Fannie Mae Pricing Change Brings Higher Margins For Reverse Mortgages

image Fannie Mae announced some significant pricing changes yesterday, just a few days before lenders will make the switch to mandatory delivery for live pricing.  The change brings higher margins to the reverse mortgage industry with some lenders offering CMT based HECMs with margins as high as 3.75%.

According to people who attended last weeks NRMLA conference in Boston, one of the messages taken away from the event was that Fannie Mae doesn’t want to be the only investor for reverse mortgages.  The significant change in pricing could signal that Fannie Mae is looking to attract other secondary market investors.

Our industry has relied almost entirely on Fannie Mae for the past 12 months and having one investor to sell loans to is never a smart strategy.  However, even when companies like Goldman Sachs were still interested in purchasing HECM production, executives form the company were shocked at the pricing offered by the GSE.

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So will the higher margins attract interest from other investors?  People in the industry are confident it will.  “Long term, the changes are better for the industry,” said David Peskin, CEO of the Senior Lending Network.  He added, “By having more than one take out there is less risk for lenders and competition from other investors will help drive margins down for borrowers in the long run”.

Fannie’s pricing adjustment also makes the LIBOR index much more attractive to HECM borrowers.  For most wholesalers, par pricing is about .5% lower in rate on LIBOR products compared to CMT based HECMs.

Even with the pricing changes, historically the rates for HECMs are still low.  However, I do understand everyone’s frustration with having to re-disclose to borrowers and explain to them why they’re getting a higher margin product.  Everyone wishes there was an alternative, but when there is only one investor… there isn’t much we can do.

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  • Good morning,

    All I can say about FNMA’s move to change its pricing strategy at this critical time in our economy is, this is ludicrous!

    I can understand FNMA not wanting to be the only purchaser of the HECM. However, does Barney Frank and FNMA realize what they may have done. Not only to the seniors but the depressed Housing industry and economy.

    This confirms what I have been saying all along, we have people making decisions that do not understand the mortgage industry and most definitely do not understand how serious the economic situation is in this country.

    Instead of FNMA and the Barney Frank’s of the world announcing the problem and pitch in to help find the alternative, what do they do? Like normal, drop a “BOMB”, this time its on the Reverse Mortgage industry and our senior citizen population.

    Many people in the industry are having a hard time grasping “Live Pricing”. Now that mandatory deliveries will come into play, the confusion, coupled with this pricing strategy change will put the Reverse Mortgage industry in a tail spin.

    Just imagine our seniors and loan officers trying to grasp all of this on Monday morning. Why doesn’t FNMA and the people like Barney Frank understand this. If they ONLY held off for a while, warned the industry of the problem and tried to be part of the solution to the problem rather than the cause of the problem.

    I appeal to FNMA, our legislative department heads and any one else with authority reading my comments. I appeal to all of you in the name of every senior that will be affected by this and everyone of us that are trying to do right for the senior. Please, pull back and hold up on implementing the pricing change. In fact I wish FNMA would hold up implementing the mandatory delivery requirement.

    Give the industry time to adjust and hopefully work some thing out with the investment community to bring new funds to the market place. Even a 120 day or six month reprieve would help tremendously.

    That is my good morning speech, I hope the right people will take what I am saying seriously and act accordingly!

    Thank you,

    John A. Smaldone

  • Seniors with mortgages who are in danger of losing their home can’t qualify for a loan modification. They have seen their home value drop substantially, reducing their equity, and now some are going to lose the possibility of doing a reverse mortgage. I have clients that are trying to help their children who are in financial trouble. Has anyone mentioned to Obama tht seniors would also like to participate in the multi-trillion dollar bailout plan and that interest rates are supposed to be going down instead of up?

  • Peter Bell recently described the price hike by Fannie Mae as “Draconian,” and I couldn’t agree more. We in the industry completely understand the condition of the marketplace, and we clearly understand the need to attract more buyers of HECM’s to create a more liquid market which in the long run creates a better product for all.

    We get it.

