New York Regional NRMLA Conference Offers Useful Information – Part TWO – Industry/HUD/FHA Updates

21 Mar

NRMLA President Peter Bell offered welcoming remarks at the General Session Tuesday March 19, 2013.   Guest speakers remarked that 8000 Americans turn 65 every day, and eleven million retirees will not be able to afford household expenses.  Again it was stressed how important a reverse mortgage can be in a wealth management portfolio.  Americans have 50 – 66% of their assets tied up in home equity, while only 2% of those eligible have taken advantage of the HECM product.

Director of HUD Single Family Program Development Karen Hill spoke about FHA policy.  She mentioned the predicted effects of the current sequestration: Staff impacts will include furloughs, a hiring freeze, and limited travel and training.  There will likely be delays in mortgage insurance applications, claims and answers to inquiries.  Counseling grants could also be impacted.

The mission of the FHA is to provide access to credit for under-served borrowers.  They must preserve the health of the MMI fund and manage/mitigate loss.  Steps taken this year were to raise the MMP in forward loans and to consolidate the fixed HECM products, eliminating the Fixed Standard on April 1 of this year.  Ms. Hill predicted that slightly fewer HECMs would be endorsed this year.

Currently, she reported, 73% of HECMs are fixed rate while only 23% are adjustable rate products.  Issues that will be addressed this year are the cap on HECM endorsements, the non-borrowing spouse scenario, and the funding and availability of HECM counseling.  Policy changes being considered may set limits on loan draws, mandate escrows for taxes and insurance, and implement a financial assessment for borrowers.  Policy will be published August 1st for implementation in October.

John Olmstead from the HUD Office of Housing Counseling remarked on their intentions to improve monitoring, communications and metrics for reporting the data collected by reverse mortgage counselors.  There are currently 2400 approved counseling agencies, 129 of which are approved for HECM counseling.  There are 629 active, approved HECM counselors today.

Recent guidance which has been promulgated to reverse mortgage providers includes warning against steering, loan officer participation in counseling, and cases where a loan officer has provided answers to possible counseling quiz answers.

HUD staff reported that $895 million has been disbursed from the insurance fund for 8591 claims processed.  61% of claims resulted from foreclosure and deed-in-lieu, 23 from assignments of mortgage, and a further 9% from mortgagors’ sale.

The Conference then moved to a panel discussion on the state of the reverse mortgage industry.  The goal of empowering the FHA with authority over the HECM product was discussed.  Broadening the marketplace, however, was the theme that everyone agreed is top priority.  Communication with the general public is key.  There have been fewer HECM loans written in the recent past, but the product remains a valuable one.  It is possible that sales strategies changed when the fixed rate product came to the market in 2009 and they need to be changed again to illustrate to seniors the advantages of a reverse mortgage.

The mission of the HECM program is to facilitate aging in place, and many factors in the current market favor its success.  Aging Baby Boomers, appreciation of home values, and the money being spent on TV advertising all bode well for the future of the HECM program.

In NRMLA’s future, we see more professional education and more involvement of state legislators/regulators.

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