How the taxes and insurance default situation facing the reverse mortgage industry plays out is unclear, but National Mortgage News looks into a few possibilities.
According to the article, there could be a jolt to the secondary market for existing reverse mortgages as a result in the short term, but in the long term it looks like there also could be some positive implications for new and perhaps even older product.
While there has been few if any foreclosures as a result so far, the reverse mortgage industry is anxiously awaiting a mortgagee letter from the Department of Housing and Urban Development on how to handle the loans. Everyone agrees that something must be done, but exactly what isn’t clear.
“There’s no easy solution to it, but I think everyone realizes the status quo is really not acceptable,” Joe Kelly, partner at New View Advisors LLC, told NMN. He believes HUD will require a set-aside for T&I payments going forward, but admits it doesn’t help in the wake of two principal limit reductions.
Jeff Traister, Managing Director at Cantor Fitzgerald told NMN adding the new set aside could draw more investors into the space. While it initially lessens supply, that supply could later expand if buyer interest holds. “The cleaner you make the product the better it is in the long run but of course there’s a tradeoff,” he said.
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