    However, the point that is continually missed in this discussion is that thousands of seniors have just been severely harmed by these rate hikes that came in the dark of night and with no warning. These are seniors who are using the HECM to successfully avoid imminent financial disaster as they navigate this impossible economy. The hike basically declared these loans null and void.

    In many cases, there is no amount of re-disclosure or restructuring that can save these loans, and asking the lender to do the loans at a loss is not feasible.

    There doesn’t seem to be a reason for Fannie to do this all at once and without warning – not one that would fairly balance the pain they’ve caused thousands of seniors. If Fannie really had no other way of doing this, we need to know why, so we can explain it to the actual people we serve (who ironically are taxpayers that now essentially have ownership in Fannie Mae).

    I am personally disappointed at the lack of outrage in the industry about the irresponsible actions of Fannie and the lack of an acceptable explanation.

    Seniors have been deeply hurt, lenders have been hurt, the industry has been hurt, our credibility has just been knocked down a notch, and nobody seems to think this is a big deal.

    At a time when the lending industry is under fire for being irresponsible, we have this totally avoidable situation. Am I the only one who feels this way?

    Honestly, where is the outrage? Without seniors we would not have a reverse mortgage industry. They deserve a complete explanation from the people that work for them at Fannie Mae, because right now, all we’re hearing is something like, “Let them eat cake.”

  • Thank you for the article John. I’m going to ask the homeowners in my pipeline to read it, so they’ll know the sad story I’m about to tell them isn’t a “bait and switch” tactic from their Reverse Mortgage Loan Officer.

  • Mike,

    Good morning. I agree with you 100%. If you read my comments, which is the first one on the list, you will see that I do get your point. This will drastically affect every loan in process. Consequently, thousand of seniors are going to be hurt beyond our wildness imagination.

    This is why I said and it appears you are saying, we need a reprieve on implementing the rate hike strategy on the part of FNMA as well as holding up on the mandatory delivery requirement.

    Mike, this is a serious matter! I will go as far as saying I will be writing congressmen and senators to see if anything can be done. I am sure many of our elected officials have no idea this is happening, even though it is under their Noses. We somehow have to unite and get FNMA to retreat for a period of time so the industry can digest this as well as work toward finding alternate secondary marketing sources.

    Thanks for your response on this subject, I believe it just reinforces mine. Have a great weekend Mike.

    Best regards,

    John A. Smaldone

  • This information is so new that most companies selling reverse mortgages don’t know it happened yet. Those working the secondary markets for this type of business are aware but I don’t believe its hit the advisor level yet with the exception of a few.

  • Raymond,

    I appreciate your reply to me. I am glad you are going to use my response as well as some others like Mike Gruley’s. Their has to be a way to stop FNMA on a temporary basis from going through with this. Thanks again and have a great weekend.

    Best regards,

    John A. Smaldone

  • In my opinion, the key to President Obama’s reelection
    centers on the senior vote (and if he is successful with his Administration’s Economic Policy). Mr Sam Collins on another website was extrolling the virtues of the new media(internet such as Facebook, e-mail, etc) as to a major reason why Mr. Obama won the election. In part I’m sure that was true: But I said marketing, smarketing–The real reason Presaident Obama won was the majority of Americans were so tired of what the Republicans had done to this Country during the eight years of George Bush (Actually, since the trickle down (actually a rageing river of income flow up to the rich). I believe the Obama Administration is trying mightly to turn our economic ship around and based on what I read here (while I surely don’t understand it all–though I’ll probasbly be the victum of it since I’m in the process of getting my own Reverse Mortgage right now)
    the Key people at the White House need to be informed as to what Fanny Mae’s recent decision will do to Seniors. Seniors vote and remember those who support Senior needs. I tried to call certain people at the White House but was unsuccessful. I will continue. What is Peter Bell doing now: All he can I hope.

