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.

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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.

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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

The Power of Celebrity

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The New York Times Examines Reverse Mortgage Celebrity Spokespersons

reverse mortgage newsThere may be a window of opportunity in the wake of President Trump’s call to overhaul regulations for financial institutions and housing agencies. The National Reverse Mortgage Lenders Association (NRMLA) submitted several requests to HUD to update and refine the non-borrowing spouse provisions of the Home Equity Conversion Mortgage, and improve the rules for HECM purchase transactions. An opportune moment indeed as HUD has asked for inputs to identify regulations that impose an undue burden.

The addition of non-borrowing spouse protections was a welcomed change that provided protection for the spouses of HECM borrowers not named on the loan and removed a thorn in the side of the HECM industry that buoyed claims of reverse mortgages unfairly punishing widows and widowers in their most painful and vulnerable hours. While several tweaks have been made in recent years, NRMLA has asked for improvements addressing conflicting language in HECM loan documents and provide protection to non-borrowing spouses.

While getting a reverse mortgage is complex, unwinding the loan can be even more complicated for surviving non-borrowing spouses, heirs and services

Reforms Sought for Non-Borrowing Spouses

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NRMLA Submits Requests to Reform NBS Policies

reverse mortgage newsThere may be a window of opportunity in the wake of President Trump’s call to overhaul regulations for financial institutions and housing agencies. The National Reverse Mortgage Lenders Association (NRMLA) submitted several requests to HUD to update and refine the non-borrowing spouse provisions of the Home Equity Conversion Mortgage, and improve the rules for HECM purchase transactions. An opportune moment indeed as HUD has asked for inputs to identify regulations that impose an undue burden.

The addition of non-borrowing spouse protections was a welcomed change that provided protection for the spouses of HECM borrowers not named on the loan and removed a thorn in the side of the HECM industry that buoyed claims of reverse mortgages unfairly punishing widows and widowers in their most painful and vulnerable hours. While several tweaks have been made in recent years, NRMLA has asked for improvements addressing conflicting language in HECM loan documents and provide protection to non-borrowing spouses.

While getting a reverse mortgage is complex, unwinding the loan can be even more complicated for surviving non-borrowing spouses, heirs and services

Huron Valley Financial Acquires Home Point Financial’s Reverse Mortgage Division

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Significantly expands 1st Nations Reverse Mortgage footprint; Industry leader Joshua Shein joins Company as EVP

Ann Arbor, MI, and Owings Mills, MD—June 27, 2017—Huron Valley Financial, Inc. (HVF), a privately held full-service mortgage banking firm, and Fannie Mae seller/servicer, announced today it has acquired Home Point Financial Corporation’s (Home Point) reverse mortgage lending division. The transaction combines Home Point’s nationally-ranked reverse mortgage division led by Joshua Shein, with Huron Valley Financial’s 1st Nations Reverse Mortgage division, led by Mike Gruley. The deal brings together two reverse mortgage industry leaders, who together will propel 1st Nations Reverse Mortgage into a national top-tier firm.

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Josh Shein, Huron Valley Financial, EVP

This acquisition reinforces HVF’s commitment to serving the reverse sector. The company, which launched its 1st Nations Reverse Mortgage division in October 2016, continues to invest in building its national footprint and product offerings. The Home Point team provides 1st Nations Reverse with a turn-key platform, including sales and operations, to quickly position 1st Nations among the top lenders in the country. Through this acquisition, 1st Nations Reverse aims to be licensed in 35 states by the end of 2017 and funding more than $150 million in reverse mortgages annually.

Eric Bradley, President, and CEO of Huron Valley Financial says “This deal is evidence of our commitment to serving the reverse mortgage product and industry at a national level. Through this acquisition, 1st Nations Reverse will be able to continue to play a positive role in advocating reverse mortgages as a responsible financial tool for seniors and their families. I was thrilled to meet the many members of the Home Point Financial Reverse team who share the attributes we value as a company, including their commitment to anticipate and address the needs of current and future customers. We look forward to having Josh join our executive team; his extensive industry expertise and business acumen will be essential as we continue to solidify our position as a top-tier player in the reverse mortgage industry.”

FOR IMMEDIATE RELEASE

Mike Gruley, EVP of Reverse Mortgage Lending says, “I could not be more pleased to welcome this team to 1st Nations Reverse Mortgage. Josh has maintained a long and reputable track record of success within our industry, building multiple top ten lending teams; his commitment and expertise in the reverse mortgage space is absolutely unparalleled. I look forward to working with Josh to build a sound, reputable reverse mortgage business.”

“I look forward to being part of the 1st Nations Reverse team. Eric, Mike and the entire leadership team have established a culture and company basedupon shared values. I am excited to significantly expand both our retail and

Mike Gruley, 1st Nations Reverse
Mike Gruley, 1st Nations Reverse

wholesale channels. With more than six trillion dollars in senior home equity, there is a tremendous market opportunity for us to quickly become a top ten nationwide lender, working with consumers to remain in their homes while supporting their retirement goals.” said Mr. Shein.

Shein’s team, with locations throughout the U.S., will be seamlessly integrated into 1st Nations Reverse. He brings more than 17-years’ industry experience to 1st Nations Reverse. Prior to overseeing Home Point Financial’s Reverse division, Shein was Executive Vice President at Maverick Funding’s Reverse Mortgage Network, where he was responsible for building and leading the company’s Reverse Mortgage platform, prior to its acquisition by Home Point Capital in 2015. He joined Maverick Funding from Great Oak Lending Partners, a company he founded in 2001.

