On the Docket—Issues We Can Tackle

One of our responsibilities at NRMLA is to closely monitor the national press. Each morning, with the support of our public relations firm, Rasky Baerlein/Prism, we collect as many stories from around the country as we can find via press aggregators such as Google Alerts and PR Newswire.

At this month’s meeting of our Board of Directors, I presented an assessment of just where we stand with the press, looking at the topics that have attracted negative press in the past: those that seem to have been eliminated, and those that linger.

The list of issues over the past few years included:

• Non-borrowing spouses
• Tax and insurance default
• High or full upfront draws
• Costs
• Approach to advertising
• MMI Fund treasury draws
• Industry behavior

Of these, the changes to the HECM program over the past year have minimalized press fingerprinting on tax and insurance default, high or full upfront draws, MMI Fund treasury draws and non-borrowing spouses for loans that closed after August 4 of this year.

The issues that linger are costs, our approach to advertising, industry behavior and non-borrowing spouse cases that occurred before August 4.

What we find interesting here is that the issues that have been eliminated needed program alterations from HUD. But, with the possible exception of the non-borrowing spouse cases occurring before August 4, the issues that linger are under our control. If we choose to as an industry, we can address costs, advertising and behavior as a path toward further improving our reputation.

1,100 Housing Professionals Converge On D.C. After three years of work devoted to setting a new direction for the nation’s housing policy, the Bipartisan Policy Center’s Housing Commission united over 1,100 housing professionals in Washington, D.C., September 15-16, to more fully engage federal, state and local officials on housing topics.

The commission’s co-chairs, former Senators Kit Bond, Mel Martinez and George Mitchell, along with former Housing Secretary Henry Cisneros, highlighted for the attendees the nation’s aging population, which desires to age in place, and unanswered questions about how the housing system can meet these changing demands.

In the commission’s own report on policy recommendations that might “provide a more dedicated focus on responding to the housing challenges of a growing senior population,” there is a call for better integrating aging-in-place priorities into existing federal programs, such as reverse mortgages and other home equity access products. The commission’s report recognizes that limited preparedness and a shrinking social safety net will create increased consumer interest in reverse mortgages. As such, the commission suggests that it will be “imperative that older homeowners have access to low-cost and effective reverse mortgage counseling so they can learn about the risks and potential benefits of these mortgage products before they face a financial crisis.”

After panel discussions with five FHA commissioners and six secretaries of housing, the event was capped by a closing keynote by Secretary Julian Castro (who also happened to be celebrating his 40th birthday). While only being on the job for seven weeks, Secretary Castro unveiled his bold vision for HUD’s next 50 years.

You can read Castro’s remarks at portal.hud.gov/hudportal/HUD?src=/hudvision.

Ethics Committee Updates Refinance Guidelines NRMLA’s Board of Directors has adopted Ethics Advisory Opinion 2014-1: Ethical Refinancing of HECM Reverse Mortgage Loans and Anti-Churning Considerations. The document updates prior advisories that addressed ethical refinance activities, so that new FHA program changes enacted over the past year are considered.

For example, prior guidance permitted members to refinance HECM reverse mortgages six months after closing if there was a bona fide advantage to the borrower. However, Mortgagee Letter 2013-27 limits upfront draw restrictions during the initial 12 months after closing, so these concepts must now be considered when members develop refinance policies.

The advisory opinion was developed by the Standards and Ethics Committee, with advice from NRMLA’s outside legal counsel, Weiner Brodsky Kider, PC.

Reverse Market Index Highest Level Since 2007 The NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI), a quarterly measure that analyzes trends in home values, home equity and mortgage debt held by homeowners 62 and older, reached 178.91 during the second quarter of 2014, its highest level since Q4 2007. The RMMI is updated quarterly and tracks back to the start of 2000.

Homeowners eligible for a reverse mortgage now have more equity in their homes than at any time since early 2008. Home equity held by persons 62 and older has grown by more than 22 percent since Q2 2012 to a total of $3.73 trillion. The $125.2 billion increase in senior home equity in the second quarter was the largest quarterly increase since Q3 2005.

Mortgage debt held by older homeowners stands at $1.08 trillion, a figure that has held steady over the past three quarters. Debt levels peaked at $1.143 trillion in the fourth quarter of 2009.

The RMMI has now risen for nine consecutive quarters.

In the States: California Governor Approves Reverse Mortgage Consumer Protection Bill On September 30, California Governor Jerry Brown signed into law Assembly Bill 1700, which prohibits a reverse mortgage lender from accepting a loan application or assessing any fees until the lapse of seven days from the date the borrower receives counseling from a HUD-approved counselor.

In addition to this new “cooling off” period requirement, the bill revises the current reverse mortgage checklist disclosure and changes the name of the checklist to a “worksheet guide.”

The bill’s effective date is January 1, 2015. The reverse mortgage worksheet guide provides a list of issues that the borrower is advised to consider and discuss with the counselor. Lenders are prohibited from taking a reverse mortgage application unless the borrower has received a copy of the worksheet guide from the lender before the borrower’s counseling session. However, if the borrower seeks counseling prior to requesting a loan application from the lender, the counseling agency must provide the borrower a copy of the worksheet guide. Furthermore, the reverse mortgage worksheet guide must be signed by the borrower and the counselor, if the counseling is done in person, and returned to the lender along with the certification of counseling.