  • Mr. Nelson,

    You are right sir. Key people at the White House do need to be informed as to what Barney Frank and FNMA is doing. We are now treading on very dangerous ground when messing with our senior citizens lives. Believe me, come Monday morning, a lot of senior citizens lives are going to be affected. Thank you for being direct on this issue.

    I am going to repeat myself in what I said in one of my responses above. We all need to write our congressmen and senators Immediately. We need to do it this weekend and not put it off. I am doing exactly that and have been all morning. Lets all pitch in and be a strong unit!

    My best,

    John A. Smaldone

  • Where do we go, who do we talk to? I can write to my representatives but is there anything else that we can do as an industry?
    No explanation is going to help the seniors that cannot qualify now. Not only is this a real problem now, what about a few years from now when the market stabilizes and the Libor and CMT indexes are more realistic. To the seniors that get a reverse mortgage now, it will look like our industry took advantage of them as they see their interest rate skyrocket beyond other mortgages.
    Happy to see more investors but at what price?

  • Dear R.M. Broker,

    You are exactly right, what happens when the index value goes up? Guess what, so does the gross interest rate go up and I mean it could go way up. What is happening here has years of back lash ahead of us all. More important is what this will do to the seniors. FNMA and Mr. Frank’s have no idea what BOMB they are going to touch off!

    All I know what to do now is to write our senators and congressmen. We also need to write NRMLA and try get them to be our lobbyist. I hope the Reverse Mortgage Daily Post can take up our banner as well. You have excellent questions R.M. broker. I only hope we will be heard.

    Best regards,

    John A. Smaldone

  • Mr. Smaldone,

    I hadn’t noticed your previous comment when I wrote mine. Excuse me for repeating some of your comments, but I agree that this is a problem.

    When Fannie went to daily pricing some months ago, I suggested to our wholesale partners that they must offer a longer rate lock term to protect seniors from this happening. I posed that if they didn’t, Fannie Mae or the wholesale lender would be able to make overnight changes that could devastate the client. With a longer lock term (45-60 days, fewer seniors would be exposed to “last minute” price changes (this also helps the broker as well).

    I suspect that Fannie and many secondary marketing folks don’t like this model due to the difficulty of predicting pipeline attrition and fallout when determining commitments with end investors. It seems that many have taken the easy, most profitable method at the expense of the seniors.

    Currently, HECM borrowers sign over 40 documents and disclosures at application, and not one of them guarantees them any rate, fee or loan amount. They are totally naked to the whims of Fannie, the wholesale lender or the broker. Not good.

    I will be contacting my legislative representatives, and I have already contacted NRMLA and I ask those in the industry to do the same. If we don’t, for sure this will happen again. It’s just not right.

  • Mike,

    You are right on target and please, it is fine you repeated my comment. Like I said, it reinforced what I had said, we are thinking in the same channel.

    As far as protection for the senior, they do sign the “Principle Limit Lock Disclosure”. However, I fell it is not worth the paper it is written on now. I think this disclosure itself opens up a Pandora’s Box for HUD/FNMA. I see many seniors taking legal action against lenders and HUD. Seniors are going to look at this as a major misrepresentation, loan officers, lenders, HUD/FHA and especially FNMA will be facing many problems in the not to distant future. I am sure FNMA and Mr. Barney Frank did not look at that possibility.

    The principle limit lock disclosure lock’s in the expected rate for the senior based on the application date. The lock is for 120 days starting from the time the FHA case number is pulled.

    What we all have to realize is that FNMA is forcing us to do a switch and bait on seniors. We are going to have to go back to these seniors, re-disclose a new margin and maybe a new program, guess what? Their expected rate goes up. In this market the floor of 5.50% means absolutely nothing!

    What we have here is a vulnerable senior that is going to expect the amount of money that was disclosed to him or her at time of application. They know what they were told and they know what they signed. The disclosure they signed has the amount in it as well as the expected rate. Believe me the ignorant people who thought this one up, either don’t understand one thing about the Reverse Mortgage products and its disclosures, or they are “Fleecing” seniors out of fortunes. Think of how many seniors may not qualify with the new and higher margins. Think of how many more foreclosures this could create, I could go on and on with what this blunder is going to do to our seniors and our country. those of you who have been in the Reverse Mortgage industry for a while, know I am right.

