Industry Veteran Calls Out HUD On HECM Recourse Policy (Part 2)

Ding Ding!  Here comes “Round 2” from Atare Agbamu in his second installment of An Assault on Fairness: Quash Mortgagee Letter 2008-38 (Part 2).  In Round 2, he discusses how the arms-length rule in the ML has the potential to arouse anger and alienate seniors’ heirs and relatives, which he calls the “core centers of influence, essential to continued HECM and reverse mortgage acceptance by seniors.”

He writes that despite consistently high customer satisfaction with HECM and reverse mortgages, he believes that  HUD’s non-recourse policy discourages seniors and their heirs from using a HECM and is unwise and counterproductive for all seniors, federal treasury (taxpayers), and the industry.

He describes a recent meeting with a senior and her daughter explaining the new arms-lenth rule and the “clarified” HECM non-recourse policy found in ML 08-38 and was interrupted by the daughter who said:

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“This policy amounts to elder abuse [emphasis added] by our federal government! They collect hefty mortgage insurance premiums from seniors. Then, they arbitrarily deny them and their heirs one of the benefits of those expensive premiums?” “It is an outrage! It stinks!!”

I’m not sure I agree that it’s elder abuse, but I can understand her frustration.  I thought the most interesting part of his argument was how the “clarified” non-recourse policy could keep the under age spouse of a HECM borrower from buying their home directly.

Imagine the younger spouse was taken off title due to her age when her husband decided to get a reverse mortgage.  Should she want to refinance the HECM that her late husband used but is unable to since the balance is more than the value of the home.  Someone who isn’t related to the family could come in and buy the property at the appraised value, but not the widow.

Again, Atare brings up some great points, read it at the link below.

An Assault on Fairness: Quash Mortgagee Letter 2008-38, part 2

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  • I applaud Atare and his efforts, and am so glad to have him around.

    I purchased 3 copies of the book he authored, Think Reverse!, and gave one each to my Brother and Sister, and have been recommending it to my peers. I think that’s the best way I could help support Altare’s efforts.

  • The point about the “under-aged” spouse is well taken. Thanks Atare, for addressing the inequities inherent in the current clarification of HUD's non-recourse policy.

  • Atare says it best. This is all our fight. I hope you all do as I have and pass this on to everyone with a vested interest in this issue. We should all stand united behind Atare.
    HUGE APPLAUSE!!!

  • I am grateful to all of you for your support. The GAO's report to Congress on June 29th illustrates what damage ML-08-38 has done: A once unassailable HECM non-recourse claim is now suspect, even in the eyes of an agency of the federal government, just as I feared and predicted in my March 18th Op-Ed in Origination News
    http://brokeruniverse.com/originationnews/views

    Buckets of marketing dollars from the deepest corporate pockets cannot replace the value of unconditional non-recourse guarantee that has been needlessly destroyed. It is damage control from now on. May God help us.

  • I am grateful to all of you for your support. The GAO’s report to Congress on June 29th illustrates what damage ML-08-38 has done: A once unassailable HECM non-recourse claim is now suspect, even in the eyes of an agency of the federal government, just as I feared and predicted in my March 18th Op-Ed in Origination Newsrnhttp://brokeruniverse.com/originationnews/views/?story_id=130rnrnBuckets of marketing dollars from the deepest corporate pockets cannot replace the value of unconditional non-recourse guarantee that has been needlessly destroyed. It is damage control from now on. May God help us.

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