The Mortgage Bankers Association is taking a different stance than the National Reverse Mortgage Lenders Association on the US Department of Housing and Urban Developments proposal to raise net worth requirements and eliminate the approval of FHA loan correspondents.
"MBA supports limiting the approval process to qualified mortgagees and increasing the net worth requirement," said John Courson, MBA president and chief executive in a comment letter to HUD.
"However, we strongly believe market conditions merit an increased phased-in period," MBA says, "with lenders meeting a minimum net worth of $1 million by the end of year one."
The trade association is requesting that HUD extend the timeline from 3 to 5 years due to an analysis conduced by the MBA which found that it would take companies with a current net worth of approximately $1 million five years to retain enough earnings to reach the $2.5 million threshold.
While the MBA is supportive of the net worth increases, NRMLA is requesting that HUD establish an FHA approved HECM mortgagee which requires a net worth of no more than $250,000 (current mortgagee requirement) and whose principal activity is the origination of reverse mortgages.
NRMLA’s proposal is clearly more favorable to small brokers and lenders compared to the MBA.