FHA Extends HECM Reasonable Diligence Timeframe

After releasing 3 Mortgagee Letters concerning various aspects of the Home Equity Conversion Mortgage (HECM) program in a few days, FHA announced on April 30 that is is immediately rescinding Mortgagee Letter 2015-03. The agency’s new stance is that cases with numbers issued before August 4, 2014, which also have a non-borrowing spouse, are being provided with an additional 60-day extension in which to take first legal action to commence foreclosure, as well as to apply with due diligence.

Lenders are allowed to immediately choose to utilize this extension at their discretion. Oddly, the request for this extension itself is effective when made, but in a strange twist of silence, FHA will not be providing any specific approval for this extension, so lenders can just run with it.

FHA put out an email on the HUD Homeownership email list on May 1 with additional information on how to elect an extension:

“To elect an extension related to the aforementioned guidance, mortgagees must:

  1. Prepare a detailed Extension Request on their company’s letterhead;
  2. Obtain an authorized loan servicing manager’s signature on the Request; and
  3. Upload the Request in the Home Equity Reverse Mortgage Information Technology (HERMIT) system to the “Documents’ tab,” then select the Document Type “Extension.”  Include the following description in the Notes field: “Extension authorized under notice FHA INFO #15-33.”

Questions about this policy change are directed to HUD’s answers page at www.hud.gov/answers.

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