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HUD reverse mortgage requirement adherence period postponed
The HUD Company announces that it is postponing the date of entry into force of the valuation and financing requirement for the real estate cost payments under its Home Equity Conversion Mortgage ("HECM") programme described in the HUD Mortgagee Letters 2013-27 and 2013-28 (the "Mortgagee Letters"). HUD's notification of 20 December 2013 stated that, in reaction to observations from the general public, HUD would consider amendments to the guidelines included in the mortgage letters and that the new guidelines would enter into force at the earliest 90 working days after their publication.
Amendments to the HECM programme requirement set out in the Mortgagee Letter 2013-27 contain a limitation on the amount of capital that can be paid in the first 12 month after completion and the creation of a new mortgage policy payment scheme. The Mortgage Letter 2013-28 require creditors to perform a full review of all potential HECM borrower to assess the borrower's readiness and capability to fulfill their commitments and mortgage needs.
Massachusetts Division of Banks published an industry letter on 3 September 2013 on HUD's changes to the HECM program's valuation and financing needs. Creditors with an authorized reverse mortgage programme may grant HECM reverse mortgage lending in Massachusetts only if the creditor provides the Division with documents showing that the Government's legal requirement and HUD's amended programme requirement as set forth in the Industry Letter are met.
Division of Bank has stated that it has prolonged the deadline for the submission of documents proving adherence to the valuation and financing criteria for the encumbrance of land set out in the Division's mortgage letters and industrial letters. Creditors, as well as bankers, with reverse mortgage programmes must file their revised lending documents and revised guidelines and processes 30 working days before HUD's date of entry into force when HUD publishes the new guidelines.
Under Massachusetts Act, reverse mortgage lending must be granted in accordance with procedures that have been verified and authorized by the Division pursuant to Chapters 167E, Sections 7 and 74A of the General Laws of Massachusetts. This Act shall apply to Massachusetts bankers and all other mortgage creditors who grant reverse mortgage credit under Section 67 of the General Laws of Massachusetts, Section 183.
Industry Letter reminded reverse mortgage banks that they are obliged to upgrade their programmes by submitting changes to their reverse mortgage lending programmes to the Division and setting a time limit for submitting changes. Any such changes to the reverse mortgage lending programme must be presented to the Department on or before 15 December.
The Industry Letter requires each creditor with an authorized reverse mortgage programme to file a revised credit record together with all revised guidelines and processes via either CD or DVD drives to prove conformity with the Mortgagee Letters.