New Hampshire Bill Proves Problematic for Reverse Mortgage LO Comp

A New Hampshire bill amending loan officer compensation for reverse mortgages has garnered criticism for its vagueness. 

House Bill 594 amends the state’s general consumer laws, striking out a phrase that prohibits yield spread premiums on reverse mortgage transactions. 

“In a reverse mortgage transaction, any credit derived from offering an interest rate higher than the par rate shall only be paid to the borrower or used to pay the borrower’s costs, and shall not be used as an additional source of compensation,” the bill states on page nine.

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Sponsored by Rep. Mary Beth Walz (D) of Merrimack, the bill fails to verify what exactly the “par rate” might be. 

“This proposed provision is problematic,” says Jim Milano of Weiner, Brodsky, Kider, who also serves as counsel to the National Reverse Mortgage Lenders Association (NRMLA), in an email to members. 

According to NRMLA, HB 594 is one of several hundred bills right now being considered by the New Hampshire legislature before the legislature adjourns on June 28, 2013.   

Written by Jason Oliva

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  • She’s proposing a law for a bygone era of low interest rates and robust property appreciation where a little “above market pricing” could go unnoticed.

    With rising interest rates, impending lowering of PLF’s, unreliable property appreciation, financial assessment, escrows for property taxes and insurance and the likely return of the servicing set aside there won’t be a lot of room for unfettered profit taking from “premium pricing” as it used to be called.

    The market will self regulate with or without new compensation controls or lender desires for above market pricing as the hecm becomes less and less generous and thereby less and less popular. The “industry” will have no choice but to shrink to fit the new demand and cost/volume/profit model.
    Now that’s “problematic”.

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