A little over a month after the U.S. Department of Housing and Urban Development (HUD) announced that it had posted draft Home Equity Conversion Mortgage (HECM) Origination through Servicing sections of its Single Family Housing Policy Handbook 4000.1 for the review of program stakeholders, it has delayed the end of the review period from November 15 to December 31, 2021. This is according to Federal Housing Administration (FHA) INFO #21-94, released on Monday morning.

These revisions to the HECM portions of the 4000.1 handbook represent the potential fulfillment of an objective that FHA has previously described since agency officials which came into office with the Joe Biden administration spoke publicly about the HECM program earlier this year, and the new deadline will allow additional time for reverse mortgage program stakeholders to offer perspectives on the consolidated provisions.

The delay

While HUD did not offer any specific reason for the delay, the verbiage accompanying the announcement of the new timeframe could indicate that the agency is seeking additional input from reverse mortgage program and industry stakeholders.

“Stakeholders are encouraged to thoroughly review and provide feedback on the draft sections through its new feedback period end date of December 31, 2021,” HUD said in the announcement. “Instructions for viewing the draft sections and providing feedback are available on the Drafting Table. FHA will carefully consider all feedback received.”

In an email alert sent to members of the National Reverse Mortgage Lenders Association (NRMLA) on Monday morning shortly after the official announcement, the association detailed that the additional time was requested by the association itself.

“Given the scope of information that needs to be reviewed, NRMLA submitted a letter to the executive team at HUD requesting more time [to review the draft sections],” NRMLA explained in its member alert. “Several working groups have been formed by NRMLA and they are busily convening and discussing the draft HECM Handbook.”

Additional time is necessary as this is a change to the HECM program that has been a long time coming, and it is paramount to ensure that new information is properly and adequately absorbed before providing necessary industry feedback. This is according to Steve Irwin, president of NRMLA in the email alert to association members.

“We greatly appreciate HUD’s flexibility in this very important initiative,” said Irwin. “We’ve been waiting a long time for a new HECM Handbook and so we want to take our time and carefully review everything before submitting our comments to HUD.”

Scope of changes, recent history

In an emailed message to the association’s membership upon the original announcement of the Drafting Table additions, NRMLA explained that its HUD Issues Committee led by All Reverse Pro’s Elly Johnson will be preparing industry feedback for a later date. When reached for her perspective, Johnson described the anticipation for the association in providing feedback to FHA.

“We are very pleased to see a draft of the Single Family Housing Policy Handbook 4000.1 for the Home Equity Conversion Mortgage Program,’ Johnson told RMD in September. “NRMLA and the HUD Issues Committee will work diligently to review, and provide timely feedback to FHA.”

The consolidation of HECM program guidance has been in development for some time, and was previously alluded to this past April at the NRMLA Virtual Policy Conference by Lopa P. Kolluri, Principal Deputy Assistant Secretary (PDAS) for the Office of Housing and the FHA in a keynote at that event.

“I was actually surprised to learn that the HECM program is still governed by so many individual Mortgagee Letter policy documents,” she explained. “And I find it sort of confusing and inefficient to some extent. And so, we need to take a look at that pretty seriously and make sure that it works for both program participants and for HUD. I’m hopeful that we can get to a consolidated set of policies incorporated into our Single Family Handbook this year.”

Consolidating all of the guidance issued thus far into a single place could be generally beneficial for existing and new reverse mortgage industry participants, Kolluri contended. Kolluri is scheduled to keynote this week’s NRMLA Virtual Annual Meeting, and may provide additional perspective on this issue and other active reverse mortgage-relevant elements at FHA and HUD under the Biden-Harris administration.

RMD will be in virtual attendance at this week’s meeting.