FHA proposes updates to HECM program

Federal Issues FHA Consumer Finance Home Equity Loans Mortgage Servicing HECM HUD

On November 1, the Federal Housing Administration (FHA) proposed updates to FHA’s Home Equity Conversion Mortgage Program that are intended to address a number of servicing issues where existing program requirements have conflicted with HUD’s policy objectives.  FHA is requesting public feedback. Key changes include the following:

• Allowing mortgage servicers to contact borrowers by phone to verify occupancy for the program’s required annual occupancy certification;
• Allowing outstanding homeowner’s association dues to be included in the calculation of a repayment plan for borrowers who are behind on their HECM financial obligations;
• Expanding the ability of mortgage servicers to work with borrowers who are behind on their property tax or hazard insurance by an amount up to $5,000 without calling the mortgage due and payable;
• Allowing mortgage servicers to assign a HECM to HUD after the servicer has funded a cure for a borrower’s delinquent financial obligations so long as the borrower has made all property charge payments for one year and all other assignment eligibility criteria are met;
• Streamlining requirements for executing alternatives to foreclosure and updating existing incentive payments for successful completion of loss mitigation options; and
• Providing a new incentive payment to mortgage servicers for completing these alternatives.