Our industry is rich with experienced and ethical professionals. Tom O’Donoghue of Reverse Loans Now is just such a person. In Part 1 of our exclusive interview Tom shares exactly how he’s built relationships with area professionals, maintains those relationships, and what every originator should do when the borrower has a CPA.
In part two of our exclusive interview with New York Financial advisor Robert Intelisano, we cover the risks of a 30-year mortgage refinance for older homeowners and why partnering with other mortgage and financial professionals may the most effective means to reach distressed homeowners.
Losing a parent is truly a heart-wrenching experience. One that many of you our viewers, and myself have endured. Compounding the grief is the frustration in settling the financial affairs of your loved one. According to a recent column in USA Today last week, some reverse mortgage heirs are finding themselves thwarted in their attempts to purchase their parents home facing conflicting notices, bureaucratic red tape, and foreclosure- even when the family has the means to pay off the loan. Each delay driving up the ultimate loan balance payoff.
Servicing issues are not a new phenomenon. On this show, we have reported on some of the challenges of loans serviced by HUD’s chosen contractors…
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“My mother passed 3 years ago and she had a reversed mortgage on her home that funds ran out several years ago. All documents were sent to the servicing company (death certificate, copy of the trust) in 2016. Since then the loan has changed servicing Co. two different times and it still has not gone into foreclosure…”
This is just one example of the servicing issues that are a continued drain on FHA’s insurance fund and lead to neighborhood blight.
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Tuesday, December 3rd FHA released Mortgagee Letter 2019-20 announcing the new maximum claim amount (or lending limit) for Home Equity Conversion Mortgages. The new limit of $765.600 is in effect for the calendar year 2020 and represents a nearly $39,000 increase from last year’s MCA. The move is not an unusual one. Reverse Mortgage Daily reports that the Housing and Economic Recovery Act or HERA mandates that conforming loan limits must reflect changes in the average U.S. home price…
FHA case numbers reflect a significant increase in application activity in the last quarter of fiscal year 2019. More interesting is the composition HECM loan types which reveal…
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As we gather around the table this Thanksgiving there’s one thing to be grateful for: FHA’s most recent report to Congress showing a showing significant improvement in the federally-insured reverse mortgage’s economic value. This year’s valuation of the program reflects the fluid nature of assigning an economic value to the program being heavily influenced by larger market forces. These disparate valuations have drawn the attention of lawmakers since the HECM was moved to the Federal Housing Administration’s Mutual Mortgage Insurance Fund in 2009.
Beyond the improvements reflected in the report there’s a recurring subtext in the comments coming from the Federal Housing Administration. It is this: now is the time for the industry to expand its private loan offerings and reduce our near-total dependence on the government-backed Home Equity Conversion Mortgage. To paraphrase FHA Commissioner Brian Montgomery’s comments at NRMLA’s annual meeting as reported by Reverse Mortgage Daily ‘FHA must ensure that the HECM market is not overwhelmingly shouldered by the federal government’.
While the HECM’s financial footing may have improved some significant changes lie ahead. “We’ve seen the improvements [in the HECM program] over the past year, and we know that it is not enough, It is not self-sustaining, and while the state of the economy is important to the improvement, the time to fix the roof is when the sun is shining”, said FHA Commissioner Brian Montgomery during his keynote speech at NRMLA’s annual meeting in Nashville.
[Download transcript]
Each year reverse mortgage lenders, originators and other mortgage market participants eagerly await the release of the Federal Housing Administration’s report to Congress on the financial status of the Mutual Mortgage Insurance Fund.
The good news is that the valuation of the HECM portion of FHA’s portfolio improved by over 50% in a single fiscal year from a negative valuation of -$13.63 billion in 2018 to a negative $5.92 billion in 2019. Why are we seeing such a rapid and marked improvement?
The comments of FHA Commissioner Brian Montgomery during a press call last Thursday may shed some light. “The improvements we’ve begun to put in place in the last two years to stem the losses of the reverse mortgage portfolio, aided by favorable economic conditions, are contributing to some improvements in our reverse mortgage portfolio.”
Despite the more Americans retiring without sufficient savings to fund their non-working years, reverse mortgages remain a niche product- one whose acceptance has shrunk considerably in recent years. This conundrum is addressed in a recent paper released by the Brookings Institution entitled, “The unfulfilled promise of reverse mortgages: Can a better market improve retirement security?”
It’s ironic when you consider the increasing debt held by older Americans, the near-complete disappearance of pensions from private sector companies, and increasing longevity. One would conclude this should be the golden age for reverse mortgages- but it’s not. The authors of the paper from the Economic Studies at the Brookings Institution made their case on why the Home Equity Conversion Mortgage is not widely accepted and how the HECM can move from being merely a niche product to one that has widespread acceptance. For those of you not inclined to read the report here’s our brief summary.
