Due to changes in loan officer compensation as mandated by the Federal Reserver Board effective April 6, as well as a clarification from MetLife Bank, loan originators in New Hampshire once again have the ability to be competitive on fixed rate HECM loans.
A New Hampshire reverse mortgage statute that prohibited the use of a yield spread premium in reverse mortgage transactions meant that wholesale originators in the state could only be compensated through an origination fee on fixed rate HECM loans. With large lenders waiving the fees, it became increasingly hard to compete under the new compensation rules.
Throughout the early discussion surrounding loan officer compensation, Reverse Mortgage of New England’s Nicholas DeMasse began to pursue the issue with state legislators, but to no avail. As of April 1, he says, “It became clear we no longer had YSP.”
DeMasse approached MetLife to find out whether the bank’s definition of “premium” included YSP, and whether the premium could be paid to brokers originating fixed reverse mortgage loans in New Hampshire. Within three weeks, MetLife issued guidance clarifying the premium definition and stating “Since all Fixed Rate HECM loans are priced at a consistent amount regardless of the terms or conditions of the loan, broker compensation no longer meets the State’s definition of Yield Spread Premium.”
“It’s a very important clarification for every brokers originating reverse mortgages in New Hampshire,” DeMasse says. “They can now get paid. Prior to that, they couldn’t.”
The timing, he says, was essential, in establishing the compensation for loans closed after implementation of the new loan officer compensation rules in early April.
“It becomes a moot point because there is no YSP being paid,” he says.
Written by Elizabeth Ecker