He Figured It Out A tribute to Ed Szymanoski By Peter Bell, NRMLA president & CEO

In the Housing and Community Development Act of 1987, Congress approved the creation of a new financial product “to meet the special needs of homeowners by reducing the effect of the economic hardship caused by increasing the costs of meeting health, housing and subsistence needs at a time of reduced income, through insurance of home equity conversion mortgages to permit the conversion of a portion of accumulated home equity into liquid assets.”

It took seven years for senior advocate Ken Scholen to push this notion through Congress. But HUD was now given nine months to publish proposed regulations for what would become the new Home Equity Conversion Mortgage. Among the requirements were that the insurance component of the program be net neutral on an annual basis, which meant there would be no cost to the government. This would necessitate analyzing the actuarial risks, or looking into the crystal ball to project how the country’s economy and this program would perform over time, as much as 30 years out. There was no previous model to base this on. Someone had to figure the whole thing out.

Enter Ed Szymanoski, Jr., a Hartford, Connecticut, native and Brown University graduate with degrees in applied mathematics and economics who had come to Washington from HUD’s regional office in his hometown a year earlier. Along with Judy May and a team of economists and lawyers, Szymanoski created a simulation model based on three innovative ideas:

1. The first two-part mortgage premium structure that included both an upfront and annual premiums to sustain the fund
2. A totally original notion called “principal limit factor” based on a borrower’s age and interest rates to determine how much a borrower could receive
3. Customized payment plan options to best fulfill the specific needs of the borrowers

Over the next 29 years, there were extensive alterations to improve the HECM program for both consumers and government, many of them conceived or executed by Szymanoski. But when he died on April 9, 2016, following a brave battle with cancer, these three original concepts that helped nearly one million American families improve their lives in retirement remained in place.

I do not think it is an exaggeration to say that without Ed Szymanoski’s unique mathematical foresight, there would be no HECM program. All of us in the reverse mortgage industry, as well as elder Americans and citizens all around the world, were extremely fortunate to have Ed Szymanoski on our team. He made our lives better.

On the Docket

HUD Announces Updates to FA Guide and HECM Policy Handbook

Addressing NRMLA’s Eastern Regional Meeting in New York, April 9-10, HUD officials announced pending revisions to the Financial Assessment & Property Charge Guide and a new section being added to the Single Family Housing Policy Handbook 4000.1 devoted exclusively to reverse mortgages.

Commenting on the revised FA Guide, Phil Caulfield, a policy analyst within the Office of Single Family Housing and one of the chief architects behind Financial Assessment, said, “This is going to happen by mortgagee letter very soon. Much of the content is going to be the same as the current Guide, but we have gained a fair amount of experience with Financial Assessment. We have received feedback from the industry about what you don’t fully understand and what needs to be clarified, so we are taking the opportunity to cover these issues in the revised Guide.”

Relief Given to Defaulted Borrowers HUD has provided servicers with new options to cure loans in technical default for non-payment of property taxes and homeowners insurance in lieu of calling them due and payable or proceeding with foreclosure. Mortgagee Letter 2016-07 took effect immediately and:

• Allows servicers to create repayment plans for defaulted T&I loans where foreclosure had been initiated, or for loans at, or approaching, 98 percent of the maximum claim amount
• Allows servicers to delay submitting a Due and Payable request to HUD for tax and/or insurance default amounts of less than $2,000

• Provides servicers with the option to use their own funds to cure a T&I default, as long as the servicer does not add said amount to the loan balance, submit a claim to FHA seeking a reimbursement, or assign the loan to HUD for a period of three years

Senior Home Equity Hits $5.83 Trillion An estimated $140.2 billion increase in the aggregate value of homes owned by seniors drove their share of home equity to $5.83 trillion and fueled the NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI) to an all-time high of 203.20 in Q4 2015, compared to 198.53 in Q3 2015.

On a year-over-year basis, the RMMI—a quarterly measure that analyzes trends in home values, home equity and mortgage debt held by homeowners 62 and older—increased 8.1 percent in 2015, compared with increases of 7.8 percent in 2014 and 17.5 percent in 2013.

NRMLA distributed a press release reporting the data, which got picked up by numerous media outlets, including bankrate.com’s nationally syndicated Senior Living blog, written by Dr. Don Taylor. You can get more information on the RMMI by visiting nrmlaonline.org. In the Press

• Retirement planning expert Jamie Hopkins of The American College (and recent presenter at NRMLA East) published a commentary on CNBC, titled, “Cash-strapped Boomer? You Can Retire Using Home Equity,” in which he discusses four strategies that use home equity to help retirees age in place, among them reverse mortgages.
• Morningstar’s Christine Benz interviewed noted financial planner Harold Evensky for a video segment, entitled “Strategies for Securing Your Retirement,” in which he discusses how to maximize savings, build sustainable retirement income, plan for longevity and utilize a HECM Line of Credit to improve portfolio survivability.
• com published an article, “Wade Pfau: Retirees Should Consider Reverse Mortgages,” that summarizes remarks made by retirement expert Wade Pfau of The American College, during a webinar for the Financial Planning Association. “I think it’s really important for advisors who may have done their due diligence about reverse mortgages 10 or 15 years ago to look at what all has changed starting in 2012 and to do their due diligence over,” said Pfau.
• “New Math on Reverse Mortgages,” written by nationally syndicated retirement expert Robert Powell for The Wall Street Journal, is a well-researched story highlighting new interest from the financial planning community in the benefits of reverse mortgages.

New CRMPs NRMLA congratulates the following people for achieving the status of Certified Reverse Mortgage Professional:

• Fernande Marie Bencze, Alliance Reverse Mortgage, Santa Rosa, California
• Cesar Flores, Reverse Mortgage Funding LLC, Melville, New York
• Susan Perry, Capital Funding, Laguna Niguel, California
• Christine Uva, Reverse Mortgage Funding LLC, Melville, New York
• Rob Wyatt, Reverse Mortgage Advisors, based in Lady Lake, Florida
• Ken Wieland, United Capital Lending, Knoxville, Tennessee

New Members NRMLA welcomes its newest members:

• Alpha Mortgage Corporation, based in Wilmington, North Carolina (Lender)
• Best Capital Funding dba Lending360, based in Woodland Hills, California (Lender)
• EverBank, based in Boston, Massachusetts (Associate)
• Geneva Financial, LLC, based in Tempe, Arizona (Lender)
• Land Home Financial Services, based in Concord, California (Lender)
• Reverse Lending Experts, a dba of Pacific Capital Mortgage, based in Orange, California (Lender)

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