The Federal Housing Administration has worked out the early kinks associated with recent reverse mortgage program changes after those changes were announced last year.
Through Mortgagee Letters 2013-27 and 2013-33, the Department of Housing and Urban Development spelled changes to the Home Equity Conversion Mortgage program including new policy guidance to strengthen the Mutual Mortgage Insurance Fund and subsequently to establish the program’s mandatory obligations, life expectancy set-aside calculation and purchase transactions; clarifying the earlier guidance.
HUD updated some of its systems to accommodate the changes including new HECM calculation software to accommodate the new mortgage insurance premium set by the mortgagee letters. Home Equity Reverse Mortgage Information Technology (HERMIT) system changes, however, were delayed until this week, FHA said in a memo to lender partners, including instruction on the system updates.
Further, FHA said, it has addressed some technical problems associated with processing certain reverse mortgage loans.
“Additionally, since the release of these mortgagee letters and the implementation of Initial Disbursement Limits for the First 12-Month Disbursement Period, FHA has become aware that FHAC was unable to accommodate cases where the amount of the mortgagor’s mandatory obligations were greater than the initial principal limit amount,” FHA says. “To address this technical issue, two new data fields have been added to FHAC and it has become necessary for FHA to change how mortgagees enter the amount of mandatory obligations in FHA Connection and the HECM Calculation Software.”
The changes are effective March 10. View them on HUD’s website.
Written by Elizabeth Ecker