    How can we allow this to go on, we can’t, Monday morning is going to be the start of a sad day.

    Best regards,

    John A. Smaldone

  • This is a disaster! When I started in this business I was proud of the job I was doing in helping our seniors
    ” The Greatest Generation “. All of a sudden I have a knot in my stomach wondering how to explain this to my future clients.

    This has suddenly changed into a product for seniors who are in dire need of paying off debt (mortgages etc.)and only if they have enough equity! The Reverse Mortgage as a financial plannig tool has ceased to exist.

    I was wondering why I had to read ten comments before R.M. Broker finally addressed the long term concern of the higher margins. We are being very short sighted if we are just wondering about how to explain this on Monday morning. The 20 year average on the CMT is 4.77% (in 2000 it was 6.11%) Do the math: 4.77% plus 3.75% margin plus .50% MIP = 9.02% The Libor is just as bad. How long will it take to drain the equity? This is a BIG concern to many of my senior clients.

    How long will it take before the equity is eaten up and FHA can no longer afford to insure these mortgages? This is our future or it could be our demise if something is not done quickly!
    We need to unite and stand up for the rights of our seniors!!!

    I would really like a plan of action from NRMLA.

  • Treverse,

    Perhaps the reason the first ten comments didn’t address the long term affects of the higher margin is that it is expected (and I would concur)that as the margins rise and more buyers of HECMs enter the market (remember Q407)and the demand for HECMs in the secondary market increases, the price for HECMs will increase driving down margins.

    Of course, this is not guaranteed to happen, but in a normal market like the one you propose in the future, it would be a likely scenario. Fannie Mae, it would seem, wants to get us there quickly…overnight I guess.

    Right idea in my view, but wrong approach.

  • Mike,

    Great point! They are the only game in town and we have no choice but to play by their rules. It’s just not a good feeling being held hostage by Fannie Mae!
    This is my livelihood and I have a choice whether I want to continue in this industry.

    Unfortunately, the seniors who need this product do not have a choice. I also believe that from my experience once things go up they never seem to come down so quickly no matter how many buyer’s come into the market.

  • John S. and subsequent comments are right on. It seems not long ago the HECM Advantage 100 was introduced. Senior’s who would never have qualified for a reverse mortgage became eligible and many homes and families were blessed with staying in their homes, through the use of a reverse mortgage.

    It would seem that our legislators need to understand how margins can dramatically affect the borrowing power of our senior homeowners. Considering the state of the credit markets there will surely be some changes, but perhaps Fannie Mae should consider pursuing investors interested in reverse mortgage securities first, before it incurrs changes that affect the interests and hopes of our nations senior homeowners.

  • Sam,

    Thanks for the vote of confidence in my message, good to see you participating. You are a man that will ad a lot of value to this major problem.

    I am glad to see the Cynic involved, I have missed your valuable input. Mike and Treverse as well as Cynic, you are all right. The long term affects are going to be devastating, especially when index values start going up.

    However, I did not focus on that point, even though it is a serious one. I focused mainly on the immediate problem we are all facing. FNMA laid a BOMB on all of us. We have not have time to adjust our mindset or our strategy. FNMA through either their stupidity or cunningness has forced all of us to play a bait and switch game with our seniors. I know I mentioned this in on of my previous responses, but this is a serious act perpetrated on our seniors and us by Mr.Frank and his little toy, FNMA.

    We have thousands of seniors loans in process around the country. Many seniors are relying on the funds they feel they will be able to receive, providing their appraisal comes in where it was estimated to be.

    Just think how many of these people may be in a position of not being able to make their mortgage payments. Just think how many of them may be so close to the line that $5,000 short on the appraisal would put them upside down? You see, we can explain that one, how are we going to face these people and tell them, the good news is your appraisal came in $2,000 higher, however the bad news is? You are right folks, the bad news is we are going to have to re-disclose new documents to our seniors because the margin has gone up 50 or 75 bases points. We might even have to change a program on them. Guess what else, because of the margin increase or program change, the expected rate went up! Now we have an upside down loan and a senior that may be facing a foreclosure.

