HECM Insured Volume Cap Reached
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Everyone knew this day was coming and now it’s arrived. HUD today (2/14/07) made the following announcement with regards to the statutory cap on federally-insured HECM reverse mortgages:
NOTICE ON FHA HECM INSURING AUTHORITY:
The Department has reached the “Reverse Equity” or Home Equity Conversion Mortgage (HECM) insurance endorsement authority limit of 275,000 mortgages. Until Congressional action is taken to increase FHA’s insurance endorsement authority, HECM mortgages cannot be insured. Lenders may continue to request and obtain new case numbers and close mortgages; however, the following message will appear on the screen:
Lenders may continue to close and submit HECM case binders to the FHA Homeownership Centers (HOCs) for insurance endorsement review. The FHAC HECM Insurance Application and CHUMS processing system endorsement screens will issue the following message when the lender enters error free data on the HECM Insurance Application screen or insurance endorsement is attempted.
HECM ENDORSEMENT AUTHORITY PENDING, SEND BINDER TO HOC:
The FHA HOCs will use the following procedures for handling HECM case binders submitted for insurance endorsement. These procedures have been used successfully in past situations where insuring authority has been temporarily removed.
Case binders are received and logged into CHUMS. This verifies the receipt of the binder at the HOC for the lender.
The case binder will be routed to the endorsement contractor and/or FHA staff reviewers for completion of the pre-endorsement review.
If the case is acceptable for endorsement, a NOR will be issued in the system based on the CHUMS message regarding insurance authority (using the language reflected above).
The case binder will be held by the HOC until new HECM insuring authority has been granted. Issuance of a system NOR provides a record for the HOCs and the lenders.
If the case contains deficiencies that warrant issuance of an NOR, the NOR will be generated and the filed returned to the lender for correction.
Updated information will be posted once FHA has received new HECM insurance authority.
If you have any questions or for FHA technical support, please contact the FHA Resource Center: http://answers.hud.govSearch our online knowledge base and find answers to our most commonly asked questions. Use “live help” to get on-line technical support. You can also get email technical support at: hud@custhelp.com or phone FHA toll-free between 8:00 a.m. and 8:00 p.m. ET (5:00 a.m. to 5:00 p.m. PT) at: (800) CALLFHA or (800) 225-5342. Call FHA TDD at: (877) TDD-2HUD (877) 833-2483).
(emphasis added)
The limit on the number of HECMs was originally set in place because reverse mortgages were a new foray for the federal government and the related risks were unknown. Efforts have been underway for the last several years to lift or expand the cap to accomodate the rapid rise in reverse mortgage popularity. To date, these efforts haven’t succeeded.
Obviously, phones will be ringing at HUD and at Congressional offices until the issue is resolved. We’ll keep you informed as we learn more.
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