Comments on: Implementation of HECM Principal Limit Reduction, “A Nightmare” says Industry http://reversemortgagedaily.com/2009/09/29/implementation-of-hecm-principal-limit-reduction-a-nightmare-says-industry/ Reverse Mortgage News and Information Mon, 13 Feb 2012 00:19:00 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Anonymous http://reversemortgagedaily.com/2009/09/29/implementation-of-hecm-principal-limit-reduction-a-nightmare-says-industry/comment-page-1/#comment-38416 Anonymous Tue, 06 Oct 2009 03:10:00 +0000 http://reversemortgagedaily.com/2009/09/29/implementation-of-hecm-principal-limit-reduction-a-nightmare-says-industry/#comment-38416 John Smaldone wrote in response to James_E_Veale_CPA_MBTrnrnJames,rnrnI appreciate you writing to me. I do understand what you are saying. Arnfriend of mine in HUD could not tell me much other than expect more changesrnand be on the look out soon for another directive from HUD. Sounds like yournare right on target James. Thanks for missing me, I will start coming backrnin the picture my friend. You have a great eveningrnrnTake care,rnrnJohn John Smaldone wrote in response to James_E_Veale_CPA_MBTrnrnJames,rnrnI appreciate you writing to me. I do understand what you are saying. Arnfriend of mine in HUD could not tell me much other than expect more changesrnand be on the look out soon for another directive from HUD. Sounds like yournare right on target James. Thanks for missing me, I will start coming backrnin the picture my friend. You have a great eveningrnrnTake care,rnrnJohn

]]> By: jsmaldone http://reversemortgagedaily.com/2009/09/29/implementation-of-hecm-principal-limit-reduction-a-nightmare-says-industry/comment-page-1/#comment-34172 jsmaldone Tue, 06 Oct 2009 01:10:15 +0000 http://reversemortgagedaily.com/2009/09/29/implementation-of-hecm-principal-limit-reduction-a-nightmare-says-industry/#comment-34172 John Smaldone wrote in response to James_E_Veale_CPA_MBT<br><br>James,<br><br>I appreciate you writing to me. I do understand what you are saying. A<br>friend of mine in HUD could not tell me much other than expect more changes<br>and be on the look out soon for another directive from HUD. Sounds like you<br>are right on target James. Thanks for missing me, I will start coming back<br>in the picture my friend. You have a great evening<br><br>Take care,<br><br>John John Smaldone wrote in response to James_E_Veale_CPA_MBT

James,

I appreciate you writing to me. I do understand what you are saying. A
friend of mine in HUD could not tell me much other than expect more changes
and be on the look out soon for another directive from HUD. Sounds like you
are right on target James. Thanks for missing me, I will start coming back
in the picture my friend. You have a great evening

Take care,

John

]]> By: James_E_Veale_CPA_MBT http://reversemortgagedaily.com/2009/09/29/implementation-of-hecm-principal-limit-reduction-a-nightmare-says-industry/comment-page-1/#comment-34167 James_E_Veale_CPA_MBT Mon, 05 Oct 2009 04:56:20 +0000 http://reversemortgagedaily.com/2009/09/29/implementation-of-hecm-principal-limit-reduction-a-nightmare-says-industry/#comment-34167 Mr. Smaldone,<br><br>Good to "hear your voice" and see your name in print again. <br><br>Get ready. We could only have a short breather before change occurs once more on the principal limit front. If the Conference Committee meets soon and a bill is enacted that requires a different percentage change to the principal limits than HUD just mandated, more change will be required. It is remotely possible that could happen before the end of the month.<br><br>What just happened could be an annual event depending on the home appreciation rates that OMB chooses to use in its budget calculations. It is interesting to read the recent GAO report on HUD in this regard.<br><br>The story is far too complicated to be presented here. Its roots are in HERA. Not only did HERA fail us by driving Fannie Mae to increase margins on HECMs to avoid lack of compliance under HERA Section 1109 but it also resulted in a significant and permanent budget change under Section 2118(b)(2). Despite the passage of 14 months after HERA was enacted, several issues related to HERA Section 2122 have yet to be implemented.<br><br>Marty Bell touched on one facet of the budget battle when he responded to the Consumer Reports article but there is much more to report. Sadly, like all good messengers, some are attacking HUD for its part in implementing what is expected from H.R. 3288, all due to HERA Section 2118(b)(2).<br><br>What the current situation shows is that not even HECMs are immune from quick and immense changes. Here in California not only are we facing federal changes but many of us expect to see the Governor sign AB 329 into law before the holidays.<br><br>Look forward to your involvement in the future. Mr. Smaldone,

Good to “hear your voice” and see your name in print again.