    I am very concerned about these people who signed the “Principal Limit Lock Disclosure” and are interpreting it in a way that the expected rate and amount of money they are getting is a worse case scenario.

    Read the principle limit rate disclosure thoroughly. Tell me, after reading it, how would you look at this disclosure if you are the senior sitting across from you. Yes, there are out clauses in the disclosure which can be construed as ambiguous to the senior. Think of how most loan officers explain this disclosure to them, see what I am getting at my fiends. I agree with those who said we need NRMLA to hop on the Band Wagon quickly. I wish you all a god evening, lets see what Monday brings us.

    Best regards,

    John A. Smaldone

  • Admin, thanks for calling this to all of our attention.

    I have been following the thread on my Blackberry over the last two days. It is hard to believe that this is the best Fannie Mae working with NRMLA and HUD could come up with (assuming Fannie Mae made the attempt).

    On Thursday night I had a call from an industry friend in AZ warning me that the margin could quickly go to 4%. I told him I doubted it. Well, do I have egg on my face.

    I did not think Fannie Mae would espouse a policy that would result in such detrimental results to the financial well being of seniors both now and in the future. The potential long-term damage to the perceived integrity of our industry and its chief product could be substantial. It is hard to believe this was the best alternative.

    The comment thread has been insightful and has generally focused on the subject at hand. NRMLA needs to know they have our support to work out a less “draconian” result and then we need to address our concerns to our Representatives and Senators.

  • FYI for John Smaldone:

    Barney Frank did not change the margins, Barney Frank Does not run Fannie,

    TAKE YOUR POLITICAL AGENDA SOMEWHERE ELSE! You have mentioned him too many times to count and he had nothing to do with margin changes.

  • “I am very concerned about these people who signed the “Principal Limit Lock Disclosure” and are interpreting it in a way that the expected rate and amount of money they are getting is a worse case scenario.

    Read the principle limit rate disclosure thoroughly. Tell me, after reading it, how would you look at this disclosure if you are the senior sitting across from you. Yes, there are out clauses in the disclosure which can be construed as ambiguous to the senior. Think of how most loan officers explain this disclosure to them, see what I am getting at my fiends. I agree with those who said we need NRMLA to hop on the Band Wagon quickly. I wish you all a god evening, lets see what Monday brings us.”

    John,

    You are right on with your statements above. I’ve been sick to my stomach since I heard from Financial Freedom on Thursday about the pricing change. I don’t know how I’m going to honestly explain this to my customers in a way they’ll understand. We’ve got to eliminate that disclosure, because their is no real principal limit protection for the customer. I’ve got two HECM for purchase that have contracts in place and were counting on the amounts I disclosed. Looks like I’ll be doing those loans for free just to save face.

    I wish all the loans in my pipeline were deciding on the tenure option, because I’d happily take the loss on the back end of those deals.

  • Matt,

    Thank you for your support and compliment. You are right, this will be a major problem when you face your customers to try and explain to them, the “Expected principle limit disclosure” is not what they thought it was. Or, we zinged you? I don’t mean we literally zinged the seniors but what are they going to think?

    This is why I have said, FNMA should not have dropped a BOMB on the seniors, lenders, loan officers and the industry the way that they have. This is out right criminal in my opinion. I am doing what I can to bring this to the floor of the house of representatives. I will probably not get any where but I can’t be faulted for trying.

    Do what you can Matt, we all must try to do what we can to get FNMA to retreat temporarily and allow the industry to adjust, but more important to allow all the loans in process to go through the system. Even 120 to 180 day reprieve should be enough time for the industry to adjust and go to the markets to develop other investment avenues.

    Thanks again Mark, have a good day and fight on.

