Government Shutdown Impact on Reverse Mortgages

[Updated 12/26/18] What happens with your reverse mortgage in a Government shutdown?

In the event of a Government shutdown, as is currently the case, the Federal Housing Administration’s Office of Single Family Housing (FHA) and its mortgage insurance fund will operate with limited services. We will continue to close HECM reverse mortgages that fully comply with all HECM Guidelines during the shutdown. However, if a requirement cannot be met (i.e., Social Security Number verification is not obtained), then the closing will be postponed.

If you are currently in process on a HECM reverse mortgage or are looking to apply, please don’t hestiate to reach out to us toll free (1-888-888-4834) with any questions you may have about how a Government shutdown will impact you and your family.

The below chart shows the history of US Government Shutdowns with the length of time from 1976 through 2018.

Some good News for the kids though is in the event of a government shutdown, NORAD will continue with its 63-year tradition of NORAD Tracks Santa on Dec. 24. Military personnel who conduct NORAD Tracks Santa are supported by approximately 1,500 volunteers who make the program possible each and every year.

I already closed my reverse mortgage. Will the Government shutdown affect me?

No. Your ability to request funds from your line of credit or monthly payments you’re receiving will not be affected since your loan is already closed.

I’m in process with a Jumbo/proprietary reverse mortgage. Will I be impacted? You will not be impacted as our jumbo/proprietary reverse mortgages are not insured through HUD and do not rely of the Government.

If a shutdown does occur, we believe the impact will be similar to previous shutdowns. In January 2018, HUD issued information in the form of FHA Info #18-02, which stated that as a result of the shutdown the Federal Housing Administration’s (FHA) Office of Single Family Housing and it’s mortgage insurance program will be operating with limited services. As was the case in previous shutdowns, under a lapse in funding, FHA’s actions  and decisions about which operations continue, or not, are governed by the Constitution, statutory provisions, court opinions, and Department of Justice (DOJ) Opinions, which provide the legal framework for how funding gaps and shutdowns have occurred in recent decades.

While some services will continue to be operational, please note that across the board, the services that remain available during the shutdown will have significant impacts to customer service and/or limited functionality. Below are a few takeaways on items impacting HECMs from FHA’s shutdown guidance issued 1/22/18.

Insurance Endorsements
• Insurance endorsements will continue for Title II forward mortgages only; and
• Insurance endorsements will not be made for Home Equity Conversion Mortgages (HECM) or Title I loans for the duration of the shutdown.

Pre-Endorsement Loan Processes
The following pre-endorsement loan processes will be available during the shutdown, but with limited staff assistance available and longer wait times for assistance:
• Condominium Project approvals under the Direct Endorsement Lender Review and Approval Process (DELRAP);
• Manual endorsement actions: case number cancellations, reinstatements, and transfers; resolution of the Holds Tracking queue; and
• TOTAL Mortgage Scorecard evaluations.

The following processes will be unavailable for the duration of the shutdown:
• Condominium Project approvals under the HUD Review and Approval Process (HRAP); and
• Test Case Loan Submission.

Servicing, Claims, and Asset Management
The following servicing, claims, and asset management business processes will be available during the shutdown, but with limited staff assistance available and longer wait times for assistance:
• Submissions of upfront Mortgage Insurance Premiums (MIP) for new endorsements (note that lenders are required to submit monthly MIP during the shutdown);
• MIP refunds to borrowers;
• Claims filing and payments;
• Conveyance of properties;
• HECM payments to borrowers;
• HUD Real Estate Owned listings; and
• Servicing of HUD Secretary-held notes and mortgages.
The following processes will be unavailable for the duration of the shutdown:
• HUD Broker Name and Address Identification Number (NAIDs) application processing; and
• Extension and variance processing in the Extensions and Variances Automated Requests System (EVARS) by the National Servicing Center

FHA Customer Service

(Based on info published 1/22/18 (we will update if a shutdown does occur)

The following will be available for general inquiries during the shutdown, but with limited staff assistance available, longer wait times for assistance, and limited ability to answer case-specific questions:
• The FHA Resource Center:
— The Resource Center’s online FAQ site will be available, but will not be updated for the duration of the shutdown;
— By email at answers@hud.gov; and
— By phone at (800) 225-5342.
• The FHA National Servicing Center, by phone at (877) 622-8525.

FHA Resources

Contact the FHA Resource Center:
• Visit our online knowledge base to obtain answers to frequently asked questions 24/7 at: https://www.hud.gov/answers
• E-mail the FHA Resource Center at: answers@hud.gov. Emails and phone messages will be responded to during normal hours of operation, 8:00 AM to 8:00 PM (Eastern), Monday through Friday on all non Federal holidays.
• Call 1-800-CALL-FHA (1-800-225-5342). Persons with hearing or speech impairments may reach this number by calling the Federal Relay Service at 1-800-877-8339.

HUD Quick Links

• HUD’s Contingency Plan for Possible Lapse in Appropriations document posted on HUD.gov at:
https://www.hud.gov/sites/documents/HUDCONTINGENCYPLANFINAL.PDF

2 Replies to “Government Shutdown Impact on Reverse Mortgages”

  1. Nice article, Josh — thanks for sharing all that research. Fingers crossed that the politicians can cross this bridge quickly.

Leave a Reply

Your email address will not be published. Required fields are marked *