A New Mexico Senate bill has loss mitigation implications that would impact reverse mortgage borrowers in the state and the National Reverse Mortgage Lenders Association has expressed formal concerns about the bill moving forward.
In a letter sent January 27 to Sen. Michael Sanchez (D-N.M.), NRMLA stressed concerns regarding the Mortgage Fair Foreclosure Act, which states that in New Mexico, “homeowners should be given reasonable notice of the fact of and basis for an alleged default on their mortgage, apprised of all loss mitigation methods available to them in connection with their home loans prior to the loss of their home and afforded a meaningful opportunity to participate in loss mitigation to prevent the loss of homeownership.”
The bill includes loss mitigation efforts such as a review and underwriting of income to assess a borrower’s ability to stay in the home under a revised loan modification plan, NRMLA explained. Such payment plans have no relevance to a reverse mortgage.
While it is not a reverse mortgage bill, per se, it could impact all servicers, NRMLA notes.
“If the borrower is in default under his or her HECM mortgage because of failure to pay property taxes and/or hazard insurance, HUD has robust procedures in place for servicer to assist seniors in curing such a default, including post-closing servicing related counseling with HUD-approved counselors,” the NRMLA letter states.
The provisions are designed to account for the unique features of reverse mortgage loans, NRMLA writes, urging an amendment to the bill that would exclude reverse mortgages.
View the New Mexico Senate Bill.
Written by Elizabeth Ecker