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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It is admirable to have strongly-held beliefs. It is even more laudable when one changes their position based on new facts and insight. That’s exactly what happened for one Chicago Tribune financial columnist.
Last week we addressed the divergent relationship between the increasing need of retiring homeowners and the continued decline in reverse mortgage volume. Beyond the potential fallout of future HECM regulations what is hindering market growth?
We’ve all heard the predictions. The industry will bounce back to 100,000 endorsements per year, the baby boomer wave will spur industry growth, etc. A recent article on CNBC’s website predicts that retiring baby boomers will spark reversemortgage demand. Truth be told, reverse mortgage demand may increase but our industry’s volume will most likely not keep pace with the increasing need of future retirees.
A recent MarketWatch article “
It’s no secret. For the last three years our industry has born the brunt of numerous changes to the Home Equity Conversion Mortgage program. Not only us, but senior homeowners applying for the loan. In the light of recent proposed rule changes one may be left with several lingering questions.
If there’s one word that describes the recently announced proposed rule changes it’s digestion. As many professionals comb over the finer details, one can begin to see a clearer indication of the true impacts on our industry and most importantly, reverse mortgage borrowers.
If you think the dust has finally settled in the wake of numerous HECM changes, think again. HUD announced their intention to codify recent program changes while also adding new consumer protections to the federally-insured Home Equity Conversion Mortgage program.