NEW HECM Final Rules Begin Sept 19th

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reverse mortgage newsHECM Final Rule Changes Begin Tommorw- Part 2: Interview with RMI’s John Lunde

HUD’s HECM Final Rules go into effect tomorrow (9/19/2017) and include in part:

    1. For fixed rate HECMs, only a full-funded LESA may be used.
    2. Partially funded LESA’s will distribute LESA funds two times a year to the borrower for the payment of property charges. Fully funded LESAs will directly pay the insurance or taxing authority, not the borrower.
    3. Initial distribution limits will remain in effect for the first 12 months, but cannot be reduced below a 50% distribution cap without additional rulemaking.
    4. Sellers are allowed to pay fees required to be paid by the seller under local or state laws, including the purchase of a home warranty policy.
    5. The seasoning of non-HECM liens looks at the 12 month period prior to the HECM closing.
    6. HELOCs (home equity lines of credit) are excluded from the 12-month seasoning requirement but are subject to first-year distribution limits.
    7. All HECM products and features must be disclosed to the borrower in a manner that is acceptable to the FHA Commissioner, regardless of the products offered by the particular HECM lender.
    8. Borrowers may lock in their Expected Interest Rate (EIR) prior to the date of loan closing or lock in their rate on the day of closing.
    9. The payoff of unsecured debts not secured by the property as defined by the Commissioner is a mandatory obligation.

GET FULL OFFICIAL TEXT OF FINAL HECM RULES HERE
John Lunde is the president and founder of Reverse Market Insight (RMI). They closely track the reverse mortgage (HECM) industry data points and trends.

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What are your thoughts? Please leave your input in the Comments section below, and share this post on social media using the Twitter, Facebook and LinkedIn icons at the top of this page. Thank you!

 

Exclusive Interview with John Lunde of Reverse Market Insight

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reverse mortgage newsExclusive Interview with John Lunde, founder of Reverse Market Insight

John Lunde is the president and founder of Reverse Market Insight (RMI). They closely track the reverse mortgage (HECM) industry data points and trends.

John discusses the following

  • Impacts of the reduced Principal Limit Floor
  • How this recent announcement compares to previous HECM changes
  • Lender profitability and consumer pricing
  • Key industry metrics we should be watching closely
  • What opportunities does this change present?

HUD is soliciting feedback from interested parties until September 29, 2017. Feeback can be submitted to: answers@hud.gov

Official Mortgagee Letter 2017-12 “Home Equity Conversion Mortgage (HECM) Program: Mortgage Insurance Premium Rates and Principal Limit Factors”

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What are your thoughts? Please leave your input in the Comments section below, and share this post on social media using the Twitter, Facebook and LinkedIn icons at the top of this page. Thank you!

 

HUD Reins in HECM Program: Industry Reacts

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Exclusive Interview with Shelley Giordano from Funding LongevityScreen Shot 2017-09-01 at 9.41.37 AM

This week we discuss:

  • How HECM lenders will compete under the new rules
  • Potential changes to the how the HECM is viewed by seniors and HECM professionals
  • The recent changes in light of the HECM’s mission
  • Impact of lowered ongoing FHA premiums on the principal limit growth (line of credit)
  • The ‘ruthless’ option

REGISTER-WEBINAR
HUD is soliciting feedback from interested parties until September 29, 2017. Feeback can be submitted to: answers@hud.gov

Official Mortgagee Letter 2017-12 “Home Equity Conversion Mortgage (HECM) Program: Mortgage Insurance Premium Rates and Principal Limit Factors”

reverse mortgage news

What are your thoughts? Please leave your input in the Comments section below, and share this post on social media using the Twitter, Facebook and LinkedIn icons at the top of this page. Thank you!

 

Market Disruption Brings Opportunity


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Retirement planning requires a solution-based approach

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“It’s ironic that the biggest source of wealth is locked up in bricks & mortar…”

equity-lockedWhile more financial professionals are embracing the HECM, ironically our cousins across the pond seem to better grasp the concept of home equity management and its role in funding retirement. Is today’s choice of retirement investment vehicles adequate to meet the needs of today’s savers and retirees?  Can asset management live up to it’s name without including a retiree’s largest tangible investment?

Hedgeweek is a blog for hedge fund managers and institutional investors…the big players. Moving in the deep waters of asset management, their recent post recognizes challenges similar to those faced by American retirees seeking to fund retirement. Beyond a lack of saving, individual investors are stymied with a choice of investment products that may not meet their needs.
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Download the video transcript here.

A HECM or a Jumbo?

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Equity consumption, home appreciation, and heirs

HECM-JumboMillion dollar homes are more commonplace than many would expect and with more affluent borrowers considering a reverse mortgage, the question arises: does a reverse mortgage make sense? Jack Guttentag’s (aka The Mortgage Professor) latest column in the Herald Tribune addresses the strategies and risks to consider with high valued properties. Guttentag compare two borrowers aged 62 with homes worth $636,150 (today’s HECM lending limit) and $1 million respectively. If both take the maximum tenure payment of $1,854 per month and remain in their homes until the ripe old age of 100, their loan balances would have ballooned to $2.75 million. This assumes a relatively unchanged interest rate for both borrowers..

