The reverse mortgage industry may experience processing delays as cuts to forward mortgage insurance premiums (MIPs) push a surge in activity on the Federal Housing Administration’s loan system.
The agency cautioned that its FHA Connection anticipated high volume and slower-than-normal processing times beginning Monday, Jan. 26, due to an expected spike in case number assignments.
According to the Department of Housing and Urban Development, this could have an indirect impact on home equity conversion mortgage (HECM) case numbers, given the “system overload” FHA Connection is experiencing, a HUD spokesman tells RMD.
However, the temporary delays are only expected to last until Feb. 25, he said.
FHA will monitor processing times and, if necessary, provide updates through the FHAC Message Board, which lenders can access after the FHAC log in.
The FHAC Message Board currently states, “Due to the popularity of [Mortgagee Letter] 15-01 and the resulting high volume of case number assignments, FHA Connection is experiencing intermittent availability impacting access and the assignment of case numbers. We are working to correct the problem and this message will be updated accordingly.”
Earlier this month, President Barack Obama announced the annual fees the FHA charges to guarantee mortgages would be cut by 0.5 percentage points — taking the current annual fees from 1.35% of the loan balance to 0.85%.
For the typical first-time homebuyer, this decrease will translate to a $900 reduction in their annual mortgage payment.
Written by Emily Study