On the Docket: Fed Budget Shows MMI Fund Gaining Strength, Proposes Loan Cap Elimination
The FHA’s Mutual Mortgage Insurance Fund is heading in the right direction, according to President Barack Obama’s FY 2016 budget released on February 2. Strengthening the fund, which by statute is required to be net neutral, was the intent of the Reverse Mortgage Stabilization Act of 2013. NRMLA advocated for that act, and the resultant changes to the HUD program include upfront draw limitations, alterations in the mortgage insurance premium structure to encourage lower draws, and the imminent implementation of financial assessment.
For FY 2016 (which begins October 1, 2015), the Office of Management and Budget projects the HECM portion of the fund will produce a negative credit subsidy of -0.69. No Treasury infusion will be needed for the third-consecutive fiscal year. The HECM program will more than pay for itself. And accusations that the federal reverse mortgage program will cost the taxpayers money—such as those made recently by Pat Robertson—will join the list of misinformation doled out too frequently.
Obama’s 2016 budget proposes an elimination of the cap on the number of HECM loans that can be outstanding at any time. The most recent cap of 275,000 loans was set in 2006 and has been suspended every year thereafter to accommodate growth in the program. This proposal would eliminate the need for an annual suspension extension. The budget also requests an increase in housing counseling support from $47 million utilized in FY 2015 to $60 million available in FY 2016.
In addition, an Administrative Provision is proposed that amends the National Housing Act to delete the sentence “For purposes of this subsection, the term ‘homeowner’ includes the spouse of a homeowner.” In its place is language stating, “The Secretary may, within his sole discretion, provide for further deferrals.” The deleted language is the basis for the recent lawsuits against HUD around the rights of non-borrowing spouses following the passing of borrowers.
The release of the president’s budget each year is a kickoff for negotiations between the White House and the houses of Congress with the goal of reaching an agreement by the start of the new fiscal year. An interesting note about this year’s budget process is that Shaun Donovan, who served as HUD Secretary when the HECM changes were designed, now serves as Director of the Office of Management and Budget.
Reiterating “Freedom of Choice” Draw Options A new Ethics Advisory Opinion published by NRMLA’s Ethics Committee reminds industry participants that any requests for funds after the expiration of the first 12-month disbursement limit period should be at the sole discretion of the borrower. Ethics Advisory 2015-01: Freedom of Choice Remaining Draw Options After 12 Months/Ethical Obligations and Restrictions highlights two key points contained in Mortgagee Letter 2014-11:
- That mortgagees, whether through pricing options, marketing or advertising, may not “encourage” mortgagors to take any remaining funds after the 12-month period ends “whether they need it or not;” and
- That mortgagors should determine at their own discretion and without “encouragement” from mortgagees, the “timing or amount” of such remaining draws.
The Ethics Committee refers to these two points as the mortgagor “Freedom of Choice” requirements. The advisory opinion adds, “It is the Committee’s view that NRMLA Members are required under the Code of Ethics to honor the mortgagor Freedom of Choice requirements, and not, through pricing options, marketing, advertising or otherwise, to take any actions that directly or indirectly encourage HECM loan mortgagors with remaining draw amounts following the First 12-Month Disbursement Period to draw such remaining amounts in any manner (including, for example, drawing all such remaining funds) other than in the manner, and with such timing and in such amounts, as such mortgagors themselves determine are appropriate to meet their needs.”
Any NRMLA member who violates the Freedom of Choice requirements is subject to possible sanctions by the Ethics Committee, including termination of membership and public naming.
Preparing for the White House Conference on Aging Preparation for the 2015 White House Conference on Aging, scheduled for July, includes regional forums, the first of which will be in Tampa, Florida, on February 19. Subsequent forums will be held in Phoenix, Arizona, on March 31; Seattle, Washington, on April 9; Cleveland, Ohio, on April 27; and Boston, Massachusetts, on May 28. Each will allow the planning committee to hear directly from the public on issues such as ensuring retirement security, promoting healthy aging, providing long-term services and support, and protecting older Americans from financial exploitation, abuse, and neglect. They will also help to reach older Americans and their caregivers, advocates and others stakeholders where they live.
The regional forums are co-sponsored by AARP and are being planned in coordination with the Leadership Council of Aging Organizations, a coalition of more than 70 of the nation’s leading organizations serving older Americans. While participation is by invitation, all of the events will be live via webcast to engage as many people as possible.
In the Association
Traffic to Consumer Site Grows 44% Unique visits to NRMLA’s consumer site, reversemortgage.org, grew 44 percent last year, averaging 28,259 visits per month versus 19,561 in 2013. A record 33,066 unique visitors utilized the site in July.
We anticipate these numbers will improve through NRMLA’s efforts to maintain a strong ranking on Google, as well as our promotion of the site through social media and during press interviews.
With all this traffic, you will want to make sure your complementary lender listings are still current. If changes are necessary, please send them to Darryl Hicks at dhicks@dworbell.com.
Professionals Achieve CRMP Status NRMLA congratulates the following individuals for earning the Certified Reverse Mortgage Professional designation:
- Tim Anderson, Responsible Reverse Mortgage, Inc., Fernandina Beach, Florida
- Eric Christensen, Access Reverse Mortgage Corporation, St. Petersburg, Florida
- Mike Gruley, 1st Financial Reverse Mortgages, Plymouth, Michigan
- Pat Kubert, Reverse Mortgage Solutions, Canton, Michigan
- Tim Linger, 1-866-REVERSE Mortgage, Orlando, Florida
- Jonathan Michael Maiolatesi, 1st Financial Reverse Mortgages, Plymouth, Michigan
- Malcolm S. Tennant, Access Reverse Mortgage Corporation, St. Petersburg, Florida
- Parker Turk, Sun American Mortgage Company, Mesa, Arizona
Ninety-seven individuals have earned the CRMP designation since mid-2010 and every one of them is prominently listed on the NRMLA consumer website, reversemortgage.org.
Just Joined NRMLA welcomes the following new members:
- Loan Lynx, LLC, Port Saint Lucie, Florida (Lender)
- Realty Lending Group, based in San Diego, California (Lender)
- Quontic Bank, based in Jericho, New York (Lender)
- Synergy One Lending dba Retirement Funding Solutions, based in San Diego, California (Lender)
