One Million HECMs and Counting The reverse mortgage industry reached a monumental milestone: 1 million HECMs. FHA endorsed 3,919 loans in October, bringing the total number of older homeowners who have benefited from FHA-backed reverse mortgages to 1,002,679.
“As an industry, we are proud to offer a financial product that helps older adults supplement their retirement funds while living in their own homes,” said NRMLA President and CEO Peter Bell. “We are grateful to the U.S. Department of Housing and Urban Development, and especially to the work of the late Ed Szymanoski, for modeling the original pilot program that made the HECM program possible.”
Reverse Mortgages: Fact vs. Fiction A new NRMLA graphic, available for download from reversemortgage.org, debunks five common misconceptions about reverse mortgages.
NRMLA explains to consumers that borrowers never lose ownership of the home, that HECM closing costs are comparable to other FHA mortgages, that borrowers will never owe more than the value of the home, that having a conventional mortgage doesn’t automatically disqualify them from getting a reverse mortgage, and that reverse mortgages are not a loan of last resort.
Members are encouraged to share the infographic on Facebook, Twitter and LinkedIn, and use the graphic as part of your educational materials.
FHA Reduces Condo Owner-Occupancy Levels FHA updated its Condominium Project Approval and Processing Guide by clarifying the definition of owner occupancy and establishing new conditions under which occupancy levels in existing projects can be reduced from 50 percent to 35 percent.
Mortgagee Letter 2016-15 retains a minimum owner occupancy requirement of 30 percent of the declared units in Proposed and Under Construction Condominium Projects. Its policies are effective immediately.
“FHA believes this requirement offers a balanced approach between providing affordable, sustainable housing opportunities and managing risk to FHA’s Mutual Mortgage Insurance Fund,” the agency stated.
New Data Source for HECM 10-Year LIBOR Swap Rate Beginning October 31, expected interest rate calculations made for LIBOR-indexed HECM loans are now based on data sourced from the Intercontinental Exchange (ICE) Benchmark Administration instead of the Federal Reserve Board’s H.15 statistical release.
Guidance contained in Mortgagee Letter 2016-15 replaces requirements issued in ML 2007-13 that directed mortgagees to use the H.15 statistical release as the source for LIBOR rates, which ceased publication October 31, 2016.
ML 2016-16 clarifies that mortgagees must continue to the use the LIBOR 10-Year Swap when calculating the expected interest rate for LIBOR-indexed HECM loans even though ICE does not use the term LIBOR in its reference to the 10-Year swap rate.
CFPB Publishes HECM Servicing Examination Procedures The CFPB updated its Supervision and Examination Manual by including new exam procedures for reverse mortgage servicing.
The examination guidelines are for government auditors or examiners (in this case, CFPB employees) to utilize when they audit and examine entities subject to the CFPB’s supervision authority.
The exam procedures cover eight modules, including Servicing Transfers, Loan Ownership Transfers, and Escrow Disclosures; Account Maintenance, Payments, and Disclosures; Foreclosures; and Consumer Inquiries, Complaints, and Error Resolution Procedures. You can view the servicing examination guidelines and a memorandum written by NRMLA’s legal counsel Jim Milano at nrmlaonline.org.
HUD Announces Foreclosure Moratorium in Disaster Areas Housing Secretary Julián Castro said that his department will grant a 90-day moratorium on foreclosures and forbearance on foreclosures of FHA-insured home mortgages, including reverse mortgages, in disaster-declared sections of North Carolina, Florida and Georgia hit by Hurricane Matthew. View the full press release and get more information on disaster relief options for FHA homeowners at hud.gov.
Reverse Mortgages in the News
- If you’re nearing retirement or already there, and you’re worried you won’t have enough money, a reverse mortgage might be a smart strategy, writes NerdWallet personal finance reporter Deborah Kearns, whose article, “How to tell if a reverse mortgage is right for you,” appeared in USA Today. “The key to deciding if a reverse mortgage is right for you is finding the right company to work with,” asserts 63-year-old Eileen Redden of Bayside, New York, who has a reverse mortgage line of credit. In addition to describing the features and costs of reverse mortgages, Kearns interviewed Paul Fiore, executive vice president at AAG, who provided tips to help consumers avoid potential scams.
- Money magazine editor-at-large Penelope Wang interviewed Wade Pfauprofessor of retirement income at the American College of Financial Services and author of Reverse Mortgages: How to Use Reverse Mortgages to Secure Your Retirement,—about recent regulatory improvements to the HECM program and why reverse mortgages should be considered part of a retirement plan. “Used strategically, a reverse mortgage can greatly improve the sustainability of your retirement income,” Pfau told Wang for her article, “A Surprising Suggestion for Retirement Income.” After comparing different scenarios using reverse mortgages with other forms of retirement income, Pfau found that reverse mortgages improved the sustainability of retirement portfolios and resulted in larger amounts for heirs. “Reverse mortgage loans help cushion market risk, and they reduce the need for investment portfolio withdrawals,” he says.
- Financial planning expert Neil Krishnaswamy wrote “5 Ways a Reverse Mortgage Can Help Your Retirement” for NextAvenue, public media’s first and only national service for America’s booming 50-plus population, to explain how reverse mortgages can improve retirement spending outcomes. His reasons include providing funding to pay taxes for Roth IRA conversions and actually leaving a larger inheritance to heirs. Krishnaswamy’s column was reposted to forbes.com.
New Members NRMLA welcomes the following new members:
- Homeowners Financial Group USA, LLC, Santa Fe, New Mexico
- McGuireWoods LLP, San Francisco, California
- True Concept Title, Dunedin, Florida
- Navicore Solutions, San Diego, California
- National Payment Services Co., Inc., Studio City, California
- 1st National Reverse Mortgage, Ann Arbor, Michigan
- Atlantic Coast Mortgage, LLC, Fairfax, Virginia
- Lakeshore Home Solutions, Cleveland, Ohio
Congratulations New CRMPS NRMLA congratulates the following individuals for achieving the status of Certified Reverse Mortgage Professional (CRMP).
- Craig Bryant, Banc of California, Tustin, California
- Mary Nelson, VIP Mortgage, Scottsdale, Arizona
