FHA Deputy Assistant Secretary for Single Family Housing Discusses HECM Plans for 2021
The Federal Housing Administration (FHA) has seized the opportunity in responding to the impacts of the COVID-19 coronavirus pandemic, and has a series of key priorities for the Home Equity Conversion Mortgage (HECM) program that it aims to continue in 2021 related to greater integration of technology, and further complementing Policy Manual 4000.1 to include more information on reverse mortgages.
So said Joseph Gormley, deputy assistant secretary for single-family housing at FHA, during a presentation at the virtual National Reverse Mortgage Lenders Association (NRMLA) annual meeting and expo. Gormley, who was appointed in his post in early 2020, sought to provide a solid and granular perspective on FHA’s activities with respect to the Reverse Mortgage Program for the meeting’s Reverse Mortgage Participant audience.
“Rising to the occasion” for COVID-19
Like U.S. Department of Housing and Urban Development (HUD) Assistant Secretary Brian D. Montgomery at start of the conference, Gormley recounted many of the various relief measures for FHA borrowers during the COVID-19 coronavirus pandemic, describing that the FHA recognized the need to intervene at a time when many borrowers needed help. aid as the financial impacts of the outbreak have become clear.
“Many far more eloquent people than I have commented on the unique challenges presented by the COVID-19 pandemic over the past eight months, but I believe FHA has taken the opportunity to help borrowers affected by the pandemic and maintain the FHA insured market. loans are working well,” Gormley said.
Echoing the optimism expressed by Undersecretary Montgomery, Gormely described the continued implementation of FHA Catalyst software features as major new efficiencies for the reverse mortgage industry, although industry players need to always ensure that they perform all the due diligence that comes with handing over a HECM workbook.
“By using FHA Catalyst, approval times have decreased by approximately 20%,” Gormley described. “That means our homeownership centers are accepting loans 20% faster thanks to new technology. But as with any technology, what’s entered into the system impacts its output. It is so important for HECM lenders to ensure that the files they submit for approval are as complete and error-free as possible, so that they are not returned.
When a case submitted for approval is returned, FHA issues the lender a notice of return (NOR) that requires the error to be corrected before a case can be resubmitted, which takes time and increases expense. .
“Therefore, it’s much more cost-effective to ensure files are complete when submitting,” Gormley said.
FY 2021 priorities: HECM stability
HUD’s priorities for fiscal year 2021 were also shared by Deputy Assistant Secretary Gormley, primarily driven by a desire to further stabilize the HECM program within the Mortgage Mutual Insurance Fund (MMI).
“In line with HUD’s housing finance reform plan, FHA’s number one goal is to help make its HECM program more financially stable,” Gormley said. “However, due to the national COVID-19 emergency and the ‘all on deck’ approach we had to adopt to maintain the day-to-day operations of our forward and reverse portfolios. We had to shift priorities and some things have been put on the back burner. But moving forward in fiscal year 2021, the FHA, among other priorities, plans to continue working with the NRMLA and the reverse mortgage industry as a whole to bring our programs HECM on a more sustainable basis.
Gormley also addressed the FHA’s position regarding the impending LIBOR/CMT rate index transition, reiterating a leadership position on the subject by the Department first communicated by Under Secretary Montgomery.
“We all know that Ginnie Mae released an APM a few months ago that focused her programs on transition, and I know there’s a lot of interest in the marketplace and among NRMLA members regarding what the FHA does,” he said. “But rest assured, we have worked with the ARRC and others who are very invested in this process.”
Reverse policy in the 4000.1 manual
Gormley also shared another top priority for the agency, this time revolving around the FHA’s Single Family Housing Policy Handbook 4000.1 (SF Handbook). Online documents describe the SF Handbook as “a consolidated, consistent, and comprehensive source of FHA single-family housing policy,” but Gormley explained that in fiscal year 2021, the hope is to make it truly a single policy benchmark that affects both future and reverse mortgages.
“One of our other major priorities for fiscal year 2021 is the completion of the single-family housing policy manual, also referred to as the 4000.1 manual,” Gormley explained. “This is another area where we can share good news: the forward section of the 4000.1 manual is moving towards completion, and the industry can expect further updates in the months ahead. are also hard at work completing the Reverse Mortgage section of the manual, and we hope that we can finally achieve our dream of having a complete, single source of single-family FHA term and reverse mortgage policies over the next financial year 2021.”