Underwriters ask a lot of questions. They seek file-related issue resolution from originators, vendors and processors who assist in providing additional support to variances in policy and procedure or lack of information noted in their review. Many times, these resources assist in clearing confusion. I have a confession to make: I am confused. My confusion has resulted in several questions that I cannot clearly resolve.
For example, over the past years, at what point in time did I not exercise a prudent underwriting approach and philosophy to safeguard the borrower(s); protect the “fund”; mitigate risk for my employer, who is the lender; and observe the guidance, regulation and direction provided by FHA when evaluating the request for approval of a HECM transaction assigned to me for decision?
I underwrote conventional and government loans for very many years in the forward market. Last decade (!) I was taken under the wing of my mentor, Deanne Opstad, while a correspondent for Financial Freedom. She tough-lovingly converted my seasoned forward skills and knowledge to HECM underwriting authority as well. Deanne imparted a discipline that required observance of guidelines, guidance, manuals, mortgagee letters and regulation as the basis for addressing loan approval requests for reverse mortgages. She painstakingly relieved me of my ratio fears, MCAW activities, derogatory credit (except for federal debt) concerns and modified my forward concept of capacity, willingness and ability to pay within the confines of HECM-specific program requirements and guidelines. She allowed me to look and not react to a 475 FICO score!
Her support made me what I was and remain today: a prudent underwriter. So, where does an underwriter seek “confusion resolution” when the investor, lender and loan program policies and procedures remain unchanged and the only guidance available is “You have always had the ability to…”?
Take the credit report. Is the FICO score combined with a repossessed auto and several unpaid medical bills from a deceased spouse something to which I should now react? What about the fact that in the forward market, every borrower was born with a 30-day late payment on their Sears revolving charge card?
Another question: Can someone tell me which Mortgagee Letter I can reference wherein the privilege and opportunity to transact a HECM was mandated as a right for every older American homeowner?
As an industry we have been discussing financial assessment for months now. When I review HECM lender websites, why are the features and benefits virtually unchanged from what we have been educating potential borrowers about for years?
No Monthly Payments No Credit Report No Employment Qualification No Medical Qualification No Income Requirements No Asset Verification No Recourse No Tax or Insurance Escrows No Restrictions on Use of Funds
Lastly, what is the capacity and willingness of the older American, the counseling network and our own industry origination force to enact some of the proposed financial assessment tools based upon no prior experience with a forward process of evaluation of ability, willingness, overlays of credit, capacity and character?
In the next few months I will be seeking resolution to these and related financial assessment-related questions. Your help, comments and support as a reader will be greatly appreciated and will also be a critical part of the resolution process. The Reverse Review and I welcome your input and ask that you direct your comments to us at: email@example.com. Happy New Year!