It will be very interesting to see 1) if you get a response and 2) what the response will be. If it is tied to financial products, things could become very sticky, very fast.

dduck12,rnrnLate last year, NRMLA released their magazine which included great testimonials from around the country. Sam Collins also created a great book with 52 stories about the experiences of seniors. You should contact both. Of course there are hundreds of thousands of other stories that have yet to be printed.

dduck12,rnrnGreat questions!! I wonder what his credentials and licenses (such as securities licenses) might be?

As a financial advisor who has utilized the HECM program for a number of clients over last 15 years,’nnWould you mind describing how you “utilize” RMs in your practice?nWhat is your professional background.?nThank you in advance.

As a financial advisor who has utilized the HECM program for a number of clients over last 15 years, I am greatly disturbed that there are proposed changes that would make reverse motgages even more expensive to those who really need them. With the principal reduction last fall, and the proposed changes in the works, I doubt that I could have avoided the imminent foreclosure that several of my clients faced prior to obtaining their reverse mortgages.rnrnThe proposed changes will eliminate this program from consideration in many cases in my city (over 20% of population are seniors), and directly refutes the “do no harm” mantra of this administration. Hopefully this proposal can be forestalled till a better analysis is done of the harm it will do to the program, and the seniors who really need this option available.rnrnOne question I have….does anyone have a clear idea of the expected timetable for implementation of these rules changes and the proposed effective dates should it be approved? Thanks for any input!

Mr. Smaldone,rnrnWhat is odd to me is Representative Frank and many of his fellow Democratic Representatives are strong supporters of the HECM program. In this regard I admire and appreciate the enduring fight of Representative Frank on behalf of so many seniors. Even though I believe President Obama is the boss and the ultimate blame, it seems there is someone within the Administration who is bent on harming HUD or the HECM program itself; I have a difficult time believing it is the President himself doing this.rnrnLast budget fight, the negative effect on the HECM program may have been innocent. The individual or individuals may have believed that Congress would bail the HECM program out. This time there is no excuse and a heavy hand is evident in the proposal.rnrnSomeone caught the inappropriate remark Mr. Emanuel made last August and now he is paying the price. The question is, can the culprit who is tearing down the HECM program be rooted out? I have a very difficult time believing President Obama wants his Administration being perceived as anti-senior. Yet until this element within his Administration is weeded out, President Obama looks like he is against seniors.rn

I have read everyone’s comments up to this point. I must say that the Critic and James Veale have read into this release and presented their case very well.rnrnI am appalled at what I am seeing happening. Does the Obama administration (President) really have this little faith in our economy. Do they have so little faith that we are never going to see the housing market come to life again?rnrnTo me, this is what I see our President saying in the signals he is putting out. Increasing the MIP to 1.25% is ridicules, decreasing the principle limit again at this time in the economic mess we are in is ludicrous.rnrnDoes Obama want and end to the reverse mortgage industry, if so, he is doing a good job in achieving his goal.rnrnHUD is not the cause or the creator of this proposal, it is Obama, our president. He is doing all he can to make it more difficult for a senior to live a long life. From the Health Care Reform Bill to attacking the reverse mortgage industry through HUD/FHA and the other agencies every chance he gets. Lets not forget Barney Franks behind the scenes as well.rnrnI am saddened over what I have seen over the past year perpetrated on the reverse mortgage industry. I fear what I feel I am going to see perpetrated on the reverse mortgage industry over the next year.rnrnJohn A. Smaldone

Agreed.

Hi,rnI am delighted to hear the funds will find their way into the MIP reserves. That makes the current considerations more rational. It is great news.rnAs an alternative to what is being discussed, why could we not reduce the up front MIP by 1%: charging 1% of appraised value and adjust the monthly MIP to 1%,just as a trail to see if it would alleviate the shortage of reserves. Funding decrease will impact younger seniors, bringing total up front rnavailability to just a fraction over 40 % of FMV. Seniors more advanced in age will still have substantial funding, especially those in their late 70′ s on up.rnI sincerely appreciate your response. Bob LaFay,Reverse Mortgage Counsultant

