FHA Adds Revised Reverse Mortgage Program Guidelines to Drafting Table for Single Family

The Federal Housing Administration (FHA) announced on Wednesday that it had released a proposed equity conversion mortgage (HECM) through the service sections of its 4000.1 Single-Family Housing Policy Manual for stakeholder review of the program, and to provide a review to the agency for the proposed groupings. This is according to FHA INFO # 21-81, distributed directly to FHA stakeholders.

The material, made available today on the Single-Family Dwelling Editorial Board portal, will be available for review and stakeholder comment until November 15, and represents the achievement of a goal that the FHA previously outlined. since agency officials took office with Joe Biden. the administration spoke publicly about the HECM program earlier this year.

Provisional sections available for review

The draft sections published in the drafting table contain a proposal to “fully consolidate HECM requirements,” the FHA said, which aims to incorporate about 150 Mortgage Letters (MLs) and other policy documents currently in use by mortgage creditors when granting or managing HECM reverse mortgages. .

“This publication is a continuation of the FHA’s progress towards a consolidated and authoritative 4000.1 manual that will facilitate business relationships with the FHA,” the agency said in its announcement of the material availability. “When the final version is finally released, the HECM Origination through Servicing sections will provide mortgage creditors, managers, appraisers and other stakeholders with a comprehensive policy resource.[.]”

Among the key directions that the new material will seek to consolidate, the FHA has identified four specific elements: origin through closure and approval; appraiser and property requirements; maintenance and mitigation of losses; and the glossary and reference acronyms.

The FHA also states in its information notice that some of the changes to the relevant sections are underway in an attempt to “preserve the future” of the program for future changes.

Similar to other sections of Handbook 4000.1 published for comment, the HECM Origination through Servicing draft sections contain revisions to the policy language for improved clarity and consistency, a proposed new policy, and to conform to the organizational structure of the handbook. 4000.1 ”, reads the opinion. “These provisional sections do not contain policies for HECM non-assignment claims; however, these non-assignment claim sections will be posted for comment at a later date.

Review and analysis, next stakeholder briefing

Wednesday begins a 45-day review period during which all interested stakeholders are “strongly encouraged” to review the content of the new draft sections and submit any relevant comments related to the proposed changes by November 15th.

“Instructions for viewing draft sections and providing comments are available on the drafting table,” says the FHA. “The FHA will carefully review all comments received. “

To delve deeper into the proposed changes for anyone interested in learning more about them, including direct stakeholders like mortgagees as well as any other interested parties, the FHA will host an information session on Thursday, October 21 from 2:00 p.m. EST / 11:00 a.m. 3:00 p.m. EST / 12:00 p.m. PST.

“The FHA will host an industry briefing to provide stakeholders with an overview of the organization and structure of the HECM section projects,” the FHA explained in the briefing notice. “Although the content is primarily aimed at mortgagees, service agents and appraisers, all stakeholders are welcome to participate. “

Industry response, recent history

When contacted to comment on the new draft changes, National Reverse Mortgage Lenders Association (NRMLA) President Steve Irwin explained that while this event was ultimately expected, it remains welcome and the industry is ready to communicate with FHA on proposed changes.

“NRMLA members appreciate the initiation of the HECM manual review and feedback process,” Irwin told RMD. “The industry has been anticipating this part of the process for some time and our members are eager to start gathering the appropriate feedback. “

In an emailed message to association members, the NRMLA explained that its U.S. Department of Housing and Urban Development (HUD) Questions Committee led by Elly Johnson of All Reverse Pro will prepare industry comments. for a later date. When contacted for her point of view, Johnson described the anticipation for the association to provide feedback to the FHA.

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

The consolidation of the orientations of the HECM program has been under development for some time and was already mentioned last April during the virtual political conference of the NRMLA by Lopa P. Kolluri, Principal Deputy Secretary (PDAS) of the housing office. and the FHA at a speech at this event.

“I was actually surprised to learn that the HECM program is still governed by so many individual mortgage lender letter policy documents,” she explained. “And I find that a little confusing and ineffective to a certain extent. And so, we need to take this pretty seriously and make sure that it works for both the program participants and the HUD. I hope we can come up with a consolidated set of policies incorporated into our One Family Handbook this year.

Consolidating all of the guidelines released so far in one place could be generally beneficial for existing and new participants in the reverse mortgage industry, Kolluri argued.

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

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