The Federal Housing Administration (FHA) on Tuesday announced that even after a slew of extensions issued last week regarding relief for reverse mortgage borrowers impacted by the COVID-19 coronavirus pandemic, another form of relief requires extension in allowing industry partners additional opportunity to leverage flexible guidance related to verification of self-employment and verification of rental income for single family Title II forward mortgage and Home Equity Conversion Mortgage (HECM) programs.
The move follows on several additional actions taken late last week by departments of the federal government to ease populations which have been leveraging several different forms of mortgage relief back into life without such relief, in the hopes of staving off negative consequences for vulnerable populations with unstable housing situations.
Additionally, FHA announced its FHA Connection (FHAC) portal – which provides FHA-approved lenders and business partners with direct, secure online access to computer systems of the U.S. Department of Housing and Urban Development (HUD) – will be taken offline at the end of this week to undergo necessary maintenance.
Extension of employment verification relief
In Mortgagee Letter (ML) 2021-16 published on Tuesday, FHA detailed that its previous relief for borrowers related to the verification of employment and other forms like rental income will be extended to allow for additional time to borrowers and mortgagees who require it before the situation returns to normal.
“Due to the restrictions imposed by the COVID-19 National Emergency and in compliance with State and Local government directives many businesses throughout the country had to reduce the scope of their operations or completely close their doors,” the new ML reads in part. “Mortgagees are therefore experiencing an additional layer of challenge as they attempt to determine income stability for self-employed borrowers and for borrowers who rely on receipt of rental income.”
This has made the additional extension of this relief necessary, according to the ML.
“In recognition of these and other challenges that Mortgagees are experiencing during these unprecedented times, FHA is temporarily updating its income requirements for self-employed borrowers and borrowers who rely on the receipt of rental income to qualify for an FHA-insured mortgage,” the letter explains.
FHA is also extending relief applied to its 203K rehabilitation program in the same ML, which solely affects 203K escrow administration guidance and will not affect the HECM program.
FHAC will temporarily go offline beginning Friday
FHA also revealed in a new informational notice that FHAC will be going offline beginning this Friday for maintenance, in a planned outage which is expected to persist into part of the working week next week.
“(FHAC) will be unavailable beginning Friday, July 2, 2021, at 10:00 PM (Eastern) through Tuesday, July 6, 2021, at 8:00 AM (Eastern) for system upgrades and maintenance,” the notice reads in part.
As a part of this planned systems outage, 13 different functions will be unavailable to mortgagees including the Computerized Homes Underwriting Management System (CHUMS), the Credit Alert Verification Reporting System (CAIVRS), claims,the Housing Counseling System (HCS), the Lender Electronic Assessment Portal (LEAP), the Loan Review System (LRS), Neighborhood Watch, Multifamily Premiums, the Single Family Insurance System (SFIS), the Single Family Default Monitoring System (SFDMS), the Single Family Premium Collection Subsystem – Periodic (SFPCS-P), the Single Family Collection Subsystem – Upfront (SFPC-U), and Title I.
“These applications are scheduled to resume operations in FHAC on Tuesday, July 6, 2021, at 8:00 AM (Eastern),” the notice reads. “Access to FHA’s (Technology Open To Approved Lenders) TOTAL Mortgage Scorecard by approved Automated Underwriting System (AUS) providers will not be affected by this outage.”
In the original guidance for re-verification of employment on the reverse mortgage side issued in ML 2020-24 from July of 2020, a year-to-date pay stub or direct electronic verification of income for the pay period that immediately precedes the note date or a bank statement showing direct deposit from the borrower’s employment for the pay period that immediately precedes the note date will be accepted.
Mortgagees do not need to provide a re-verification of employment within 10 days of disbursement as described in Section 3.8 and 3.9 of the HECM Financial Assessment and Property Charge Guide, provided that the mortgagee is not aware of any loss of employment by the borrower and has obtained either of the described documents.
The employment re-verification guidance was further extended in ML 2021-06 this past February for cases closed on or before June 30, 2021. That date has not been moved to the end of September in this latest round of guidance. For the rental income guidance, FHA previously described the difficulty that some people were experiencing in documenting less typical sources of income, such as from rental properties.
“Mortgagees are therefore experiencing an additional layer of challenge as they attempt to determine income stability for self-employed Borrowers and for Borrowers who rely on receipt of rental income,” ML 2021-07 reads in part. “In recognition of these and other challenges that Mortgagees are experiencing during these unprecedented times, FHA is temporarily updating its income requirements for self-employed Borrowers and Borrowers who rely on the receipt of rental income to qualify for an FHA-insured mortgage.”