The Myth of Reverse Mortgage Foreclosures?

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Guttentag Questions the Definition of a HECM ‘Foreclosure’

“Whoever controls the language controls the debate”. The purported ‘epidemic’ of reverse mortgage foreclosures has long been a staple for major media outlets to attack the reverse mortgage as a risky and dangerous loan. Closer to home, the incidence of HECM foreclosures has been often cited as one justification for increased restrictions, product reengineering, and the financial assessment underwriting guidelines.

Jack Guttentag -"The Mortgage Professor"
Jack Guttentag -“The Mortgage Professor”

The media loves a good drama. Find a villain and add some emotional tension and you have a headline that is click-worthy. Such a scenario played out in a recent article on Bloomberg.com entitled “Mnuchin’s Reverse Mortgage Woes Blemish Record of Treasury Pick.” Jack Guttentag, aka the Mortgage Professor, was intrigued. The headline is timely since Steven Mnuchin was recently announced as president-elect Trump’s pick for Treasury Secretary. Mnuchin’s blemish in the article centers on his acquiring of IndyMac Bank in 2009 and with it Financial Freedom. Now we can see the ‘reverse mortgage’ connection that Bloomberg hints may point to alleged unethical business practices. Financial Freedom “has carried out 16,220 foreclosures since 2009, or about 39 percent of the country’s reverse mortgage foreclosures, according to HUD data obtained by the California Reinvestment Coalition…” Guttentag was skeptical that one lender could account for such a large percentage of HECM foreclosures.

What ‘foreclosure’ really means

Skeptical, Guttentag researched for the total number of HECM foreclosures since 2009. He uncovered a report provided by the agency to a consumer group in response to a freedom of information request. Since April 2009, there have been 41,237 reverse mortgage foreclosures accounting for roughly 4% of all…

Download the video transcript here.

Sacred Cows



HECM Line of Credit (Principal Limit) Growth Rate in AARP’s Crosshairs

reverse mortgage newsSacred cows. Those tenets or beliefs that have been long held above reproach and which are seen as immune from criticism. For the Home Equity Conversion Mortgage, one benefit has been largely left unscathed, that is until now. AARP is recommending the elimination of the principal limit growth factor, or as many refer to it the credit line growth rate feature.

There are many competing and cooperating opinions that are voiced when HUD makes revisions to the federally-insured reverse mortgage program. Industry stakeholders, trade groups and consumer advocacy groups. While all groups stated goal is to serve the needs of aging homeowners, the proposed policies have profound differences in implementation, and most importantly on the future appeal and accessibility of the HECM to future borrowers…

Download a transcript of this episode here.

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Where Do We Go from Here?

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RMD Interviews NRMLA president Peter Bell on Industry Outlook and change 

If you want an example of rapid industry change look no further than the Home Equity Conversion Mortgage program.

where-we-go

Recently Reverse Mortgage Daily interviewed Peter Bell, president of the National Reverse Mortgage Lenders Association or NRMLA seeking insight on the recent spate of changes to the HECM program and our industry’sfuture.

First RMD asked- given the Financial Assessment is underway and the non-borrowing spouse issue seems to be getting resolved, how would you classify the footing of the Reverse Mortgage program right now relative to other points in history?

Download a transcript of this episode here.

Looking for more reverse mortgage news, commentary and technology? Visit ReverseFocus.com today.

5 Things You May Not Know about the Financial Assessment

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Five Take-Aways from the Financial Assessment

reverse mortgage newsTwo weeks ago today we hosted a national webinar on the Financial Assessment with over 800 participants. Since that time the proverbial dust has begun to settle allowing us to absorb more details for the new way of doing business. That said there are five key facets of the Financial Assessment that may be overlooked or misunderstood.

1- Credit Scores. One could reasonably conclude that anytime a lender is checking a credit report the applicant’ts credit score is a key factor in determining their eligibility. Fortunately unlike traditional mortgages where the applicant’s credit score not only determines eligibility but the interest rate the HECM program has no such consideration. The credit report is soley for examining a borrowers history of paying obligations in a timely manner thus indicating their willingness to meet the financial obligations of a reverse mortgage.

2- Non-HECM liens. Recently uncovered is the requirement that non-HECM liens where the borrower

Download a transcript of this episode here.

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A Plan for Change

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Preparing Yourself for the Financial Assessment

“The reed which bends in the wind is stronger than the mighty oak which breaks in a storm”.

reverse mortgage newsThough centuries old this familiar quote could have been written for the reverse mortgage professional. The last two years have given us both numerous and monumental changes to the federally-insured Home Equity Conversion Mortgage Program. That change is here to stay regardless of our misgivings, approval or apprehension which leads us to the question, ‘how can we prepare for change?’.

Here are five points to ponder in your planning for 2015 and the brave new world of reverse mortgage lending.

1- Adjust your mindset. This is perhaps our most challenging task to date. Even if we strongly disagree with distribution limits, the financial assessment or seasoning requirements for non-HECM liens we must first get ourselves into a mindset of acceptance and implementation. The good news is we have a few months to settle our misgivings and concerns before we reach out to new potential borrowers once the Financial Assessment is enacted. If we skip this step our prospects will sense our hesitation or lack of belief in the program and respond in kind.

 

2- Prepare your approach. Rather than a script write down the…

Download the video transcript for this episode here.

Looking for more reverse mortgage tools, training & technology? Visit ReverseFocus.com today.