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Financial Services Law Insights and Observations

FHA announces update and consolidation of the HECM program

Agency Rule-Making & Guidance Federal Issues FHA HECM Mortgages Consumer Finance

Agency Rule-Making & Guidance

On October 31, the Federal Housing Administration (FHA) announced, after a multi-year effort, the inclusion of policies for its Home Equity Conversion Mortgage (HECM) program in the Single-Family Housing Policy Handbook 4000.1. The FHA indicated this is the first time that all HECM program requirements will be available in a single place. According to the FHA, consolidating these programs eliminates more than one hundred individual policy documents and assist with strengthening the understanding and implementation of the HECM by lenders. New sections include Section II.B covering FHA policy for the origination through post-closing and endorsement of HECMs; and Section III.B, covering FHA policy for the servicing of HECMs and loss mitigation options to assist HECM borrowers who are behind on their HECM obligations. Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon stated that the “completion of the HECM sections of our Single Family Handbook reinforces FHA’s commitment to the HECM program and is part of a larger effort to retool the program for long-term success.” The FHA also updated model documents, frequently asked questions, and training and expects the online version to be available soon.