On the Docket: Reiterating “Freedom of Choice” Draw Options 

A new Ethics Advisory Opinion published by the Ethics Committee in February 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”
• 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. CFPB Sues Reverse Lender for False Advertising The CFPB is taking legal action against a Maryland-based mortgage company for disseminating deceptive reverse mortgage advertising.

The CFPB alleges that from November 2011 to December 2012, All Financial Services (AFS), which is not a member of NRMLA, used deceptive advertisements, including some that misrepresented the source of the advertisements as being, or affiliated with, a governmental entity. For example, one mailer sent to nearly 200,000 consumers advertising All Financial Services’ reverse mortgages had an eagle resembling the Great Seal of the United States. Furthermore, the header read, “GOVERNMENT LENDING DIVISION” and “Housing and Recovery Act of 2008 Eligibility Notice.” AFS also misrepresented that the HECM program was time-limited or had a deadline.

In the States Several bills have been introduced by state legislatures that impact reverse mortgage lenders.

California Keep Your Home California, a federally funded mortgage assistance program managed by the California Housing Finance Agency, announced a new effort to help low- and moderate-income homeowners avoid foreclosure on their reverse mortgages.

Borrowers whose loans are in technical default because they are delinquent on their property taxes, homeowner’s insurance policies or condo fees, can qualify for as much as $25,000 in assistance. Keep Your Home California has reserved $25 million for the Reverse Mortgage Assistance Pilot Program and estimates about 1,400 homeowners could benefit from the program. Borrowers who need assistance should contact their reverse mortgage servicer to begin the application process.

Connecticut. House Bill 5651 implements the recommendations of the Connecticut reverse mortgage task force, established last year pursuant to Connecticut Public Act 14-89, to protect elderly homeowners from financial harm and unfair and deceptive marketing of reverse mortgages. HB 5651 would create new counseling requirements, including new disclosures and a seven-day cooling-off period.

Illinois. Senate Bill 1281 also provides a seven-day cooling-off period. Specifically, the bill provides that “[a] borrower shall not be bound for seven days after the borrower’s acceptance, in writing, of a lender’s written commitment to make a reverse mortgage loan and cannot be required to close or proceed with the loan during that time period. A borrower may revoke his or her acceptance within this seven-day period.” SB 1281 also authorizes the Illinois Department on Aging to develop a statement regarding non-recourse reverse mortgage loans, including the potential benefits and risks associated, alternative options, and the availability of independent counseling services.

Oregon. House Bill 2532 would require a lender, agent or affiliate of a lender, when distributing an advertisement or communication intended as an inducement to apply for or enter into a reverse mortgage, to provide the following information in a clear and conspicuous typeface: 1) at the conclusion of the reverse mortgage contract, the borrower may need to sell or transfer the property to pay back the reverse mortgage; 2) the lender will charge certain fees which are added to the loan balance; 3) the loan balance grows over time and the lender charges interest on the outstanding loan balance; 4) the borrower retains title to the property, but must pay property taxes, insurance, maintenance and related taxes. Failure to do so may cause the loan to be called due and payable immediately; and 5) interest paid on a reverse mortgage is not tax deductible until the borrower pays off all or a portion of the reverse mortgage.

Utah. Senate Bill 120 would enact the Utah Reverse Mortgage Act. The bill defines a reverse mortgage, requires disclosures, limits fees, requires independent counseling, requires a seven-day cooling off period between the borrower’s written acceptance of the lender’s written commitment and the closing of the loan, and places requirements on the foreclosure of a reverse mortgage. There are limited exceptions from some of the bill’s requirements on disclosures, counseling and fees for FHA-insured HECM loans. Status: Passed the Senate and introduced in the House.

Preparing for the White House Conference on Aging

Preparation for the 2015 White House Conference on Aging, scheduled for July, includes regional forums, which will be in held in Phoenix, Arizona, on March 31; Seattle, Washington, on April 9; Cleveland, Ohio, on April 27; and Boston, Massachusetts, on May 28.

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 webcast live to engage as many people as possible.

Western Regional Goes to Huntington Beach

Join us May 12-13 at the Hyatt Regency Huntington Beach, in Huntington Beach, California, as we review initial results of Financial Assessment and the changing market of reverse mortgage borrowers.

100 CRMPs

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
• 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
• Roberto Crespo, PS Financial Services, Coral Gables, Florida
• Pat Kubert, Reverse Mortgage Solutions, Canton, Michigan
• Pamela Tennant, Access Reverse Mortgage, St. Petersburg, Florida

One hundred and one individuals have now earned the CRMP designation since mid-2010 and every one of them is prominently listed on the NRMLA consumer website, reversemortgage.org.

New Members

NRMLA welcomes the following new members:

• Consumer Education Services, Inc., based in Raleigh, North Carolina (Counseling agency)
• ENG Lending, Denver, Colorado (Lender)
• Emery Financial, Newport Beach, California (Lender)
• Foster Pepper PLLC, Seattle, Washington (Law Firm)
• Springwater Capital, Heber City, Utah (Lender)

Record Consumer Site Visits 

A record 36,249 unique visitors came to NRMLA’s consumer site, reversemortgage.org, in January. Traffic remained strong in February with 32,990 unique visits.