What I write does not come easy. While I greatly respect Mr. Lewis as an industry spokesman and an ardent defender and supporter of the HECM program, I do not agree with his strident remarks against FHA in this article. rnrnAs I could not agree with the remarks of Mr. Lewis in RMD on May 27, 2009, I cannot agree with his remarks now. His remarks in May showed very little knowledge about the positive credit subsidy for the fiscal year ending September 30, 2010. His remarks now show his lack of understanding of the budget process.rnrnTo blame FHA for either of the HECM budget fiascos for the fiscal years ending September 30, 2010 or September 30, 2011 is irresponsible for an industry leader of the stature of Mr. Lewis. I strongly urge him and anyone else who blames FHA or HUD for the current HECM mess to read Page 31 of the July 2009 GAO report (GAO 09-836) on the HECM budget. The GAO is the Government Accountability Office and calls itself the u201cinvestigative armu201d of the United States Congress which is dominated by the Democratic Party. It is hard to believe that the GAO report would be biased against this White House.rnrnWhoever in the Obama Administration is foisting these ridiculous appreciation rates on HUD should be flushed out and questioned as to why this individual (or individuals) believes that the HECM program and SENIORS should be the casualty of infighting and squabbles. To say I lack respect for such political maneuvering is a gross understatement. rnrnAs an appointee FHA Commissioner Stevens works for and at the pleasure of President Obama, not vice versa. This is a budget matter. OMB (the Office of Management and Budget, part of the White House) is responsible for the budget, not FHA Commissioner Stevens or even his boss, HUD Secretary Donovan. Secretary Donovan also serves at the pleasure of the President. President Obama is a few pay grades above either Commission Stevens or Secretary Donovan. Since the budget is the responsibility of the President of the United States of America and his OMB, as deceased and former President Harry S. Truman might say today: u201cThe buck stops THERE u2013 WITH PRESIDENT OBAMA.u201drn

Jerry,rnrnIf no one else condemns “your” idea, let me be the first. rnrnWhile Congress needs to provide the HECM program with full principal limit factors and no increase in MIP, putting the recovery on the backs of seniors and the eldery with interest bearing debt is silly. The vast majority of seniors and the eldery rightfully want nothing to do with mortgages at their age. I for one fully encourage that way of thinking.rnrnWhat I disagree with is the attitude that avoiding debt should be encouraged even it results in the physical detriment of or some other detrimental loss to seniors. I absolutely agree that seniors should be free to spend their wealth in any way they choose. But it should be based on their choice not what Congress or anyone else says it should be.rnrnI consider “your” suggestion as lacking in both fiscal responsibility or integrity. I am not condemning you but rather this idea you are espousing which others have also promoted.rnrn

There were salvos at the NRMLA convention on this. Issues were raised about fears that more seniors would be foreclosed on when they had used up all the proceeds from the RM and had no money to pay for insurance and property taxes. rnrnThe officer from the Office of the Inspector General for HUD said that the loans they were currently investigating were those which took out all the proceeds up front.rnrnBy penalizing seniors for large withdrawals of proceeds, HUD may think they are controlling the unwarranted use of funds for inappropriate disbursements. In other words, Big Brother knows best. But, by the same token, this program was begun by Congress to help seniors use their homes to stay in their homes for as long as they could. Now, a lot of those seniors who need the program most don’t qualify for it.rnrnWell I hate to say it but Critic is right. This is strictly an OMB/Obama administration issue. How do we plead our case that seniors deserve better treatment when, as Marty Bell, our program is barely a whisper in the shouting of the needs within the HUD Budget.rnrnHow do we make ourselves heard?

The Federal government has a huge budget deficit. The HECM is not an entitlement or welfare program, and the taxpayers refuse to subsidize it (or most other programs that don’t benefit a broad majority of them directly); therefore, it must be self-supporting. The arguments about business cycles and appreciation are well-taken, but difficult decisions must be made based on what’s happening now. And right now, all FHA mortgage insurance programs must have adjustments made so that they will be self-sustaining. The taxpayers demand it.nnI agree that we’ve seen a peak in HECM production volume for the current business cycle. If the proposed changes are implemented, future growth will be limited. Those who are considering a change of career should pursue that option.nnSome of my colleagues who only recently entered the reverse mortgage business might forget that when the HECM was created as a demonstration program some 20 years ago, it was hoped that the private sector would be inspired to create its own, non-FHA insured products that would supplement and eventually replace the FHA HECM. Part of the reason this has not happened successfully is because the private sector recognized the risk involved and wasn’t willing to offer benefits comparable to the HECM without some sort of shared appreciation or shared equity to mitigate that risk. Horror stories of seniors being taken advantage of in connection with sharing equity or appreciation with the lender, along with the negative press and lawsuits that resulted, put those programs, including one offered by Fannie Mae, to an end. nnIn order to properly manage risk, an entity taking that risk must occasionally be on the winning side of its bets, to offset its losses when it ends up on the other side. In the case of the HECM program, the homeowner always wins (if they exhaust all their equity and then some, they REALLY win, despite uninformed pronouncements to the contrary), and FHA always loses.

I’m more interested in what jpolony has been doing as a “financial advisor”.

I really am curious, because I think properly used the RM can really enhance some seniors lives. But, I’d like to hear about real life examples that I could relate to my fellow financial adviser associates.

