The HECM is a great product for seniors. It standardizes the terms and affords protection to the homeowner that regardless of what happens to the lender, HUD is there to ensure continuation of the contract. As long as the borrower can pay the R/E taxes & homeowners insuranec and maintain the property, the homeowner does not have to worry about foreclosuer. The HECM contract is straight forward & reviewed by HUD to ensure compliance by the lender.

The proprietary RM requires a careful reading of the terms on the mortgage by the borrower and, perhaps an attorney, with a keen eye for an appreciation sharing clause. HUD disallowed appreciation sharing in the HECM.

Face to face counseling is great because it allows the borrower to ask questions of the counselor and have a discussion. The counselor can also make the client aware of other benefits for which they may be eligible.

The main problem is HUD and Fannie Mae seem to want to take the HECM mainstrean in the market. It was never meant to be a major security. It was a program HUD used to provide cash to seniors to continue to live in their homes. Currently HUD is discussing raising MIP and decreasing the net principal limit available on the HECM. Question is whether some of HUD’s action in raising costs and limiting net principal beyond current
terms discriminating against the senior compared with forward FHA mortgages. Is it pushing senior homeowners into propriatory where there is no government protection?

Seniors need the support of the federal government because the financial sector caused this economic collapse. The government bailed banks and investment companies. Now how about helping senior homeowners?