The Federal Housing Administration unveiled new policies that will allow for faster payment of funds to mortgages when they assign a home equity conversion mortgage, or a reverse mortgage, to the U.S. Department of Housing and Urban Development.
The changes allow those with FHA mortgages to submit a request for preliminary title approval earlier in the process and with less documents, according to a May 17 news release. Together, these changes will shrink the time between the eligibility for assignment to HUD and the payment of claim funds to the mortgagee.
“The home equity conversion mortgage program is an important resource for the nation’s senior homeowners who wish to age in place,” Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon said in the release. “Today’s changes simplify processes and pay mortgagee claims more quickly, providing meaningful relief to program participants as they navigate the unique challenges of today’s economic environment.”
The program allows a mortgagee to assign a home equity conversion mortgage to HUD once it reaches 98% of the maximum claim amount, the release reported. Under the new policy, mortgagees are able to begin submitting required information and documentation to HUD once the home equity conversion mortgage reaches 97% of the maximum claim amount, based on the value of the property at the time the home equity conversion mortgage loan is originated.
Before the change in regulation, mortgagees were only able to provide the required data and paperwork if the home equity conversion mortgage reached 97.5% of the maximum claim amount, according to the release.
Additionally, in contrast with the previous regulation, the FHA will permit mortgagees to submit original notes and mortgages following the payment of an assignment claim, the release said. The time between the home equity conversion mortgage reaching 98% of maximum claim amount and the FHA paying the mortgagee for the claim is expected to be shortened due to the FHA's earlier filing policy and more flexible document submission requirements.