However, the pivotal factor in this scenario is the assumed appreciation rate of 4%. With an appreciation rate of 4% the heirs of the lesser valued home would stand to receive about…

Download the video transcript here.

Two Senators concerned about Non-Borrowing Spouse Risks

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Bipartisan letter from senators cites concerns of new language endangering NBS protections

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Joint letter to HUD and OMB from Senators Rubio & Masto

Despite the increasingly toxic and adversarial political climate in Washington, D.C., two United States Senators have joined together to push the Department of Housing and Urban Development for clarification of language in the Trump administration’s new budget which could strip away key protections for reverse mortgage non-borrowing spouses. Bad language can lead to bad policy.

U.S. Senators Marco Rubio (Republican of Florida), and Catherine Cortez Masto (a Nevada Democrat) sent a joint letter to HUD Secretary Ben Carson and OMB (Office of Management and Budget) director asking the agencies to clarify the proposed language found in the federal government’s budget request. To date, no response has been received. New York Times columnist Matthew Goldstein rightly point the significance of the Home Equity Conversion Mortgage program writing, “reverse mortgages are viewed as crucial pieces in helping an aging population plan for retirement, and new lenders are coming into the market. The language that concerns the senators and advocates for the elderly is a proposed change in the National Housing Act that says, in regard to reverse mortgages, that a mortgagor “shall not include the successors and assigns of the original borrower under a mortgage.” Simply put, such language could leave spouses not named on the loan at risk of displacement or foreclosure.

Download the video transcript here.

A Rising Tide Lifts All Boats

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An improving economy and housing market have the HECM poised for growth

 

reverse mortgage newsIf you have been originating reverse mortgages for over ten years, congratulations. You survived the Great Recession and housing crash of 2008 and lived to tell the story. While some are concerned we are entering another housing bubble, the good news is that home values in several markets have reached new highs that set in 2006. Despite the controversies swirling in the wake of the presidential election economic growth accelerated to an annual rate of 2.6% from April to June according to government statistics. With an ever-growing need to fund retirement, a modest growth in the GDP, and increased consumer confidence, will a rising tide lift all boats?

Measuring success and potential market growth is a tricky business where hindsight is truly 20/20. Looking back at the pre-recession boom in reverse mortgage growth and housing prices alone would be akin to one comparing their high school 100 yard dash times to their speed in middle age. As mentioned last week, our industry’s loan volume, and the prospects of economic growth for that matter must be viewed historically.

Download the video transcript here.

Do We Have It All Wrong?

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There’s a Silver Lining in HECM Endorsements That is Overlooked

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The chorus of dismay from reverse mortgage professionals lamenting declining reverse mortgage loan numbers began after the Great Recession and continues through today. Consequently, a sense of frustration and futility has set in for some who believe our industry was decimated in the aftermath of the housing crash, product restrictions and the Financial Assessment. But do we have it all wrong? In other words when considering HECM endorsement volumes are we comparing apples to oranges? Do mere annual sales numbers reflect the true state of our industry?

Jim Veale is more than an industry veteran- he’s a numbers guy. Not surprising considering his background as a CPA with a Masters in Business Taxation. While often outspoken on industry issues, Jim has been my personal go-to guy when it comes to the more technical aspects of the HECM market. His recent Op-Ed in Reverse Mortgage Daily does not disappoint.

“Most sales managers, originators, and other participants in the Home Equity Conversion Mortgage industry are longing for significant validation that the sales efforts of this decade have had any meaningful results.

Carson talks reforms, Scammer sentenced, SEC warns of de-listing

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Scammer sentenced, Carson talks reverse mortgages, Walter faces possible de-listing from NYSE

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In this week’s edition: HUD Secretary Ben Carson supports reverse mortgage program while speaking for the need for reform.  The New York Stock Exchange puts Walter Investment on notice. US Postal Service nabs reverse mortgage scammer in a sting operation. The best & worst uses of a reverse mortgage.

While Dr. Ben Carson is settling into his new job as Secretary of the Department of Housing and Urban Development, he did take the time to note both his support and the need for reforms of the Home Equity Conversion Mortgage program. Speaking before the Leading Age Florida convention, Carson stated “More and more of our citizens are over 65 years of age … about 15 percent, nationally. And, as our nation ages, we must become wiser, smarter, while expanding choices for seniors.”

A successful con requires confidence on the part of the scammer. This time Kemal Barnes had the tables turned on him after scamming over $120,000 a 79-year old Texas woman according to the Boston Globe. Barnes began his con game while living in his native Jamaica and continued while living in Massachusetts. The victim’s son notified authorities in 2015 after