Comments on: FNMA’s Reverse Mortgage Pricing Changes Worry Industry http://reversemortgagedaily.com/2009/05/05/fnmas-reverse-mortgage-pricing-changes-worry-industry/ Reverse Mortgage News and Information Fri, 10 Feb 2012 19:11:00 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: John A. Smaldone http://reversemortgagedaily.com/2009/05/05/fnmas-reverse-mortgage-pricing-changes-worry-industry/comment-page-1/#comment-26617 John A. Smaldone Thu, 07 May 2009 19:27:46 +0000 http://reversemortgagedaily.com/2009/05/05/fnmas-reverse-mortgage-pricing-changes-worry-industry/#comment-26617 Old timer, Thank you very much, I appreciate you. You are right, those who have not been around long do not get it. You have a good day. Best regards, John A. Smaldone Old timer,

Thank you very much, I appreciate you. You are right, those who have not been around long do not get it. You have a good day.

Best regards,

John A. Smaldone

]]> By: Old Timer http://reversemortgagedaily.com/2009/05/05/fnmas-reverse-mortgage-pricing-changes-worry-industry/comment-page-1/#comment-26615 Old Timer Thu, 07 May 2009 19:07:58 +0000 http://reversemortgagedaily.com/2009/05/05/fnmas-reverse-mortgage-pricing-changes-worry-industry/#comment-26615 John, Well said to say the least. This program has changed and is being destroyed almost overnight by people that are incompetent enough to actually think theey are helping. “It was supposed to be a program that did not have the characteristics of the forward mortgage world, it was meant to be a non-competitive regulated product and it was meant to give our seniors a way to improve the quality of their lives. We have turned this product into another mortgage product that has the characteristics of the forward lending world. We have predatory lending, fraud, bate and switch and you name it. I blame government, I blame government because they did not police this product through their quazi governmental agencies the way they should have..” Those that have not been around very long do not get it. John,

Well said to say the least. This program has changed and is being destroyed almost overnight by people that are incompetent enough to actually think theey are helping.

“It was supposed to be a program that did not have the characteristics of the forward mortgage world, it was meant to be a non-competitive regulated product and it was meant to give our seniors a way to improve the quality of their lives.

We have turned this product into another mortgage product that has the characteristics of the forward lending world. We have predatory lending, fraud, bate and switch and you name it. I blame government, I blame government because they did not police this product through their quazi governmental agencies the way they should have..”

Those that have not been around very long do not get it.

]]> By: Treverse http://reversemortgagedaily.com/2009/05/05/fnmas-reverse-mortgage-pricing-changes-worry-industry/comment-page-1/#comment-26547 Treverse Thu, 07 May 2009 04:33:51 +0000 http://reversemortgagedaily.com/2009/05/05/fnmas-reverse-mortgage-pricing-changes-worry-industry/#comment-26547 Live pricing, margin increases?? All this and the 625,500 limit is only temporary. What happens if it goes back to 417K at the end of the year. Does anyone know if any progress is being made in keeping the new limit permanent? Live pricing, margin increases?? All this and the 625,500 limit is only temporary. What happens if it goes back to 417K at the end of the year.

Does anyone know if any progress is being made in keeping the new limit permanent?