James,rnrnI agree with you. Something is very odd. Either Frank is putting on a good show for the public and then doing his devious work behind closed doors, which is a possibility. rnrnI also agree with you on Obama not being the only one behind this movement against the RM industry. It makes no sense for Obama and his administration to openly being perceived to be anti-senior.rnrnTheir is no doubt in my mine a culprit or culprits are lurking in the present administration to go after the senior in a negative way.rnrnI really have to wonder if Obama is the boss? You take care my friend, have a good evening and we will talk soon.rnrnBest personal regards,rnrnJohn A. Smaldone

jpolony,rnrnThis proposal comes from the budget report for the fiscal year beginning October 1, 2010. That is the expected date it would begin.rnrnThat is why the 10% prinicpal limit started on October 1 last year; it resulted from the $798 million positive credit subsidy projection that OMB gave for the HECM program back in May 2009 for the budget for the fiscal year that started October 1, 2009.

Save_The_HecmrnrnWow! I mean… Wow!!! What an activist you are! Write.. some letters? Oh my. rnrnIf this change lowers volume a little and washes some orgininators out, genuises like you can circle the bowl as it goes flush…. rnrnFighting it tooth and nail? Come on, dude.

Hi James,rnThank you kindly for the explanation. It would be greatly appreciated to get a national news release explaining the procedure. It would help tornquell the resentment from those of us who did not see it that way. I am a strong advocate of FHA and the HECM program.Theirs is the onlyrnviable survivor of the 20 year experiment with Reverse Mortgages. I feel it is significant that several other countries around the World arerndoing all they can to emulate FHA ‘s HECM. Again, thanks for the input. It is kind of you. Bob LaFay Reverse Mortgage Consultant

Mr. LaFay,rnrnFrom reading the financial reports of HUD, it seems The Cynic is correct. Apparently Treasury reports the cash received as an increase to its cash and an increase to the amount it owes HUD. HUD seems to report it as an increase in the amount due from Treasury identified by program with an increase to the MIP account to which it is related. That is the way that double entry accounting normally works on such transactions. It seems as if there is also interest charged on the amounts due to and due from.rnrnSince I have NOT looked at, reviewed, or verified their accounting system, internal controls, or recordkeeping practices, my inferences could be wrong but the financial reports seemed to be based on double entry accounting principles. There is little doubt on my end, again wthout verification, that the record keeping is tracking HECM MIP revenues appropriately.

I count four major proposed and potential changes to the program.rnrn 1. A reduction to the principal limits through a direct percentage deduction of less than 10%rnrn 2. A potential reduction to the principal limits by perhaps an additional 5% (or more) if Congress does not grant the suggested subsidyrnrn 3. Next is an increase to the ongoing MIP of a startling 0.75% from 0.5% to 1.25%rnrn 4. Finally the proposed increase in ongoing MIP will probably result in an effective reduction of principal limits of the magnitude of an increase in the expected rate of 0.75%,rnrnIf all four items occur, the number of seniors who can be helped by HECMs will drop dramatically. How HUD can project that the volume of HECMs will be above 90,000 is absolutely astounding.rnrnWhat is most startling of the four is the sharp increase in ongoing MIP. A consulting firm to NMRLA had projected that an increase of the MIP from 0.5% to just under 1% would allow HUD to replace if not all, most of the upfront MIP. This means that if the current suggestion adjustment in the HECM program that is reflected in Item 3. above had been to increase the upfront MIP instead, the proposed upfront MIP would be around 5% rather than 2%. rn

Bob,rnrnI normally find what you write thoughtful, reasonable, and rational. These are the very qualities that are starkly missing from this comment. Sir, those funds that were “siphoned off” as you call it will be returned to pay for the losses that the current outstanding HECMs are expected to produce.rnrnEven though I find a whole lot wrong with their findings, New View Advisors, LLC address this issue on their lengthy and overly wordy blogs on their website. Much of their blogs are propaganda for their assertions but there is much value in getting familiar the blogs on their website.

We all draft letters to our existing clients”nnBy all means, and some suggested text should be provided by NRMLA.nAny word from AARP?

Since they are looking for an equalizer, why not return all of the MIP npremiums originated by HECM over the eight year period 2002 to 2008nto the HECM fund. Nearly all of the premiums collected were siphoned offnand used as general tax revenues, which of course, has been spent long ago.nWith Cost of Living Adjustments frozen in place at 0 % for the next two years and now this ,it appears the veneration of Senior Americans hasnbeen turned into a war of vengeance on Senior Americans.nIt is estimated that 10 million Seniors own their homes free and clear.nIt is the greatest source of solid assets in the country. nWhy not extend an invitation to President Obama to attend a one hour private session overview to portrait the stimulus multiplier of the HECM program.nIt pumps money into the economy that likely, would be frozen in place without it.nThe unemployment rate will take a quantum jump upward if this ill conceived plan is implemented. nBob LaFay, Reverse Mortgage Consultantnnn

>>Now I truly regret the disappearance of privately issued reverse mortgages.rnrnThey’re not all gone yet – Bank of America still offers the Platinum and Simple Equity programs – the lending limits are $10,000,000.00