The Department of Housing and Urban Development (HUD) is giving reverse mortgage lenders until January of next year to submit due and payable requests on Home Equity Conversion Mortgages (HECMs) in default due to unpaid property charges, the federal agency announced late Friday via a mortgagee letter.

Mortgagee Letter 2015-26 provides HECM mortgagees with an extension through January 18, 2016 to the timeframes previously provided in ML 2015-11 to submit a due and payable request, as well as extends the timeframe to take first legal action where the mortgagee is actively reviewing the borrower for loss mitigation.

The new mortgagee letter released Friday only affects the “effective date” section of ML 2015-11, leaving all other provisions in that mortgagee letter unaffected. 

Issued in April, ML 2015-11 permits servicers to implement certain loss mitigation options, such as repayment plans, to help borrowers become current on their obligations, which include property charges as well as taxes and hazard insurance. 

The mortgagee letter stated that any outstanding amounts owed must be satisfied within 30 days, in the event the last surviving borrower dies before the plan is paid in full. 

Friday’s update is the latest timeframe extension for HECM mortgagees when submitting due and payable requests on defaulting loans.

Nearly two months after issuing ML 2015-11, in a memo to HECM servicers and counselors in June, the Federal Housing Administration said it was permitting the mortgagee to take a “one-time extension” to submit a due and payable request no later than October 20, 2015.

Per ML 2015-11, the extension applies for HEMCs that default for tax and insurance on, or after, April 23, 2015.

 View Mortgagee Letter 2015-26.

Written by Jason Oliva