Urban Financial Group notified its wholesale partners this week that it is seeking feedback on proposed financial assessment guidelines for its reverse mortgage borrowers.
In a memo obtained by RMD, Urban outlined the draft of proposed guidelines for borrowers and is seeking comments between now and January 27. The company has not indicated any time frame for implementing any guidelines, a company spokeswoman told RMD.
“It is important that the entire industry be proactive on this matter to help assure the long term viability of the HECM program,” Urban said in an email to its wholesale partners. “Before we announce our final policy, we want our partners’ feedback on our proposed financial assessment guidelines.”
Under the proposal, each loan submission must include income documentation and tax payment history.
If borrowers have defailted on their taxes within the past two years or failed to maintain up-to-date insurance on the property, the application will be reviewed to ensure the borrower meets minimum residual income requirements.
“As a leader in the reverse mortgage industry, Urban Financial Group, Inc. recognizes its duty and responsibility to finding a viable solution for the current tax and insurance default situation,” the company said in the memo.
Urban Financial’s proposal is the first following MetLife’s implementation of a new policy in November. However, RMD confirmed with MetLife this week that it has suspended that policy, effective Wednesday, January 25.
In its announcement, MetLife cited the lack of other lenders following suit as one reason for the suspension, although it remains committed to the concept and the initiative toward reducing borrower tax and insurance defaults, a company spokesman said.
Many lenders have stated their support for implementing a financial assessment, but have yet to establish official policies.
Additionally, the National Reverse Mortgage Lenders Association released “limited underwriting” guidance in October following statements of encouragement from Department of Housing and Urban Development officials in the months preceding.
Written by Elizabeth Ecker