NCOA Announces Pilot Program to Assist HECM Borrowers in Default

The National Council on Aging (NCOA) made the pilot program we reported on earlier this week official with an announcement on Thursday.

Working with the Department of Housing and Urban Development and the National Reverse Mortgage Lenders Association, NCOA is partnering with senior service agencies in Miami, Houston, Detroit, and Los Angeles to assist seniors with reverse mortgages who are most at-risk for foreclosure from not keeping up with their borrower obligations.

“While reverse mortgages can help seniors to stay at home, these funds may be depleted over time,” said Barbara Stucki, vice president for home equity initiatives at NCOA. “With economic conditions putting pressure on many of these borrowers, we want to assess the services and supports to help them remedy their delinquencies and stay at home.”

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According to NCOA, case managers from the agencies will work with reverse mortgage borrowers to pursue local tax relief options and identify other financial, legal, and housing solutions to resolve delinquencies. If appropriate, case managers will also help borrowers who need to move to other housing options, such as affordable-housing or supportive-housing developments.

All of the loans and solutions will be review by NCOA and NRMLA experts to develop a set of recommendations on how best to assist reverse mortgage borrowers who are not meeting their borrower obligations.  Borrowers who receive a letter informing them about their delinquency should contact their loan servicer immediately and are eligible to receive free counseling from NCOA and other select HUD approved counseling agencies.

“This problem is primarily a result of a faltering economy—lowering home values and losses in retirement savings—and our members feel a strong responsibility to help guide those in need through this rough time,” said National Reverse Mortgage Lenders Association President Peter Bell. “With the issuance of HUD’s new guidelines this week, we have a level-headed, clear road map to launch this process.”

The program will run through at least the middle of 2011 said NCOA.  The pilot program was funded with a $130,000 that was provided by Bank of America, Celink, Generation Mortgage, Genworth Financial, MetLife, Urban Financial and Wells Fargo Home Mortgage.

Last year, a report from the HUD Office of Inspector General estimated there are approximately 13,000 HECM loans in default from a failure to pay taxes and insurance.

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  • What is not mentioned in the article is the “…nearly $3 million…” “HUD is also providing … to housing counseling agencies to specifically help reverse mortgage borrowers facing…” foreclosure due to “technical” defaults as presented in the January 4, 2011 RMD article also on this default issue.

    If HUD is putting up that $3 million why do we read: “The pilot program was funded with a $130,000 that was provided by Bank of America, Celink, Generation Mortgage, Genworth Financial, MetLife, Urban Financial and Wells Fargo Home Mortgage?” Now we read of lenders (and a servicer) being involved in the funding of this process. That actually sounds less of an independence problem related to providing counseling for the HECMs in “technical” default which are owned by Fannie Mae than HUD being financially involved in it. However, having lenders involved financially in any of this, opens the door further to questioning the independence of counseling agencies participating in the pilot program not only as to their default counseling but also their origination counseling. The funding was for specific services provided and NOT a charitable donation free of any expectation of the specific use of those funds.

    Also why will “all of the loans and solutions … be reviewed (typo corrected) by NCOA and NRMLA experts to develop a set of recommendations on how best to assist reverse mortgage borrowers who are not meeting their borrower obligations?” Why is it that only one counseling agency is meeting with NRMLA to develop recommendations, especially when we read that “borrowers who receive a letter informing them about their delinquency should contact their loan servicer immediately and are eligible to receive free counseling from NCOA and other select HUD approved counseling agencies?” Who selected NCOA? There is an industry trade association for HECM counseling agencies similar to NRMLA. Why not use two trade associations to make these recommendations? It really would have looked better.

    How would it sound if we were being told that Wells by itself was meeting with the HECM counseling trade association and working out a set of recommendations? Even though some in our industry accuse Wells and B of A of completely dominating the actions of NRMLA, at least there is the appearance of reverse mortgage industry wide lender representation in the recommendation process. The same cannot be said about counseling agency representation. When only a select group of counseling agencies will receive these monies and then only one agency is intimately involved in the process, something smells fishy but not just in Denmark or Shakespeare’s writings.

    This whole methodology has a worse and worse appearance as more of it is being revealed each day. It almost has the feel of a last minute solution to the unexpected exposure of a “dirty little family secret” (as some in the industry are fond of calling it). All may be fine with what is being done but it completely lacks the level of professionalism one would expect after more than a decade of supposedly intensive deliberations between the parties and two decades of consideration by lenders and HUD.

    If there is this much of a PR problem at the start, what will it be like when foreclosures actually begin taking place? NRMLA, HUD, and NCOA should have been in the forefront on this long before a rank amateur cynic began questioning the proposed process.

  • Cynic, please. Peter Bell of NRMLA was exploring a “soft landing” foreclosure mitigation idea and at lunch one day we discovered Barb Stucki of NCOA had the same thought, so we decided to combine forces. And then, with the clock ticking on seniors-in-need, we went out to fund it quickly to get it rolling. This is being done by a group of people (and companies) with the best intentions across the board totally focused on trying to help seniors out of hardship. Any other interpretation is bogus.

    • Marty,

      This is not a question of intent but rather of appearance. Many lines are crossed with the very best of intentions holding to the highest ethical standards. That is the problem with holding to not just a standard of independence but to an even higher one, the appearance of no lack of independence which seems to be that of HUD in regard to counseling.

      My interpretation of the intentions of the parties has never been with any thought of anything less than all parties holding to the highest standards. If you disagree, please point it out.

      It is the reported actions of the parties that have caused the question about the appearance issue and unfortunately intentions are not in any way shape or form a consideration in addressing that standard.

      It is sort of like typing in the wrong name in your browser Internet address block purely by accident and getting to a website which offends you. You did not intend to type that website address but it does not matter, you got there all the same. The browser does not discriminate between key touches and intended key touches; it has zero tolerance. A standard of the appearance of the lack of independence has zero tolerance and totally disregards intent.

      Again this is not my standard. I wish it was not HUD’s.

  • Again we see a move to complicate the issue and open the flood gates to people that may or may not require help just like the defaults in forwards.A simpler approach will address legitimate defaults without creating more problems.See my previous comments on this issue.

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