Get ready. We could only have a short breather before change occurs once more on the principal limit front. If the Conference Committee meets soon and a bill is enacted that requires a different percentage change to the principal limits than HUD just mandated, more change will be required. It is remotely possible that could happen before the end of the month.

What just happened could be an annual event depending on the home appreciation rates that OMB chooses to use in its budget calculations. It is interesting to read the recent GAO report on HUD in this regard.

The story is far too complicated to be presented here. Its roots are in HERA. Not only did HERA fail us by driving Fannie Mae to increase margins on HECMs to avoid lack of compliance under HERA Section 1109 but it also resulted in a significant and permanent budget change under Section 2118(b)(2). Despite the passage of 14 months after HERA was enacted, several issues related to HERA Section 2122 have yet to be implemented.

Marty Bell touched on one facet of the budget battle when he responded to the Consumer Reports article but there is much more to report. Sadly, like all good messengers, some are attacking HUD for its part in implementing what is expected from H.R. 3288, all due to HERA Section 2118(b)(2).

What the current situation shows is that not even HECMs are immune from quick and immense changes. Here in California not only are we facing federal changes but many of us expect to see the Governor sign AB 329 into law before the holidays.

Look forward to your involvement in the future.

]]> By: HECM_Dude http://reversemortgagedaily.com/2009/09/29/implementation-of-hecm-principal-limit-reduction-a-nightmare-says-industry/comment-page-1/#comment-34126 HECM_Dude Thu, 01 Oct 2009 16:35:42 +0000 http://reversemortgagedaily.com/2009/09/29/implementation-of-hecm-principal-limit-reduction-a-nightmare-says-industry/#comment-34126 Perhaps you can get some relief by calling the HECM contact, Dan Mooney at the Santa Ana HOC. His number is: (714) 796-1200 Ext. 3439. Results are not guaranteed, but it's worth a try. Good luck. Perhaps you can get some relief by calling the HECM contact, Dan Mooney at the Santa Ana HOC. His number is: (714) 796-1200 Ext. 3439. Results are not guaranteed, but it's worth a try. Good luck.

]]> By: Reverseit http://reversemortgagedaily.com/2009/09/29/implementation-of-hecm-principal-limit-reduction-a-nightmare-says-industry/comment-page-1/#comment-34125 Reverseit Thu, 01 Oct 2009 14:42:11 +0000 http://reversemortgagedaily.com/2009/09/29/implementation-of-hecm-principal-limit-reduction-a-nightmare-says-industry/#comment-34125 What a disaster...I had people who were counseled in time, signed an application in time and yet could not get an FHA case number...why? simple, counseling done last evening could not be confirmed and certs received in time to issue a case number prior to FHA connection shutting down at 6pm pacific. Try explaining to borrowers why they now will not get the quotes they hoped for? This is why they should have gone on App and counseling date for Sept 30 and not FHA Case number assigned date...they should provide another 48 hr extension with issuance of case numbers to any client that had signed by Sept 30 and were also counseled...this was an absurd and shortsighted implementation of an important change in the program. What a disaster…I had people who were counseled in time, signed an application in time and yet could not get an FHA case number…why? simple, counseling done last evening could not be confirmed and certs received in time to issue a case number prior to FHA connection shutting down at 6pm pacific. Try explaining to borrowers why they now will not get the quotes they hoped for? This is why they should have gone on App and counseling date for Sept 30 and not FHA Case number assigned date…they should provide another 48 hr extension with issuance of case numbers to any client that had signed by Sept 30 and were also counseled…this was an absurd and shortsighted implementation of an important change in the program.

