HECM Saver Hits Mainstream Media

NewImage.jpgThe Chicago Tribune is reporting that while there hasn’t been any official announcement about the HECM Saver, the Federal Housing Administration may be getting ready to lessen the upfront costs of reverse mortgages for some borrowers.

“HUD is looking at options to provide a lower-priced HECM option,” said Lemar Wooley, a spokesman for the U.S. Department of Housing and Urban Development. “We are still working out the details. Our basic plan is to make the product more attractive, while limiting FHA’s exposure to risk.”

During a call with lenders, HUD said the HECM Saver will charge borrowers only a 0.01% upfront mortgage insurance premium (MIP) and have an annual MIP of 1.25%.  Offered as both a fixed and adjustable rate, the HECM Saver is expected to have principal limit factors roughly 11-23% lower than the standard product.

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According to the Tribune, the National Council of Aging has advocated the development of a more flexible reverse mortgage product for some time, views the coming changes as welcome news that the industry is moving past the one-size-fits-all mentality.

However, the advocacy group also sees potential pitfalls.

“The more flexibility there is, the more chance there is to be talked into (something) that doesn’t make sense,” said Barbara Stucki, vice president of home equity initiatives for the National Council on Aging.

FHA shifting gears on reverse mortgages

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  • What a remarkably wild statement from Dr. Stucki. People don’t call our offices to be “talked into something.” They call for information on our products. If we do not offer the product they want, they go somewhere else. In any case, insulting the borrower is not a particularly smart way to gain their trust. I wonder if Dr. Stucki realizes how stunningly insulting she is being to the seniors she purports to “protect and serve.”

    Just for her information, I always direct my borrowers to counselors as disinterested sources of information and guidance. After that lovely vote of confidence from Dr. Stucki, I find myself less willing to consider that source disinterested. An agenda raises its ugly head. Dr. Stucki apparently considers our industry to be the enemy. Well, fasten your seatbelt, Dr. Stucki. It’s going to be a bumpy ride.

    And where, oh where is HUD’s voice in all this? All we hear is Dr. Stucki, Dr. Stucki. Doesn’t HUD have anything to say?

  • HUD Delay Causing Co-op Owner-occupied to Residents to Lose Investment: Having been a prior HUD-certified Housing Consultant, know that counseling is limited and should in no way take the place of information required from lender. But my concern now as one of U.S. 429,000 owner-occupied stock cooperative residents along with a community of 6,300 co-ops, is why the national MEDIA ignoring HUD’s delay in implementing the Housing and Economic Recovery Act of July 30, 2008? This act directs implementation of reverse mortgages for “single family, condominium and stock cooperative” homeowners. nSingle family and condominium homeowners have received their reverse mortgage opportunity but co-op owners are still waiting. We have been two-and-six-month assured for two years that reverse mortgages for co-ops are coming, with such statements as: “HUD is expected to release a reverse mortgage program soon.” nBut “soon” has yet to come. Co-op owners are still waiting and HURTING. They are losing their homes because of this expectation. Their home values are further degraded. Prospective buyers are chilled and more on to more expensive condominium sales. For most economy-strapped co-op owners their largest investment is going at a loss or falling into foreclosure. nThe question is: When is the national MEDIA going to pay attention to this travesty?nBarbara B. Howard Cofounder of HECMs for CO-OPs Group at Laguna Woods CA

  • Overall the article is great. It does, however, have several errors and some drawbacks.rnrnOne of the biggest disappointments was the following advice from Dr. Stucki: “u2018Go talk to a counselor before you talk with a lender,u2019 she said. u2018Don’t wait until you’ve talked with a lender and been talked into something. This counseling is something that can be an extraordinary teachable moment.u2019u201drnrnAs a California originator I find this statement potentially harmful to prospects. In California Civil Code Section 1923.5(a) there is a specific requirement that a lender and only a lender can fulfill. This provision specifically requires that before a prospect starts counseling, that prospect receive a specific California only counseling disclosure from the lender whos is taking the application. If the prospect receives no such disclosure from any lender, NO lender can take an application. The law provides no cure if the prospect starts counseling without receiving such disclosure from a lender who is attempting to take an application.rnrnThe statements are also faulty because they presume that counselors are aware of the variations of the programs that lenders are currently providing when it says: u201cu2026and been talked into something.u201d Counseling can be very beneficial but it can provide incorrect information. The experience of Ronni Bennett in her Part 5 of Time Goes By is proof positive on that point.rnrnFinally just because counselors have passed an exam given by HUD on counseling and HECMs does not prove counselors are experts on financial matters. Counselors should be required to provide a disclaimer very early in the session and then at the end which states that counselors are not responsible for their answers nor is HUD. Then counselors should state that if prospects need advice on a specific subject, they should seek the counsel of those who are qualified to provide such information and responsible for the advice they render. To say otherwise is to mislead the prospect even IF the counselor has the necessary credentials to render the advice.rn