]]> By: John A. Smaldone http://reversemortgagedaily.com/2009/05/05/fnmas-reverse-mortgage-pricing-changes-worry-industry/comment-page-1/#comment-26523 John A. Smaldone Wed, 06 May 2009 23:49:54 +0000 http://reversemortgagedaily.com/2009/05/05/fnmas-reverse-mortgage-pricing-changes-worry-industry/#comment-26523 Good evening, I want to thank all of you that liked and commented on the release. This actually came out over the Associated Press. If you go back up to the top of the page where the article starts, you will see a link a link. The link is in blue and has the same name as the heading of the news story. If you click on it, you will go into the entire article. You will also see a story about a 71 year old handy-caped widow who tried to get relief from a reverse mortgage. She was approved, however, she was 5 months late on her mortgage payments and heading into foreclosure. If you read the entire release and read this woman's story, it is sad. You will see what happened to her because FNMA dropped the BOMB with out any warning. What you will read is happening all over the country to people like this handy-caped woman. Something has to be done to get the ear of those that are in power. Our industry is slowly eroding, we have more so called experts interfering and changing things daily. We need to take a breather, analyze all that has been done to the Reverse Mortgage industry over the past year and bring it back to what it was intended to be. The Reverse Mortgage industry was intended to be a regulated program by HUD for seniors. A program whereby seniors could take a portion of their equity out of their homes with out worrying about ever making a payment again for the rest of their lives, as long as they lived in their home. It was supposed to be a program that did not have the characteristics of the forward mortgage world, it was meant to be a non-competitive regulated product and it was meant to give our seniors a way to improve the quality of their lives. We have turned this product into another mortgage product that has the characteristics of the forward lending world. We have predatory lending, fraud, bate and switch and you name it. I blame government, I blame government because they did not police this product through their quazi governmental agencies the way they should have. We now are in an industry that true Reverse Mortgage professionals don't understand, it is against their principles and values. Instead of being able to concentrate on educating them selves, spending the proper time with the borrower and doing what they did 4 or 5 years ago, they now are in a battle zone. The battle zone is fighting and scraping to compete with the next guy on the street fighting to get his or her customer. They are trying to figure out live pricing. They are worried about having to lock the loan in because if they don't, they will lose a lot of money. What about the bait and switch we are forced to do. Lets say you have a loan in process, a HECM Libor 275 with a $30 servicing fee. When you took the loan it was paying a premium of 0.78, you are now a few days from getting it out of underwriting. Guess what, a HECM Libor 275 with a $30 service fee is now in negative territory. The loan is at a discount of 075% instead of a premium. The loan has a pay off of an existing loan of $210,000, closing costs of $19,000 and the borrower wants $25,000 at closing. This totals a UPB of $254,000 times .75% equals $1,905.00. Now you are facing not only no premium gain like you thought you would have but $1,905 that must be deducted from the origination fee. What do you do? Most companies will re-disclose at a higher margin and a good chance show a $35 servicing fee. It was not supposed to be this way in the Reverse Mortgage business. The senior is suffering and so are the companies and the loan officers. Mainly the senior is the one suffering the most, they are going to face another fleecing. What has happened? Almost overnight we are destroying a program that we have struggled to make a success since 1989. The objective was to make this a tremendous benefit to our seniors. A program with simplicity to it and one with no surprises at the end. Why do we always take away from our seniors. These are the people that fought in battles to preserve our freedom, they are pioneers who struggled and worked so hard to give us a country to be proud to live in. We just hang them out to dry. This is wrong, our system is wrong, we must do something to preserve this program and roll it back in time. Please read the entire release, I would appreciate it. Have a good evening. John A. Smaldone Good evening,

I want to thank all of you that liked and commented on the release. This actually came out over the Associated Press. If you go back up to the top of the page where the article starts, you will see a link a link. The link is in blue and has the same name as the heading of the news story. If you click on it, you will go into the entire article. You will also see a story about a 71 year old handy-caped widow who tried to get relief from a reverse mortgage. She was approved, however, she was 5 months late on her mortgage payments and heading into foreclosure.

If you read the entire release and read this woman’s story, it is sad. You will see what happened to her because FNMA dropped the BOMB with out any warning. What you will read is happening all over the country to people like this handy-caped woman.

Something has to be done to get the ear of those that are in power. Our industry is slowly eroding, we have more so called experts interfering and changing things daily. We need to take a breather, analyze all that has been done to the Reverse Mortgage industry over the past year and bring it back to what it was intended to be. The Reverse Mortgage industry was intended to be a regulated program by HUD for seniors. A program whereby seniors could take a portion of their equity out of their homes with out worrying about ever making a payment again for the rest of their lives, as long as they lived in their home. It was supposed to be a program that did not have the characteristics of the forward mortgage world, it was meant to be a non-competitive regulated product and it was meant to give our seniors a way to improve the quality of their lives.

