Wrestling with the issue of defaults on tax and insurance payments for properties which have reverse mortgages on them, private and public sector practitioners know they’re handling a hot potato issue, described succinctly by Steve Irwin as “headline risk.”
Irwin has been in the reverse mortgage business since 1995, serving now as a consultant but prior as first vice-president of servicing operations at Financial Freedom Senior Funding Corporation.
“On the servicing side, there are ten or eleven issues that HUD is looking at,” says Irwin, adding that “the most pressing is what to do about T&I defaults.” Among others is what to do about required repairs to a property, according to Irwin, who says these and other issues have gained prominence over the years as reverse mortgages have transitioned. “This was an experimental program that became permanent [so the] nuts and bolts continue to be addressed.”
On the T&I question, Sarah Hulbert, president/CEO, Senior Financial Corp., says: “There needs to be more robust disclosure during the counseling, application and closing process to ensure borrowers fully understand their responsibility to pay taxes and insurance themselves on-time.” Hulbert, who is a past chair of NRMLA and now co-chairs their Ethics Committee, notes that “many seniors utilize reverse mortgages to refinance their homes and if mandatory T&I escrows were imposed it would cut the amount they could obtain in a reverse mortgage and reduce the number of seniors who would qualify.”
Neil J. Morse has been a communications professional working in the mortgage finance industry for more than a decade, currently specializing in the reverse mortgage sector. He can be reached at email@example.com