Recently recommended servicing reforms may boost HECM image
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?
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.
One problem that has garnered the most press and Congressional ire are HECM ‘foreclosures’. While the vast majority of HECM foreclosures are the result of the last borrower passing away thus terminating the loan, many could have been avoided with better communication and outreach. At least that’s the consensus among lawmakers- some who are pushing for increased scrutiny of the servicing process- more specifically how those who are overdue on their property taxes are managed. Are they sent a reminder before their property taxes are due? Are HECM borrowers who are delinquent on their property tax installment notified of any available local and state tax-deferral programs? Lawmakers are pushing for reforms to help avoid the fiasco that we call a ‘technical default’.
For a summary of last week’s Congressional hearing click here.