FHA Updates HECM Due and Payable Requirements

FHA Updates HECM Due and Payable Requirements

The Federal Housing Administration changed its requirement for mortgagees to notify a borrower’s estate and heirs that a HECM has become due and payable from within 30 days of the date of the borrower’s death to within 30 days of providing notice of the borrower’s death to the Secretary of Housing and Urban Development.

Details were provided in Mortgagee Letter 2022-15.  The policy change aligns the notification requirements for all HECMs, regardless of the case number assignment date or the due and payable status.

ML 2022-15 fixes an issue that had been causing problems for HECM servicers. Because it can sometimes take longer than 30 days to find out that a borrower has died, HUD had been penalizing servicers for not distributing due and payable notices to the estate within the required 30-day timeframe. The policy change provides more time now that the due and payable letter can be sent after the HUD Secretary is informed of the borrower’s death.

A joint statement issued by Gail Balettie and Rex Lamb of Celink states, “We are thankful that HUD has addressed this longstanding issue that causes HECM servicers and investors to suffer unfair losses. We are still hopeful that HUD will open a path for HECM servicers to recover debenture interest curtailed for this reason.”

NRMLA President Steve Irwin adds, “NRMLA has long advocated for a resolution to this programmatic requirement, which in many cases was operationally unfeasible to comply with.  By making this timing requirement consistent across all books of business, HUD has taken a critical step forward in stemming servicer losses.”

The policy may be implemented immediately; however, it becomes mandatory 90 days from the ML’s publication date, which places the effective date on November 31, 2022.

Published by

Darryl Hicks

Darryl Hicks is Vice President of Communications for the National Reverse Mortgage Lenders Association. In this capacity, Hicks writes for NRMLA's publications, manages the association's web sites and social media accounts, assists committees and the Board of Directors, and manages the Certified Reverse Mortgage Professional designation. Prior to joining NRMLA in 1999, Hicks spent three years in the Washington, D.C. bureau for National Mortgage News.