Reverse mortgage lenders have been given a deadline extension when assigning Home Equity Conversion Mortgages (HECMs) to the Department of Housing and Urban Development, in turn granting eligible non-borrowing spouses more time to establish the legal right to remain in the home.
The Federal Housing Administration (FHA) issued an FHA Info #15-89 memo Monday stating that mortgagees may request an extension of 60 days in order to confirm that the non-borrowing spouse has secured title or the legal right to remain in the property, and to complete its assessment following the lender’s Mortgagee Optional Election (MOE) Assignment as required by Mortgagee Letter 2015-15 issued earlier this year.
In the memo, FHA said it had been advised that certain states’ probate procedures may impeded a non-borrowing spouse’s ability to obtain title or otherwise establish the legal right to remain in the home before the deadline for a mortgagee to complete its MOE assessment.
By electing the MOE, lenders are allowed to assign an eligible HECM—with a case number prior to August 4, 2014—to HUD despite the death of the last surviving borrower, though certain eligibility conditions apply.
Mortgagees can now request a deadline extension to complete the 60-day assessment provided that the mortgagee confirms the non-borrowing spouse’s inability to obtain legal title or some other legal right to remain was wholly outside of the non-borrowing spouse’s control; and the mortgagee has no reason to believe that the non-borrowing spouse will be unable to secure legal title or some other legal right to remain in the property.
To request a 60-day extension, mortgagees must upload into FHA’s Home Equity Reverse Mortgage Information Technology (HERMIT) system documentation that proves the inability to timely obtain title or legal right to remain in the home was out of the NBS’s control.
Should the mortgagee learn that the NBS will be unable to obtain either legal title or some legal right to continue living in the property, any extension that was granted terminates immediately.
In the event of such termination, FHA directs mortgagees to adhere to the guidance provided by ML 2015-15, where appropriate.
Written by Jason Oliva