Thank you for your thoughtful response. I think you have done a very good job of expressing what many of us feel. Again, thank you.

Thank you for taking the time to respond to these posts, as you can see I did post your response you sent me regarding the principle limit reduction that was printed on AmericanBanker.com. I agree with some of what you say in regards to the anger tone that comes across on here but if this bothers some of your staff you can imagine how it bothers individuals that are on here, the ones that have to answer to the seniors, OUR customers, about all of the negative media, and the “Angry and Misinformation” that is out there from the politicians like Senator Claire McCaskill, I would think that is what should make you, the legislative staffers and regulator more nervous than what is written on here. I can tell you that rarely a day goes by that I do not have to answer questions and concerns because of these statements.

Yes we do get a little riled up but I believe that is brought out because of the passion we have for this industry. I will venture to say that a very high percentage on here are on the origination side of this industry and we are the ones on the front lines directly dealing with the customers that all of these questions, new guidelines, restrictions, and laws that are continuously being implemented effect. I do not intend to speak for everyone on here or in general, but it does seem like we, the originators, are constantly being attacked and characterized as a bunch of crooks trying to swindle every senior citizen out there, who is by the way incapable of making any rational decisions without the help and assistance of the federal government. I am not here to argue with you or rile up the village and march on the castle with pitch forks and torches, I want to work with you and others to make sure that this product is there to help as many of our seniors as possible, but when someone like Meg Burns comes out and states that HUD is going to ask these questions because this is what the lawmakers are asking about, I get nervous. After seeing what the lawmakers like Senator McCaskill are doing now and what some of their attitudes are regarding this industry and how we are portrayed by people of influence like John Dugan, “While reverse mortgages can provide real benefit,” he said, “they also have some of the same characteristics as the riskiest types of subprime mortgages—and that should set off alarm bells” how can I not.

Peter, we all appreciate and applaud the work that you and NRMLA have done and continue to do, but I believe that what this thread has brought out in people is that we get more than a little tired of what we perceive as “Knee Jerk” reactions to inaccurate and unsubstantiated reports from journalists, media and lawmakers who seem to be more interested in selling newspapers, magazines, and votes than taking the time to talk to “The Many” seniors who have taken out Reverse Mortgages in the last few years, ones that are happy with them and not just the “Few” that may or may not have been taken advantage of. Or take the time to talk to many originators, go on a few appointments and actually learn how they work! If they do not have time, then they should not be out there writing articles and making laws.

I think we would all like to see a comprehensive list of all the cases of abuse that have been reported, investigation results, and the punishment to any individual or firm that was handed out. This way we can see why all of these changes, laws and guidelines are coming into effect, and why they are justifiable. If this can be proven I do not think anyone would then oppose these changes as ones that are needed. The problem is what we have all seen, or rather what we have all NOT seen is many, if any, cases that support all the accusations and these changes. Senator McCaskill is from the show me state, well Show Me!

Again, I am not here to go into a rant and I agree that there is no need for hostility; I think we all just want to know that what is going on is JUSTIFIED. It seems that a lot of these changes are redundant to guidelines and laws that are already in effect, they just need to be enforced. This is the industry that we have all chosen to make our livelihood in and do not want to see it over regulated to the point where it will become difficult to get anything done.

Eric Meehan

This chain was triggered by a report of Meg Burns comments at the NRMLA Annual Meeting. What Meg told us is that, as part of implementing the “anti-cross selling” provisions of HERA, the Department will soon be publishing in the Federal Register a Notice of Proposed Rule Making asking for input on a number of questions before it develops a Proposed Rule. Included in questions to be asked in the Notice will be questions on how to control inappropriate cross sales.

Because the HECM program was enacted by Congress to help seniors stay in there homes and pay basic living expenses and costs of maintaining their homes (go read the statute and the accompanying reports when the program was first enacted in the late 1980s, some have raised the question whether it is appropriate for the FHA guarantee to be used on loans that are taken out to pay for discretionary items other than medical and home maintenance expenses? it is a legitimate question. What is the legislative intent of the program? What did Congress expect it to do when they created it?

All Meg said was that they might raise some of those questions in the course of seeking input from those concerned about the operation and use of the HECM program. If RMD readers feel that funds from a HECM shouyld be available for any use whatsoever, you will have the opportunity to submit comments to that effect. If others feel that, as Congress stated in enacting the program, it is to be used for necessary expenses, they will be able to make those comments. All HUD is looking to do is generate public discussion on the topic. That's an appropriate role for the Department as steward of the program.

As far as another principal limit factor reduction, what was discussed at the Annual Meeting was that once the Office of Management and Budget develops its projections for what might happen with home prices in the next federal fiscal year (October 1, 2010-September 30, 2011), if they feel that values will continue to decline, there might need to be further adjustments to the program. Such adjustments could come in a number of ways, i.e. further principal limit reductions, higher MIPs, limiting the number of loans that could be made, raising the eligible age, etc. From what we saw earlier this year, reducing the PLFs seems to be the most attractive option to HUD. However, this is all speculation at this point. In the end, it will all depend on whether home values stabilize or continue to decline.

By the way, I have had several legislative staffers and regulators tell me that they read the postings on this RMD site and when they see the tone, the anger and, most of all, the amount of the misinformation and misunderstanding voiced here by folks who are supposedly knowledgeable reverse mortgage industry insiders, it makes them very nervous about who participates in the HECM program.

A possible further PLF reduction next Oct. 1 was discussed at the annual
meeting, but was misreported by a reporter there as happening around January
1.

If it is to happen, it would be part of the FY 2011 budget, so it's
premature to do anything. We'll have to wait until we see the Administration's
budget proposal first. That's not due out until late January or early February.
Right now it is purely speculation, based on an expectation that the 2011 budget
will project a further deterioration in home values.

Looks like we are safe for now.

Let's see I count about 15 different aliases in this thread. 15 is hardly representative of the industry as a whole.

In the last 20 hours, exactly how many volunteers from the other 13 have you raised up?

Where is NRMLA in all of this? It seems as if they represent the industry. You are a NRMLA member, why ignore NRMLA at the start? What is their counsel in all of this? Most likely the 650 attendees at the NRMLA national convention are more representative of the views of the industry than we 15 or so?

NRMLA already has done much of the legwork you are contemplating. Why not run with what they have already?

While not expecting much hope for progress with 13, I for one will be looking for reports on your progress. I hope it works although it looks like there are some real differences of opinion among the 13, already.

It’s unfortunate that it takes such bad news to unite us…but it appears we finally have a subject that the great majority of us agree on…
Now the question is, as an industry, what is our best next step?

I think you need to read your comment. It is far too reactive. You are an industry leader, not a rookie or some cranky old man.

Many in Congress are concerned that they are backing insurance on a product that could backfire. They get nervous every time someone, like you, describes this product as a “complex financial planning tool” or whatever you and Jim Veale are calling it this week. They are reminded of how the government had to bail out AIG from its insurance obligations on various exotic “financial planning” products.

What are we making the HECM program? Three years ago, less than 50% of borrowers took all of the proceeds at funding; now over 90% do. FHA is now more in the business of insuring home values than providing insurance so that seniors can stay in their homes.

Why do you of all people confuse HECMs with all reverse mortgages? At the moment this is a HECM issue; please do not push lawmakers into finding ways to restrict the use of proceeds on other reverse mortgage products as well.