The Department of Housing and Urban Development (HUD) has extended the implementation date deadline for Home Equity Conversion Mortgages (HECMs) in default due to unpaid property charges.
Per Mortgagee Letter 2015-11, for HECMs that default for tax and insurance on or after April 23, 2015, the Federal Housing Administration (FHA) is permitting the mortgagee to take a one-time extension to submit a due and payable request through no later than Oct. 20, 2015.
The extension is aimed at ensuring that mortgagees successfully implement the new guidance provided by ML 2015-11, which supersedes and rescinds Mortgagee Letter 2011-01 in its entirety, FHA stated in a memo to HECM servicers and counselors Monday.
Mortgagee Letter 2011-01 specified loss mitigation options that lenders must provide to borrowers who are delinquent on paying taxes and insurance, which included establishing repayment plan for the delinquent property charges.
The loss mitigation options set out in the latest letter are not available during a deferral period. In addition, HECM loans that are in default, and eligible to be called due and payable for reasons other than the death of the last surviving mortgagor, are not eligible for an assignment.
Written by Cassandra Dowell