Friday Round-Up: HUD Shows Signs of HECM Support

In case you missed it…here’s what happened in reverse mortgage news this week.

California signed a reverse mortgage protection bill into law. California Governor Jerry Brown (D-CA) signed into law a bill on Wednesday that aims to prohibit inappropriate conduct by insurance professionals in the sale of reverse mortgages. The bill was designed to prohibit insurance agents and brokers from participating with, employing, or making referrals to an individual involved in the sale of reverse mortgages.

A CFPB director hearing rehashed partisan concerns. A Senate Committee hearing Tuesday to address the nomination of former Ohio Attorney General Richard Cordray to lead the Consumer Financial Protection Bureau turned into a discussion much more focused on the structure of the CFPB’s governance than of the nomination itself.

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A HUD official stated support of the HECM program. Despite major exits by large reverse mortgage lenders, the Department of Housing and Urban Development believes it is important that the HECM program remain a viable option for seniors, Karin Hill, director of the Office of Single Family Program Development at HUD, told RMD in an interview.

HUD said that a HECM financial assessment is fair game, with an official statement coming soon. A statement confirming that reverse mortgage lenders can conduct a financial assessment to help ensure borrowers can meet their tax and insurance payments on the loans is coming soon, HUD’s Karin Hill told RMD on Thursday.

OIG recommended that HECM fraud reporting needs attention. Unreported cases of HECM fraud led the Office of Inspector General for the Department of Housing and Urban Development to recommend that timely reconciliation of HECM loan payment data by lenders and a more comprehensive policy of detecting and reporting fraud will benefit the HECM program.

Written by Elizabeth Ecker

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  • The summary of the California law above is interpretative.  The California Department of Insurance has yet to issue any guidance.  It is hoped that will come soon.

  • Neither HUD nor Karin Hill have approved any action by lenders other than rejection of an application.  As Karin is quoted in a National Mortgage News article which RMD referenced in its article dated August 16th — “HUD is considering a number of ideas covering a range of issues…. Among other things, it is looking into requiring lenders to perform a full financial assessment of potential HECM borrowers, giving lenders wider latitude in requiring set-asides for property charges, and giving borrowers the option of allowing lenders to escrow for the taxes and fees.”

    Having other tools available to modify HECMs would be very helpful.

  • Neither HUD nor Karin Hill have approved any action by lenders other than rejection of an application.  As Karin is quoted in a National Mortgage News article which RMD referenced in its article dated August 16th — “HUD is considering a number of ideas covering a range of issues…. Among other things, it is looking into requiring lenders to perform a full financial assessment of potential HECM borrowers, giving lenders wider latitude in requiring set-asides for property charges, and giving borrowers the option of allowing lenders to escrow for the taxes and fees.”

    Having other tools available to modify HECMs would be very helpful.

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