We have turned this product into another mortgage product that has the characteristics of the forward lending world. We have predatory lending, fraud, bate and switch and you name it. I blame government, I blame government because they did not police this product through their quazi governmental agencies the way they should have. We now are in an industry that true Reverse Mortgage professionals don’t understand, it is against their principles and values. Instead of being able to concentrate on educating them selves, spending the proper time with the borrower and doing what they did 4 or 5 years ago, they now are in a battle zone. The battle zone is fighting and scraping to compete with the next guy on the street fighting to get his or her customer. They are trying to figure out live pricing. They are worried about having to lock the loan in because if they don’t, they will lose a lot of money. What about the bait and switch we are forced to do.

Lets say you have a loan in process, a HECM Libor 275 with a $30 servicing fee. When you took the loan it was paying a premium of 0.78, you are now a few days from getting it out of underwriting. Guess what, a HECM Libor 275 with a $30 service fee is now in negative territory. The loan is at a discount of 075% instead of a premium. The loan has a pay off of an existing loan of $210,000, closing costs of $19,000 and the borrower wants $25,000 at closing. This totals a UPB of $254,000 times .75% equals $1,905.00. Now you are facing not only no premium gain like you thought you would have but $1,905 that must be deducted from the origination fee. What do you do? Most companies will re-disclose at a higher margin and a good chance show a $35 servicing fee. It was not supposed to be this way in the Reverse Mortgage business. The senior is suffering and so are the companies and the loan officers. Mainly the senior is the one suffering the most, they are going to face another fleecing.

What has happened? Almost overnight we are destroying a program that we have struggled to make a success since 1989. The objective was to make this a tremendous benefit to our seniors. A program with simplicity to it and one with no surprises at the end. Why do we always take away from our seniors. These are the people that fought in battles to preserve our freedom, they are pioneers who struggled and worked so hard to give us a country to be proud to live in. We just hang them out to dry. This is wrong, our system is wrong, we must do something to preserve this program and roll it back in time.

Please read the entire release, I would appreciate it.

Have a good evening.

John A. Smaldone

]]> By: RSaffer http://reversemortgagedaily.com/2009/05/05/fnmas-reverse-mortgage-pricing-changes-worry-industry/comment-page-1/#comment-26503 RSaffer Wed, 06 May 2009 20:37:28 +0000 http://reversemortgagedaily.com/2009/05/05/fnmas-reverse-mortgage-pricing-changes-worry-industry/#comment-26503 Dear Critic, I very much appreciate your analysis of some of the potential problems with the reverse mortgage program. I don't think it would surprise anyone that our Government may have miscalculated mortality rates. But my concern remains that the credibility of this program, especially because we're dealing with seniors and their families, rests on our ability to produce a document that gives a clear and accurate disclosure. What will hurt this program is leaving information with potential clients that is most likely to be wrong. Our credibility with the potential client is extremely important, especially with the constant negative press that we unfortunately experience. This lack of a lock on the expected rate has given fodder to the naysayers of this program. In fact, the Orlando Sentinel published an article a couple of days ago with the heading "Beware Reverse Mortgages," which talked about exactly that. I am not suggesting locking in a low rate or a low margin. I am simply suggesting locking in ANY reasonable rate that will guarantee an outcome. The entire FHA HECM program was not thrown into turmoil just a couple of months ago when this was the common practice and a disclosure lock was included in the application packages. If MIP collections prove not to be sufficient to cover short sale claims in the short run, the shortfall will certainly be made up over time. Dear Critic,
I very much appreciate your analysis of some of the potential problems with the reverse mortgage program. I don’t think it would surprise anyone that our Government may have miscalculated mortality rates. But my concern remains that the credibility of this program, especially because we’re dealing with seniors and their families, rests on our ability to produce a document that gives a clear and accurate disclosure. What will hurt this program is leaving information with potential clients that is most likely to be wrong. Our credibility with the potential client is extremely important, especially with the constant negative press that we unfortunately experience. This lack of a lock on the expected rate has given fodder to the naysayers of this program. In fact, the Orlando Sentinel published an article a couple of days ago with the heading “Beware Reverse Mortgages,” which talked about exactly that. I am not suggesting locking in a low rate or a low margin. I am simply suggesting locking in ANY reasonable rate that will guarantee an outcome. The entire FHA HECM program was not thrown into turmoil just a couple of months ago when this was the common practice and a disclosure lock was included in the application packages. If MIP collections prove not to be sufficient to cover short sale claims in the short run, the shortfall will certainly be made up over time.

