HUD Updates HECM Servicing Policies

HUD Updates HECM Servicing Policies

The Federal Housing Administration implemented numerous servicing policy changes that are designed to improve the HECM program’s financial stability and overall performance.

Details were provided in Mortgagee Letter 2023-23. The final policies in this ML take into consideration industry feedback provided by NRMLA and other industry stakeholders.

Changes announced in ML 2023-23 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.

What they’re saying: FHA said, “The policies included in this ML will simplify servicing requirements, incentivize actions that improve outcomes for all HECM program participants, and protect the MMIF.”

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.