Update on HECM Handbook Underway By Thomas A. Barstow THE FEDERAL DEPARTMENT of Housing and Urban Development (HUD) last updated the HECM Handbook in 1994, so Elly Johnson knew that NRMLA’s response to proposed changes would be detailed and time-consuming. Shortly after HUD announced its plans last September and solicited industry comments, Johnson, who leads NRMLA’s HUD Issues Committee, assembled a team to review the various handbook sections and to offer comments and suggestions. Five working groups emerged: origination/counseling/application process; underwriting/financial assessment/condo/ appraisal; HECM for Purchase/HECM refinance; closing/post-closing/endorsements; and servicing. “Early on in the process, we knew that reviewing this handbook would be a major undertaking,” says Johnson, founder and owner of All Reverse Pro, a reverse mortgage consulting company. NRMLA asked for an extension and HUD granted several, with HUD taking comments up through January 31. “The last update to the guide was November 1994, and over that 27-year period, more than 150 mortgagee letters and policy documents have been published.” “We tried to meet at least once a week to gather all of our comments and concerns and kept a master spreadsheet with all of our notes,” Johnson says. “We cataloged everything.” In the end, the team developed 183 comments, with servicing garnering the most at 45. Other top matters were related to closing; counseling; appraisals/appraisers; nonborrowing spouses; disbursements; life expectancy set asides (LESAs); and financial assessment. “It was a lengthy process, but we had a great group of people assisting with the process,” says Johnson, adding that NRMLA welcomed HUD’s initiative to update the handbook. Many of the suggestions align with NRMLA’s goals to eliminate contradictions among the various advisories over the years. On January 31, NRMLA President Steve Irwin wrote an eight-page letter to Lopa P. Kolluri, HUD’s principal deputy assistant secretary, to highlight some of the main concerns. At the top of the list was a request to clarify the “due and payable notices due to borrower death” to match guidance from 2017. “As we worked through all the issues and concerns, the biggest item that everyone kept coming back to was under the servicing section for defaults,” Johnson says. “That was our hot-button item. The others were important, but that was the one we wanted to make sure to get in front of HUD.” Johnson expects HUD’s review to take a while, with its responses coming late this year at the earliest. A timeline is difficult to gauge because what might appear to be clerical clarifications in some cases could be more involved from HUD’s perspective. “Sometimes, from our perspectives, we see them as easy fixes, but that is not always the case,” Johnson adds. “And it is a huge undertaking. This was the first actual update to the HECM guide in more than 27 years, so we anticipate it is going to take them some time to go through all of the comments.” For Irwin’s full letter to HUD on the HECM Handbook, go to bit.ly/3sH2SG6. 32 REVERSE MORTGAGE / JULY-AUGUST 2022
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