Reverse mortgage lenders have recently taken initiative to implement individual financial assessment procedures in an effort to minimize tax and insurance default among borrowers. The Department of Housing and Urban Development, too, is working on its own rule that all lenders will have to follow once it is finalized and published, the department has confirmed. A HUD official recently shed more light on the process behind the development of a financial assessment, stressing the department’s commitment to to the rule.
Lenders are likely to see that rule materialize this year, a HUD official told attendees of an industry conference in late March.
The proposal will come first, followed by comments and implementation—which is likely to be a more involved process, according to HUD.
“It will require a public comment period. We hope to have a proposal out sooner, but to complete that proposed rule and comment period, I think it’s going to be a year,” said Karin Hill, director of HUD’s Office of Single Family Program Development.
As for the actual estimated time of arrival of the rule, the process could take place within several months.
“Look toward fall,” Hill said.
Several lenders have proposed their own policies, including a financial assessment implemented by MetLife in late 2011, which was later suspended indefinitely. Urban Financial Group sent a drafted financial assessment for feedback from its broker partners in January and Genworth Financial Home Equity Access most recently announced it would implement a three-phased financial assessment program some time during the first quarter of this year.
Written by Elizabeth Ecker