FHA Plans System Updates Ahead of Reverse Mortgage Final Rule

It may have gotten a little lost in the wave of industry news about lower principal limit factors and new reverse mortgage insurance premiums, but the Home Equity Conversion Mortgage final rule is coming — and the Federal Housing Administration is updating its systems accordingly.

The FHA this week announced that it will update a variety of its systems to accommodate the final rule changes on September 19, the updated servicing guidelines announced in August, and the new principal limit factors and mortgage premium rates on October 2.

The affected systems include FHA Connection, the Computerized Homes Underwriting Management System (CHUMS), the FHA HECM Calculation Software, and Home Equity Reverse Mortgage Information Technology (HERMIT).


Final rule

The long-awaited HECM final rule formally codifies several key changes for the industry, requiring mortgagees to describe all available reverse mortgage products to prospective borrowers, limiting closing costs, and easing restrictions on concessions in HECM for Purchase transactions — allowing sellers to pay fees “customarily paid by a seller in the locality of the subject property,” and leaving the door open for further interested party contributions.

“Mortgagees should prepare to implement all new and revised policy contained in the HECM final rule using the final rule information published in the Federal Register on January 19, 2017,” the FHA warned in a message to mortgagees. “Furthermore, mortgagees must ensure all loan documents comply with the HECM final rule.”

The FHA plans to roll out updates to model loan documents in the future, the agency said.

Counseling certificate changes

Starting September 18, mortgagees will be able to view HECM counseling certificates through FHA Connection, though they will not appear signed.

“While the mortgagee may still take the initial loan application, the mortgagee can only proceed to process it once the counseling is complete,” the FHA noted, adding that a signed counseling certificate will still be required.

Written by Alex Spanko

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  • This is a new and pleasing development. Normally it takes HUD much longer to get all of this done especially the changes reflected in Mortgagee Letter 2017-12.

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