NRMLA publishes the “Servicing Corner” so that we can better educate our readers on the most commonly asked questions that loan officers ask about HECM servicing guidelines. This week’s question focuses on being out of the home for extended periods.
Question: When a borrower plans to be out of the house for an extended period, what’s a normal timeframe that they should be thinking is worthy of a phone call to the servicer?
Answer: Many borrowers have family who live out of town or out of state and they go to visit for extensive periods of time, or they may have a second home in another location (i.e., snowbirds). That’s perfectly fine. HUD’s requirement is that the borrower cannot be away from the property for 12 consecutive months. Let’s say a borrower likes to spend the summers with her daughter and grandchildren. If they expect to be away for any longer than two months they should call the servicer, let them know how long they’ll be away, what the expected return date will be and provide a temporary mailing address.
This is important because HUD requires servicers to provide written proof every year from the borrower that they occupy the home. On or around the anniversary date that the loan was closed, the servicer mails an annual occupancy certification. The form is very simple. It states the guidelines and asks them to acknowledge that they are still residing in the home as their primary residence by signing and returning the form to their servicer. Borrowers are also provided space on the form to authorize third parties to receive information on their account (this is optional). Servicers may vary slightly what they ask on the forms, but most importantly the borrower must sign and acknowledge that they occupy the property as their primary residence on an annual basis.