Tag Archives: National Reverse Mortgage Lenders Association Regional Conference

2015 NRMLA Regional Conference, Day Three

14 Apr

Tradition Title Agency representatives Karen Keating and Alison Keating met many of our partners at this year’s National Reverse Mortgage Lenders Association Regional Conference in New York.  Here is a recap of the conference topics, a day at a time.

On Friday March 27, the conference panel resumed with the “Counsel’s Briefing” where the NRMLA legal team of Jim Brodsky and Jim Milano gave participants a regulatory and legal update.  They covered several topics of interest.

In general, marketing has been under scrutiny by the CFPB (Consumer Financial Protection Bureau). The Bureau has taken action against misleading advertising, with litigation and penalties imposed.  Cases examined included an ongoing lawsuit against All Financial regarding HECM advertising, a settlement with former HECM lender New Day over non-disclosure of paid endorsements, and a civil penalty against Lighthouse Title for paying referral fees.

The team advised caution in marketing.

The non-borrowing spouse case of Bennett vs Donovan (as Secretary of HUD) was resolved with a determination that regulations at the time were unclear, with an ongoing effort for senior borrowers, as a class, to be protected.

As always, loan officer compensation rules were discussed.  The CFPB has said that LOs cannot be paid based on terms of the loan, no dual compensation is permitted, and no steering can be allowed.  These rules are not applicable to open-ended loans.

The CFPB has compiled a complaint database on the Bureau’s website where Yelp-like reviews can be posted.  Their internal complaint portal has a feature where companies can sign up to receive and respond to any complaints.

The final session of the day and of the conference was an update on the secondary market: “HMBS Investor Issues and Trends.”

The latest on secondary markets is summed up in this article:

http://www.nrmlaonline.org/RMS/SECONDAY_MARKETS.ASPX?article_id=1591

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2015 NRMLA Regional Conference, Day Two, Afternoon

13 Apr

Tradition Title Agency representatives Karen Keating and Alison Keating met many of our partners at this year’s National Reverse Mortgage Lenders Association Regional Conference in New York.  Here is a recap of the conference topics, a day at a time.

The first topic covered Thursday afternoon was “Trends and Issues in Counseling”.  The panel reiterated that HECM counselors do not make pass/fail decisions on Financial Assessment.  Their mission is to explain, field questions, and determine whether their client fully understands the HECM product.

Counselors are not permitted to steer clients to any particular product or lender, but they may encourage them to shop around and to negotiate fees.  There were conference attendee comments that stated occasions when counselors had given erroneous information to borrowers, and the panel urged everyone to call the counseling agency in question if they believe that is the case.

Counseling agency panelists had comments of their own on the topic of lender steering, and reminded the audience that steering to any particular counselor is not permitted.  They asked attendees to report to HUD any marketing information received by a counseling agency, because in the same way, counseling agencies are not permitted to solicit clients.

 

The second afternoon session addressed HECM Loss Mitigation.  Payment of property taxes is tracked by the servicer directly, while insurance coverage and policies are tracked using outside vendor services.  Technical delinquency is defined as a failure to pay taxes and/or insurance when due.  Servicer actions include paying taxes and “lender-placed” insurance.

Reminder letters are sent before taxes are due, and if they are not paid in a timely manner the servicer will pay taxes on the borrowers behalf, notifying them by letter that they have done so.  Letters are sent before homeowners insurance premiums are due and upon being late for 21 days, lender-placed insurance becomes effective.  If property charges are paid by the servicer, a letter is sent to the borrower requiring them to contact the servicer, and a repayment plan is put in place.

A borrower is determined to be in default if they are Unable to pay, Unwilling to pay, and Unresponsive to servicer prompts.

A “due and payable” process may be set in motion if all loss mitigation options have been exhausted.  The timeline for the demand letters leading up to the foreclosure process and sale is regulated by each state.  A borrower can at any point reinstate their loan by paying taxes and insurance up to date.  A borrower is not personally liable for a reverse mortgage, so no deficiency judgment is filed after a foreclosure sale.

Very specific rules govern non-borrowing spouses who do not fall under the rules set forth on August 4, 2014.  There is a Principle Limit test and a Factor test which are outlined in Mortgagee Letter ML 2015-03.  A call to the servicer is recommended in all cases where there is a question or problem.

 

Thursday’s final session was “Understanding the Mechanics of Social Security and Its Impact On Your Clients Retirement Plan.”

A variety of options and scenarios were provided, highlighted by some useful information and ideas.  A 62-year-old loses $200,000 – $300,000 in lifetime Social Security benefits by NOT holding off until age 66 to claim benefits.  Maximum benefits are gained by claiming between ages 68 and 70, while maximum spousal benefits can be claimed at around age 66.

Full retirement age for people born between 1943 and 1954 is 66, while for those born 1960 and later full retirement will not come until age 67.  For those years in between, there is a scale of months based on years of age.  Social Security looks at the best 35 years of earnings.

Couples can use strategies such as “File and Suspend” and/or “Restricted Application” to maximize the combination of personal and spousal benefits.

Speaker Russell Settle of Social Security Choices provided his website http://www.SocialSecurityChoices.com to explore the various strategies.

 

 

2015 NRMLA Regional Conference, Day One

7 Apr

Tradition Title Agency representatives Karen Keating and Alison Keating met many of our partners at this year’s National Reverse Mortgage Lenders Association Regional Conference in New York.  Here is a recap of the conference topics, a day at a time.

Day One featured an in-depth session on the Financial Assessment that goes into effect for FHA case numbers assigned on or after April 27, 2015.  In 2012, the FHA promised Congress to restore the insurance fund in two ways:  through Financial Assessment (FA) and Tax and Insurance Set-Asides.

Fundamentally, the FA will assess credit history, assess property charge payment history, and calculate residual income.  This will apply to every HECM, every borrower, without exception.  A full assessment will not be required for a non-borrowing spouse unless their residual income is used as a compensating factor.

There was discussion of the use of FA as a sales tool, providing valuable information to borrowers in the decision-making process.  FA can be used to go further than loan qualification and truly understand the applicant’s situation.  In the same way, analysis of a credit report can be used to track spending habits and credit card debt to see where a particular situation is heading.

The panel gave attendees some useful tips, including the use of a checklist and FA worksheet.

The LESA, or Life Expectancy Set-Aside was discussed extensively.  Based upon income and debt, and the predicted cost of living, borrowers must demonstrate that their residual income is sufficient.  If payment history and income fall within acceptable parameters, a LESA may not be required.

If an applicant does not meet standards even with the consideration of extenuating circumstances, a fully-funded LESA is required.  If credit and payment history is satisfactory but income is insufficient, a partially-funded LESA can be prescribed, where the mortgagor sets aside funds to be provided to the borrower periodically for the payment of property charges.

LESA charges include real estate taxes, homeowners insurance and flood insurance.

It was strongly recommended to read the FA handbook – more than once if possible – to fully understand FA.  You can download the pdf file here:

http://portal.hud.gov/hudportal/documents/huddoc?id=14-22ml-atch2.pdf