Wholesale Competitors Seeing Benefit from New MetLife Reverse Mortgage Underwriting?

Competing wholesale reverse mortgage lenders say they are beginning to see an uptick in business from brokers that previously had delivered loans to MetLife Bank. As a result of new financial assessment guidelines, one wholesale executive told RMD his business this month has been the best December on record and what typically would be a slow month for volume has not subsided at all.

“We’ve received a lot of files from brokers on MetLife [applications] afraid to send them to MetLife,” the wholesaler said.

Brokers say they are having a hard time qualifying borrowers under the guidelines, and that the assessment has added pages to the application, as well as time to go through the process with borrowers. The requirements, they say, are too tough for the average borrower to qualify.

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For example, FAQs released last week and obtained by RMD after the initial financial assessment was written specify include a rule with respect to credit, stating that if a borrower owes more than $1,500 on a collection account, charge off or tax lien, it must be paid prior to closing with borrower funds, not at closing with HECM proceeds.

“Is it me, or have we gone way beyond verifying if they can pay their taxes and insurance?” one broker said.

When asked about the impact on MetLife’s volume the financial assessment has had, a MetLife spokesman declined to comment.

Written by Elizabeth Ecker

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  • Who said financial assessment is about taxes and insurance?  What a ridiculous idea!!!  It is about qualifying borrowers according to the financial requirements of the lender.

    Other wholesale lenders should be happy.  MetLife is throwing them buiness.

  • With regards to the following statement:  “For example, FAQs released last week and obtained by RMD after the initial financial assessment was written specify include a rule with respect to credit, stating that if a borrower owes more than $1,500 on a collection account, charge off or tax lien, it must be paid prior to closing with borrower funds, not at closing with HECM proceeds, as was previously allowed.”

    As an FYI, it was NEVER allowed. It is clearly stated within HUD Handbook 4235.1 as well as 24 CFR 206 that only liens on title among the traditional closing costs and repair escrows may be paid out of the HECM proceeds.

    If a potential borrower cannot meet their current financial obligations, how is obtaining a HECM going to benefit them? It would typically be just a temporary fix and not something that would benefit them during their retirement and/or later stages in life. This is something the industry, as well as financial planners, have been struggling with for some time.

    This industry is going through a transitional stage. Our economy is still not on track. The qualifications for purchasing or refinancing a home is reverting back to the pre Carter administration days with slight tweaks. Is that a good thing? Well, at least our economy was somewhat stable back them and steadily growing.

    • Please cite the specific reference in 4235.1 regarding the borrower’s inability to use HECM proceeds to pay collections or charge offs.  I do not find any such prohibition in that document.  On the contrary, the borrower has always been able to use HECM proceeds to pay anything they choose, including past-due debts to any creditor. 

      With regard to your next paragraph, I would be willing to bet that the vast majority of HECM borrowers have been “unable to meet their current financial obligations” to one degree or another at the time of closing.  The benefit of the HECM is obviously that it can be used to remove some of those obligations.

      As for the HECM being a temporary fix — so what?  If the borrower knows what they are doing, and understands that the funds will not last forever, why is it not acceptable to use the HECM to put off financial crisis for a few more years?  One could argue the same thing about many kinds of financial tools, including HELOCs.  Would you say that no one should use a HELOC to meet a financial need because it will not meet all financial needs for the rest of the borrower’s lifetime?

  • If MetLife Bank wants to be certain a debt which is not a lien against the subject property is paid off at the time of funding, how else can they enforce it other than as a prerequisite to closing?  No mortgagee is permitted to mandate the use of HECM proceeds other than those specifically granted by FHA such as the payoff of all existing liens on the subject property, payoff of specific government debts, payment of current taxes and insurance, and payment of upfront and closing costs.
     
    Some are in an uproar that the industry is changing and that MetLife Bank is in the forefront of that change.  Our industry is maturing and like the reactions of some teenagers who are startled by certain life changes, some industry members are not mentally prepared for industry changes and respond poorly to them.  The middle aged will help the young and the old to prepare for such changes.  Not all old-timers will choose to ride out this wave; unfortunately due to the economic realities of today, more will have to stick to it out than want to.
     
    It is time to move forward or be like the reluctant woman in the cartoons of the 1800s being dragged west by her pioneering husband.  Not all change is for the best or even necessary.  But change is here and even more is on its way.  The days of every mortgagee being able to help or even wanting to help every senior who meets minimum FHA requirements are in the past; it is time to move on.

    The industry will adjust but not everyone will like it.

  • >>business this month has been the best December on record and what
    typically would be a slow month for volume has not subsided at all.

    Resulting in increased Underwriting turn times of 48 hours, as opposed to 24 hours.  I’ve been considering trying MetLife again, thinking the reduced volume would result in reduced turn times, but the entire process may still take the same amount of time, due to the additional Financial Assessment requirements, in addition to their inability to accept digital documents.

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