The Department of Housing and Urban Development (HUD) has announced today its decision to delay implementation of the long-heralded Financial Assessment rule just weeks before its effective date.
Citing a delay in the delivery of “certain system enhancements” required to support policies published in Mortgagee Letters 2014-21 and 2014-22, HUD said in an email notice to lenders that the Federal Housing Administration (FHA) will publish a Mortgagee Letter in the coming weeks announcing a new effective date for the policies detailed in those letters.
The new effective date is expected to be within 30 to 60 days of the original March 2, 2015 effective date announced in those previous Mortgagee Letters.
Additionally, HUD also announced that is has revised Home Equity Conversion Mortgage (HECM) model loan documents that incorporate requirements from ML 2014-21 and 2015-02 pertaining to the Life Expectancy Set-Aside; revised eligible and ineligible non-borrowing spouse certifications; and reinstatement of the period of deferral of the due and payable status for an eligible non-borrowing spouse.
A regulation that has been years in the making, the highly anticipated Financial Assessment has assumed a central focus in lenders’ training programs since HUD finally issued the rule back in November.
If history has any way to shape the present, then the delay from HUD was not unlikely.
At an industry conference in November 2013, then-FHA Assistant Secretary Carol Galante told attendees it would grant an extension period of the long-awaited Financial Assessment past its previous January 13, 2014 implementation date.
“We have thrown a lot at you in a short period of time,” Galante said during the event. “We threw a lot at ourselves. But this was necessary to get a program that will be stable from a budgetary perspective. We had to make these changes before the start of the fiscal year.”
A month later, FHA delayed the rule altogether without an indication for when the actual rule would take effect, only that it would issue new guidance no sooner than 90 days from the date of the new Mortgagee Letter that would detail the Financial Assessment.
Fast forward to May 2014 at the National Reverse Mortgage Lenders Association’s Western Regional conference in San Diego, when HUD Director of Single Family Program Development Karin Hill revealed that the agency was making progress on a new Mortgagee Letter for the Financial Assessment, which was likely to arrive by early summer.
In November, Mortgagee Letter 2014-22 finally arrived, effective for HECMs assigned on or after March 2, 2015, thus sending lenders’ training preparations in motion as they rushed to coach their teams for the landmark change that would seemingly appear in a matter of three months.
But now that the Financial Assessment has been delayed again, lenders are afforded more time to train their personnel after what hopefully will be the final tease.
Written by Jason Oliva