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FHA Issues Pair of Partial Waivers

On Friday, the Federal Housing Administration (FHA) announced the issuance of two temporary partial waivers. This pair of waivers, which will apply directly to the Home Equity Conversion Mortgage (HECM) program, was specifically created to address and help with concerns related to the ongoing effects of the COVID-19 coronavirus pandemic.

The two waivers are designed to enable more flexibility for mortgages, both when submitting HECM assignment claims without borrower signatures and in reviewing borrowers for subsequent repayment plans for unpaid property charges, regardless of the total outstanding money owed that has not yet been paid (arrearage).

Other recently-extended relief has previously been provided for the HECM program and its borrowers in response to the still-rising coronavirus infections spreading across the nation,  among which includes exterior-only property appraisals.

The first waiver waves the borrower signature requirement for HECM assignment claims. Although they are no longer required to have the aforementioned signature, mortgagees are still required to continue to obtain annual occupancy certifications from HECM borrowers.

However, due to the difficulties that COVID-19 is currently posing to receiving and sending mail, this requirement (to obtain a signed annual occupancy certification) is being temporarily waived as well. The waiver, which Director of HUD’s National Servicing Center (NSC) Matt Martin requested, officially will be in effect through December 31, 2020.

The justification of the waiver cites (verbatim): “HECM borrowers are experiencing significant difficulties due to the COVID-19 National Emergency. This includes recommendations from public health officials for all individuals, but especially those over age 62 or with preexisting health conditions, to maintain physical distance from all others not residing in their home. Following these recommendations has caused difficulties for HECM borrowers in traveling to carry out routine tasks such as receiving and sending mail.”

The second waiver regards unpaid property charges. Also requested by Director Martin, the waiver applies to original guidance handed down in ML 2015-11, which applied to HECMs that default for tax and insurance. The 2015 ML saw FHA permit the mortgagee to take a one-time extension to submit a due and payable request.

The waiver’s exact text cites: “A temporary partial waiver of Mortgagee Letter 2015-11, that allows the Mortgagee to offer a Repayment Plan for unpaid property charges to HECM borrowers regardless of the total outstanding arrearage. [The waiver would apply to] the phrase ‘if the outstanding arrearage is less than $5,000’ in bullet point 1 and waiv[e] in its entirety bullet point 2 of Section D (Unsuccessful Repayment Plan Performance) under the section of the Mortgagee Letter entitled ‘Option 1: HECM Loss Mitigation Repayment Plan.’ This waiver will remain in effect through December 31, 2020.”

In layman’s terms, the waiver will help those seniors who are unable to meet the “two consecutive payments” standard of the original guidance by extending an earlier waiver designed to answer this need that was set to expire on Friday.

 

About Author: Andy Beth Miller

Andy Beth Miller is a well-established freelance editor and writer with almost 20 years’ experience working within the media industry, contributing to various publications such as Lonely Planet, Zicasso, Honolulu Star-Advertiser, Midweek Magazine, Kauai Traveler Magazine, HILuxury, and many more. She also currently serves as the Editor-in-Chief of ProcuRising Magazine, which enables procurement professionals to increase their knowledge base within a creative and collaborative community.
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