MortgageReverse

Shortfalls and Protocols in Reverse Mortgage Sector

If asked to name a key player in the federal government’s HECM program, the name Margaret “Meg” Burns no doubt would be at the top of most lists. In her capacity as director, Office of Single Family Program Development in the FHA, Burns often keynotes reverse conferences, as she did this month in San Diego at the MBA’s semi-annual event.

And, it was there that the director alerted industry players to FHA’s decision to reduce loan proceeds that seniors can receive from a HECM, by 10 percent.

Burns, who is generally acknowledged to be overwhelmed by mounting challenges and limited staff support – and who reportedly almost left the agency in the past year to join a senatorial staff – told MBA conference attendees that HUD was “preparing for all contingencies,” in the wake an estimated $800 million insurance shortfall, a result of declining house prices. “It makes the most sense to reduce the principal limit backwards,” she said in San Diego, adding: “We’ll be running those numbers in the next few weeks.”

Then, on the subject of oversight, Burns sounded apologetic, announcing that “a lot of you will hate some of the new [counseling] protocols” yet to come. Among them, she said, will be a requirement that counselors assess a consumer’s “comprehension”, including an assessment of whether there would be sufficient loan proceeds to pay long-term obligations, including taxes and property insurance premiums.

Neil J. Morse has been a communications professional working in the mortgage finance industry for more than a decade, currently specializing in the reverse mortgage sector. He can be reached at [email protected]

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