Written by Marty Bell, as originally published in The Reverse Review.

On the Docket: HUD Granting 60-Day NBS Foreclosure Extensions
FHA mortgagees may request extensions on foreclosure initiation of up to 60 days when there is a surviving non-borrowing spouse living in the property, according to a Mortgagee Letter released by HUD.

Announcement 2014-19, published April 21, says extensions will be granted on a case-by-case basis and may include loans where the mortgagee has already initiated foreclosure.

To request the extension, a mortgagee must:
-Prepare a detailed extension request on company letterhead
-Obtain an authorized loan servicing manager’s signature on the request
-Upload the request in HERMIT to the Documents tab; the servicer is to select the Extension document type

The notice also advises servicers to track these extension requests in their proprietary HECM servicing systems in the event that HUD needs to reach out to the servicers to track the volume of these requests.

GNMA Clarifies Eligibility Guidelines For HMBS Securities
Ginnie Mae placed a temporary moratorium on the pooling of fixed-rate HECMs that allow homeowners to take future draws, either from a line of credit or monthly payments, until it and FHA have additional time to study these newer product variations.

An All Participant Memorandum published this week said Ginnie Mae will cease guaranteeing HECM mortgage-backed securities containing fixed-rate HECMs, other than fixed-rate HECMs with a single disbursement lump sum payment plan option, beginning June 1. The moratorium does not impact participations or future draws from loans that were securitized prior to the June 1 deadline, nor does the moratorium affect variable rate HECMs.

However, note that under Ginnie Mae guidelines, the first participation in a HECM loan is not eligible for pooling in the same month in which the loan is funded. Thus, fixed-rate HECM loans originated without the single disbursement lump sum payment plan option will have to be closed on or before April 30, 2014, in order to be pooled and included in Ginnie Mae-guaranteed HMBS securities prior to June 1, 2014.

Ginnie Mae will also monitor issuers who retain fixed-rate HECM loans (other than fixed-rate HECMs with single disbursement lump sum payment plans) outside of HMBS pools because of the interest-rate risk such loans could pose and the potential impact on issuers’ capacity to meet their obligations administering other MBS pools.

However, Ginnie Mae left open the possibility that fixed-rate HECM loans with future draws may be allowed into HMBS pools at a later time after they have been thoroughly analyzed.

In the States
California à Introduced by Assemblyman Jose Medina, Assembly Bill 1700 would impose a seven-day cooling-off period after counseling during which time a lender could not take an application or assess any fees. It would also require a counselor and the prospective borrower to sign a worksheet that addresses and discloses certain issues that the borrower is advised to consider and discuss with the counselor.

Connecticut à In its original form, Senate Bill 226 would have required a non-borrowing spouse to offer his or her consent for the reverse mortgage transaction to proceed. A substitute version has since been filed, which establishes a task force to study the reverse mortgage industry with a special focus on consumer protections and federal and state court cases that directly impact the business. Status: Pending in the Senate.

Another bill introduced in the Connecticut legislature is Senate Bill 5352, which would require reverse mortgage servicers to obtain a license from the Connecticut Banking Commissioner. Status: Pending in the Joint Committee on Banks.

Illinois à Illinois House Bill 5331 would require persons exempted from the Illinois Predatory Lending Database Program, which includes reverse mortgage loan originators, to obtain a certificate of exemption that must be filed with the mortgage. Status: Passed the Illinois House of Representatives and is now pending in the Senate.

Rhode Island à House Bill 7648 would require reverse mortgage servicers to obtain a license from the Director of the Department of Business Regulation. Status: Committee on Corporations has recommended its passage, but no further action has been taken.

In the Press
The following series of items gives you a sense of NRMLA’s war-room approach to press we feel is inaccurate or misinformed.

NY Times Article Causes Backlash
One of the more controversial articles published this past month was Jessica Silver-Greenberg’s piece in the March 26edition of The New York Times about the frustration of heirs whose parents got a reverse mortgage and the issues they encountered paying off the debt so they could keep the house.

The article, titled “Pitfalls of Reverse Mortgages May Pass to Borrower’s Heirs,” generated just under 630 comments, the vast majority of them critical of the reporting and the views expressed by the heirs.

Persons interviewed for the story, including Isabel Santos, whose mother, Yolanda, got a reverse mortgage in 2009 to pay for living and medical expenses, argue that they were never told by the lender that they could purchase their parent’s home for 95 percent of its appraised value.

Silver-Greenberg wrote, “Ms. Santos, 61, along with a growing number of baby boomers, is confronting a bitter inheritance: The same loans that were supposed to

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help their elderly parents stay in their houses are now pushing their children out.”

NRMLA President & CEO Peter Bell explained that reverse mortgages are tightly regulated and that lenders strictly abide by the 95 percent rule. Lenders must give heirs up to 30 days from when the loan becomes due to determine what they want to do with the property, and up to six months to arrange financing or sell the property, with possible extensions. If the heirs don’t meet these federally mandated deadlines, then lenders are obligated to initiate foreclosure.

There is no data, wrote Silver-Greenberg, on how many heirs are facing foreclosure, but based on interviews with elder care advocates, housing counselors and heirs, she said it is a “growing problem already affecting an estimated tens of thousands of people. And it is one that threatens to ensnare future generations, as older Americans increasingly turn to their homes for cash.”

The conclusions perpetuated by Silver-Greenberg led to an immediate response from NRMLA President & CEO Peter Bell. “The misleading rhetoric and the author’s unsubstantiated estimates on the scope of families in similar situations as those she wrote about were irresponsible at best. Important facts about repayment options that heirs of borrowers have are glossed over or simply omitted,” Bell wrote. “The handling of an estate is inherently difficult, both emotionally and logistically. But such inaccurate reporting only perpetuates misinformation about an important retirement financing tool for many aging Americans.”

The Times did not publish Bell’s Letter to the Editor, but the newspaper did print a more balanced follow-up story (titled “Reverse Mortgage Realities”) on April 10 that uncovered a sense of entitlement felt by some heirs, who focused on their needs rather than their parents’ financial well-being. Elder law and reverse mortgage experts, wrote author Lisa Provost, say they frequently encounter resistance from children less concerned about the terms of the loan than about losing their presumed inheritance.

“When the entire family is involved in the discussion about whether to take a reverse mortgage, sometimes the children understand their parents need the equity, while other times, they are openly opposed,” added James A. Robbins, an elder law attorney in New York. The duty of the lawyer representing the parents, he said, is to advise them as to what’s in their best interests, not the best interests of their children.

Once fully informed, the children may be more supportive of their parents’ decision. Another New York-based elder law attorney interviewed by Provost, Deborah Ball, tells of a wife and ailing husband who took out the largest reverse mortgage they could qualify for so they could renovate their home to accommodate a live-in caregiver. Their children had no objections at all. And “when the children are not a factor,” she said, “it’s a beautiful thing.”

New Members
NRMLA welcomes the following companies who recently joined the association.

Silver Lining Realty (Associate Member)
Newport Beach, California

Salem Five Mortgage Company, LLC (Lender)
Plymouth, California

360 Mortgage Group, LLC (Lender)
Austin, Texas

Starboard Financial Management LLC (Lender)
Gilbert, Arizona

Consumer Site Traffic Jumps 33%
During the first four months of 2014, NRMLA’s consumer site,, has averaged 28,834 unique visits per month, compared to an average of 19,561 in 2013. In April, unique visits totaled 27,561.


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3d rendering of a row of luxury townhouses along a street

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