Two months after a history-making move by Metlife to implement a financial assessment for reverse mortgage borrowers, sources close to the company have confirmed that changes to the new policy are coming this week. [Update: RMD confirmed Wednesday that MetLife will suspend its financial assessment effective immediately.]
Account executives within the company have begun to notify brokers that there are changes on the way, though whether MetLife will update or eliminate the changes has not been revealed. Sources have indicated that more information on the changes will be made available on Wednesday.
The expected changes come just months after MetLife implemented the financial assessment on November 14, 2011. The assessment rolled out by MetLife includes a series of requirements that examine residual cash flow, credit history and principal limit usage (PLU), to determine whether a borrower will be able and willing to pay tax and insurance once they have obtained a reverse mortgage. Many brokers have reported since then that they are taking business to other lenders because the guidelines are too stringent.
“It’s an unfortunate element,” Craig Corn, MetLife vice president and head of its reverse mortgage division told RMD in November. “Some people just may not qualify. But if it ensures the program is outstanding for many years to come then I think we’ve done a really good thing.”
Industry analysts have estimated the assessment could prevent as many as 30% of borrowers from qualifying.
The company implemented the changes following official guidance on limited underwriting from the National Reverse Mortgage Lenders Association in October. The Department of Housing and Urban Development has also stated publicly that it is in the process of developing a rule for lenders that will work to prevent tax and insurance default, and while other large lenders have said they are developing their own financial assessment plans, they have yet to implement changes.
Written by Elizabeth Ecker
Editor’s note: RMD has learned that MetLife will suspend its financial assessment, effective Wednesday. Read more.