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FHA delays transition to Catalyst for reverse mortgage appraisal submissions

The Federal Housing Administration (FHA) on Wednesday announced a delay for previously-announced mandatory transition dates for mortgagees to submit appraisals for both single-family forward and reverse mortgage endorsements through its Catalyst software. This is according to the publication of Mortgagee Letter (ML) 2022-04. The new date is now March 14, 2023, a delay of one year.

The original announcement last year detailed that the Catalyst software now has Home Equity Conversion Mortgage (HECM) appraisal submission functionality as a new capability. While the imposition of a mandatory deadline for submissions through Catalyst was described as a core component of “FHA’s information technology modernization initiative,” feedback on the deadline convinced the agency to implement the delay announced this week.

The official HUD portrait of Lopa P. Kolluri, Principal Deputy Assistant Secretary for the Office of Housing and FHA who helps oversee the reverse mortgage program.
Lopa P. Kolluri, Principal Deputy Assistant Secretary for the Office of Housing and FHA who signs current Biden-era Mortgagee Letters.

“FHA stakeholders have expressed concern with the existing timeline for the mandatory use of FHA Catalyst: [Electronic Appraisal Delivery] (EAD),” the new ML reads. “FHA acknowledges and is receptive to the comments shared by these industry partners. Therefore, FHA is extending the mandatory use date of the FHA Catalyst: EAD Module. During this additional period, Mortgagees and Technology Service Providers are encouraged to continue their integration with and usage of the FHA Catalyst: EAD Module for all forward and HECM Single Family origination electronic appraisal deliveries.”

The original deadline of March 14, 2022 is fast approaching and has now been extended to the same date in 2023. There are some additional case types to consider, however.

“For cases with a previous appraisal submission to the legacy EAD before March 14, 2023, appraisal resubmissions may continue to be delivered through the legacy EAD portal until April 17, 2023,” the agency specified. “After April 17, 2023, appraisal submissions for all cases, regardless of previous submissions, must be delivered through the FHA Catalyst: EAD Module.”

This added reverse mortgage functionality of Catalyst follows on from a series of updates that the agency has made to the software in 2021, including a prior update which allowed mortgagees to more quickly and accurately respond to the agency’s request for case binders on both the forward and reverse sides of the mortgage business.

That summer, FHA also published an update to the Single Family Housing 4000.1 handbook which incorporated policies requiring mortgagees not approved for eCaseBinder (eCB) submission through FHA Connection (FHAC) to use the Catalyst: Case Binder Module to submit both Single Family forward and Home Equity Conversion Mortgage (HECM) case binders that were requested through the Loan Review System (LRS) for post-endorsement technical review.

Read the details of the new provisions in Mortgagee Letter 2021-23 at HUD.

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