FHA Expands COVID-19 Reverse Mortgage Benefits, FHA Goes Offline For Maintenance

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The Federal Housing Authority (FHA) announced on Tuesday that even after a slew of extensions issued last week to help borrowers with reverse mortgages hit by the COVID-19 pandemic, another form of assistance is in need of an extension to give industry partners an additional opportunity. use flexible options. guidance related to self-employment verification and rental income verification for Title II Forward Mortgage and Single Family Convertible Mortgage (HECM) programs.

The move follows several additional actions taken late last week by federal government departments to make life easier for the population, which has used several different forms of mortgage assistance without such assistance, in the hopes of preventing negative consequences for vulnerable populations with precarious housing situations.

In addition, the FHA announced that its FHA Connection (FHAC) portal, which provides FHA-approved lenders and business partners with direct, secure online access to US Department of Housing and Urban Development (HUD) computer systems, will be shut down at the end. this week to get the required maintenance.

Extension of Facilitation of Employment Verification

In a Letter of Mortgagee (ML) 2021-16 released Tuesday, the FHA detailed that previous benefits for borrowers related to employment verification and other forms such as rental income will be expanded to provide additional time for borrowers and mortgagees who will require this before the situation returns to normal.

“Due to the restrictions imposed by the COVID-19 emergency in the country, and in accordance with the directives of the state and local governments, many businesses across the country have been forced to scale back or close their doors completely,” the new ML says in part. … “Thus, mortgage lenders face an additional layer of challenges when trying to determine the income stability of self-employed borrowers and borrowers who rely on rental income.”

This made it necessary to further expand this relief, according to ML.

“Recognizing these and other challenges that mortgage lenders face in these unprecedented times, FHA is temporarily updating its income requirements for self-employed borrowers and borrowers who rely on rental income to qualify for an FHA-insured mortgage,” the letter explains.

The FHA is also expanding the benefits applicable to its 203K rehab program in the same ML, which will exclusively affect the 203K escrow administration guidance and will not affect the HECM program.

FHAC will temporarily shut down from Friday

The FHA also announced in a new newsletter that FHAC will go offline from this Friday for maintenance due to a planned outage that is expected to last part of the workweek next week.

“(FHAC) will be unavailable Friday, July 2, 2021, 10:00 PM ET through Tuesday, July 6, 2021, 8:00 AM ET, for system updates and maintenance,” it said. notification. part.

As part of this planned system outage, 13 different functions will not be available to mortgage holders, including Computerized Home Underwriting Management System (CHUMS), Credit Alert Verification Reporting System (CAIVRS), Claims, Housing Counseling System (HCS), Lender. Electronic Assessment Portal (LEAP), Loan Review System (LRS), Neighborhood Service, Multi-Family Premiums, Single Family Insurance System (SFIS), Single Family Defaults Monitoring System (SFDMS), Single Family Premium Collection Subsystem – Periodic ( SFPCS) -P), Prepaid Single Family Collection Subsystem (SFPC-U), and Section I.

“These apps are due to resume work at FHAC on Tuesday, July 6, 2021 at 8:00 AM ET,” the notice said. “This failure will not affect access to the FHA (Approved Lender Technology) TOTAL Mortgage Scorecard from approved Automated Underwriting System (AUS) vendors.”

Recent history

In the initial guidance on rechecking employment on the back of a mortgage, issued in ML 2020-24 from July 2020, a receipt for payment one year before the date or direct electronic verification of income for the payment period immediately preceding the entry date or bank statement stating direct deposit from the borrower for the repayment period immediately preceding the statement date.

The mortgagee does not need to provide a re-verification of employment within 10 days of payment as described in sections 3.8 and 3.9 of the HECM Financial Valuation and Payment Guidelines, provided the mortgagee is not aware of the borrower’s loss of employment and has received any of the documents described.

The employment re-verification guidance was further expanded in ML 2021-06 this February for cases closed on or before June 30, 2021. This date has not been pushed back to the end of September in this latest round of recommendations. For information on FHA rental income earlier described difficulties some people have had when documenting less typical sources of income, such as renting out property.

“Thus, mortgage lenders face an additional layer of challenges in trying to determine the income stability of self-employed borrowers and borrowers who rely on rental income,” ML 2021-07 states in part. “Recognizing these and other challenges that mortgagees face in these unprecedented times, FHA is temporarily updating its income requirements for self-employed Borrowers and Borrowers who rely on rental income to qualify for an FHA-insured mortgage.”

To read ML 2021-16 as well as FHA INFORMATION No. 21-51 in the HUD.

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