Reverse Mortgage Trading Association Seeks To Clarify New NBS Rules

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The National Reverse Mortgage Lenders Association (NRMLA) has sent a letter to the Department of Housing and Urban Development (HUD) specifically asking the Department to update its loan documents and the Home Mortgage Assurance Tool (HECM) to comply with the spousal remedy requirements. borrowers (NBS) that were recently announced in a letter to the mortgagee (ML).

In the comments submitted by the association, there are several proposed revisions of the relevant technical documents. The service technicians have additionally requested written confirmation from the Department stating that they can proceed with compliance with the recently announced changes prior to updating the relevant loan documents to effectively avoid the insurance threat of the affected and related loans.

“[T]Maturity events in HECM notes and security instruments, as well as the borrower’s language and final certificates related to NBS, if applicable, should be changed to remove the requirement that NBS must establish a market title or other legal right to occupy real estate, and extend the right to a deferral not only for the period after the death of the borrower, but also in the event that the borrower does not work for more than 12 consecutive months while in a medical facility, ”the letter says.

ML provisions

Matching ML, 2021-11, includes four major new protections for eligible NBSs in a reverse mortgage transaction, including expanding the criteria to start the grace period for HECM loans with case numbers assigned on or after August 4, 2014, including for the scenario in which the primary borrower resides … in a medical facility for more than 12 months in a row, but NBS stayed at home.

ML is also expanding the appointment criteria for Appointments of Mortgagee’s Choice (MOE) for HECM with case numbers assigned prior to August 4, 2014. The new criteria will “include HECMs that are eligible to be revoked and payable under the terms of the original mortgage because the property is no longer considered the borrower’s primary residence due to the borrower’s residence in a medical facility for more than 12 consecutive months,” the MD says. …

In addition, the definition of a person who can be called a “non-loan eligible spouse” has been expanded to include “the spouse of a HECM borrower who was assigned an FHA case number prior to August 4, 2014” for the HECM loan. as a few additional new criteria. Those newly eligible for the NBS program can be spouses who were legally married to the borrower either as a result of his death or during his move to a medical facility.

This definition also includes an allowance for a spouse who was in a “serious relationship” with the borrower, but who may not have been legally allowed to marry at the time of HECM’s closure, but who was married shortly before the borrower’s death or remains married after the move. borrower to a medical institution.

Reaction to the original ML

Reverse mortgage service specialists are mainly welcomed new changes from HUD received by RMD shortly after the publication of the corresponding ML.

“I believe the service industry is very grateful that HUD has essentially created a single set of rules to allow all non-borrower spouses to stay in their homes,” said Leslie Flynn, senior vice president of loan services for Reverse Mortgage Solutions (RMS) for RMD in May. “The deadline for NBS to meet the requirements is achievable, and hopefully that puts an end to this very frustrating problem.”

NRMLA members can view the entire letter submitted on the association’s website. Web site

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