News Archives - Page 45 of 99

Reverse Mortgage Loan Limit Increased: Impact & Outlook

Potential Impact of Lending Limit Increase

reverse mortgage news The Department of Housing and Urban Development announced the third consecutive increase of its national lending limit to $726,525 for the federally-insured reverse mortgage and FHA loans beginning January 1st, 2019. An increase of over $46,000 from its previous limit of $679,650. The risks the Home Equity Conversion Mortgage poses to FHA’s mutual mortgage insurance fund have been well-documented which may lead some to ask will the loan limit increase losses or negatively impact the thriving jumbo reverse market?

Well generally lauded by industry participants there are perspectives that warrant further consideration. Will this make a notable change to help boost overall loan volume? Are there any particular advantages in HUD attracting more owners of higher-valued properties? How does this impact the recent growth of private or proprietary jumbo reverse mortgage loans? To answer these question we reached out to a few our fellow reverse mortgage professionals.

Dan Hultquist VP of Education & Organizational Development at Live Well Financial and author of Understanding Reverse sees the move as such a positive he’s written a new chapter in the 5th edition of his book. Dan sees more money for the homeowner and lower risk for FHA. “Consider a 73-year old borrower with a 5% expected rate, that allows the borrower a principal limit factor (PLF) of 47.50%. So long as the home appraises for at least $726,525, this borrower’s initial principal limit will be $345,099. However, when you calculate the initial maximum Loan-To-Value (LTV) for homes above this amount, it is obvious that FHA’s risk declines with higher property values.” The bonus for FHA is that these borrowers will pay the maximum upfront mortgage insurance premium of $14,530.50- even when there is a lower loan to value ratio... [download transcript]

2018 Year-End Thoughts

Final thoughts on 2018

Merry Christmas and a happy new year from the team at Reverse Focus!

HECM outlook

HECM Changes in 2019: Inspector General’s Report Provides Clues

Inspector General report points to specific risks

reverse mortgage news In October HUD’s Office of the Inspector General released their report which telegraphs what changes to the HECM we may see in 2019.

If you were to ask ten HECM professionals what their outlook was for 2019, you would likely get ten different answers. Of all the responses one were to receive the most honest and realistic would be- expect more change.

There’s been much talk in the media of Inspector Generals recently- most of it centered on the political war that rages in the wake of alleged Russian collusion in the Trump administration and also the Inspector General (IG) investigations into the Department of Justice and the intelligence community. However, what most may not know is that all major federal agencies have a functioning IG who serve as watchdogs to ensure that the best interests of the government and taxpayers are served. On October 15, 2018, the U.S. Department of Housing and Urban Development Inspector General’s office released their report outlining 6 challenges facing the agency.

Of the six the most troubling and problematic are the continued risks to FHA’s Mutual Mortgage Insurance fund, which backs both HECM and traditional FHA loans. The OIG states that HUD is presently lacks sufficient safeguards to prevent loan servicers that fail to meet foreclosure and conveyance deadlines from incurring holding costs which are passed onto HUD. It is estimated these delays cost the agency $2.23 billion in ‘unreasonable and unnecessary’ holding costs in a five year period. While not specifically mentioning HECMs it’s not a stretch to believe these issues plague both traditional and HECM loans. This comes as no surprise considering our recent report and an article in HousingWire which reveals a number of illegitimate occupants continue to remain in properties with a reverse mortgage; many times years after the borrower has moved, passed away, or in some cases even rented the property to another party. In other instances, heirs have reported considerable delays in getting a deed in lieu of foreclosure processed or waiting over 5 months for an appraiser to come to the property so the family can arrange for a purchase. While noncompliant occupancy of HECM properties is not specifically addressed, the report does cite delayed property claim reporting by servicers and/or lenders.

There’s no question that the HECM is flashing brightly on the radar of government watchdogs as evidenced in the report which reveals large losses attributed to the reverse mortgages… [download transcript]

So you’ve had a bad day?

