HECM improvements will pay dividends

The focus on foreclosure prevention and servicing will pay dividends for both consumers and industry participants alike


It’s a fact every salesperson and reverse mortgage professional must embrace- the vast majority of consumers inherently distrust salespeople. Will recent HECM changes help bolster the product’s legitimacy in the public eye? How will you approach the nuances of future policies and present them to homeowners?

The irony is that every major purchase from buying a home, a car or investing in your retirement entails working with a sales professional. The same applies to reverse mortgage professionals who approach a distrustful public. Further compounding this general skepticism are products whose unique features are highly advantageous leading many to say ‘if it sounds too good to be true, it probably is’. The good news is that recent changes to the federally-insured reverse mortgage may have helped us close the credibility gap.

It can be argued that recent changes to the Home Equity Conversion Mortgage may help improve the loan’s reception and close the credibility gap. The Financial Assessment raised the bar of entry excluding homeowners with a questionable credit history and late tax and insurance payments. Now Congress is looking to HECM loan servicers to modify their communication with borrowers before property taxes are due, and how delinquencies are handled. These reforms will help reduce foreclosures actions which are key to keeping and building public trust.

One witness representing the Government Accountability Ofice outlined the need for additional data collection from FHA, especially for foreclosure actions. This data could provide additional insight into how to further prevent foreclosures.

The good news is we have no major cutbacks in principal limit factors or changes in FHA insurance premium pricing. In addition, the outstanding HECM changes discussed in recent months are not guaranteed to be implemented. With that in mind, our best course of action is to continue reaching out to those who would benefit from a HECM being embued with the confidence that comes with Congress openly supporting the need for the program and acknowledging the impact of previous reforms.

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