Changes aim to make FHA more responsive to participating lenders
The Federal Housing Administration has revised the requirements for Home Equity Conversion Mortgage (HECM) servicers when they assign FHA-insured reverse mortgages to the agency for claim payment.
In a Mortgagee Letter, FHA said that approved HECM servicers can use alternative supporting documentation in lieu of previously required materials that, in many instances, delayed claim processing. The change is effective immediately.
For example, in lieu of a current hazard insurance declaration page, the Department of Housing and Urban Development will accept a document from the hazard insurance provider on its letterhead containing certain required information. Additionally, if a servicer is unable to obtain a copy of a deceased borrower or co-borrower’s death certificate, HUD will accept alternative evidence of the death, such as an obituary or documentation from a health care institution, for purposes of certain claim reviews.
Under the new requirements, participating lenders will not be unduly burdened when seeking claims payments when the HECM reaches 98% of its maximum claim amount.
“Streamlining the HECM claim payment process makes us more responsive to participating lenders and helps continue our effort to put the program on a more financially viable path,” FHA Commissioner Brian Montgomery said.
