NRMLA Responds to Proposed HECM Changes

A brief summary of NRMLA’s 30-page response to FHA

Collectively as an industry we have endured numerous changes to the Home Equity Conversion Mortgage program in recent years. Two months ago, FHA outlined several proposed changes to the HECM program and received inputs from loan officers, industry participants, and most recently the National Reverse Mortgage Lenders Association.

NRMLA recently submitted a detailed 30-page letter to the Federal Housing Administration regarding the agency’s proposed rule changes to strengthen the federally-insured reverse mortgage program. The document goes into great detail to outline specific concerns of the new rules impact on future borrowers and our industry as a whole.

For the sake of brevity, we will highlight a few notable responses.

1. Lower interest rate caps. NRMLA rightly points out the significant unintended consequences of lowering both annual and lifetime adjustable interest rate caps stating, “various institutional investors have indicated that they would have to cease purchasing monthly adjustable HMBS pools if the lifetime cap was reduced to 5%.” What FHA overlooked is our small fragile secondary market, limits on investor derivatives, and increased consumer costs.

2. Required HECM counseling prior to a sales contract. The HECM for Purchase program while attractive to downsizing seniors, has not met it’s anticipated volume in our industry. FHA’s requirement for prospective borrowers or homebuyers to complete HECM counseling prior to signing a sales contract is impractical at…

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As a prominent commentator and Editor in Chief at HECMWorld.com, Shannon Hicks has played a pivotal role in reshaping the conversation around reverse mortgages. His unique perspectives and deep understanding of the industry have not only educated countless readers but has also contributed to introducing practical strategies utilizing housing wealth with a reverse mortgage.

Shannon’s journey into the world of reverse mortgages began in 2002 as an originator and his prior work in the financial services industry. Shannon has been covering reverse mortgage news stories since 2008 when he launched the podcast HECMWorld Weekly. Later, in 2010 he began producing the weekly video series The Industry Leader Update and Friday’s Food for Thought.

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