HECMs: February 1, 2011 Date Approaches

Counseling is a central feature of the Home Equity Conversion Mortgage (HECM) program. Without a counseling certificate from an FHA-approved provider, a lender may not originate a HECM. Counseling has always been part of the HECM program, going back to Handbook 4235.1 Rev-1, which outlines the basic program. Published in 1994, it has been continuously revised through Mortgagee Letters, HECM regulations, and, of course, amendments to the HECM statute. Handbook 7610.1 contains the HECM Counseling Protocol.

Recently, HUD issued Mortgagee Letter 2010-37, which seeks to clarify certain aspects of the required List of HECM Counseling Agencies (Counselors List), along with guidance about completing the FHA Connection case assignment screens for HECMs vis-à-vis the Counselors List, and the timing for completion of certain relevant screens.

The salient requirement: lenders are required to provide each client with a list of HECM counseling agencies and that list must include no fewer than nine HUD-approved counseling agencies, based on specific criteria.

Compliance Effective: February 1, 2011

HUD WEBINAR ON HECMS – REGISTRATION

January 19, 2011 - 9:00 AM to 11:30 AM

A free webinar is being offered by HUD, which will provide an overview and the latest updates to the HECM origination requirements.

Topics will include: HECM purchase transactions, refinances, and updates to the HECM process, HECM Standard and the new HECM Saver.

ALL TIMES MDT

HECM COUNSELOR LIST BACKGROUND

Mortgagees are required to provide each client with a list of HECM counseling agencies.

The Counselors List must include no fewer than nine (9) HUD-approved counseling agencies, based on specific criteria.

The Counselors List must include at least:

• five agencies within the local area and/or state of the prospective borrower
• one of the local agencies located within a reasonable driving distance for the purpose of face-to-face counseling, and
• the following four national intermediaries:

1. National Foundation for Credit Counseling (NFCC)
2. Money Management International (MMI)
3. National Council on the Aging (NCOA)
4. CredAbility

[Note: Earlier this month, the National Reverse Mortgage Lenders Association (NRMLA) sought guidance from FHA on the required actions lenders must take if they are unable to provide a full list of counselors to a potential applicant, when the client lives in an area that does not have five HUD-approved counseling agencies, as required by the selection criteria.]

FHA CONNECTION HECM REFERRAL LIST REQUIREMENTS

Within one (1) business day of requesting a FHA case number, a lender should complete the HECM Referral List Update in FHA Connection.

• The screen must be completed prior to a HECM loan being endorsed for insurance.
• This screen requires the lender to input the nine (9) agencies that the lender provided on the list given to the client.

WHEN A CLIENT IS NOT REFERRED

In the FHA Connection, the mortgagee must check the "Not Referred" box only if a client has already been counseled by a HUD-approved HECM counselor.

• The client must be able to confirm that s/he has received counseling by providing the lender a completed the Certificate of HECM Counseling (Form HUD 92902), which verifies where and when the client received HECM counseling, and that counseling was received from a HUD-approved HECM counselor.

Visit Library HUD-Approved Housing Counseling Agencies Mortgagee Letter 2010-37 November 8, 2010

FHA: WEBINAR - Sponsored Originations, HECM, FHA Connection

On September 28, 2010, the Federal Housing Administration (FHA) held a webinar, entitled Sponsored Originators, HECM Saver, and Other FHA Connection Changes, Effective October 4, 2010, subtitled "Sponsored Originators and Other Upcoming Modifications."

The webinar was well attended and topped out at over 650 participants. Indeed, the day before the webinar HUD-FHA notified the public that registrations could no longer be accepted due to space limitations.

The purpose of the webinar was to provide an overview of FHA Connection enhancements to support Sponsored Originations, including the Sponsored Originator Maintenance page, key case processing changes, and B2G & TOTAL Scorecard modifications. Also discussed were the HECM Saver, new ADP Codes, and the new Property Title Information section added to the Appraisal Logging screen of FHA Connection.

Because the webinar presentation was proscribed on a limited basis and would only be available for a short period of time to participants, we have downloaded it in order to make it available to you.

Highlights

Subjects Covered in the Webinar

• Mortgagee Letter 2010-20

• Mortgagee Letter 2010-33

• Sponsored Originators

• Sponsored Originator Maintenance Page
• Key case processing changes through FHA Connection
• B2G & TOTAL Scorecard Modifications
• New Data Collection on Form 92900-A

• New Appraisal Logging Data Fields
• HECM Saver

____________________________________________

Visit Library for Issuance

HUD-FHA Webinar: Sponsored Originators, HECM Saver, and Other FHA Connection Changes, Effective October 4, 2010
September 28, 2010

____________________________________________

LENDERS COMPLIANCE GROUP is the first full-service, mortgage risk management firm in the country, specializing exclusively in mortgage compliance and offering a full suite of hands-on and automated services in residential mortgage banking.

FHA: Issues FHA Connection Update for Sponsored TPOs

In my article, entitled FHA Issues Guidance for Lender Approvals (July 2010, National Mortgage Professional Magazine), I discussed the many changes that would be required pursuant to Mortgagee Letter 2010-20.

