FHA: Digital Delivery of Reverse Mortgage Case Binders Permitted During Emergency

The Federal Housing Administration (FHA) will permit the electronic submission of traditional single-family mortgage and Home Equity Conversion Mortgage (HECM) case binders through its FHA Catalyst module for mortgage endorsement, in accordance with President Trump’s March 13 declaration of a national emergency related to the COVID-19 coronavirus pandemic. This is according to Mortgagee Letter (ML) 2020-07, released by FHA earlier this week.

Due to the suspension of many non-essential operations and additional guidance from authorities related to social distancing, some requirements related to the submission of hard copy case binders have become too onerous on lenders in the midst of efforts to mitigate the coronavirus pandemic.

“[These directives have] hampered the ability of Mortgagees to fully comply with FHA requirements for the delivery of Single Family Forward and HECM paper case binders as well as hampering FHA’s ability to process such paper case binders,” the ML reads. “As a result, FHA is accelerating the development and deployment of a system to securely deliver case binders electronically for endorsement.”

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While the system is described as “limited in initial functionality,” it will nonetheless enable mortgagees and FHA to continue providing both mortgages and mortgage insurance functions which are vital to maintaining stability in the U.S. housing market for the duration of the national emergency.

Mortgagees are instructed to submit separate case binders for each mortgage endorsement, which is detailed in the FHA Catalyst: Case Binder Module user guide. The formatting of case binders must also be in accordance with the “HECM Required Documents for Endorsement” list for reverse mortgages, with the “Left Side” appearing first.

Electronic transmission of case binders will mean that “the Mortgagee is certifying that the documents submitted electronically are true and correct copies of the original documents,” FHA says in the ML. Mortgagees may request access to the FHA Catalyst: Case Binder Module through the FHA Resource Center.

FHA has also made a frequently asked questions (FAQ) document available for those who may have common questions about the FHA Catalyst: Case Binder Module.

Read ML 2020-07 at the U.S. Department of Housing and Urban Development (HUD).

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