At the NRMLA Policy Conference Colin Cushman of HUD explained why the proceeds are dropping for older seniors more drastically than younger. Since that time, Colin and I had a telephone where we discussed a related issue at some length.rnrnFirst let’s clear the slate of all of the speculation that went before. Second it would be great if others who attended that Conference would chime in. I am at work and do not have my notes from that Conference with me but here it goes.rnrnThe most basic issue is HUD has changed its assumptions in calculating Principal Limit Factors (u201cPLFsu201d) from assumptions based on reasonable theoretical assumptions to ones based on twenty years of experience. As they reviewed the differences, it became apparent that the PLFs for older seniors were too generous. A new factor was also added to the computation for deferred maintenance. What was discovered is that on HECMs which were outstanding for the same periods of time, older seniors generally had more deferred maintenance on their properties than younger seniors.rnrnLogically the answer Colin provided seems correct. Just looking at mortality in the last twenty plus years, life expectancy for older Americans has risen. rn rn

I have wondered, with the yields continuing to increase on this product, if the lenders will be reducing their rates to compensate for this increase in monthly MIP. With many lenders offering a 4.99% rate, it’s almost a wash on the fixed rate product.

does the growth rate on the credit line also increase the same amount? just thought about that

While we have been awaiting the notification of this change since February 1, we now finally have it in print so that we can get some prospects off of the fence. rnrnWhile I agree with Admin about the 1% to 5% increase in reduction to PLFs coming also on October 4th (or October 1st), that is a minimum. It all depends how CBO (and perhaps OMB) rescore the program and then it all depends on the action of Congress, if a positive credit subsidy is still indicated.

At the NRMLA Policy Conference Colin Cushman of HUD explained why the proceeds are dropping for older seniors more drastically than younger. Since that time, Colin and I had a telephone where we discussed a related issue at some length.rnrnFirst let’s clear the slate of all of the speculation that went before. Second it would be great if others who attended that Conference would chime in. I am at work and do not have my notes from that Conference with me but here it goes.rnrnThe most basic issue is HUD has changed its assumptions in calculating Principal Limit Factors (u201cPLFsu201d) from assumptions based on reasonable theoretical assumptions to ones based on twenty years of experience. As they reviewed the differences, it became apparent that the PLFs for older seniors were too generous. A new factor was also added to the computation for deferred maintenance. What was discovered is that on HECMs which were outstanding for the same periods of time, older seniors generally had more deferred maintenance on their properties than younger seniors.rnrnLogically the answer Colin provided seems correct. Just looking at mortality in the last twenty plus years, life expectancy for older Americans has risen. rn rn

It might be assumed that older seniors would be expected to pass on sooner, possibly while the market is in its current depressed state, while younger borrowers might continue on until there is some recovery in real estate markets.

I have wondered, with the yields continuing to increase on this product, if the lenders will be reducing their rates to compensate for this increase in monthly MIP. With many lenders offering a 4.99% rate, it’s almost a wash on the fixed rate product.

Does anyone understand the logic behind older borrowers receiving the greater PLF reduction? Seems the greater ‘risk’ would accrue to the younger borrower with a longer potential period of occupancy…

Just one more example of the disparate treatment that personifies the Obama Administration. Roll out the red carpet for the “Liar Loan” borrowers with endless streams of money in foreclosure rescue schemes, yet at the same time when it comes to our seniors, they get bubkus.

does the growth rate on the credit line also increase the same amount? just thought about that

While we have been awaiting the notification of this change since February 1, we now finally have it in print so that we can get some prospects off of the fence. rnrnWhile I agree with Admin about the 1% to 5% increase in reduction to PLFs coming also on October 4th (or October 1st), that is a minimum. It all depends how CBO (and perhaps OMB) rescore the program and then it all depends on the action of Congress, if a positive credit subsidy is still indicated.

It might be assumed that older seniors would be expected to pass on sooner, possibly while the market is in its current depressed state, while younger borrowers might continue on until there is some recovery in real estate markets.