This ML, issued on June 11, 2010, outlines some of the most important revisions that HUD-FHA has made to its single family loan origination program and contained the long-awaited guidance regarding the implementation of its Final Rule. That Final Rule adopted changes pertaining to the approval of mortgage lenders by the Federal Housing Administration (FHA) that are designed to strengthen FHA by improving its management of risk.

If your organization has not drafted and begun implementing policies and procedures to comply with Mortgage Letter 2010-20, I highly urge you to do so immediately.

After December 31, 2010, loan correspondents (i.e., Third-Party Originators, so-called "TPO"s) will only be permitted to continue participation in FHA programs by establishing a sponsorship relationship with an FHA-approved mortgagee. Indeed, loan correspondents will no longer have access to non-public FHA systems, beginning January 1, 2011 (i.e., FHA Connection). Only FHA-approved mortgagees will be permitted to order FHA case numbers from the FHA Connection. HUD will provide future guidance, with respect to the processing of case numbers ordered prior to the January 1, 2011.

Mortgagee Letter 2010-33 has been expected. It describes the system enhancements to FHA Connection, providing notice to mortgagees who are sponsors ("Sponsoring Mortgagees') of sponsored third party originators ("Sponsored Originators") of new FHA Connection data submission requirements as was announced in Mortgagee Letter 2010-20.

For transactions originated by an FHA-approved loan correspondent, mortgagees should follow the current process through December 31, 2010.

FHA Connection enhancements will be implemented on October 4, 2010, and sponsoring mortgagees must begin complying with the new data entry requirements on that date.

_____________________________________

Highlights

EFFECTIVE DATES

On or After October 4, 2010

• All required sponsored origination data fields must be completed on assigned case numbers assigned.

• Sponsoring mortgagees will no longer enter their 10 digit FHA ID in the FHA Connection as the loan originator for loans involving a sponsored originator, as previously advised in Mortgagee Letter 2010-20, as a temporary workaround pending this system enhancement release.

• For mortgagees using B2G (FHA Connection Business to Government) that are unable to modify their systems to accommodate the transmission of the Employer Identification Number (EIN) by October 4, 2010, the FHA Connection Case Number Assignment screen must be used to order a case number for sponsored originator transactions.

• The modified HUD/VA Addendum to the Uniform Residential Loan Application (92900-A) is required for all applications.

Until January 1, 2011

• For loan originations not involving a sponsored originator, FHA mortgagees may use the prior version of the 92900-A (dated 5/2008) until January 1, 2011.

As of January 1, 2011

• The FHA-approved loan correspondent program will no longer be available, and B2G mortgagees must comply with new systems requirements to support collection of sponsored originator data. Only FHA-approved entities will have direct access to FHA Connection.

SYSTEM AND SCREEN CHANGES

• New Sponsored Originator Maintenance Screen Modified Case Number Assignment Screen

• Modified Case Transfer Screen

• Modified Insurance Application and HECM Insurance Application Screens

• Modified Case Query Screen

• Viewing Sponsored Originator Performance in Neighborhood Watch

• FHA TOTAL Scorecard Changes

FORM CHANGE AND NEW SIGNATURE COMPLIANCE

HUD/VA Addendum to Uniform Residential Loan Application (92900-A)

• Modified on page 3 to capture necessary information for sponsored originators, as follows:
  • Loan Origination Company - Entity's Legal Name of the originating mortgagee
  • Loan Origination Company Tax ID -- Employer Identification Number issued by the Internal Revenue Service (IRS)
  • NMLS ID of the Loan Origination Company - The unique identifier of the company, if licensed with NMLS

• For those loans originated by a sponsored originator, the sponsoring mortgagee must enter its name and address in block 15 on pages 1 and 3. Directly below block 15 on page 3 are the new fields the mortgagee must enter for capturing the sponsored origination information described above.

• The revised form 92900-A (dated 9/2010) must be used for all loan applications taken by a sponsored originator on or after October 4, 2010.

• For loan originations not involving a sponsored originator, FHA mortgagees may use the prior version of the 92900-A (dated 5/2008) until January 1, 2011.

Uniform Residential Loan Application

• On the Universal Residential Loan Application (URLA), the actual interviewer's name, signature and telephone number must appear on page 4, regardless of who employs the interviewer (e.g., a sponsored originator).
• While common practice in the industry is for the interviewer to also sign page 1 of the 92900-A, if a sponsored originator is involved, it is now required that the sponsoring mortgagee must sign and date page 1 of the URLA.

_____________________________________

Visit Library for Issuance

FHA Connection Enhancements to Support
Sponsored Third Party Originations (Sponsored Originations)
Mortgagee Letter 2010-33, September 21, 2010

LENDERS COMPLIANCE GROUP is the first full-service, mortgage risk management firm in the country, specializing exclusively in mortgage compliance and offering a full suite of hands-on and automated services in residential mortgage banking.