HUD seeks public comment on updates to reverse mortgage documents

The U.S. Department of Housing and Urban Development (HUD)’s Office of Policy Development and Research is seeking public comment related to application and origination documents for the Federal Housing Administration (FHA)-backed Home Equity Conversion Mortgage (HECM) program, according to a notice published this week in the Federal Register.

Two key documents are at the center of the proposed changes. The first is for the HECM anti-churning disclosure, which is designed to protect borrowers from unnecessary loan refinancing. The newly proposed version has received several key revisions.

These include wholesale revisions to the lender table for the best estimate of the total cost of the refinancing to the borrower, as well as increases to the borrower’s principal limit. It also adds the lender’s certification, revises the borrower’s acknowledgment and includes “a warning of the actions that may be taken against anyone who knowingly submits a false claim or makes a false statement.”

HUD also seeks to transition away from the discontinued Fannie Mae Form 1009, the residential loan application for reverse mortgages, to Form 1003, the Uniform Residential Loan Application (URLA).

Form 1003 “is also used in the mortgage industry by government sponsored enterprises to originate conventional mortgages,” the notice stated.

HUD also plans to replace its use of some internal forms and one used in conjunction with U.S. Department of Veterans Affairs (VA) loans, the notice said.

In particular, HUD Form 92900–C is designed to “collect loan-level data that is needed for insuring purposes and not found on Fannie Mae form 1003,” according to the notice.

Additionally, the standard loan application to originate a HECM include Fannie Mae Form 1003, HUD Form 92900-C and Fannie Mae Form 1103, the latter of which is a supplemental consumer information form that has been adopted by the mortgage industry.

In a previous interview with RMD, loanDepot national reverse sales manager Lisa Moriello specifically cited the ongoing use of the Fannie Mae Form 1009 as something she hoped HUD would address.

“Why are we on a 1009? And I don’t say that because it’s a bad tool,” she said in April 2023. “It’s not a bad tool. But anything that the mortgage industry has created to make it easier for borrowers has been created to work with the 1003.”

The 1003 is also aging but has garnered more attention from mortgage service providers, Moriello said at the time.

“Not really having the 1003 and the 1009 talk to each other, you can’t export one to the other,” she said. “By not updating the 1009 that we’re using, there are tools that I’m blessed I can work with in my system and then transfer them in cutting [through] a lot of things that my borrowers would have to provide me with, because I have tools built in with the 1003. So, I would like to see them either talk to each other or some kind of upgrade happen.”

Comments on the proposal are due by April 26, 2024. The notice features instructions on the process that interested parties can follow to submit comments prior to the deadline.

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