Does anyone understand the logic behind older borrowers receiving the greater PLF reduction? Seems the greater ‘risk’ would accrue to the younger borrower with a longer potential period of occupancy…

Just one more example of the disparate treatment that personifies the Obama Administration. Roll out the red carpet for the “Liar Loan” borrowers with endless streams of money in foreclosure rescue schemes, yet at the same time when it comes to our seniors, they get bubkus.

At the NRMLA Policy Conference Colin Cushman of HUD explained why the proceeds are dropping for older seniors more drastically than younger. Since that time, Colin and I had a telephone where we discussed a related issue at some length.rnrnFirst let’s clear the slate of all of the speculation that went before. Second it would be great if others who attended that Conference would chime in. I am at work and do not have my notes from that Conference with me but here it goes.rnrnThe most basic issue is HUD has changed its assumptions in calculating Principal Limit Factors (u201cPLFsu201d) from assumptions based on reasonable theoretical assumptions to ones based on twenty years of experience. As they reviewed the differences, it became apparent that the PLFs for older seniors were too generous. A new factor was also added to the computation for deferred maintenance. What was discovered is that on HECMs which were outstanding for the same periods of time, older seniors generally had more deferred maintenance on their properties than younger seniors.rnrnLogically the answer Colin provided seems correct. Just looking at mortality in the last twenty plus years, life expectancy for older Americans has risen. rn rn

I have wondered, with the yields continuing to increase on this product, if the lenders will be reducing their rates to compensate for this increase in monthly MIP. With many lenders offering a 4.99% rate, it’s almost a wash on the fixed rate product.

does the growth rate on the credit line also increase the same amount? just thought about that

While we have been awaiting the notification of this change since February 1, we now finally have it in print so that we can get some prospects off of the fence. rnrnWhile I agree with Admin about the 1% to 5% increase in reduction to PLFs coming also on October 4th (or October 1st), that is a minimum. It all depends how CBO (and perhaps OMB) rescore the program and then it all depends on the action of Congress, if a positive credit subsidy is still indicated.

It might be assumed that older seniors would be expected to pass on sooner, possibly while the market is in its current depressed state, while younger borrowers might continue on until there is some recovery in real estate markets.

Does anyone understand the logic behind older borrowers receiving the greater PLF reduction? Seems the greater ‘risk’ would accrue to the younger borrower with a longer potential period of occupancy…

Just one more example of the disparate treatment that personifies the Obama Administration. Roll out the red carpet for the “Liar Loan” borrowers with endless streams of money in foreclosure rescue schemes, yet at the same time when it comes to our seniors, they get bubkus.

At the NRMLA Policy Conference Colin Cushman of HUD explained why the proceeds are dropping for older seniors more drastically than younger. Since that time, Colin and I had a telephone where we discussed a related issue at some length.rnrnFirst let’s clear the slate of all of the speculation that went before. Second it would be great if others who attended that Conference would chime in. I am at work and do not have my notes from that Conference with me but here it goes.rnrnThe most basic issue is HUD has changed its assumptions in calculating Principal Limit Factors (u201cPLFsu201d) from assumptions based on reasonable theoretical assumptions to ones based on twenty years of experience. As they reviewed the differences, it became apparent that the PLFs for older seniors were too generous. A new factor was also added to the computation for deferred maintenance. What was discovered is that on HECMs which were outstanding for the same periods of time, older seniors generally had more deferred maintenance on their properties than younger seniors.rnrnLogically the answer Colin provided seems correct. Just looking at mortality in the last twenty plus years, life expectancy for older Americans has risen. rn rn

I have wondered, with the yields continuing to increase on this product, if the lenders will be reducing their rates to compensate for this increase in monthly MIP. With many lenders offering a 4.99% rate, it’s almost a wash on the fixed rate product.

does the growth rate on the credit line also increase the same amount? just thought about that

While we have been awaiting the notification of this change since February 1, we now finally have it in print so that we can get some prospects off of the fence. rnrnWhile I agree with Admin about the 1% to 5% increase in reduction to PLFs coming also on October 4th (or October 1st), that is a minimum. It all depends how CBO (and perhaps OMB) rescore the program and then it all depends on the action of Congress, if a positive credit subsidy is still indicated.