MBA Letter Offers Recommendations to FHA Single-Family Policy Handbook
The Mortgage Bankers Association this week provided feedback to HUD on its Claims and Disposition subsections of its proposed FHA Single-Family Housing Policy Handbook, urging clarity and ease of navigation.
The letter expressed concerns that “significant” omissions exist regarding Mortgagee Letters, relevant Housing Notices, Frequently Asked Questions and other servicing policies and guidance that had appeared in the draft Handbook. MBA urged HUD to restore those omissions and continue to maintain an “accessible repository” of previously operative guidance for future auditors or examiners to understand past practices.
The Single-Family Policy Handbook is HUD’s effort to consolidate hundreds of Mortgagee Letters and thousands of documents in to a single handbook to assist lenders in working with FHA.
The draft Claims and Disposition section (http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/SFH_policy_drafts.), released this summer, isorganized into two subsections. The first subsection, Draft Claims, provides consolidated guidance on submission of claims for single-family FHA mortgage insurance benefits. It consolidates existing claims calculation and submission guidance found in the FHA Single-Family Insurance Claims Handbook REV-1 (HUD Handbook 4330.4), subsequent Mortgagee Letters, relevant Housing Notices and other claims policies and regulations published since 1995. The Claims subsection also covers claims calculations and submissions; post-claim reviews; withdrawal or cancellation of insurance claims; and debt collection and administrative offsets.
The draft Disposition subsection contains guidance on disposition of HUD Real Estate Owned single family properties and covers HUD’s Management and Marketing program and all activities from acquisition of title by HUD to disposition of the property. It consolidates existing guidance found in the 1994 Property Disposition Handbook–One to Four Family (HUD Handbook 4310.5), subsequent Mortgagee Letters, relevant Housing Notices and other disposition policies and regulations published since 1994.
In the letter, MBA Senior Vice President of Residential Policy and Member Services Pete Mills noted many terms are capitalized in the Handbook but not defined, while many are defined within the Handbook but not included in the Glossary. The letter strongly recommends defining terms consistently across all sections of the Handbook and ensuring that all terms are defined in the Glossary.
The letter also noted as most users will access the final Handbook online, HUD should establish an effective online content management system that will be easy to use and provide crosslinking to relevant sections and definitions.
Mills reiterated MBA’s request that HUD provide a list of all of changes to existing policy–including those through omission–when it publishes revised subsections and allow at least 45 days for servicers and others to provide input on the revisions.
“We recognize that this is a significant undertaking that has the potential to generate numerous comments,” Mills said. “Providing a post-publication review will allow servicers to work with HUD to reconcile any possible issues with the comments…It is important to allow servicers and other interested parties sufficient time to examine the revised Handbook for further policy changes through inclusion or those made through omission.”
MBA strongly recommended that once HUD publishes a finalized Handbook, that HUD provide servicers with at least 180 days to implement any required changes.
Additionally, MBA noted the current draft does not reflect any time limit for post-conveyance HUD review of title defects/reconveyance analysis.
“Our members report receiving reconveyance requests more than 24 months from the date of conveyance, at which point in time it is difficult to assess whether the defect existed prior to conveyance or was due to lien attachment post-recordation,” Mills said. “Delays in reconveyance requests also lead to subsequent property preservation issues that require additional expenditure to remedy the property to allow for conveyance back to HUD.”
MBA requested HUD establish a reasonable timeframe for HUD to review a claim and propose reconveyance.
