Abandoned HECM Properties



ePath 100K RM leads

Accounts of abandoned HECM properties highlight significant servicing problems for assigned loans

“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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6 comments

Victor December 16, 2019 at 3:15 pm

That is a 1 off, not indicative of the program overall. Overall the program is getting better as evidenced by the number of new products being created and financed by private money.

Reply
The Critic December 19, 2019 at 1:40 am

Victor,

Let me clear — What??

You are saying that making more products creates better endings? How does that correlate? Creating more products has nothing to do with how REO is handled. Please elaborate on your logical connection.

Yesterday, I actually listened to the NRMLA session on reframing the approach to financial advisors and one of the speakers said that proprietary reverse mortgage production in fiscal 2019 was about 3,000 to 4,000 closings. That is the total of all such closings. Far more money was invested with Bernie Madoff than with the private money invested in proprietary reverse mortgages last fiscal year.

Whether you realize it or not, absolutely none of the money used to fund the entire cohort of HECMs endorsed last fiscal year came from any other source than private money.

Reply
Pat Smoot December 17, 2019 at 6:02 am

As always, good information and reminder to keep in touch with your prior clients.
I am finishing my holiday cards now to my past clients and I keep in touch for birthdays too.
I regularly hear from a family member or Realtors that ask for help with the process of listing or selling a home when a senior can no longer live there or they have passed. It is a necessary service to offer and helps create referrals.

Reply
The Critic December 19, 2019 at 1:57 am

We are dreaming if we think we can reverse the practices of derelict servicers. Only the lenders can do that. In fact there will be only a very few cases where your “help” will influence the servicer in a positive way.

So is Pat Smoot doing the right thing? Well, there is nothing wrong with it and it will help those who are at a loss just to have someone hear them out. If referrals result, that is an inexpensive way to market. You might offer to do a mailing campaign or provide other uncompensated services in trying to get the servicer’s attention.

In some concentrated of HECM collateral, the term “HECM” induced blight is springing up.

Reply
Mary Regan December 20, 2019 at 4:19 pm

It is very disappointing that the final step of a Reverse Mortgage – the disposal of the property when the homeowners have passed away – is so poorly handled. It is not uncommon for the home to be vacant for 2 to 3 years while the neighbors complain to the Asset Management Company with little result. I live in a 55+ community that has many Reverse Mortgages and many of my neighbors know that I am a HECM loan officer, former HECM counselor and former HUD counselor that handled foreclosures. They come to me for help and with authorization from them I am able to keep the line of communication open with the AMC but other than that, I am no help at all. This process needs to be addressed and improved.

Reply
James E. Veale, CPA, MBT December 30, 2019 at 3:20 pm

Most people are aware that there are more people alive than have died throughout history.

Yet it is sad that most HECM originators do not realize that they have been more terminations and assignments (about 655,000) than there are active HECMs today (about 482,000). Active HECMs are defined as endorsed HECMs which are neither terminated nor assigned. All data is provided directly or indirectly through the monthly FHA HECM Reports and the monthly HECM Endorsement Summary Reports as of October 31, 2019.

The upshot is that the human race is still growing and the HECM portfolio of active HECMs is still in decline.

Reply

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