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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