Tag Archives: National Reverse Mortgage Lenders Association

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.

See You Next Week!

13 Mar

Conference_Banner.1

We look forward to seeing all our reverse mortgage brokers/lenders/loan officers at the conference next week!

Tradition Title is a proud sponsor of this event!

 

Federal Legislation Affects Reverse Mortgages

7 Mar

Two issues exist that affect reverse mortgages:

 

The first is the current budget sequester.  With federal funding cut to HUD grants that provide reverse mortgage counseling,

“From HUD’s perspective, the March 1 sequestration would also have even broader harmful effects on middle class families, on communities, and on the economy across the nation. Specifically: Sequestration would result in 75,000 fewer households receiving foreclosure prevention, pre-purchase, rental or other counseling though HUD housing counseling grants,”  said  Department of Housing and Urban Development Secretary Shaun Donovan.

 

The second is the current cap set by Congress on the total number of HECM reverse mortgages that can be insured by the FHA.  The cap has been raised from 2,500 loans in 1990 to 25,000 loans by the end of 1995., with subsequent raises of the cap leading to its current level, set in 2006 at 275,000.

“A major issue faced by the reverse mortgage industry is that, while the HECM program was made permanent back in 1998, there has been a statutory limit on the number of loans FHA is authorized to insure,” NRMLA President Peter Bell said in testimony presented to the Senate Banking Committee. “Although the cap has been routinely raised or suspended by Congress in a series of consecutive appropriations measures and continuing resolutions, the existence of the cap deters some industry participants from making the commitment required to fully embrace reverse mortgage lending, thus keeping competition in the market at a minimal level.”

“NRMLA urges Congress to support the continued availability of Home Equity Conversion Mortgages by permanently removing the cap on the number of HECMs that FHA may insure to minimize any possible disruption in the availability of this importance personal financial management tool,” Bell said.

Protecting Your Business: Recognizing and Avoiding Fraud

9 Apr

Some great info was put out at the NRMLA Eastern Regional Meeting earlier this month.  One of the more important topics was fraud.  I covered this in my notes, but here is a recap of that session:

Investigations are sometimes initiated by complaints made by family members, which, by the way, do not always turn out to uncover fraud.  Some family members simply do not understand the product, but every complaint is investigated.  There can be single instances, and worryingly, organized criminal groups targeting elderly reverse mortgage clients.  Several crime rings have already been busted.

Common ways in which fraud can be committed or attempted in reverse mortgage origination is through misrepresentation of appraisal value, if the transaction is non-arms-length, or it may involve identity theft through abuse of a power of attorney.  Occupancy of the property may be misrepresented, documents falsified, kickbacks given, or there can be theft of funds disbursed – sometimes without the knowledge or understanding of the borrower.

Fraud has occurred after origination during servicing, through misrepresentation of occupancy or unauthorized requests for funds (back to identity theft here).  Money

online fraud

online fraud (Photo credit: ivers)

laundering is not unknown.  Fraudulent solicitations to refinance are not uncommon.

If you discover fraud within your own company, the panelists at the conference advised attendees that it is best to self-report.  A cover-up can only complicate matters and exacerbate punishment.  Good advice.

REPORT FROM THE NRMLA 2012 EASTERN REGIONAL MEETING

29 Mar

Those friends and colleagues old and new that I had the pleasure of meeting at the Hyatt in Manhattan: It was great to see you!

For those who were unable to attend:  Here is a brief summary of the highlights – those who would like a copy of my detailed notes, call or email me.  kkeating@traditionta.com or 631-328-4410.

First, there was some discussion on the immediate future of reverse mortgages.  Press has generally been more positive and more accurate, but we may not see a big increase in loans until real estate starts to appreciate significantly.

The Consumer protection Bureau’s study on reverse mortgages should be complete in July of this year, and in the meantime they are participating in the effort to simplify loan disclosures.

Notably, a hybrid reverse mortgage has been discussed with HUD, and they seemed quite interested, but their wheels turn slowly.

A panel of mortgage company principals and active originators discussed compensation rules, which still seem to remain unclear or subject to interpretation.

A panel of HUD directors pointed out that since the new counseling protocol has been in place, the default rate has halved, and quoted statistics on defaults and repayment.

On Day Two, some very helpful information was shared on marketing the HECM Saver and HECM for Purchase, emphasizing tips on networking and good referral sources.

Later Tuesday morning, he three most common fraud investigations were discussed:  complaints by family members, one-off events and organized criminal groups, along with examples of origination fraud, servicing fraud, and how to recognize and avoid them.  A Special Investigator gave some colorful examples from cases he has dealt with.

Important sessions on company branding, with a focus on what motivates an older person’s decision making, and the NRMLA “Borrow with Confidence” campaign rounded out the conference.

Detailed notes will be available on these soon.  Give me a call or send me an email.

Hoping to see you in NYC in March!

29 Feb

For those of you in the reverse mortgage business who have not yet registered for the NRMLA Regional Conference, time is running out to save a few bucks and get the preferred registration rate.

The agenda, plus links to registration, can be found below:

Tradition Title Agency looks forward to seeing you in New York City!

NRMLA Conference Agenda Announced
Effective company branding. Successful sales strategies for HECM Saver and HECM for Purchase. Current policy issues impacting your business. Corporate social responsibility. HMBS issuer challenges.
These are just some of the important issues we will be discussing at the upcoming NRMLA Regional Conference in New York, March 26-27.

NRMLA NY NY Eastern Regional Meeting & Reverse Mortgage Securitization Forum March 26-27, 2012
To view the complete agenda, click here.
 To review for one or both conferences, click here.
 To book your hotel room, click here.

The Reverse Mortgage Nest Egg

24 Jan

According to CBS News MoneyWatch, Americans aged 62 and older had accumulated $3.19 trillion in home equity by the end of the third quarter of 2011, according to data recently released by the National Reverse Mortgage Lenders Association (NRMLA). During the same quarter, home equity increased by $46 billion, reflecting stabilization and improvement in home prices. The $3.19 trillion is the net result of a $4.2 trillion increase in aggregate senior housing values and a mortgage debt of $1.02 trillion.

Reverse mortgages are one way to use your home equity in retirement. You can borrow against the equity in your home without having to make monthly payments as required when you have a traditional mortgage or home equity loan. Under a reverse mortgage, funds are advanced to you, and interest accrues on this balance. The outstanding balance isn’t repaid until you leave the home, sell it or pass away. You can take loan proceeds as a lump sum at loan origination, establish a line of credit or request fixed monthly payments for as long as you continue to live in your home.

According to the NRMLA, 99 percent of the reverse mortgages offered in America are home equity conversion mortgages (HECM) that are insured by the U.S. Department of Housing and Urban Development (HUD). To date, more than 725,000 senior households have utilized an HECM.  

Possible uses of a reverse mortgage include: 

— To pay for high medical or long-term care bills
— To pay for needed repairs on your home
— To provide a monthly payment to supplement your retirement income
— To buy a new home

Here’s one example of how a reverse mortgage might work, according to an online calculator offered by the NRMLA. A 70-year-old couple with a paid-for home worth $300,000 could get a monthly payment of $986 for as long as they live in the home or a single sum payment of $172,564.  The monthly income shown by this example would certainly help supplement Social Security and other retirement income.