FHA Introduces New Policies to Streamline Home Equity Conversion Mortgage Claims Processing

The Federal Housing Administration (FHA) has unveiled a set of new policies aimed at expediting the payment of funds to mortgagees when assigning a Home Equity Conversion Mortgage (HECM), commonly known as a reverse mortgage, to the Department of Housing and Urban Development (HUD). These changes will significantly reduce the time it takes for mortgagees to receive claim funds.

Under the new policies, individuals with FHA mortgages can request Preliminary Title Approval earlier in the process, requiring fewer documents. Collectively, these adjustments will shorten the period between a loan becoming eligible for assignment to HUD and the subsequent disbursement of claim funds to the mortgagee.

Julia Gordon, Assistant Secretary for Housing and Federal Housing Commissioner emphasized the importance of the HECM program in assisting senior homeowners who wish to age in place. She stated that the updated policies simplify procedures and accelerate mortgagee claims payments, providing substantial relief to program participants in today’s challenging economic environment.

In the HECM program, a mortgagee can assign a HECM to HUD when it reaches 98 percent of the Maximum Claim Amount (MCA). The revised policy allows mortgagees to begin submitting required information and documentation when the HECM reaches 97 percent of the MCA, based on the property’s value at the time of origination.

Previously, mortgagees could only submit this information when the HECM reached 97.5 percent of the MCA. Additionally, FHA now permits mortgagees to submit original notes and mortgages after claim payment assignment, a departure from the previous requirement of submitting them. These changes aim to reduce the time between the HECM reaching 98 percent of MCA and FHA disbursing claim payments to mortgagees.

These initiatives align with HUD’s mission to build strong, sustainable, inclusive communities and provide quality affordable housing options for all.

For more information about HUD and its programs, visit www.hud.gov and https://espanol.hud.gov.

Source: HUD Press Release