Reverse Mortgage Changes Roadblock Growth, FHA in Need of a Think Tank?

ReverseFocusReverse Focus Weekly Podcast Episode #251

In this week’s Reverse Focus podcast, Shannon Hicks discusses several barriers to growth within the reverse mortgage industry, including the elimination of the fixed-rate Standard and the future implementation of financial assessment and mandatory escrow set asides. 

While home price recovery is one place to look for the recovery of the reverse mortgage market or stabilization, notes Hicks, upcoming product challenges and legislative changes could impact that.

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Also discussed, the Progressive Policy Institute (PPI) suggested a think tank for the Federal Housing Administration (FHA) in the short term, as the agency “finds itself confronting its most severe economic delinquency and default rates in its history.” 

Given the current low-interest rate environment, the time for a reverse mortgage might be sooner rather than later, especially if you do not need the money, according to the Mortgage Professor Jack Guttentag. 

Lastly, Hicks touches on the announcement from the National Reverse Mortgage Lenders Association (NRMLA) about its western annual conference scheduled for May. 

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Talking Points:

  • Is this the key to the industry’s recovery?
  • Think tank suggested for FHA’s financial woes
  • Professor says the time is now for a reverse mortgage
  • NRMLA announces west coast conference

Listen Now“Reverse Focus is the ultimate resource for reverse mortgage professionals providing the technology, training and marketing to grow your business. We are your one-stop resource for those committed to taking their business to the next level.”

Editor’s Note: These posts are sponsored by Reverse Focus.

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  • “Barriers” to growth? We haven’t seen nothing yet. Wait till Servicing Fee Set Asides and Full Loan Origination Fees make a comeback in the absence of the lavish profits from the fixed rate product to subsidize all the Variable rate product’s pricing and fees like those mentioned above.

    Add to all this the sad fact that consumers have bigger mortgages just at the time when the program is going to become more costly, less generous, and laden down with new requirements like escrow set asides and this ill conceived and ill advised “financial assessment”.

    To further complicate things, we only underwrite to “investor standards” these days rather than HUD standards so it is becoming exceedingly difficult to know what the rules du jour are.

    I see “pull through rates” dropping to 30 percent or less.

    • There are two types of financial assessments, one which is simple acceptance or rejection and the other which allows loan modification to strengthen the financial position of the borrower but where the prospects of being able to avoid default is marginal even with modifications, rejection. NRMLA is advocating for the latter.

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