NRMLA to HUD: New Servicing Guidelines Should Apply Retroactively

To help mitigate further risk to the MMI Fund, new servicing requirements, including the “Cash for Keys” incentive, should be applied retroactively and not just for new loans with case numbers assigned on or after September 19, 2017, according to comments submitted last week to the Department of Housing and Urban Development.

“By allowing this incentive (Cash for Keys) across all books of HECM loans regardless of case number assignment date, we believe HUD would see a significant decrease in property disposition timelines, and therefore, help further mitigate risks to the MMI Fund,” commented NRMLA.

HUD’s final HECM rule also eliminates the requirement that an appraisal be conducted when a loan is called due and payable (unless the borrower’s heirs request such an appraisal) and extends the timeline for submitting insurance claims, which the industry would like to see made retroactive as well.

By requiring HECM servicers and HUD’s HECM contract sub-servicer to track and administer loans according to two (2) separate sets of business rules, HUD is creating inherent servicing inefficiencies and creating additional expenses for HUD and the servicers, added NRMLA.