The Federal Housing Administration (FHA) announced revised requirements for Home Equity Conversion Mortgage (HECM) servicers when they assign FHA-insured reverse mortgages to the agency for claim payment, the U.S. Department of Housing & Urban Development (HUD) announced in a press release.
Effective immediately, FHA-approved HECM servicers can use alternative supporting documentation in lieu of previously required materials that, in many instances, delayed claim processing.
“Streamlining the HECM claim payment process makes us more responsive to participating lenders and helps continue our effort to put the program on a more financially viable path,” FHA Commissioner Brian Montgomery said in the release.
FHA’s new HECM claims payment requirements will ensure lenders participating in the program are not unduly burdened when seeking claims payments when the HECM reaches 98 percent of its maximum claim amount.
HUD also stated that by streamlining the requirements and relaxing the documentation burden during the claims process, FHA is seeking to reduce the time required to make timely claims payments to servicers.