM) program. Today’s updates include the HECM Mortgagee Optional Election (MOE) Assignment Options for non-borrowing spouses and the continuation of the HECM collateral risk assignment requirements. See below for details.
FHA Issues Updated Guidance on Home Equity Conversion Mortgage (HECM) Mortgagee Optional Election Assignment Options
Today, under the Reverse Mortgage Stabilization Act (RMSA) authority, the Federal Housing Administration (FHA) issued Mortgagee Letter (ML) 2019-15, Updates to Mortgagee Optional Election (MOE) Assignment for Home Equity Conversion Mortgages (HECMs) with FHA case numbers assigned prior to August 4, 2014. This ML — in addition to providing updated guidance — eliminates all interim deadlines for MOE Assignments that were outlined in ML 2015-15 for HECM case numbers issued prior to August 4, 2014.
Since implementation of the MOE Assignment process outlined in ML 2015-15, FHA has found that several of its requirements obstructed mortgagees’ election of the assignment option. To address these issues, and to improve the fiscal safety and soundness of the HECM program, FHA is modifying the requirements for HECM MOE Assignment claims by:
• Eliminating the interim MOE Assignment election and assessment deadlines, along with associated notification requirements;
• Eliminating the 120-day timeframe for bringing current all property charges on a HECM loan that is subject to a pre-existing loss mitigation repayment plan;
• Establishing a 180-day reasonable diligence timeframe to initiate an MOE Assignment;
• Eliminating the requirement for an eligible surviving non-borrowing spouse to obtain good and marketable title to the property that secured the HECM or demonstrate the legal right to reside in the property for life, and modification of related certifications and assignment criteria;
• Updating the definition of eligible non-borrowing spouse; and
• Requiring mortgagees to request information from borrowers to attempt to identify non-borrowing spouses.
To view full update, please click the source link above.