Now that Congress has passed a bill to fix the FHA reverse mortgage program, HUD wants to implement the changes by October.
Ideally, Department of Housing and Urban Development officials want lenders to implement the changes by Oct. 1, the start of the federal government’s fiscal year.
“However, FHA will take care to ensure it and the industry has sufficient time for an operationally responsible implementation,” a HUD spokesman told NMN.
The Reverse Mortgage Stabilization Act (H.R. 2167) gives the Federal Housing Administration the authority to make changes to its home equity conversion mortgage program via mortgagee letter so it can act quickly to stem losses to the FHA insurance fund. FHA and HUD no longer have to go through a lengthy rulemaking process.
H.R. 2167 also requires lenders for the first time to conduct financial assessments to ensure a HECM loan is the right product for the senior. It allows FHA to set limits on a first draw on a new HECM loan and require escrow accounts or set-asides for property taxes and homeowners insurance, if necessary. FHA can authorize those changes by mortgagee letter
“We are looking at issuing a mortgagee letter by the end of August,” a HUD spokesman said.