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.”
