Reverse Mortgages in a Time of Change We have a new HECM rule. We have a new president and incoming management team at the HUD. How will these changes impact your businesses?
NRMLA’s Eastern Regional Meeting & Expo, Reverse Mortgages in a Time of Change is a great opportunity to get exclusive information on the HECM final rule from NRMLA’s outside counsel, Jim Milano; to obtain timely updates on other marketplace issues and trends; and to network with hundreds of other loan officers, business owners, servicers and wholesalers.
The 1.5-day conference in New York, April 3-4, will feature engaging panels with dynamic speakers from all areas of the reverse mortgage industry, as well as outside speakers such as Jamie Hopkins of the American College of Financial Services, one of America’s leading retirement income planning experts.
To get more information on the 2017 Eastern Regional Meeting, or to register, visit NRMLA’s website, nrmlaonline.org.
HUD Publishes HECM Final Rule, But Defers on Rate Cap and H4P Proposals
HUD published a HECM final rule on January 19 that formally adopts policy changes previously implemented by mortgagee letter and makes additional regulatory changes.
Among the existing policies codified in the rule are: performing financial assessments, deferring due and payable status for eligible non-borrowing spouses and limiting loan disbursements during the first 12 months after closing.
HUD said it is still reviewing public comments and has deferred making final policy decisions on proposed interest rate cap adjustments; creating exceptions for exceeding the initial disbursement limit; post-closing property inspections; requiring counseling before signing a HECM for Purchase contract and/or making an earnest money deposit; and including utilities in the definition of property charges. Read a more detailed summary of the Final Rule on nrmlaonline.org.
NRMLA Proposes HECM Loan Document Revisions
Comments were submitted by NRMLA to HUD recommending updates to existing HECM loan documents that take into account recent regulatory changes, such as financial assessment and non-borrowing spouse protections.
Forms that NRMLA would like to see updated include: HUD Form 92800.5B-Conditional Commitment; HUD 92900A-HUD Addendum to URLA; Fannie Mae 1009; HUD-1 and the Good Faith Estimate. Download NRMLA’s comments to view its recommendations.
NRMLA submitted its comments in response to a 60-Day Notice of Proposed Information Collection published by HUD on November 22. We will alert members if any form changes are implemented.
NRMLA Adds Online Ethics Complaint Feature
NRMLA’s new online form streamlines the process for reporting ethics violations to NRMLA’s Ethics Committee. Information and documents can now be uploaded for submission on nrmlaonline.org. The portal is accessible to both members and non-members.
Anytime you see a questionable advertisement or inappropriate behavior that may violate NRMLA’s Code of Ethics, we encourage you to submit a complaint for review by the Ethics Committee. To help us in our investigations, we ask that you cite the Values and/or Rules within the Code of Ethics that are being violated.
You can review the Code of Ethics and supplemental Ethics Advisories by visiting nrmlaonline.org.
President Initiates Regulatory Freeze
On the first day of President Donald Trump’s term, a regulatory freeze was issued affecting government agencies, including HUD. On Monday, January 30, the Trump administration went one step further, issuing an executive order that requires federal agencies to rescind two regulations for every one new regulation implemented. The executive order also requires that the cost of any new regulation must be offset by the rescinded regulations.
The freeze pertains to any proposed regulations, which must now receive approval from a Trump-appointed department or agency head. Furthermore, for regulations already published in the Federal Register but not yet in effect, the freeze temporarily postpones implementation for 60 days.
The final HECM rule published by FHA on January 19 has an effective date of September 19, 2017, but at this point it is unclear if the new administration’s regulatory freeze memorandum will act to defer or delay it. Further updates will be provided as we learn more.
New Mortgagee Letter: FHA Creating Loan Review System
FHA is implementing a Loan Review System that provides an electronic platform for FHA loan-level file reviews and other quality control functions for Title II Single Family mortgages. The news was announced in Mortgagee Letter 2017-03.
HUD states that as system development is ongoing, the effective date will be confirmed in a subsequent mortgagee letter but will be no earlier than March 1, 2017. While HECMs are not specifically mentioned in ML 2017-03, NRMLA’s outside counsel, Jim Milano, reminds us that this guidance applies to all mortgagees approved for FHA Title II Single Family programs. The HECM statute, section 255 of the National Housing Act (codified at 12 USC 1715z-20), falls within Title II.
Under this initiative, HUD plans to implement a new Loan Review System, which will be used to manage Title II Single Family Loan Reviews, Title II Single Family Mortgagee Monitoring Reviews and mortgagee self-reporting of fraud, misrepresentation and other material findings.
The Loan Review System builds on recent efforts by FHA to align the documentation of loan review results across various divisions, and it incorporates the Single Family Housing Loan Quality Assessment Methodology (Defect Taxonomy), which was announced on June 18, 2015.
NRMLA Op-Ed: Most Reverse Mortgage Foreclosures Don’t Lead to Evictions
In advance of the confirmation hearing for Treasury Secretary nominee Steven Mnuchin, The Hill, a publication widely read by policymakers and their aides, published an opinion piece by NRMLA President & CEO Peter Bell, titled “The Real Story on Trump’s Treasury Pick and Reverse Mortgages.”
Bell’s column explained how reverse mortgage foreclosures are different from foreclosures on forward mortgages and the fact that most reverse mortgage foreclosures don’t end up with an eviction of the borrower.
Foreclosures can occur, adds Bell, if the borrower fails to meet the obligations of the loan, which include timely payment of property taxes, insurance, and any homeowners’ association fees, and maintaining the property. However, research by Stephanie Moulton from the Ohio State University and others, projects that a combination of policies implemented in 2013 and 2015 to prevent borrowers from missing payments will decrease T&I defaults by as much as 50 percent.
“Without taking a position on his appointment, we want to clarify false impressions about reverse mortgage foreclosures because they are unfair to Mnuchin, the industry and the reputation of this loan product that more than 1 million homeowners have used to age in place,” wrote Bell.
Duffy Appointed Chairman of Housing Subcommittee
Rep. Sean P. Duffy, a four-term congressman who represents northern Wisconsin, will be taking over as Chairman of the Housing and Insurance subcommittee, which has jurisdiction over policy matters impacting the Federal Housing Administration.
Rep. Duffy is a former ESPN sports commentator and reality television personality. He first entered public life as a cast member on The Real World: Boston, followed by 1998’s Road Rules: All Stars and 2002’s Real World/Road Rules Challenge: Battle of the Seasons, before going on to serve as district attorney of Ashland County, Wisconsin.
Rep. Duffy has served on the House Committee on Financial Services since first winning election in 2010. He succeeds Rep. Blaine Luetkemeyer (R-MO), who became Chairman of the Financial Institutions and Consumer Credit subcommittee.
Jeb Hensarling (R-TX) will remain Chairman of the Financial Services Committee during the 115th Congress, while Rep. Maxine Waters (D-CA) was re-elected as the committee’s ranking Democrat.
Save the Dates: Reverse Mortgage Education Week
Join us for Reverse Mortgage Education Week, beginning April 24, and spread a positive message about the versatility of using home equity as a retirement planning tool to other professional organizations that provide services to aging Americans.
The first Reverse Mortgage Education Week was organized last April to teach Realtors, health care workers, financial advisors and other professionals how reverse mortgages work and how they can help meet their clients’ financial needs. We will be organizing similar activities this year. Stay tuned for updates.
- Berkshire Bank, Tewksbury, Massachusetts
- Good Day Reverse, Inc., Los Angeles, California
- John Paul Leer III, KleinBank, Victoria, Minnesota
- Tammy Campanella, Reverse Mortgage Funding LLC, Melville, New York