AARP Concerned About FHA's HECM Changes

The AARP wrote a letter to Federal Housing Commissioner David H. Stevens stating it was concerned that the 10% cut to home equity conversion mortgage loan amounts will prevent thousands of seniors from avoiding foreclosure.

The AARP is "very disappointed" with the administration's withdrawal of its fiscal 2010 request for a credit subsidy for the HECM program and for the issuance of mortgagee letter 2009-34, said David P. Sloane, senior vice president of government relations and advocacy, in the Oct. 9 letter. The AARP sent a copy of the letter to The Reverse Mortgage Alert.

The $798 million HECM subsidy request is still in place, said Department of Housing and Urban Development spokesman Lemar Wooley in an email. Stevens has recently stated that the FHA will not need a subsidy due to expected loan losses. Wooley said the fact that the FHA will not need a subsidy for the forward mortgage program is unrelated to the reverse mortgage product. However, Congress did not enact the appropriation request and, in a continuing resolution, required HECM to break even, he said.

In the Sept. 23 mortgagee letter, Stevens said the new principal limit factors needed to be implemented by the start of the new fiscal year on Oct. 1 to "assist with the viability of the program."

The AARP letter cited National Reverse Mortgage Lenders Association estimates that the principal limit reduction would leave 23,000 to 25,000 older homeowners unable to get enough money from a HECM to pay off a current mortgage. Sloane stated that more than 100,000 homeowners still able to use the program "will net less equity without a commensurate reduction in the fees or insurance premiums."

Sloane stated that the AARP "strongly objected" to the Congressional Budget Office's home valuations, which were the basis of HUD's subsidy request and reduced loan amounts. He urged the administration and the FHA to re-estimate the need for a credit subsidy "at the earliest opportunity."

He also asked that the FHA consider other ways to mitigate the problem of reduced HECM amounts for seniors in danger of losing their homes to foreclosure including a waiver of up-front fees, negotiated adjustments to current loan principal amounts, and "other forbearance measures."

"AARP is committed to working with HUD and the administration to assure that the HECM program remains both a cost-effective program for taxpayers and a viable mortgage alternative for America's seniors," Sloane said in the letter.

The FHA declined to respond directly to the letter.

Reverse Mortgage Market Trends

Reverse mortgage volume is up in Illinois and down in Florida, according to data firm Reverse Market Insight.

Source: Reverse Market Insight

Magazine: Law Center's Study Backs Up News Report

Consumer Reports says the National Consumer Law Center's recently released "Subprime Revisited" study supports the magazine's earlier news report that reverse mortgages could become the next "financial fiasco."

Source: Consumer Reports

Illinois Mortgage Association Trying to Fix State's Fixed-Rate Problem

The Illinois Association of Mortgage Professionals is working on legislation to change the Illinois High Risk Home Loan Act which is restricting fixed-rate reverse mortgage lending, the Reverse Mortgage Daily reported.

Source: Reverse Mortgage Daily

MBA Selects Reverse Mortgage Program Developer as Chairman

Seattle Financial Group President and CEO Robert E. Story Jr. was sworn in as chairman of the Mortgage Bankers Association for 2010. Story oversaw the development of Seattle Financial's reverse mortgage division, which was purchased by Bank of America in 2007.

Source: Press Release

MBA Award Given to Wells Fargo Executive

The Mortgage Bankers Association awarded the Andrew D. Woodward Distinguished Service Award to Wells Fargo Home Mortgage Executive Vice President Phillip W. Bracken, who has served on the MBA's Executive Reverse Mortgage Task Force.

Source: Press Release

Few Problems with HUD's HECM Oversight

A Department of Housing and Urban Development's regional inspector general said in a recent audit report that HUD's oversight of lenders' reverse mortgage underwriting was "generally adequate" as only four of 75 loans reviewed had deficiencies.

Source: Audit Report

Mortgage Cadence Reports Record Volume

Documentation services company Mortgage Cadence said it is averaging 11% growth per month for reverse and forward mortgages as it completes technological improvements to its Mortgage Cadence Finale product.

Source: Press Release

Author: Reverse Mortgages are 'Terrific'

Reverse mortgages may be the "saving grace" for families with home equity, says finance writer Terry Savage, who recently published a book on retirement planning.

Source: Press Release

Forensic Fraud Detection for Reverse Mortgages

Expert Witness Services of Pembroke Pines, Fla., has created a forensic fact-finding unit that can audit reverse mortgages for lender compliance and fraud.

Source: Press Release

Reverse Mortgage Market Slows in Australia

Reverse mortgage market growth in Australia was 5% in the first six months of the year, a drop from 23% growth during the prior six months, reports the Brisbane Times in Queensland, Australia.

Source: Brisbane Times

Calif. Governor Signs Reverse Mortgage Bill

California Gov. Arnold Schwarzenegger signed the Reverse Mortgage Elder Protection Act (AB 329), which requires lenders to provide borrowers with a written checklist and disclosures regarding the risks and suitability of a reverse mortgage.

Source: Press Release

Testimony: HECM Program Not Part of FHA Reserve Losses

The home equity conversion mortgage program has netted the Federal Housing Administration almost $7 billion since the program's inception, the Reverse Mortgage Daily reported.

Source: Reverse Mortgage Daily

NRMLA Responds to NCLC Criticisms

National Reverse Mortgage Lenders Association President Peter Bell said in a Bloomberg report that recent comparisons of reverse mortgages to the subprime lending crisis do not take into account new consumer protections.

Source: Bloomberg

Wholesale Lenders Growing

MetLife Bank, the fastest growing wholesale lender in the past year, has close competition, according a report by data firm Reverse Market Insight for the month of August.

Source: Reverse Market Insight

Peter Graves Pushes in Reverse

Actor Peter Graves of "Mission: Impossible" fame is the new spokesman for Irvine, Calif.-based reverse mortgage lender American Advisors Group.

Source: Press Release

FHA Commissioner Testifies About Possible Losses

Federal Housing Commissioner David H. Stevens told a House subcommittee that about 20% of the loans insured last year could lead to losses, but he said a taxpayer bailout would not be necessary, The New York Times reported.

Source: The New York Times