Reverse mortgage servicing examination procedures
Updated June 1, 2020
These procedures guide reverse mortgage servicing examinations, taking into account HUD regulations issued since 2016.
The updated procedures incorporate current U.S. Department of Housing and Urban Development (HUD) regulations that provide the structure for the Home Equity Conversion Mortgage product, as appropriate, and add new exam questions to encompass issues raised by older consumers in complaints.
The additions include:
- A question regarding whether the servicer advances funds to pay for property taxes in any situation where the borrower was not behind on these payments
- A question regarding the servicer’s timeliness in providing payoff statements
- Language summarizing the circumstances under which a non-borrowing spouse may stay in the home after the borrower dies, for loans with case numbers assigned prior to August 4, 2014
- Language in the background section to incorporate HUD’s August 2017 regulatory changes that affected the ways in which lenders and servicers calculate the initial and annual mortgage insurance premiums. The Bureau also added language in the background section to provide a fuller description of reverse mortgages.
The updated procedures continue to provide guidance for examinations of reverse mortgage servicers. After completing the risk assessment and examination scoping, examiners will use these procedures, in conjunction with the compliance management system review procedures, to conduct a reverse mortgage servicing examination.