In a move designed to facilitate easier physical distancing between people as the COVID-19 pandemic continues, the U.S. Department of Housing and Urban Development (HUD) today issued a series of waivers relaxing provisions which normally require in-person contact between mortgage servicers and borrowers, including seniors with Federal Housing Administration (FHA)-insured Home Equity Conversion (HECM) reverse mortgages.
The new waivers are designed to allow for important servicing activities to continue while making interactions safer for all involved parties, as the federal government continues to make changes to its approach in handling the ongoing pandemic. Building upon some waivers issued at the end of the Trump administration, these new waivers will remain in effect through the end of the year, to December 31, 2021.
Alternatives for servicers’ interviews with borrowers
The first of the three waivers allows for alternative methods for servicers to conduct borrower interviews for FHA-insured forward and HECM mortgages when performing early default interventions for borrowers in danger of foreclosure. The waiver, requested by National Servicing Center Director Matt Martin, details the alternative methods that are permitted in the waiver document.
“Acceptable alternative methods for contacting borrowers include phone interviews, video calling services, etc.,” the document reads. “The Mortgagee must document their contact with the borrower following the same protocol that is currently required, noting the alternative methods of contact used in lieu of face-to-face contact.”
These alternative methods are designed to allow interested parties to gather information from borrowers to assess the circumstances and arrange appropriate repayment plans for those affected by an impending foreclosure action.
“This partial waiver allows Mortgagees to utilize alternative methods for contacting borrowers, in lieu of face-to-face interviews, to gather and convey required information, to assess the borrower’s circumstances, and to determine appropriate repayment plans,” the document reads in part. “This waiver is necessary to protect Borrowers and their families, as well as Mortgagees and their contractors, from the risks of spreading COVID-19 through person to person contact.”
Waiving property charge on payment plans for HECM borrowers
The second of the three documents handed down today waives the $5,000 property charge payment arrearages cap on recalculated repayment plans, in a move that is designed to allow reverse mortgage servicers to help more HECM borrowers who are behind on their property charge payments.
In the justification for this relief, HUD details that pandemic-related difficulties can affect the ability of reverse mortgage borrowers to send payments in a repayment plan to their HECM servicer.
“Under existing policy, when a borrower fails to make two consecutive payments on a HECM repayment plan, the plan fails and servicers may only offer the borrower a new repayment plan where the borrower’s total arrearage is less than $5,000,” the document reads. “Because borrowers have been unable to deliver timely payments to servicers due to COVID-19 related circumstances, this waiver allows servicers to evaluate impacted borrowers for a new repayment plan regardless of the total arrearage.”
This new document builds upon a prior partial waiver issued by HUD in mid-December 2020, according to the document, which accompanied a slew of other pandemic relief aimed at forward and reverse mortgages. The prior waiver expires at the end of February, with this new waiver expiring on December 31.
Signature requirement on occupancy check
The final of the three documents issued eliminates the requirement for servicers to obtain a signature on an occupancy certification from a HECM borrower, in an effort to facilitate physical distancing for all involved parties.
Also stemming from previous waivers handed down first in November and then having been extended in mid-December, HECM assignments can now be submitted to the department in a more timely manner in order to protect people from risk of spreading or contracting COVID-19.
“This waiver allows Mortgagees to submit a CT-22 Assignment Claim without having to obtain a signature from the HECM borrower on an occupancy certification,” the waiver reads. “Mortgagees must continue to obtain the HECM borrower’s annual certification. However, mortgagees are not required to obtain a signed occupancy certification.
In describing the extension of a previous waiver, HUD explains its recognition for the particular risk the pandemic poses to the population of eligible HECM borrowers.
“As all HECM borrowers are age 62 and above, and this population is particularly susceptible to COVID-19, this waiver mitigates public health risks by allowing for continued HECM borrower annual certification without requiring a signed occupancy certification,” the document reads.
Industry reaction, need for continuing support
According to one servicing professional, the announcement of these additional waivers is not exactly new, but welcome as the COVID-19 pandemic continues to have an effect on American society at-large.
The handing down of these waivers should prove to make a positive difference as the pandemic continues, and will be particularly helpful in attempts to mitigate its impacts on older Americans according to Steve Irwin, president of the National Reverse Mortgage Lenders Association (NRMLA).
“Given the ongoing challenges the global pandemic presents to the older homeowners served by the reverse mortgage industry, NRMLA, and its members, greatly appreciate the accommodations made by HUD through the temporary policy and handbook waivers that were announced today,” Irwin told RMD in a statement.
In the announcement of the new waivers, Acting HUD Secretary Matthew E. Ammon explained that relief needs to be targeted to elements of the population that are more vulnerable to the effects of COVID-19.
“President Biden has made it clear that protecting the health, safety, and homeownership security of the nation’s most vulnerable populations, including seniors, are urgent and immediate priorities,” said Acting Secretary Ammon. “The policy waivers issued today are another important step in addressing these priorities.”
These latest actions follow up on additional relief handed down by HUD in the wake of the inauguration of President Biden, including late January updates to guidelines surrounding forbearance requests for mortgage borrowers who have been impacted by the pandemic, and the extension of a moratorium on foreclosures and evictions that was first handed down by President Donald Trump and Former HUD Secretary Dr. Ben Carson at the beginning of the pandemic.
Read the informational notice announcing the waivers.