It’s official: Celink now provides loan servicing for Home Equity Conversion Mortgage (HECM) reverse loans sponsored by the Federal Housing Administration (FHA).
News of the transition was sent to members of the National Reverse Mortgage Lenders Association (NRMLA) and confirmed by the U.S. Department of Housing and Urban Development (HUD)’s website, which lists Celink as the entity “responsible for servicing the Assigned Secretary-held Home Equity Conversion Mortgages (HECM) and HECM Subordinate Mortgages.”
Representatives for NRMLA did not immediately return requests for comment.
The transition follows the March announcement that Celink had won the HECM servicing contract and is slated to replace prior contract holder Novad Management Consulting.
The total contract value is just over $169 million and the “period of performance” will be for a one-year base period and four additional 12-month option years, according to GSA records.
“We are thrilled that Celink will now be assuming the HUD-assigned portfolio contract responsibilities, effective today,” Marion McDougall, CEO of Celink, said in a statement. “We have been planning and preparing for this for a very long time and are excited to finally be able to put our plans into action. We will be working very hard to ensure a smooth transition alongside our partners at HUD.”
At the time the award was issued in March, people familiar with the matter told RMD that other potential bidders for the contract could offer a challenge, or that the incumbent contract holder could take steps to attempt to remain in place.
Industry response to the news of Celink gaining the servicing contract from HUD was largely positive.
“Unfortunately, poor HUD servicing has created stiff headwinds for [the reverse mortgage industry’s] salesforce,” said Dan Hultquist, national reverse mortgage sales training director at Fairway Independent Mortgage Corp. in March. “Consider that over 20% of the reverse mortgage CFPB complaints in 2021 were directly tied to HUD’s servicing contractor.”
Considering the reputational challenges the industry has faced, a new servicer could be a difference-maker, Hultquist added.
FHA had been aiming to find a new servicing contractor to help fix remaining back-end loan issues at the end of the Trump administration, according to 2020 comments from U.S. Department of Housing and Urban Development (HUD) and FHA personnel.
After the transition to the Biden administration, there were no immediate indications that HUD would change the HECM servicing contract. In October 2021, HUD announced that it had awarded a new Single Family Secretary-Held Loan Servicing contract to Information Systems & Networks Corporation (ISN) on a host of single-family forward mortgage programs.
However, the Secretary-Held HECM loans and HECM subordinate mortgages at that point remained unchanged with Novad according to an FHA informational notice. The announcement that Celink would be the new HUD HECM servicing contractor followed five months later.