HUD: Additional Mortgage Relief During Coronavirus Being Explored

The U.S. Department of Housing and Urban Development (HUD) and the Government National Mortgage Association (GNMA, or “Ginnie Mae”) are both exploring additional relief options for the mortgage industry, including the Home Equity Conversion Mortgage (HECM) program, according to a senior HUD official in an interview with RMD.

GNMA is also taking a look at ways in which mortgage servicing issues can be addressed through a seldom-used Pass-Through Assistance Program (PTAP), normally used to address problems for issuers in making payments to investors during some natural disasters.

While a forthcoming PTAP which scales up to meet the needs of servicers during this crisis will soon be made available to the traditional mortgage space, Ginnie Mae is exploring additional remedies for the reverse business, according to the senior HUD official.

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Previously at the end of March, HUD and the Federal Housing Administration (FHA) released a Mortgagee Letter (ML) which allows appraisals for properties on most new traditional forward mortgages and HECMs to be conducted through either exterior-only inspections or through desktop-only appraisals.

At the beginning of April, a subsequent ML was released instructing servicers of HECMs to delay due and payable requests on reverse mortgage loans for a period of six months for borrowers that request such relief. Ginnie Mae also recently released a brief that gives additional context to its efforts in addressing servicer liquidity issues.

Making sure that there is general equality between measures applied to the forward and reverse mortgage programs, HUD is working to make sure both programs are receiving the help they need to function adequately for the duration of this crisis.

“We’ve tried to be very mindful to ensure that there’s parity between the forward and reverse programs,” the senior HUD official said. “As far as liquidity goes, it’s something we’re looking at. We’re talking to the HECM lenders, we’re talking to NRMLA, and we’re talking to our colleagues at Ginnie Mae as well.”

At Ginnie Mae, information on a forward mortgage PTAP is expected to come later this week. However, the organization is also considering similar relief for the reverse mortgage side of the equation, but did not specify what form that may take.

Ginnie Mae has already stated an intention to address the reverse mortgage program, along with the multi-family program as quickly as it can sometime after the publication of the first PTAP bulletin the senior HUD official said. One element of the equation that is unique to the reverse mortgage world and which does not have a comparable trait in the forward mortgage arena is the requirement that a reverse mortgage issuer buy a loan out of a pool after it has reached 98% of the maximum claim amount (MCA).

This represents a large burden, the official said, but GNMA is investigating whether it is possible to include assistance for that issue in its PTAP facility.

“That’s probably the main thing, the point that Ginnie Mae will be addressing when it is able to publish that version of the PTAP program,” the official said.

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