Oftentimes we speed read. You know, skim across an article. We get the message but we can miss clues pointing to future trends. My reading this week on Reverse Mortgage Daily while preparing for my podcast left me a bit perplexed and somewhat taken back. Some say that credit underwriting could be part of all reverse mortgages…
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Fixed rate is popular, but is it the best loan for your client?
The fixed rate HECM is wildly popular and now many banks are eliminating fees for consumers. The question is are we fully informing our borrowers about the advantages and disadvantages of the fixed versus the adjustable rate?
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FHA Wants Lenders to Police Brokers
Monitoring Mortgage Underwriting
The Federal Housing Administration, the government agency that insures a bigger and bigger portion of home loans, plans to rely more heavily on lenders to police mortgage brokers.Continue reading
New HUD Counseling Requirements
It’s important to be informed of the new HUD Counseling Requirements, and to pass the information along to your reverse mortgage clients. Watch the video for information on HUD Counseling Goals, considering your client’s budget, and more!
Webinar Rebroadcast: HUD Counseling Requirements: 1/7/10 from Reverse Fortunes on Vimeo.
Landmark Reverse Loan Services expands hours for NATIONAL coverage
Landmark Reverse Loan Services is expanding their operations and their hours. Starting January 1st, Landmark Reverse will be fully staffed and operational from 6:00am PST to 7:00pm PST to ensure the entire nation properly serviced during normal business hours. In addition, Landmark Reverse is excited to introduce their Regional Solution which will allow smaller lenders to submit THEIR approved appraiser so Lanmark Reverse can offer HVCC and FHA Compliant appraisal requests. Finally, local lenders can order appraisals with local appraisers whom they have prior working relationships.
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Don’t Jump the Shark!
Jumping the shark- the ridiculous, the absurd, or perhaps a gimmick in the sad attempt to remain relevant. The phrase was born from the moment Fonzie wearing his signature leather jacket and swim shorts jumped a shark. Critics said it signaled the beginning of the end of Happy Days.
Why do some businesses jump the shark?
Mortgage brokers no longer allowed to order FHA appraisals…
Federal Housing Administration Policy Changes
The Federal Housing Administration (FHA) today announced several significant policy changes that are intended to improve their exposure to risk. The changes, effective January 1, include:
- Modification of Procedures for Streamline Refinance Transactions
- Adoption of Home Valuation Code of Conduct Guidelines (some not all)
- Updated Appraisal Validity Period
- New Appraisal Portability Regs
- New Requirement of Lenders to Submit of Audited Financial Statements for Review
- Adjustments to the Approval Process for Participation in FHA Loan Origination
- Increased Net-Worth Requirements for Lenders
Grabbing the attention of mortgage professionals was FHA’s decision to adopt language from HVCC appraisal guidelines. The HVCC, which has been the subject of heated debate within the industry, was implemented by Fannie Mae and Freddie Mac on May 1, 2009. At that time the FHA decided not to adhere to the policy. This undoubtedly increased demand for FHA loan products as originators quickly learned of the multitude of problems associated with HVCC. The new requirements will prohibit any commissioned based lender staff member from ordering an FHA appraisal.
FHA will not require the use of AMCs or other third party organizations for appraisal ordering, if lenders do use AMCs and/or other third party organizationsFHA-approved lenders must ensure that:
- FHA Appraisers are not prohibited by the lender, AMC or other third party, from recording the fee the appraiser was paid for the performance of the appraisal in the appraisal report.
- FHA Roster appraisers are compensated at a rate that is customary and reasonable for appraisal services performed in the market area of the property being appraised.
- The fee for the actual completion of an FHA appraisal may not include a fee for management of the appraisal process or any activity other than the performance of the appraisal.
- Any management fees charged by an AMC or other third party must be foractual services related to ordering, processing or reviewing of appraisalsperformed for FHA financing.
- AMC and other third party fees must not exceed what is customary and reasonable for such services provided in the market area of the property being appraised.
FHA issued five new mortgage letters explaining the policy changes. Here are links to each mortgagee letter:
Mortgagee Letter 09-28: Appraiser Independence
Mortgagee Letter 09-29: Appraisal Portability
Mortgagee Letter 09-30: Appraisal Validity Periods
Mortgagee Letter 09-31: Strengthening Counter Party Risk Periods
Mortgagee Letter 09-32: Revised Streamline Refinance Transactions
Studies Detail HUD’s Risk for HECM Loans
Home Values, Loan Amounts, and Seniors
Home values, loan amounts, and the way seniors use home equity conversion mortgages impact the Federal Housing Administration’s potential liability for its reverse mortgage program, recent studies show.
If the Department of Housing and Urban Development had used the same home appreciation models for fiscal year 2010 as it did in prior years, there would be no need for a $798 million subsidy appropriation for the HECM program, HUD officials told the Government Accountability Office in a study mandated by Congress.
And reverse mortgages with term or tenure plans are much less likely to be assigned to the FHA than line-of-credit loans, a Federal Reserve Board economist found in her own research of the HECM program.
HUD made a number of improvements to its cash flow model in 2008, partly because of a HUD Office of the Inspector General’s audit that found material weaknesses, said the GAO in a July 30 report. That year HUD began to incorporate national house price appreciation and interest rate forecasts from IHS Global Insight, an independent source for economic and financial forecasts, the report said.
To read the rest of the story – visit Reverse Mortgage Alert
MetLife Releases Study on Reverse Mortgages
As more seniors tap into their home equity to deal with the growing uncertainties of retirement, a report released by the MetLife Mature Market Institute calls for a comprehensive approach to educate and protect seniors on how to use home equity for financial planning.
Approximately 14% of seniors are taking cash out of their house through either a home equity loan or reverse mortgage, according to “Tapping Home Equity in Retirement: The MetLife Study on the Changing Role of Home Equity and Reverse Mortgages,” released yesterday. It found 35% viewed their home as collateral for a loan.
The study, jointly conducted with the National Council on Aging, indicates that older homeowners are using home equity to increase income security, to deal with unexpected expenses, and to improve debt management, according to a news statement. It highlights options such as using a reverse mortgage for delaying Social Security collection, consolidating credit card debt, and for paying out-of-pocket home and health care expenses with the credit line option.
“Our research on baby boomers indicates that they are more open than previous generations to tapping home equity and considering reverse mortgages to help fund their retirement,” said Sandra Timmermann, director of the MetLife Mature Market Institute, in the statement. “With the right guidance and policy protection, reverse mortgages can be an important financial option for boomers who do not have adequate savings.”
The report emphasizes that consumer education must be part of any new efforts aimed at increasing the use of reverse mortgages.
“The financial services industry, policymakers, and consumer advocates cannot be complacent about the potential benefits and risks of using home equity to address the challenges facing older Americans,” said Barbara R. Stucki, director of the NCOA’s Reverse Mortgage Initiative, in the statement. “We need to work together to educate consumers, create cost-effective financial products, and promote public policies that strengthen consumer protections for older homeowners.”
To complement the study, MetLife released “The Essentials: Reverse Mortgages,” a free guide to consumers.