Government shutdown halts reverse mortgage endorsements

FHA's limited operations to impact HECM lending

With the government shutdown approaching the two-week mark, reverse mortgage endorsements have ground to a halt.

The Federal Housing Administration released a notice stating it will not be making insurance endorsements for HECM loans during the shutdown.  

The FHA also noted that assistance will not be provided for lenders with issues regarding the Collateral Risk Assessment related to the second-appraisal protocol.

If the first appraisal was submitted under the interim protocol, a second appraisal must follow the interim processes, the FHA said. If the first appraisal was submitted on or after Nov. 30, 2018, when the process was fully automated, lenders must adhere to guidelines for the automated process. And, apparently, if questions arise, lenders are out of luck.

The FHA also said condominium project approvals under HUD review will be unavailable during the shutdown.

But some activities will continue as normal, albeit with “limited staff assistance available and longer wait times for assistance,” the FHA said.

HECM payments will continue to be made to borrowers, as well as refunds on mortgage insurance premiums. Submissions of upfront MIP payments for new endorsements are still required, with the FHA specifically noting that lenders are required to submit monthly MIPs during the shutdown.  

FHA Connection will still be available and will continue to assign case numbers. The Home Equity Reverse Mortgage Information Technology system and Electronic Appraisal Delivery portal will also be available for existing lenders only.

“As a result of the Federal Government shutdown due to a lapse in appropriations, until further notice the Federal Housing Administration’s Office of Single Family Housing and its mortgage insurance program will be operating with limited service,” the FHA bulletin said. “Please note that across the board, the services that remain available during the shutdown will have significant impacts to customer service and/or limited functionality.”

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