FHA Revises Requirements Related to FHA Payments of HECM Borrower Disbursements Due to Mortgagee Default

FHA recently published Mortgagee Letter 2023-15 (ML) modifying FHA’s requirements related to actual or anticipated mortgagee default on obligations to FHA-insured HECM borrowers.  The ML went into effect on July 11, 2023.

Among other things, the ML expands the sources from which FHA can receive notice of a mortgagee’s inability or unwillingness to make required borrower payments, allowing notice from both borrowers and mortgagees.  The ML also requires mortgagees to provide FHA certain borrower payment information when FHA must make HECM borrower payments due to a mortgagee’s default.  Specifically, mortgagees must ensure that the following information is provided in the Home Equity Reverse Mortgage Information Technology (HERMIT) system, in an Excel spreadsheet or Comma Separated Values (.csv) file, no later than one business day following the date the borrower payment should have been made: (i) FHA case number, (ii) payment plan type, (iii) disbursement type, (iv) payment amount, (v) payment method, (vi) bank routing number and account number, (vii) account type, and (viii) mailing address.