Here are some reverse-mortgage related stories you may have missed…
Continue readingDodd Frank, Downsizing & Padding Loans
Regulatory Rollback, State Pushback & Safer Loan
Acting CFPB Director Mick Mulvaney said,“Regulation by enforcement is done. We’re not doing it anymore”.
Continue readingThe Trump Era & The HECM
Good News for HECM, Not So Much for Housing Programs
President Donald trump embodies the essence of a political wrecking ball in Washington D.C.- a city known to cling tightly to political traditions of governing and supporting long-standing social programs, despite our ballooning deficits.
While the President weathers opposition from both Democrats and Republicans alike, his administration’s draft 2018 budget for the Department of Housing & Urban Development reflects populist sentiments of a smaller, efficient government with parsimonious allocations for social program spending. Many feared the populist agenda would gut essential HUD, programs, and more specifically, the Home Equity Conversion Mortgage program.
Politico obtained a copy of the Trump administration’s preliminary HUD budget revealing plans to gut $6 billion from several programs including the outright elimination of the Community Development Block Grant, neighborhood initiatives, and a housing program for veterans. Despite these unpopular cuts, the HECM program was spared and even strengthened.
Two changes stand to liberate the HECM – the removal of the annual cap and the erosion of the unchecked powers of the Consumer Financial Protection Bureau…
Reverse Mortgage News Roundup
This Week’s Top Reverse Mortgage Stories
1- CFPB Complaints on the Rise- The CFPB has been busy collecting consumer complaints. The Consumer Financial Protection Bureau reports an increase of 172% increase in reverse mortgage-related complaints since 2012. One could guess that much of this is due to increased consumer awareness of whom to report grievances to and how to do so. While the data shows a legitimate spike in HECM-related complaints, questions remain such as differentiating between mere questions and complaints that warrant with 80% not requiring any action. Industry trade groups such as the Mortgage Bankers Association, feel this serves only to mislead the consumers the CFPB is charged with protecting.
2- Stupid? A recent CNBC article said reverse mortgages aren’t for the ’stupid’. CNBC reporter Andrew Osterland opens his column saying “you don’t have to be old, poor, and stupid to get a reverse mortgage’. Perhaps Osterland is implying some ‘stupid’ homeowners fell prey to what he says tarnished the industry’s reputation in the first place- ‘cheesy television ads, unscrupulous brokers, and unwise borrower behavior’. He quotes University Professor and industry advocate Dr John Salter who says ‘The late-night ads are a really bad idea for the industry’. Overall the piece is a positive one citing the merits of the HECM when used wisely.
3-Government Shutdown? If there’s one certainty in life it is the political infighting in Washington, D.C., this time it could lead to a government shutdown. By the time you watch this episode, we should know if Republicans and Democrats were able to negotiate a stop-gap budget that President Trump would sign. If there is an extended shut down HECM endorsements would stop altogether, which would lead to a significant backlog. “FHA does not have the authority to insure additional HECMs during this period due to the statutory cap limiting the number of HECMs under the HECM program,” said a guidance piece issued by HUD during the last shutdown in 2013.
4- 2nd Annual Reverse Mortgage Education Week-Last week was Reverse Mortgage education week, during which the National Reverse Mortgage Lenders Association focuses on educating older adults, financial professionals, real estate agents, and family members about the Home Equity Conversion Mortgage. Topics included tax and insurance defaults, avoiding scams, and the repayment process.
Compliance: CFPB Levies Penalties on HECM Lenders
Recent CFPB actions highlight the importance of compliant advertising and sales practices
Since the founding of the CFPB (Consumer Financial Protection Bureau) in 2011, lenders have found themselves navigating the ever-changing waters of regulatory compliance. Reverse mortgage lenders have recently felt the impact of the agency with three lenders paying substantial penalties levied. Today more than ever before, compliance is not a merely a burden, it is imperative for the well being of lenders and our industry as a whole. Breaking the Bad News: It’s not the kind of news one wants to break during a corporate earnings call. Walter Investment Corporation revealed two subpoenas related to their former origination unit: Reverse Mortgage Solutions. The subpoenas focused on the former HECM lender’s origination, underwriting and appraisal practices. Even more troubling was the announcement that… Download the video transcript here.
Not Surprised
The media is inaccurate, misleading and selective in reporting the facts? What’s new. The Consumer Financial Protection Bureau’s recent release of it’s report on reverse mortgage complaints was seized upon by both the media and so-called consumer advocate groups. Surprised? No. Damaging? Possibly.
Continue reading7 Questions We All Should Be Asking
In the interest of best serving the needs of the borrower and protecting ourselves against future legal claims, each of us should reexamine the questions should be asking each potential borrower…
Continue readingCFPB Releases New Consumer Reverse Mortgage Guide
It was only two short years ago that the CFPB or the Consumer Financial Protection Bureau issued it’s first report to congress on the Home Equity Conversion Mortgage or reverse mortgage program. In this week’s segment we will examine what questions this guide addresses as well as the questions it raises…
Continue readingBack to Basics
If you look at the federally insured reverse mortgage one could say we have come full circle coming closer to the program’s original intent. What intent?
Continue readingToo Much Too Soon?
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Reexamining Product Design and Use of Proceeds
The recent overhaul of the HECM program was a watershed event for both the reverse mortgage industry and senior homeowners. The elimination of the Standard Fixed Rate, consolidation to one product, two-tiered upfront FHA premiums and first year distribution restrictions all were born from FHA’s attempt to reign in the HECM program back to its original intent while reducing the risk of defaults and payouts from the MMI fund. The idea was to prevent borowers from using all of their proceeds in the first or early years of the loan which could leave them with little or no financial options once they’ve exhausted all their funds. Also, lower upfront withdrawals and deferred or tenure payments or a line of credit reduce the likelihood that the loan balance would exceed the home’s value in the early years of the loan or when the loan ultimately terminated. Most program changes were spurred by the Consumer Financial Protection Bureau’s report to Congress…
