Novad Management Consulting — the company which has held the U.S. Department of Housing and Urban Development (HUD)’s Single Family Secretary-Held Home Equity Conversion Mortgage (HECM) Assets contract since 2014 — has filed a protest against the award of Compu-Link Corporation (Celink) for the same contract, according to people familiar with the matter.
The protest was expected, and HUD has until July 19th to make a determination on its merits and either respond to or dismiss the protest. Celink and Novad declined to comment on the protest when reached by RMD.
“We have no additional information to share beyond what was contained in the published award notice,” a representative of HUD told RMD. The award for Celink is currently “inactive” according to a website featuring the contract’s record maintained by the U.S. Government’s General Services Administration (GSA).
Earlier this year, Lansing, Mich.-based Celink was awarded the contract to provide loan servicing for HECM reverse mortgage loans sponsored by FHA. The total contract value is just over $169 million and the “period of performance” will be for a one-year base period and four additional 12-month option years, according to GSA records.
At the time the award was issued, people familiar with the matter relayed the possibility to RMD that other potential bidders for the contract could offer a challenge, or that the incumbent contract-holder could take steps to attempt to remain in place.
Industry response to the news of Celink gaining the servicing contract from HUD was largely positive, according to outreach conducted by RMD shortly thereafter.
“Unfortunately, poor HUD servicing has created stiff headwinds for [the reverse mortgage industry’s] salesforce,” said Dan Hultquist, national reverse mortgage sales training director at Fairway Independent Mortgage Corp. in March. “Consider that over 20% of the reverse mortgage CFPB complaints in 2021 were directly tied to HUD’s servicing contractor.”
Considering the reputational hurdles the industry has faced for many years, a changing of hands on the servicing contract could be a difference-maker, Hultquist added.
“Awarding Celink the HUD servicing contract may be the most significant industry change since the 2014 protection of non-borrowing spouses,” Hultquist told RMD in March. “This is not just a way to address losses on the back end, it is a way to begin repairing damage to the reputation of the product.”
Recent history of the reverse mortgage contract
FHA had been aiming to find a new servicing contractor to help fix remaining back-end loan issues at the end of the Trump administration, according to 2020 comments from U.S. Department of Housing and Urban Development (HUD) and FHA personnel.
“The current procurement that is out and [which] we are currently working through will only involve servicing of HECM mortgages,” said Kasey Watson, program director of HECM servicing at HUD’s National Servicing Center in November, 2020. “So, we’re excited for that change, and excited that that procurement is in-process. Of course, as that works through this entire process, I can’t give you any kind of update as far as when we think that will be completed. But it is in-progress, and we’re excited to be moving forward down this new path.”
After the transition to the Biden administration, indications from the agency pointed to no major change taking place regarding the HECM servicing contract by late 2021. That October, HUD announced that it had awarded a new Single Family Secretary-Held Loan Servicing contract to Information Systems & Networks Corporation (ISN) on a host of single-family forward mortgage programs.
However, the Secretary-Held HECM loans and HECM subordinate mortgages at that point remained unchanged with Novad Management Consulting, according to an FHA informational notice.
