On Monday, March 9, the National Mortgage Servicing Association (NMSA) submitted its feedback to the proposed enhancements to the FHA’s CWCOT (Claims Without Conveyance of Title) program.
In a letter directed to Dror Oppenheimer, Senior Advisor to the Assistant Secretary for Housing, U.S. Department of Housing and Urban Development, the NMSA praised the proposed changes, suggesting they have the potential to be enormously beneficial for the industry while also requesting clarification on a few matters pertaining to related timelines.
“On behalf of the National Mortgage Servicing Association (NMSA), we would like to applaud the proposed enhancements to the Claims Without Conveyance of Title (CWCOT) Program,” wrote Ed Delgado, President and CEO of Five Star Global, the parent company of both the NMSA and DS News. “These changes represent an important step in the program that will benefit all stakeholders—homeowners, servicers, and other industry partners alike. The NMSA membership’s reaction to these changes is overwhelmingly positive, and we look forward to them being put into effect.”
The letter was submitted to FHA on the final day of the comment period for the proposed changes, which ran through March 9. Any feedback was to be submitted via FHA’s Office of Single Family Housing Drafting Table.
The NMSA also joined with two other industry groups—the Mortgage Bankers Association (MBA) and the Housing Policy Council—as co-signatory on a second letter to FHA. As in the NMSA’s letter, this trio of groups both praised the CWCOT changes and requested further important clarifications.
Sara Singhas, Director of Loan Administration with MBA, told DS News that the proposed CWCOT changes "clearly reflect the industry’s efforts over the past several years to expand this important program."
HUD’s proposed CWCOT changes include:
- Providing for a second appraisal once a property becomes vacant
- Expanding the number of states for marketing services and auction services into the judicial states
- Modifying the “haircut” structure in a manner more specific to the value of that property
- Changes to reimbursement for property preservation and eviction expenses
The proposed changes included several specifically advocated for during meetings between NMSA leadership and HUD officials over the course of the past year.
After the announcement of the changes, Wes Iseley, Senior Managing Director at Carrington Mortgage Holdings, and the 2019-2021 Chair of the National Mortgage Servicing Association, told MReport, “I was happy to see the positive changes to the CWCOT program that will help communities, servicers, and the FHA Fund,” said. “The National Mortgage Servicing Association provided feedback and data to support the changes.”
Tim Rood, Head of Industry Relations at SitusAMC and the Chairman of The Collingwood Group, a SitusAMC company, echoed the enthusiasm, telling MReport, “The impact on servicers, neighborhoods, and the economic strength of the FHA MMI fund cannot be overstated. This was a massive undertaking by the FHA and required a near metaphysical change in their perceptions of patience and perseverance. Our hope is that these critical changes to the CWCOT program will pave the way for additional policy changes in the servicing space to better align FHA policies with those of the GSEs.”
FHA’s CWCOT program pays insurance benefits to a mortgagee after the sale of a property to a third-party after the foreclosure of the FHA-insured mortgage or through a second-chance sale. There is no conveyance of the property to HUD with CWCOT in exchange for payment of mortgage-insurance benefits. The program also expedites the disposition of foreclosed properties and reduces the amount of time a property sits vacant.
For more on the importance of the CWCOT program, you can read this 2018 editorial penned by Delgado.