The Government Shutdown Halts Reverse Mortgage Funding Because Lenders Can’t Get FHA Endorsements
President Trump’s government shutdown is approaching the two-week mark. It has now brought the reverse mortgage sector to screeching halt. The government shutdown has HUD is working with a skeleton crew. That means FHA cannot underwrite or endorse reverse mortgages or any FHA products.
FHA released a notice stating it will not be underwriting or issuing insurance endorsements for HECM loans during the shutdown.
The agency also stated assistance will not be provided for lenders with issues regarding the Collateral Risk Assessment.
In addition, lenders must adhere to guidelines for the automated process if the first appraisal was submitted on or after November 30, 2018.
The FHA also said condominium project approvals under HUD review will be unavailable during the shutdown.
But some activities will continue as normal. However, wait times will be longer due to limited staff.
The FHA Bulletin says:
As a result of the Federal Government and until further notice, the Federal Housing Administration’s Office of Single Family Housing and its mortgage insurance program will be operating with limited service. Please note that the services that remain available during the shutdown will have significant impacts to customer service and/or limited functionality.
FHA Connection will still be available and will continue to assign case numbers. The Home Equity Reverse Mortgage Information Technology system and Electronic Appraisal Delivery portal will also be available for existing lenders only. However, FHA insured loans will be unable to close and fund without an FHA insurance endorsement.
The government shutdown could cost the lending industry billions of dollars in delayed and lost revenue if it continues. The government shutdown has also affected lenders issuing Fannie Mae and Freddie Mac backed loans. The two GSEs are also working with skeleton crews during the shutdown.