FHA Updates Guidance on HECM Assignments and Issues Partial Waiver for HECM Tax Arrearages During COVID-19 Crisis

Weiner Brodsky Kider PC

Weiner Brodsky Kider PC

On April 14, 2020, FHA released Mortgagee Letter 2020-12 (ML 2020-12) and FHA INFO 20-27, announcing alternative documentation options and delayed documentation delivery deadlines in connection with HECM Claim Type 22 (CT-22) Assignments for HECM mortgagees affected by the COVID-19 National Emergency.  FHA also issued a temporary partial waiver (Partial Waiver) of Mortgagee Letter 2015-11 (ML 2015-11), allowing mortgagees to offer a recalculated repayment plan for unpaid property charges to HECM borrowers.

The policy updates in ML 2020-12, which apply to CT-22 Assignment Claim requests submitted on or before October 30, 2020, include the following:

  • Accepting alternative documentation as evidence of eligibility for an assignment claim payment for certain items (e.g., to document that taxes are current, mortgagees may obtain a report from a tax monitoring service indicating that property taxes are not delinquent);
  • Providing an extension of time to deliver the original Note and Mortgage to the Secretary due to issues relating to the COVID-19 crisis; and
  • For HECMs with an FHA case number assigned before September 19, 2017, giving an extension of time to deliver recorded assignments of Mortgage to the Secretary.

Additionally, for HECM borrowers under a repayment plan, FHA’s Partial Waiver will allow a borrower to repay property tax arrearages of any amount if the borrower is unable to make two consecutive payments during the COVID-19 National Emergency.  The Partial Waiver is effective immediately and will remain in effect until October 30, 2020.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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