In the wake of efforts by MetLife to implement a financial assessment for its reverse mortgage borrowers and Urban Financial Group releasing a financial assessment draft seeking feedback, the Department of Housing and Urban Development has not changed course in the development of its own rule.
“Because of the specialized nature of this program, FHA and industry representatives were aware that some market confusion might occur as a result of the introduction of lender specific financial assessment guidelines for the HECM program prior to FHA publishing formal guidance,” a HUD spokesman told RMD in an email. “FHA and the industry will continue to work on the development of Financial Assessment guidelines for this program. These guidelines will further support the sustainability of the program for the HECM borrower and the financial health of the program.
Some industry uncertainty did arise following the November implementation—and January suspension—of MetLife’s financial assessment. Brokers reported they had shifted business away from MetLife’s stringent guidelines before MetLife ultimately pulled the plug on the new underwriting.
The Federal Housing Administration has been working on development of a rule for many months—or even longer, depending on how the beginning of the process is defined. Predecessors to the current leadership in HUD were working on a financial assessment in 2011, with more formal conversation with the industry in September when officials made it clear that reverse mortgage lenders can underwrite for a borrower’s ability to meet ongoing property charges associated with the reverse mortgage loan.
Today, however, with one official lender trial and others that are still in the concept phase, HUD says it remains committed to the assessment, but has yet to reveal any details of what it has under way. The department is currently in the development stage of the process, but has been working to address the issue since 2010.
“We are currently in the development stage which includes completing in-depth data analysis to support our recommendations,” the spokesman said. “This development process includes impact analysis of this type.”
The research and analysis has been ongoing since HUD first published Mortgagee Letter 2011-01 in January 2011, which led to the collection of servicer data and formal monthly reported initiated in August 2011.
The agency is now working on a proposed rule addressing various servicing guidelines and requirements, HUD said. “We also have had considerable conversation with industry representatives, lenders, counseling agencies, etc. to discuss possible approaches to the financial assessment. Findings from loss mitigation counseling is also beginning to provide feedback that assists us in thinking about what kind of policies would be most effective in addressing risk issues.”
Written by Elizabeth Ecker