FHA Announces Changes to HECM Claim Payments

FHA recently issued Mortgagee Letter 2018-08, announcing revised requirements for Home Equity Conversion Mortgage (HECM) servicers when they assign FHA insured reverse mortgages to the agency for claim payment under Claim Type 22 (CT-22) assignment requests.

Effective immediately, FHA approved servicers of HECM mortgages may use alternative documentation in lieu of documents previously required by the agency that in many instances, delayed claim processing.  This policy change is intended to streamline the process by permitting alternate sources of documentation regarding:

• Evidence of current Hazard insurance;
• Evidence of death of borrower;
• Clarification of “current” taxes;
• Evidence of completion of repairs; and
• Clarification of mobile home title.

According to the agency, the new HECM claim payment requirements will ensure lenders participating in the program are not unduly burdened when seeking claim payments when the HECM mortgage reaches 98 percent of its maximum claim amount.  The agency is also seeking to reduce the time required to make claim payments.

Mortgagee Letter 2018-08 is available here.