    Best regards,

    John A. Smaldone

  • Safe Haven,

    You are right, I have mentioned Barney Frank to many times. I will not mention his name again, except for in this E-Mail.

    Safe Haven, this was not a political ploy on my part, you have no idea of my affiliations. I did not say Barney Frank changed the margins, he does not have the authority to do that. However, Are you trying to say to me and every one else reading my reply to you, that Barney Frank was not aware of what FNMA was going to do and announce. If you truly believe this, you need to do a lot of home work on how are Government and committees are structured.

    One other thing Safe Haven, we are not just talking about a margin issue here. If you read everyone’s responses, you would realize what the big picture is all about.

    This is a very serious issue, I have better use spending my time on the real issues rather than on some one like you who will not even identify themselves.

    If you want to help and be a part of trying to solve the problems. Just like all the others that have responded to this article of the Reverse Mortgage Daily Post. Then get off you high Horse and do something, like the rest of us are! Write you congressmen and senators, be part of the team.

    John A. Smaldone

  • Why not have the principal limit disclosure match the lock period provided by the lender? For example, Financial Freedom only allows me to lock for 30 days, so the principal limit disclosure I have my client sign should mention this. It’s the only protection they really have, and they are counting on me to lock them & close prior to that period expiring. Our industry wants to shadow the live pricing of the forward market, so we need to start disclosing like the forward market.

    On a refinance my company discloses the lock/float option. If a customer asked to be locked, we disclose the lock period and expiration date. I assume this is standard practice everywhere.

  • It seems like there are four or five people who are very concerned about Fannie’s latest pronouncement, that isn’t nearly enough. If you are reading these comments you need to go to the bottom of your screen and add your own comment, even if it is just to say I agree there is a problem. We need to convince Peter Bell that it is a devastating problem and for him to do all in his power (which is substantial) to cause Fannie to roll back this policy or at least give us their long term thinking on why now is the time to implement these margin increases.

  • Dear Bill Agner,

    I want to be the first to thank you for your advise to everyone. I want to reinforce what you have said. It is so important to have Peter Bell involved in this as quickly as possible. Their support will mean all the difference in the world. My hat is off to you sir and you are right on target. People need to go to the bottom of the screen and add their respone to this issue. Have a great day.

    Best regards,

    John A. Smaldone

  • Yes, Bill Agner, the way to take action is to whine on some obscure blog in cyberspace. I’m going to the bottom of my screen to agree there is a problem as you suggested, but the problem is that you are a fool.

  • I agree.

    As I write this comment I am listening to how our President will (try to) bail out our car industry. Meanwhile, our Reverse Mortgage industry has just suffered a catastrophic blow.

    Even if future competition allows future lower margins, the borrowers of today will be married to the current margins (assuming that the lower principal limits allow them to even move forward). The only out they will have, will be to refinance at possibly future lower margins incurring the costs of doing so. We now risk trying to explain in the future, how we allowed our borrowers to incur such potentially high future rates.

    So what do we need – now?

    1. Government backing to FNMA to reduce our margins back to a realistic level.
    2. Perhaps a “flexible margin” which would be reduced in the future based on an index.
    3. Most importantly, an application process whereby we can, with confidence, present loans to our clients which will at least bind them until closing. We cannot be showing them one set of numbers at application, and then offering them thousands less after they’ve already paid for appraisal and counseling fees.

    Without these immediate fixes, or something similar, it seems to me that our industry, our reputations, and our seniors, are in most serious jeopardy.

    PS. Doesn’t seem to me like “name calling” will help here!

  • I agree with everyone that this preemptive strike by Fannie Mae is going to hurt our clients and set back the industry. Most of us spend a great deal of time explaining the product and defending it from misperceptions created by the uninformed.

    Our clients trust us to place them in an option that will reserve as much of their equity as possible while also providing them the most benefit up front. Having our pricing change so drastically over night erodes that trust and harms most the Senior who will live with that higher margin for the rest of their loan/life.

