The Federal Housing Administration (FHA) is seeking feedback on proposed policy updates to its Home Equity Conversion Mortgage (HECM) program.
According to an announcement issued by the U.S. Department of Housing and Urban Development (HUD), the proposed updates are designed to “streamline certain requirements and reduce operational challenges associated with servicing a HECM portfolio.”
The proposed updates include:
- 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.
“The HECM program remains one of the cornerstone programs on the market to help seniors who want to stay in their own homes as they age,” said Federal Housing Commissioner Julia R. Gordon. “These proposals benefit seniors with HECM mortgages as well as their families, and they also facilitate participation in the program by HECM lenders.”
FHA is accepting responses to its proposals through Nov. 7.
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