The taxes and insurance guidance issued by the Department of Housing and Urban Development is a good “first giant step” according to Marc Helm, president and chief operating officer of Reverse Mortgage Solutions.
Helm told Origination News the mortgagee letter puts some parameters about what HUD wants done in these situations, which until now had been a gray area.
An area that concerns Helm is the guidelines for the repayment plan, which puts a 24-month limit on arrears over $5,000. “If somebody owes $10,000 worth of taxes, if they weren’t able to pay it, I don’t think they are going to be able to pay it back on a 24-month repayment plan,” he said.
Having the ability to refinance the borrower is one of the better tools HUD has provided borrowers, but whether or not that is a possibility is another question.
The agency also put “heavy duty reporting requirements” so it will monitor what servicers are doing and not doing, he noted.
“As we work through this mortgagee letter and all the pieces in there, I think we can give HUD some very solid feedback,” Helm stated. HUD spent a lot of time speaking with the industry to put this together and he called this a good starting point. But, he continued, is this enough to make a difference, which is something only time can tell.
“All of us in the industry want all of this to work, so any tools that HUD can give us to work with the borrowers a little bit better to have them stay in their homes, that is the end goal here. The end goal here is not to foreclose people, it is to keep people in their houses,” Helm said.