    It also harms most those Reverse Mortgage professionals among us who who do not sell products to unsophisticated borrowers based on maximizing thier own compensation.

    The people out there that were already selling 2.75% and 3.0% LIBOR margins when 2.0 and 2.25 were clearly in the best interest of the client will be less affected by this than the rest of us who placed fairness to our customers above our own greed. This action by Fannie Mae will have the unintended consequence (at least, I hope it is unintended) of UN-naturally selecting the most exploitative sales people to appear most honest in the eyes of their clients.

    Lynne Young

  • Frank,

    You are right about the name calling, I agree with you 100%. Perhaps a flexible margin or a lower cap. This is difficult and the problem is not going to be solved in a day. We need the reprieve I have been talking about. 120 or 180 Day reprieve by FNMA is what we need. We need the time to work out the loans in process around the country, find additional investors for the HEM product and a better solution for runaway margins.

    Because we deal with actuary tables, we are dealing with low LTV’s. We just need the time to study the whole situation. I am confident, given the time, we will work out the problem to benefit the senior and the industry.

    The only entity that can give us the time is FNMA, they need to repeal their decision to act NOW and put it on temporary hold.

    Thank you,

    John A. Smaldone

  • This is crazy! The seniors continue to get slammed over and over again. This is just another way to kick them when they are already down.

    “They” tell them to leave their money in their brokerage accounts, “It will be okay”. They loose 50%.

    “Put your money in the bank and we will pay you a fair amount of interest” They get 1% and if they are lucky their bank doesn’t go under.

    They say, “housing is a great investment”, “buy up or buy my some investment homes and make some real money” and they loose 50% of their value.

    And just when you think that they have no other way of stealing from the old and poor amoung us…. now they are gouging them in the margins of reverse mortgages. The only place they have any money left.

    I don’t know how these people sleep at night.

  • Please bear with me because I’m a newbie compared to you guys. However, I think specific numbers may help snap some heads in D.C.

    A 75-year old with a $750K home: CMT 350 instead of 250 = $40,000 less AND the MIP is $12,500, just weeks after the Stimulus Bill increased the lending limit so seniors could get more money.

    Are you kidding me?! I can’t even say that with a straight face.

  • Good god… What a bunch of whiners!

    First – what does Barney Frank have to do with a decision made by Fannie about their reverse mortgage pricing? We can debate Barney’s decisions on a lot of things – but BF had nothing to do with this one.

    Second – so what if seniors have to pay a few more percent on their reverse mortgage? You reversing whiners make it sound like they won’t be able to eat. Seniors got along before reverse mortgages existed and they’ll get along with a percent or two more in rate.

    Just because most of you in the reverse industry run your businesses like it was 1940 – don’t blame Fannie. Figure it out.

  • RU Serious,

    You obviously don’t understand what is going on and don’t deal with seniors on the front line. Otherwise, you would not make comments like that OR you are just trying get people even more fired up??
    It’s not what percent the senior will be charged over the life of the loan (in my opinion). Its those in our pipeline that we have already disclosed fiigures. We have to call them and explain why they are losing anywhere from 10K to 35K in funds available. Some who will not now qualify. Its not an easy explanation but even if it was its still not going to make me or them feel good that they don’t now qualify.
    Maybe you should educate yourself and then visit with some of the clients we deal with on a daily basis. I am sure your odd remarks and beliefs will be changed.

  • RU Serious,

    You obviously don’t understand what is going on and don’t deal with seniors on the front line. Otherwise, you would not make comments like that OR you are just trying get people even more fired up??
    It’s not what percent the senior will be charged over the life of the loan (in my opinion). Its those in our current pipeline that we have already disclosed fiigures. We have to call them and explain why they are losing anywhere from 10K to 35K in funds available. Some who will not now qualify. Its not an easy explanation but even if it was its still not going to make me or them feel good that they don’t now qualify.
    Maybe you should educate yourself and then visit with some of the clients we deal with on a daily basis. I am sure your odd remarks and beliefs will be changed.

