(678) 530-0511
Reverse Mortgage News This Week
Reverse Mortgage News for the Week of
February 12, 2012
February 12, 2012
A Game Changer:
Some claim it has created confusion in the marketplace while others fear it will exclude up to 30% of future reverse mortgage borrowers. As the debate continues, the financial assessment during the underwriting process is the biggest game changer the reverse mortgage industry faces, as well as future borrowers. Once a product focused on the needs-based borrower but now reaching middle and upper income Americans, the question is will the program be able to continue to help those for whom it was originally intended? Jeff Taylor, CEO and President of Wendover Consulting said, "We don't want to create tomorrow's foreclosure today". True- the challenge is how to balance the need to prevent future defaults while still remaining a viable option for the majority of borrowers. Lenders are waiting for HUD to issue specific guidelines while they seek to shape their own underwriting standards. Too much, too fast will be a shock to borrowers. Then comes the question of mandatory escrows. It sounds good in theory, but HUD currently prohibits such escrows for tax and insurance. How would a large required escrow account work for future borrowers who need all the proceeds to pay off their existing mortgages? In the end, the best we can hope for is for HUD to issue moderate minimum standards this year and for lenders to have the freedom to enact their own additional guidelines. Most lenders agree that we need the assessment. The question is, will it be incremental or a shock to borrowers and the reverse mortgage industry as a whole?
CFPB Is Busy:
The newly created Consumer Financial Protection Bureau (CFPB) staff actually outnumbers the number of reverse mortgage lenders present today. The bureau is going to have a focus on protecting seniors' homes with a study of reverse mortgages within the first year of their creation. The deadline for the CFPB to produce results of their study is July 21st. The CFPB submitted its first semi-annual report after six months of operation since its inception in July, 2011. In the report under Evidence-based Analysis, it states that their research and marketing teams are collaborating with their colleagues from the Students and Older American Offices to prepare required reports on private student lending and reverse mortgages and provide recommendations on best practices concerning financial advisors who work with older Americans.
Blockbuster Month:
January was a terrific month for Top Ten lender Security One Lending. The company posted over a 25% increase in reverse mortgages in January, 2012. It was one of their best months in history. Is this a sign for the industry as a whole that we're going to see a marked increase for reverse mortgages in the future? John Lundy of Reverse Market Insight says, "Given the weaknesses we've seen in applications, I don't see January as an indication of a new trend of higher volume." Housing prices are still preventing many who would like to get a reverse mortgage from doing so if they still owe a considerable amount on their current mortgage.
Under Water:
That is where nearly 20% of outstanding FHA HECM loans are currently. This means that the loan balance is greater than what the property is currently worth. But, the worst may be behind us, according to a recent report by NewView Advisors. To quote the report, "Barring another housing catastrophy, the worst might be over." If so, the current position of the HECM will improve each year as FHA's HECM risk profile reflects an increased percentage of the new, more conservative standard HECM loans with lower principal limits as well as the HECM Savers.
Historic Settlement in the Traditional Mortgage Industry:
It was announced last Thursday that federal housing officials have reached a historic $26 billion mortgage servicing settlement with five of the country's largest traditional lenders: Bank of America, JP Morgan Chase, Wells Fargo, Allied Financial, and Citigroup. 49 states have signed on to the agreement. The settlement focuses on trying to right some of the wrongs of homeowners who were foreclosed on without being allowed to go through the complete legal process, and certain measures to help finance the loans or become current.
Thanks goes to ReverseFortunes and HECM World for providing me the most note-worthy Reverse Mortgage news to draw from on a weekly basis.
Until next week...Hope you have a great week!
GA License #29757
NMLS#223108
(678) 530-0511
Reverse Mortgage...Forward Thinking
Some claim it has created confusion in the marketplace while others fear it will exclude up to 30% of future reverse mortgage borrowers. As the debate continues, the financial assessment during the underwriting process is the biggest game changer the reverse mortgage industry faces, as well as future borrowers. Once a product focused on the needs-based borrower but now reaching middle and upper income Americans, the question is will the program be able to continue to help those for whom it was originally intended? Jeff Taylor, CEO and President of Wendover Consulting said, "We don't want to create tomorrow's foreclosure today". True- the challenge is how to balance the need to prevent future defaults while still remaining a viable option for the majority of borrowers. Lenders are waiting for HUD to issue specific guidelines while they seek to shape their own underwriting standards. Too much, too fast will be a shock to borrowers. Then comes the question of mandatory escrows. It sounds good in theory, but HUD currently prohibits such escrows for tax and insurance. How would a large required escrow account work for future borrowers who need all the proceeds to pay off their existing mortgages? In the end, the best we can hope for is for HUD to issue moderate minimum standards this year and for lenders to have the freedom to enact their own additional guidelines. Most lenders agree that we need the assessment. The question is, will it be incremental or a shock to borrowers and the reverse mortgage industry as a whole?
CFPB Is Busy:
The newly created Consumer Financial Protection Bureau (CFPB) staff actually outnumbers the number of reverse mortgage lenders present today. The bureau is going to have a focus on protecting seniors' homes with a study of reverse mortgages within the first year of their creation. The deadline for the CFPB to produce results of their study is July 21st. The CFPB submitted its first semi-annual report after six months of operation since its inception in July, 2011. In the report under Evidence-based Analysis, it states that their research and marketing teams are collaborating with their colleagues from the Students and Older American Offices to prepare required reports on private student lending and reverse mortgages and provide recommendations on best practices concerning financial advisors who work with older Americans.
Blockbuster Month:
January was a terrific month for Top Ten lender Security One Lending. The company posted over a 25% increase in reverse mortgages in January, 2012. It was one of their best months in history. Is this a sign for the industry as a whole that we're going to see a marked increase for reverse mortgages in the future? John Lundy of Reverse Market Insight says, "Given the weaknesses we've seen in applications, I don't see January as an indication of a new trend of higher volume." Housing prices are still preventing many who would like to get a reverse mortgage from doing so if they still owe a considerable amount on their current mortgage.
Under Water:
That is where nearly 20% of outstanding FHA HECM loans are currently. This means that the loan balance is greater than what the property is currently worth. But, the worst may be behind us, according to a recent report by NewView Advisors. To quote the report, "Barring another housing catastrophy, the worst might be over." If so, the current position of the HECM will improve each year as FHA's HECM risk profile reflects an increased percentage of the new, more conservative standard HECM loans with lower principal limits as well as the HECM Savers.
Historic Settlement in the Traditional Mortgage Industry:
It was announced last Thursday that federal housing officials have reached a historic $26 billion mortgage servicing settlement with five of the country's largest traditional lenders: Bank of America, JP Morgan Chase, Wells Fargo, Allied Financial, and Citigroup. 49 states have signed on to the agreement. The settlement focuses on trying to right some of the wrongs of homeowners who were foreclosed on without being allowed to go through the complete legal process, and certain measures to help finance the loans or become current.
Thanks goes to ReverseFortunes and HECM World for providing me the most note-worthy Reverse Mortgage news to draw from on a weekly basis.
Until next week...Hope you have a great week!
GA License #29757
NMLS#223108
(678) 530-0511
Reverse Mortgage...Forward Thinking
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