Carl,rnrnA rumor in the marketplace is that the current level of problem delinquencies range between 2% and 3%. Three things that are not reflected in these percentages: 1) most of the delinquencies relate to variable rate HECMs; 2) delinquencies seem to get worse when homes go under water; and 3) there is more danger with fixed rate HECMs than variable.rnrnWith variable rate HECMs, a large portion of those loans have available lines of credit; thus if the borrowers on these HECMs do not pay such costs, service providers can invade the lines of credit to pay them. This is not the case with any fixed rate HECMs. Thus all delinquencies (unless this was an oversight by the borrower) related to fixed rate HECMs are difficult problems.rnrnNew View Advisors, LLC got it right when they discussed the problem of rising delinquencies as more homes go under water. This will clearly become a larger and larger problem with time.rnrnThen finally, current experience with delinquencies is based on primarily variable rate HECMs. So one would expect delinquent real estate and insurance payment problems to increase where there is no available line of credit (fixed rate HECMs). As the cohort of HECMs endorsed during fiscal years 2008 and 2009 season, we should begin to see higher percentages of HECMs that have these problems.rnrnCould it grow to 10% of all HECMs? No one knows. All we really can reasonably estimate is that if the 2%-3% rate is reasonably correct now and actual home appreciation rates remain low, these percentages will rise to some multiple of those percentages over the next seven years. The industry needs to find ways to deal with this potential growing problem. rnrn

You seem to know a lot about this Kevin. What percentage of senior homeowners with HECM’s would you say are severely delinquent on their property taxes and insurance? I’m curious to know the extent of this problem.

Admin., perhaps you could please enlighten commondude on the inappropriateness (due to sensitivity) of using that word in any forum. Also the new reverseguy.nnThanks

People who work in the White House seem to think it’s OK. Sarah Palin doesn’t like that word… but she’s not very bright. Neither is her kid…which is why she took so much offense

sounds like a witch hunt to me.

Maybe I’m crazy, but the quoted lines of advertising seem to be accurate and don’t seem misleading to me. What am I missing? Also, RM’s do allow the borrowers to keep their homes, why would advertising have to state every detail of how they could lose their homes?

Au contraire mon dumbass, my morning has not been tough at all. I always marvel at the stupidity of people who take some pissant job like “HECM Counselor.” rnrnYes, if I decide to rob a liquor store on my way to work, I am in violation of the law and may go to jail. That DOES NOT IMPLY that by driving to work I risk a prison sentence. rnrn”Madiganu2019s suits also claim that the defendantsu2019 deceptive marketing gave consumers the false impression that they would maintain ownership of their property.” rnrnCome on, DUDE. Are you really going to pretend you’re so stupid that you can’t see that that’s a false statement, one that in factm hurts the entire reverse mortgage industry? For issuing a dangerous press release like that, the AG should be put up in the stockade and old people that need money and are now going to be scared away thinking the banks takes their house if they do a reverse mortgage should get to throw snowballs at Madigan! rnrnrn

hecmcounselorguy, if you read the AG’s press release there are glaring mistatements of fact in it in regards to the HECM program. Perhaps being the best RM Counselor in the region is like being the smartest retard? rnrnI’d state the misstatement, but since you’re Einstein the counselor why don’t you play some Where’s Waldo and see where the press release quotes verbatum one of the most prevalent misconeptions regarding the reverse mortgage product?

Madigan has a staff attorney who was one of the best RM counselors in the region (even doing RM counselor training for NeighborWorks), so I’m sure that the i’s are dotted and the t’s are crossed in these cases. They aren’t venturing into something that they don’t really understand.

It is important to give the benefit of the doubt until there is a ruling or admission of guilt. Marketing on the fringe must be condemned. It is also objectionable when lenders do not identify themselves as such and use names that obscure their true nature. While in most cases legal, it is clearly misleading and should be treated as an unethical business practice within the industry.

We don’t know if they actually said that they can’t lose the home.

Yes, borrowers can be foreclosed on if they fail to meet the conditions of the loan but stating that reverse mortgage borrowers lose ownership of the property is incorrect. RMD contacted Madiganu2019s office looking for clarification but has yet to receive a response.rnrnYou can’t say they can’t lose the home without also stating the conditions that need to be met for that to be so.

I don’t know the % but it’s bad enough that the ability to be able to pay taxes and insurance AFTER completing a reverse will be part of the suitability “test” and may lead to required escrow accounts.

If you and Michael saw the marketing piece in question, you’d condemn it as well (I’m assuming, since I don’t know you). The intent of the piece I saw was to mislead the customer into thinking they are calling a government entity for a “benefit they qualify for”. If I remember correctly, the HUD logo was prominently displayed at the top of the piece. The only lender information I could find was a disclosure at the bottom that listed AAG in very small print.

The only reason many seniors haven’t been foreclosed on due to non payment of insurance or taxes is that the lenders are picking up the tab! Before this happens homeowners receive a foreclosure notice. Loan officers and lenders have been sued for not informing homeowners of this part of the Truth in Lending. Where have you all been the past year or two?

I have to agree Michael. After reading the “damning phrases” they both sound reasonably accurate to me. Of course if the AG is under the assumption that people are not allowed to retain title to their homes, then that explains a lot. I have to wonder what higher office Ms. Madigan has her eye on to go to such great lengths to manufacture such a frivolous a complaint.

Do adults use the word “retard”?

comeondude..you can’t say that the homeowner has no risk of losing the home UNLESS you also say that they must pay homeowners insurance and property taxes paid, and maintain the home or risk losing it. If you don’t, that’s misleading marketing and not allowed.

If you’re referring to the “the defendantsu2019 deceptive marketing gave consumers the false impression that they would maintain ownership of their property,” then you must not have read the next sentence. While I certainly wouldn’t have chosen the wording they did, keeping the home is not guaranteed if someone breaks the terms of the mortgage. nnI hope you have a better day from this point forward. It’s obviously been a tough start this morning.

hecmcounselorguy: Yes, I am sure the government could never be wrong, and there could never be an ulterior motive involved.

Once again Mr. Veale you are 100% correct. The problem is that the fringe may be getting bigger lately and will catch the eye of regulators etc. more and more.

Admin..the AG’s statement implies that they did and if they did that’s a no no. That’s all I’m saying.rnrn

This is nothing new for AAG. One of my past customers sent me a mailing they received from them. It contained similar language that was misleading. The letter was formatted to look like it originated from a government entity. rnrnThe biggest difference is, my experience was 4 years ago.

Yes, borrowers can be foreclosed on if they fail to meet the conditions of the loan but stating that reverse mortgage borrowers lose ownership of the property is incorrect. RMD contacted Madigan’s office looking for clarification but has yet to receive a response.

You can't say they can't lose the home without also stating the conditions that need to be met for that to be so.

We don't know if they actually said that they can't lose the home.