[vimeo id=”32590209″ width=”601″ height=”338″]
Learn what Celink is doing to help borrowers prevent and cure tax and insurance defaults for reverse mortgage borrowers.
A Behind The Scenes Look At Curing Tax & Insurance Defaults
Our exclusive interview with Celink’s John LaRose at last month’s NRMLA meeting uncovers some of the steps being taken by reverse mortgage servicers to cure tax and insurance defaults.
Mr. Ryan LaRose was right to share cautious optimism on how well the default repayment workouts are going. It is one thing to create a plan and quite another to see it completed on time and in full. If the results are anything like mortgage modifications, the results will be less than stellar.
What was lacking in the interview was a detailed discussion on what the HUD guidance on financial assessment underwriting should consist of. Again Mr. LaRose is wise to steer as far as possible from such a potentially explosive converstation. Nonetheless, servicers understand the causes much better than we and Mr. LaRose could have spoken to the issues he believes are detectible and highly indicative of default at origination.
Time is ticking on a HUD ruling related to financial assessment underwriting. Yet the industry also seems mute.
Some in our industry are arguing for HUD laying down strict rules that all must follow “to the letter.” Others are still fighting for borrowers to prepay taxes and insurance into escrow accounts yet with a division among them on whether monthly payments into the accounts should be mandatory or not.
A significant portion of the industry supports the June letter from NRMLA to Ms. Karin Hill. It provided a strict rule to separate those who needed the underwrite from those who do not. It then provided steps which could be taken to help qualify prospects who did not meet the first test including mandatory set asides for taxes and licenses. In the last analysis, however, the letter also allowed for subjective decision making as to mortgage qualification where there appeared to be nothing more than mitigating circumstances.
Why is the industry so quiet as to this very important issue? HUD has NOT issued its guidance. Too many times we speak out after a ruling is made rather than during the formation period. Now is the time to speak up not after HUD has implemented its ruling.
First off, I agree with my friend James Veale on the financial assessment underwriting issue, he covered it very well.
I have my own strong feelings on the subject but I will not get into that at this time.
The T&I issue has been looming over the markets for some time now and with out a real solution to the problem. I don’t understand why this has turned out to be such a complicated issue, so complicated it is changing how we do reverse mortgage business.
I have asked this before but never seem to get a solid answer. Why can’t the servicer/lender offer a method of escrowing the T&I on a monthly basis.
Set it up like a forward loan, at closing collect 3 months of the T&I to establish the escrow account, then give the borrower a coupon book that contains one year at a time worth of escrow payments for the T&I.
The senior sends in the monthly payment with the coupon and when the T&I comes due, the servicer pays for it each year, why can’t this be done?
What we need to fully understand is that a senior, in most cases, lives on a fixed income. They can usually handle and budget a certain amount each month. The problem is when at the end of the year the senior is faced with 2 or 3 thousand dollars at one time to shell out for the T&I. Many seniors don’t have that much in a lump sum!
So, once again my question is why not make it simple and go the escrow account I have suggesting for the past year??
John A. Smaldone
i have a reversed mortgage with celink. i have home insurance with the Hartford. they are cancelling my insurance as of 2/2/2019. will celink provide home insurance for me