]]> By: wealthone http://reversemortgagedaily.com/2009/09/29/implementation-of-hecm-principal-limit-reduction-a-nightmare-says-industry/comment-page-1/#comment-34113 wealthone Wed, 30 Sep 2009 16:26:35 +0000 http://reversemortgagedaily.com/2009/09/29/implementation-of-hecm-principal-limit-reduction-a-nightmare-says-industry/#comment-34113 Richardhunter, you may be referring to the October 2nd requirement that the client received and review the National Council on Aging's Use Your Home to Stay at Home brochure before attending their counseling session. Richardhunter, you may be referring to the October 2nd requirement that the client received and review the National Council on Aging's Use Your Home to Stay at Home brochure before attending their counseling session.

]]> By: richardhunter http://reversemortgagedaily.com/2009/09/29/implementation-of-hecm-principal-limit-reduction-a-nightmare-says-industry/comment-page-1/#comment-34112 richardhunter Wed, 30 Sep 2009 16:09:56 +0000 http://reversemortgagedaily.com/2009/09/29/implementation-of-hecm-principal-limit-reduction-a-nightmare-says-industry/#comment-34112 I am an HECM Counselor employed by Old Pueblo Community Foundation in Tucson, AZ. I can be reached for scheduling appointments at 520-301-5126 or email <a href="mailto:rtubac@aol.com" rel="nofollow">rtubac@aol.com</a>. It is my understanding that clients must obtain and review material before counseling can be scheduled, but if potential clients are looking for a counselor, they can contact me and I will try to schedule a time. I am an HECM Counselor employed by Old Pueblo Community Foundation in Tucson, AZ. I can be reached for scheduling appointments at 520-301-5126 or email rtubac@aol.com. It is my understanding that clients must obtain and review material before counseling can be scheduled, but if potential clients are looking for a counselor, they can contact me and I will try to schedule a time.

]]> By: HECM_Dude http://reversemortgagedaily.com/2009/09/29/implementation-of-hecm-principal-limit-reduction-a-nightmare-says-industry/comment-page-1/#comment-34110 HECM_Dude Wed, 30 Sep 2009 15:19:32 +0000 http://reversemortgagedaily.com/2009/09/29/implementation-of-hecm-principal-limit-reduction-a-nightmare-says-industry/#comment-34110 Having been in the reverse mortgage business since 1990, I have seen many challenges and opportunities along the way. As entrepreneurs, we find ways to deal with them. <br>Sometimes government actions work in our favor, as when the allowable origination fee was increased from $1,800 to two percent of the maximum claim amount. Or when 2-4 unit properties became eligible. Or on various occasions when the FHA loan limit was increased as a percentage of the local median home value. Or when the single national limit was implemented, then increase.<br>At other times, such actions have not been helpful, such as when the secondary market increased its margin requirement and went to "live" pricing, or when our origination fee calculation was scaled back. <br>Now we are faced with a "perfect storm" -- the principal limit has been reduced by 10 percent, on top of the most severe decline in home values since the Great depression. <br>Total industry volume most certainly will decline, and not everyone who currently is in the business of originating HECM loans will remain. Those entrepreneurs who are able to adapt and market to a diminished population in a cost-effective manner will survive and prosper when the market returns.<br>It also is possible that Congress may decide to provide HUD with its requested subsidy, rendering this "haircut" temporary. On the other hand, if the economy recovers, returning the mortgage insurance fund to healthier status, HUD may decide to return to the original principal limit formula or improve it in some other way. Having been in the reverse mortgage business since 1990, I have seen many challenges and opportunities along the way. As entrepreneurs, we find ways to deal with them.
Sometimes government actions work in our favor, as when the allowable origination fee was increased from $1,800 to two percent of the maximum claim amount. Or when 2-4 unit properties became eligible. Or on various occasions when the FHA loan limit was increased as a percentage of the local median home value. Or when the single national limit was implemented, then increase.
At other times, such actions have not been helpful, such as when the secondary market increased its margin requirement and went to “live” pricing, or when our origination fee calculation was scaled back.
Now we are faced with a “perfect storm” — the principal limit has been reduced by 10 percent, on top of the most severe decline in home values since the Great depression.
Total industry volume most certainly will decline, and not everyone who currently is in the business of originating HECM loans will remain. Those entrepreneurs who are able to adapt and market to a diminished population in a cost-effective manner will survive and prosper when the market returns.
It also is possible that Congress may decide to provide HUD with its requested subsidy, rendering this “haircut” temporary. On the other hand, if the economy recovers, returning the mortgage insurance fund to healthier status, HUD may decide to return to the original principal limit formula or improve it in some other way.

]]>