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Federal Housing Administration Implements New Policies To Streamline Processing For Home Equity Conversion Mortgages

Anticipated changes in policy will reduce the time for mortgagees to receive funds from Home equity conversion mortgages.

May 17, 2023

Washington- The Federal Housing Administration is about to announce new policies to release funds at a fast pace to mortgagees when assigned a home equity conversion mortgage (HECM), also known as a reverse mortgage. Due to these changes, people having FHA mortgages can submit a request for preliminary tile approval, and that too with fewer documents. When introduced, these changes will reduce the time between the loan’s eligibility to HUD and the payment of funds to a mortgage.

Julia Gordon, Assistant Secretary for Housing and Federal Housing Commissioner said, “ The home equity conversion mortgage program is an important resource for the nation’s senior homeowners who wish to age in place”. These changes will not only simplify processes but will also pay mortgage funds quickly providing relief to program participants.

The mortgagee can assign HECM to HUD when it reaches 98% of the maximum claim amount (MCA) under the HECM program. According to the new policy, the mortgagees can submit information and documentation to HUD when HECM reaches 97% of the MCA depending on the value of the property at the time of the loan.

Besides this, FHA will allow mortgagees to submit original notes and mortgages after claiming assignment payment instead of before. FHA is expecting to reduce the time between HECM reaching 98% and FHA paying the mortgage claim by allowing earlier claim submission and making document submission flexible.

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The content provided in this article draws inspiration and includes quotes from various reputable sources, including news articles, government data, and interviews. Affordable Housing 411 strives to ensure accuracy and credibility, but the information presented may be based on some external sources. We encourage readers to refer to the referenced materials for more in-depth insights and verification.

Department of Housing and Urban Development. “Federal Housing Administration Finalizes Policies to Expedite Claims Processing for Home Equity Conversion Mortgages”. HUD, May 17, 2023, Federal Housing Administration Finalizes Policies to Expedite Claims Processing for Home Equity Conversion Mortgages | / U.S. Department of Housing and Urban Development (HUD)

Last Updated: September 20, 2021