The current senior Federal Housing Administration (FHA) official said last week that any previous FHA Home Equity Conversion Mortgage (HECM) program guidance passed to the reverse mortgage industry through the Mortgagee Letter (ML), could be considered extensive for new businesses and existing industry participants, and the FHA is currently exploring ways how all of the previous guidance from the HECM program can be summarized in the Single Family Home Manual 4000.1.
This comes from the point of view of the Office of Housing and FHA’s Assistant Principal Secretary (PDAS) Lopa P. Kolluri, who delivered a keynote address at the National Reverse Mortgage Lenders Association (NRMLA) Virtual Policy Conference last week.
After this initially speak Described about certain updates to the Home Equity Conversion Mortgage (HECM) program and the setting of relevant policy priorities related to the program under the administration of Marcia Fudge, Secretary of the United States Department of Housing and Urban Development (HUD) and President Joe Biden PDAS Kolluri, how she sees the Reverse Mortgage Industry is working with FHA and HUD to achieve similar goals, and also talks about some of the goals FHA is looking to achieve for the program in 2021.
Instructions for mortgage letters
The manner in which the Reverse Mortgage Program has received guidelines from the FHA and HUD is primarily determined by Mortgagee Letter (ML), with the content of the MLs largely dependent on the priorities of the leadership at HUD and FHA at the time of their publication is determined. and certain published MLs may revoke guidance issued in previous MLs.
PDAS Kolluri explained to virtual NRMLA participants in 2021 the desire to potentially streamline the previously issued guidelines. This would allow industry participants to refer to the Single Family Handbook for a more holistic perspective on government guidelines for the reverse mortgage industry.
“I was actually surprised to learn that the HECM program is still governed by so many individual mortgage letter policy documents,” she said. “And I find it kind of confusing and, to a certain extent, inefficient. So we have to take this pretty seriously and make sure it works for both program participants and the HUD. I am confident that this year we can get to a consolidated set of guidelines that have been incorporated into our handbook for single family homes. “
Consolidating all of the guidance issued to date into a single place could generally be beneficial for both existing and new entrants to the reverse mortgage industry, Kolluri said. The detail that the industry is working to ensure that HUD and FHA are aware of the concerns and ideas of the reverse mortgage industry has also been commended by PDAS Kolluri, and she was optimistic about the prospect of working more closely with the leadership of the trade association and industry participants to further refine and stabilize the HECM program.
“I was definitely impressed by our outstanding one-family team, how important the HECM portfolio and the focus on the HECM portfolio are for you and how important it is for the FHA,” said Kolluri. “One of the things that impresses me the most is the attention to detail and care with which HECM becomes a reality for those who want to age on the spot. I recommend the work that [NRMLA is] to do [and] I look forward to working very closely with you and continuing to focus on HECM. “
Moving on to PDAS Kolluri’s comments, NRMLA President Steve Irwin said he anticipated positive collaboration with the FHA leadership in the future and the consolidation of previous guidelines for the HECM program in the Single Family Handbook.
“NRMLA and its members look forward to updating the manual and bringing it over the finish line,” Irwin told RMD over the phone.
Current beginnings of ML guidance
FHA was in mid-2013 checked A Senate subcommittee hearing following an annual audit of the FHA’s Mutual Mortgage Insurance Fund (MMIF) predicted significant reverse mortgage losses in late 2012 Seeking more authority on reverse mortgages, and it had been stated at the time that certain members of Congress supported giving HUD the additional reverse mortgage authority that the department requested.
In May 2013, the then members of the US House of Representatives Denny Heck (D-Wash.) And Mike Fitzpatrick (R-Penn.) introduced A bill to Congress, called the Reverse Mortgage Stabilization Act of 2013, which included an important provision to empower the FHA to issue guidance on the reverse mortgage program based on ML documents. Without the authority to provide such guidance about ML, HUD limited itself to the process of program changes, which went through a lengthy process of creating rules, and limited its agility in responding to needs that might arise.
Need for ML guidance, especially with regards to COVID-19
President Barack Obama signed Enforce the Reverse Mortgage Stabilization Act in the Oval Office in the presence of co-legislative sponsors on the Democratic and Republican sides of the Ganges, as well as officials with HUD and NRMLA. Before the law was passed, a total of 78 HECM-related MLs were issued between 1988 and 2013, according to a table from HUD.
Since the law was signed, a total of 71 MLs of HECM Program Guide have been issued by the FHA. However, not all relevant MLs are issued under the oversight of the Reverse Mortgage Stabilization Act, and HUD’s table does not distinguish between those issued and not issued under that authority. The ability to issue HECM guidelines in this manner has enabled the FHA to be far more effective and nimble in responding to the needs and events of the time based on the perspectives of HUD officials and industry leaders who have spoken to RMD.
This maneuverability has been singled out for the reverse mortgage industry lately. The number of ML guidelines for the program accelerated significantly in 2020 due to the COVID-19 coronavirus pandemic. In 2020 alone, 23 HECM-related MLs were released, and another seven HECM MLs have arrived in 2021.
This situation probably helps to emphasize why, due to the massive disruption caused by the pandemic, additional flexibility is required in terms of program management by the FHA. PDAS Kolluri believes that the consolidation of previously issued guidelines in the Handbook for Single Family Homes will simplify the process of referring to such guidelines in the future.