]]> By: Beth http://reversemortgagedaily.com/2009/05/05/fnmas-reverse-mortgage-pricing-changes-worry-industry/comment-page-1/#comment-26494 Beth Wed, 06 May 2009 19:27:26 +0000 http://reversemortgagedaily.com/2009/05/05/fnmas-reverse-mortgage-pricing-changes-worry-industry/#comment-26494 The Fannie Mae margin changes and uncertainty it provides will have an even larger negative impact if longer a rescission period is implemented such as the 10-days proposed in MN. The 30-day rescission proposed in CA is impossible as it is. The Fannie Mae margin changes and uncertainty it provides will have an even larger negative impact if longer a rescission period is implemented such as the 10-days proposed in MN. The 30-day rescission proposed in CA is impossible as it is.

]]> By: Ranya http://reversemortgagedaily.com/2009/05/05/fnmas-reverse-mortgage-pricing-changes-worry-industry/comment-page-1/#comment-26486 Ranya Wed, 06 May 2009 18:07:25 +0000 http://reversemortgagedaily.com/2009/05/05/fnmas-reverse-mortgage-pricing-changes-worry-industry/#comment-26486 The interest rate is the interest rate. What it's going to be, it's going to be. There could, however, be a lock on the expected rate which doesn't affect the ongoing interest rate at all. It merely would guarantee that the available funds at closing do not change except for the usual variables. Maybe I have it wrong but as a CSA and loan advisor, I still think my job is to help seniors and I feel awful when I have to tell them that it's not going to work after all. The interest rate is the interest rate. What it’s going to be, it’s going to be. There could, however, be a lock on the expected rate which doesn’t affect the ongoing interest rate at all. It merely would guarantee that the available funds at closing do not change except for the usual variables. Maybe I have it wrong but as a CSA and loan advisor, I still think my job is to help seniors and I feel awful when I have to tell them that it’s not going to work after all.

]]> By: Linda Lewis http://reversemortgagedaily.com/2009/05/05/fnmas-reverse-mortgage-pricing-changes-worry-industry/comment-page-1/#comment-26484 Linda Lewis Wed, 06 May 2009 17:53:06 +0000 http://reversemortgagedaily.com/2009/05/05/fnmas-reverse-mortgage-pricing-changes-worry-industry/#comment-26484 I echo Ranya's concern and Raymond's excellent question. How can we make seniors pay for counseling and an appraisal, sign all the documents, and so many people do so much work, only to find out that the rate in effect at closing prevents them from getting a Reverse Mortgage -- when we could have known that at Step One? (Appraisals create enough of a risk these days). It certainly makes it look like I'm doing a "bait and switch" and I don't like being put in this position! I echo Ranya’s concern and Raymond’s excellent question. How can we make seniors pay for counseling and an appraisal, sign all the documents, and so many people do so much work, only to find out that the rate in effect at closing prevents them from getting a Reverse Mortgage — when we could have known that at Step One? (Appraisals create enough of a risk these days). It certainly makes it look like I’m doing a “bait and switch” and I don’t like being put in this position!

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