Home Point Financial is a subsidiary of Home Point Capital LP, a financial services holding company founded in 2014 and owned by members of management and by investment funds managed by Stone Point Capital LLC.

About Huron Valley Financial

Huron Valley Financial is a privately held full-service mortgage banking firm, and Fannie Mae seller/servicer. The company maintains retail, wholesale, and correspondent lending channels and originates Conventional, FHA, VA, USDA-RD, Jumbo Loans, Construction Loans, Reverse Mortgages, and some portfolio lending products. The company is licensed to lend in 27 states. For more information, please call (800) 650-7441 or visit www.huronvalleyfinancial.com.

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For more information, contact:

Eric D. Bradley, President & CEO Huron Valley Financial
2395 Oak Valley Drive, Suite 200 Ann Arbor, MI 48103

Phone: (734) 669-8000

ebradley@huronvalleyfinancial.com 

Economist Claims Annuities ‘Safer” than HECM

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Syndicated Columnist Recommends Cross-Selling Strategy…with a Twist

 

reverse mortgage newsJust as the reverse mortgage suffered much negative media coverage and hand-wringing from financial pundits, so have annuities. If an annuity sounds familiar to reverse mortgage professionals, it should. Annuities were the financial product most often associated with what many considered a questionable and unethical practice- the cross-selling of financial products investing the proceeds into annuities.Surprisingly, one columnist and economist recommends taking out a traditional mortgage and investing in an annuity.

An annuity is a contractual agreement between an investor and typically an insurance company. A lump sum is invested and then can be ‘annuitized’ or paid out over a period of time, deferred until a later date for full withdrawal, or rolled over into another investment. There are four basic types: immediate, fixed, indexed and variable. An immediate annuity converts a lump sum premium investment into an immediate stream of payments over a specified period of time, usually over one’s lifetime. This is often referred to as a Single Premium Immediate Annuity (SPIA). A fixed annuity guarantees a declared interest rate. The indexed annuity is a variant of the fixed but credits interest based on the percentage growth tied to marked indices such as the S&P500 or the Dow Jones Industrial Average (DJIA). Variable annuities invest funds into mutual funds or other market investments that can be subject to loss of principle in many instances.

Syndicated columnist Laurence Kotlikoff opens his column with the statement, “HUD fails to mention a clear-cut and, to me, far safer way, at least for older people, to tap home equity.” But is Kotlikoff’s ‘way’ truly a safer option? Let’s examine his suggestion more closely.

“HUD fails to mention a clear-cut and, to me, far safer way, at least for older people, to tap home equity. This entails taking out a long-term fixed mortgage on your home and using the proceeds to purchase a fixed annuity payment.

Using a HECM Instead of Long-Term Care Insurance

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One Financial Planner Suggests Two LTC Insurance Alternatives

reverse mortgage newsIf you were to eavesdrop on a typical meeting with someone in their 50’s with their financial advisor, chances are you would here the sensible advice to purchase long term care insurance. This practical recommendation is rooted in the fact that nearly 70% of those aged 65 and older will need long term care services at some point in their lifetime. However skyrocketing long term care premiums has one financial planner recommending alternatives.

George Gagliardi is a certified financial planner focused on creative solutions to help preserve and grow his clients’ assets. A recent MarketWatch article shows that Gagliardi is skeptical of traditional retirement advice when it comes to protecting his client’s assets from the ravages of health emergencies and long-term care costs. Long term care costs are not the only threat, the other is the risk of exploding premium rates.  Federal employees participating in the long-term care insurance program learned this harsh lesson in 2016 when their premiums jumped 126%. Two choices were offered- pay the higher premium and retain your current coverage or pay the same premium for less coverage. A spike in premiums had a direct impact on a senior’s cash flow and quality of life.

Few financial planners stray from conventional recommendations and approaches to asset management and preservation. Unfortunately, conventional wisdom yields typical results. Gagliardi takes a different approach favoring two alternatives: hybrid long term care policies and the Home Equity Conversion Mortgage.

Retirees Conflicted on Home Equity

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Despite challenges many reluctant to tap equity in retirement

 

reverse mortgage newsOlder American homeowners find themselves beset by a variety of retirement landmines- exploding medical costs, uncertain markets and income security. Despite these challenges, retirees remain conflicted about tapping their home equity.

Mortgage and financial professionals are well aware that the baby boomer generation is less adverse to mortgage debt than the generation that preceded it. A recent New York Times article cites the seismic shift of how older American’s managed mortgage debt. The Federal Reserve reports that home-secured debt held by those aged 65-74 was only 18.5 percent in 1992, 32 percent in 2004 and 42 percent in 2004 as reported by the 2013. The percentage of those holding mortgage-related debt into retirement is expected to continue to rise as an estimated of 10,000 baby boomers turn 65- each day.

Despite the widespread acceptance of leveraging debt among boomers, retirees financial needs and uncertainty about tapping into home equity remain. The conflict between the need to fund aging in place and tapping into home equity through a mortgage is addressed in Jamie Hopkins recent column in Forbes.

“American retirees are facing a laundry list of retirement challenges. The only certainty is that