  • RU Serious,

    John Doe is right on target where you are concerned. Right now we all need to work together as a team to do what ever is necessary to help solve this issue. We are not whiners, we are realists that know we have a problem that needs immediate attention.

    Your answers and statements are not worth our time to lower us to you level. Your level of knowledge of the industry is obviously far below John Doe’s. Either help with saying some thing intelligent or leave this problem with those who are sincere and want to solve this issue.

    John A. Smaldone

  • NRMLA and Peter Bell? We are a few days into this disaster and we have not heard from them. Its the same as other important issues that come up through the years RM related. NRMLA…Clueless and slow. If they were more effective working with its lenders, FHA and Fannie Mae maybe they could have gotten in front of this thing and helped somehow. Can anyone tell if they are even aware now? A few days later I cannot.

  • Jeff P

    I concur! If anyone has heard anything from NRMLA please post. They have no mention of this on their website!
    On Saturday I requested a plan of action from what is supposed to be our voice in this industry. I know I have seen posts from Peter Bell on this blog before. Is he on vacation?
    If they are supposed to be a major voice of the industry maybe we need to look elsewhere. This is certainly no time to be silent!

  • When you do a search for NRMLA this is their self described purpose:

    “NRMLA serves as an educational resource, policy advocate and public affairs center for reverse mortgage lenders and related professionals.”

    All I can say is take your head out of the sand!

  • Fannie Mae is not going to roll it back. They have now incorporated risk pricing and feel that reverse mortgages are at a higher risk than before.

    I don’t think that changing the margins is the biggest issue, I think that it was the way they did it. If we had time to prepare the borrwers ahead of time(prior to taking the loan) this wouldn’t even be an issue.

    But this is typical government fashion. In this credit market, you better get used to it… we will have more changes ahead.

  • Dennis Hemm,

    You are right in your assessment. However, I don’t want to give up yet. With enough pressure on FNMA and the powers to be, they can roll it back in some way shape or form.

    I agree with the other’s, where is Peter Bell and NRMLA, we need them now more than ever. Time is our greatest enemy.

    Best regards,

    John A. Smaldone

  • John Smaldone,

    I agree that NRMLA should have been in front of this. But I really don’t know how much they could have done. FNMA is running by the seat of their pants in this declining credit market.

    But I do find it interesting that Peter Bell has not said anything about it…

  • Dennis Hemm,

    I do understand what you are saying. The problem is that FNMA should never have droped the BOMB the way they did. If we had some time to adjust, their are other issues that need attention as well.

    We now have to wait and see. Thanks for your reply to me, I appreciated it. Have a good day sir.

    Best regards,

    John A. Smaldone

  • As a wholesaler, i’ve already had a loan cleared, locked and lender sent a package with a higher margin and higer expected. The closing went just awesomely.

    The application is now a worthless pile of paper. Nothing means anything now. Not until you get a clear and lock your days w/out having to POC and then you can tell your client what they can get for loan.

    The game has changed on a whim to get Goldman Sachs to please oh please save us. Just like the splash of cash BOA, JPM and GS made in Jan/Feb on debased CDS swaps of AIG, this is done for ONE reason, so the mega banks can make the money.

    The big news will be that margins will go ever higher, what will stop them at 4%, if Goldman won’t buy them there why not 8.5%? with inflation and an index at 6% your initial will 14.5%

    Oh why don’t they just kill this for once and for and all and remove the non-recourse?

  • John and others are right on target. The PLP is worthless and any good class action lawyer should have fun with this in the coming years. Hell we do not even need to disclose the change to the client. Just send up and unsigned GFE and TALC 3 days before closing.
    Why yes Mr. Client you did start with a Hecm T 175 but you now have a LIBOR 275. Tell me again how that helps seniors. At least in the old days the first thing we explained was there was no protection. You might get a little more or a little less at closing depending on the rates. Further proof that those now in charge have no clue.
    “NRMLA…Clueless and slow “- could not have said it better, NRMLA has become just about worthless and after a decade my firm did not renew this year.

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