On September 23, 2019, HUD issued Mortgagee Letter 2019-15 (ML 2019-15), which updates the Mortgagee Optional Election (MOE) Assignment requirements for HECMs with an Eligible Surviving Non-Borrowing Spouse (Eligible Surviving NBS). ML 2019-15 is effective immediately and applies to all HECMs with FHA case numbers assigned prior to August 4, 2014.
HUD previously issued Mortgagee Letter 2015-15 (ML 2015-15), which provides mortgagees the option to defer the due and payable date of HECMs with an Eligible Surviving NBS and assign them to FHA through a MOE Assignment. In ML 2019-15, HUD states that since the MOE Assignment process was implemented pursuant to ML 2015-15, mortgagees have experienced difficulties complying with various MOE requirements (e.g., the requirement that the Eligible Surviving NBS must, within 90 days following the death of the last surviving borrower, obtain good, marketable title to the property or a legal right to remain in the property for life). ML 2019-15 modifies the MOE Assignment requirements and, according to HUD, addresses the complications mortgagees have experienced under ML 2015-15.
Some of the key changes made by ML 2019-15 include the following:
- Eliminates the MOE Assignment election and assessment deadlines, along with associated notification requirements.
- For example, a mortgagee is no longer required to notify HUD of its election to do a MOE Assignment within 120 days of the death of the last surviving borrower. However, the mortgagee must still notify HUD of its election as soon as the mortgagee determines it will pursue a MOE Assignment.
- Establishes a reasonable diligence timeframe to initiate a MOE Assignment.
- To demonstrate reasonable diligence in processing a MOE Assignment and avoid any curtailment, the mortgagee must initiate a MOE Assignment within 180 days from the date the last surviving borrower dies, or the effective date of ML 2019-15, whichever is later.
- Removes the requirement that the Eligible Surviving NBS must obtain good and marketable title to the property which secured the HECM or demonstrate the legal right to reside in the property for life, and modifies related certifications and assignment criteria.
- ML 2019-15 provides a revised model Eligible Surviving NBS Certification and updates the documentation requirements for a MOE Assignment.
- Requires mortgagees to request information from HECM borrowers with the Annual Occupancy Certification to help mortgagees determine if the borrowers have a NBS.
- Appendices A and B of ML 2019-15 provide a sample information collection form and a fact sheet that servicers may use to obtain NBS information.