  • Overall the article is great. It does, however, have several errors and some drawbacks.rnrnOne of the biggest disappointments was the following advice from Dr. Stucki: “u2018Go talk to a counselor before you talk with a lender,u2019 she said. u2018Don’t wait until you’ve talked with a lender and been talked into something. This counseling is something that can be an extraordinary teachable moment.u2019u201drnrnAs a California originator I find this statement potentially harmful to prospects. In California Civil Code Section 1923.5(a) there is a specific requirement that a lender and only a lender can fulfill. This provision specifically requires that before a prospect starts counseling, that prospect receive a specific California only counseling disclosure from the lender whos is taking the application. If the prospect receives no such disclosure from any lender, NO lender can take an application. The law provides no cure if the prospect starts counseling without receiving such disclosure from a lender who is attempting to take an application.rnrnThe statements are also faulty because they presume that counselors are aware of the variations of the programs that lenders are currently providing when it says: u201cu2026and been talked into something.u201d Counseling can be very beneficial but it can provide incorrect information. The experience of Ronni Bennett in her Part 5 of Time Goes By is proof positive on that point.rnrnFinally just because counselors have passed an exam given by HUD on counseling and HECMs does not prove counselors are experts on financial matters. Counselors should be required to provide a disclaimer very early in the session and then at the end which states that counselors are not responsible for their answers nor is HUD. Then counselors should state that if prospects need advice on a specific subject, they should seek the counsel of those who are qualified to provide such information and responsible for the advice they render. To say otherwise is to mislead the prospect even IF the counselor has the necessary credentials to render the advice.rn

  • HUD Delay Causing Co-op Owner-occupied to Residents to Lose Investment: Having been a prior HUD-certified Housing Consultant, know that counseling is limited and should in no way take the place of information required from lender. But my concern now as one of U.S. 429,000 owner-occupied stock cooperative residents along with a community of 6,300 co-ops, is why the national MEDIA ignoring HUD’s delay in implementing the Housing and Economic Recovery Act of July 30, 2008? This act directs implementation of reverse mortgages for “single family, condominium and stock cooperative” homeowners. nSingle family and condominium homeowners have received their reverse mortgage opportunity but co-op owners are still waiting. We have been two-and-six-month assured for two years that reverse mortgages for co-ops are coming, with such statements as: “HUD is expected to release a reverse mortgage program soon.” nBut “soon” has yet to come. Co-op owners are still waiting and HURTING. They are losing their homes because of this expectation. Their home values are further degraded. Prospective buyers are chilled and more on to more expensive condominium sales. For most economy-strapped co-op owners their largest investment is going at a loss or falling into foreclosure. nThe question is: When is the national MEDIA going to pay attention to this travesty?nBarbara B. Howard Cofounder of HECMs for CO-OPs Group at Laguna Woods CA

  • What a remarkably wild statement from Dr. Stucki. People don’t call our offices to be “talked into something.” They call for information on our products. If we do not offer the product they want, they go somewhere else. In any case, insulting the borrower is not a particularly smart way to gain their trust. I wonder if Dr. Stucki realizes how stunningly insulting she is being to the seniors she purports to “protect and serve.” nnJust for her information, I always direct my borrowers to counselors as disinterested sources of information and guidance. After that lovely vote of confidence from Dr. Stucki, I find myself less willing to consider that source disinterested. An agenda raises its ugly head. Dr. Stucki apparently considers our industry to be the enemy. Well, fasten your seatbelts, Dr. Stucki. It’s going to be a bumpy ride. nnAnd where, oh where is HUD’s voice in all this? All we hear is Dr. Stucki, Dr. Stucki. Doesn’t HUD have anything to say?

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