5 powerful thoughts you to get you back on track

If you’re not having a bad day good. But when that inevitable time comes here are some great quotes to help you push through and continue moving forward.

inspiration psychology

Strong Words: Comments on Reverse Mortgages Spur Controversy

This week: Former FHA Commissioner takes aim at reverse mortgages and a clear and present danger to the HECM

Former FHA Commissioner David Stevens wasn’t merely providing some suggestions on how to improve the Home Equity Conversion Mortgage. He also took aim squarely at the industry, its alleged practices, and those who have made the origination of HECM loans their chosen profession.

Last week we got our first look at the commissioner’s comments on LinkedIn where Mr. Stevens posted a link to a Wall Street Journal article on FHA’s new appraisal rule. The comments were both lively and heated. Stevens accused reverse mortgage lenders of making outrageous profits and engaging in predatory sales. He also slams the use of celebrities and presidential candidates as ‘pitchman’.

Stevens’ proposals to reform the HECM include mandatory credit score guidelines, mandatory set-asides for all borrowers, and the elimination of full-draw HECM loans...

negative media

Tip of the Iceberg: HECM Occupancy Abuses

HECM abuses when borrower no longer occupies the property pose risk to FHA’s MMI fund

How quickly are HECM properties sold or called due and payable when the last borrower has died or moved out? More importantly, how many properties with a HECM are sitting on the books for years while the borrower’s heirs or unauthorized tenants remain in the house; in many cases for years?

It’s not often during my show prep that I strike gold, but this week was the exception finding an intriguing and unsettling article by Mike Branson. It details where a significant portion of our HECM losses may be coming from. Mike is the CEO and owner of All Reverse Mortgage. He has over 40 years experience in mortgage banking and also has served as an expert witness for the FBI in mortgage fraud cases. That particular experience plus numerous questions he has fielded has raised some very serious concerns which we will address here today. A very timely topic since the HECM may be facing additional changes this year.

Borrowers FHA fraud MMI Fund

HECM Risks: A Balancing Act

FHA is addressing risks on both sides

The federally-insured reverse mortgage or Home Equity Conversion Mortgage while holding tremendous value has been challenged with continued losses paid from the FHA’s insurance fund. In the wake of the housing bubble and economic crisis the program, several changes were enacted. The repeal of the standard fixed-rate HECM, the introduction of the HECM Saver, increases in mortgage insurance premiums, the financial assessment, first-year distribution limits, repeated principal limit factor reductions, and most recently, the enactment of the second appraisal rule as part of the Collateral Risk Assessment. The pace of these changes increased with the passage of the Reverse Mortgage Stabilization Act of 2013 which allows HUD to establish new rules via mortgagee letter rather the previous protracted rule-making process. The intention was to allow the agency to act quickly to slow the mounting losses incurred by the program.

When it comes to HECM risks there are basically two types: front end and back end. Front-end risks would include the valuation of the home, lending ratios or principal limit factors, and product design.

Download the video transcript here

appreciation Industry Outlook

FHA’s MMI Fund Report Explained

[Download full report] [View 1-minute video summary] [Full Actuarial Review]

A look behind the numbers and factors that shaped the FHA MMI Fund Report to Congress

A recap of FHA’s and HUD’s media conference call, an examination of HECM risks, and how the value of the fund is calculated.

annual report FHA mmi Mutual Mortgage Insurance Fund

BREAKING: 2018 FHA HECM MMI Fund Summary

[Download full report] [View press release summary] [Full Actuarial Review]

Modest improvements and continued economic losses to the HECM portion of FHA’s MMI Fund

annual report Congress

Senior Homeowners Caught in the Middle

Asset-rich & Income-poor seniors find new mortgage options to tap housing wealth

While most Americans look forward to retirement- many are finding their expectations caught between the need to finance their non-working years and the harsh realities of just how difficult it is to maintain their standard of living. While it’s been long known that retirees may struggle to qualify to purchase or refinance a home being on a fixed income, now many find themselves challenged to meet the requirements of the federally-insured reverse mortgage. Reductions in loan proceeds, Financial Assessment underwriting guidelines, and a reduced interest rate floor have caught many between a proverbial catch-22. Even those who have saved hundreds of thousands of dollars are unable to qualify for a traditional refinance or home equity line of credit being unable to meet the monthly income required. To qualify these individuals are faced with having to liquidate a portion of their investments that would otherwise continue to grow in value.

The good news is that necessity is the mother of invention… [download transcript]