Following the announcement of substantial changes to the Federal Housing Administration’s Home Equity Conversion Mortgage program on September 3, the Massachusetts state Department of Banks affirmed the rules will apply within the state as they apply under federal rule.
Under past program changes including the introduction of the HECM Saver, the fixed rate HECM loan and the HECM for Purchase, the state Department of Banks has required re-approval of state reverse mortgage programs to accommodate the changes, effectively limiting lenders until they became re-approved.
In a letter sent last week to industry members, Commissioner of Banks David Cotney stressed the state’s position of alignment with the national changes and business among Massachusetts will continue as usual following the September 30 cutoff for case number assignments under the former program rules.
Lenders in the state must also submit proof of compliance with the new rules before December 15.
“During this transitional period, lenders with an approved reverse mortgage program are permitted to originate HECM reverse mortgage loans on or after September 30, 2013, provided that the lender continues to maintain compliance with state law requirements and HUD’s revised program requirements,” the letter states. “Lenders with an approved reverse mortgage program are required to submit amended loan documentation to the Division, along with any updated policies and procedures, via compact disk (CD) or flash drive, to demonstrate compliance with Mortgagee Letters 2013-27 and 2013-28, on or before December 15, 2013.”
The National Reverse Mortgage Lenders Association has worked with the Conference of State Bank Supervisors toward streamlining implementation of the changes across states.
“NRMLA called the existence of the new rules to the attention of regulators and states as well as their association,” said Peter Bell, NRMLA president and CEO. “State officials were very responsive.”
The first round of new rules will go into effect as of October 1.
Written by Elizabeth Ecker