From principal limit factor changes and non-borrowing spouse guidance to lawsuits and the financial assessment, the reverse mortgage industry was no stranger to the news in 2014.
Reverse Mortgage Daily covered these topics — and more — which presented both challenges and opportunities for the industry as a whole.
Lenders, tech companies and analysts shared their thoughts, and you tuned in. Here’s a list of RMD’s most popular posts this past year, culminating with the single most-read article of 2014:
At a hearing in the U.S. District Court for the District of Columbia, a Department of Housing and Urban Development (HUD) attorney signaled the agency was getting close to issuing new guidance regarding non-borrowing spouses of reverse mortgage borrowers.
Federal Housing Administration (FHA) Attorney Carol Federighi said during the hearing that FHA will cover the costs of a 60-day foreclosure suspension so that deceased borrowers’ spouses can remain in their homes.
Four surviving spouses of reverse mortgage borrowers filed a lawsuit against HUD Secretary Shaun Donovan claiming they faced undue harm due to reverse mortgage statute.
The lawsuit came several months following a previous suit filed by AARP on behalf of non-borrowing spouses of reverse mortgage borrowers, in which a court ruled against HUD and granted relief to the plaintiffs.
This suit sought relief for a class of borrowers who faced situations similar to those detailed in the AARP lawsuit; namely those who faced foreclosure of their homes because they had been removed from the home title or were not named on the title prior to the closing of the reverse mortgage and had survived their borrower-spouses.
A proposed class action lawsuit representing heirs of reverse mortgage borrowers was dismissed by a California judge without leaving the plaintiff an opportunity to appeal.
The suit, brought by AARP on behalf of plaintiff Robert Chandler against Fannie Mae and Wells Fargo in 2011, was the second reverse mortgage lawsuit brought by AARP in 2011 following a suit brought against the Department of Housing and Urban Development (HUD).
7. January 20 — New Appraisal Rule Could Cause Reverse Mortgage Delays Ahead
The Consumer Financial Protection Bureau (CFPB) implemented a new rule, which would require lenders to provide borrowers with their home appraisal as well as materials that were used in completing the appraisal.
The rule required lenders to provide this information before three days prior to the loan closing and within a “reasonable” time period within the loan closing.
Ginne Mae weighed in on lenders’ ability to securitize loan variations of the fixed-rate federally-insured reverse mortgage product.
The agency, which guarantees and allows lenders to securitize pools of mortgage-backed securities, said it would prohibit the inclusion of fixed-rate home equity conversion mortgage (HECM) loans where borrowers can choose a payment plan option allowing future loan advances against the principal limit.
HECM-backed securities issued on or after June 1, 2014 would not be permitted to include these kinds of loans.
5. August 19 — Urban Launches New Private HomeSafe Reverse Mortgage
Urban Financial of America announced its plan to roll out a new, proprietary reverse mortgage that would be made available to borrowers beginning Sept. 2.
The new, fixed-rate loan, called the “HomeSafe,” would be focused on borrowers with high-value homes, with a maximum loan amount slightly more than $2 million. It was expected to roll out initially in five states: California, Florida, Hawaii , New Jersey and Texas.
Long-awaited guidance on the topic of non-borrowing spouses finally came when HUD issued a mortgagee letter outlining changes to its reverse mortgage regulations and requirements that would protect non-borrowing spouses for new case number assignments on or after August 4.
For those new case number assignments, non-borrowing spouses would be able to remain in their homes, provided they are married to the borrower at the time of closing and their spousal status is disclosed at that time via a certified letter.
More loan proceeds were made available for some reverse mortgage borrowers, under HUD’s release of new principal limit factors (PLFs).
The new PLF tables now include figures for ages under 62 following a decision by HUD to allow for non-borrowing spouses of new reverse mortgage borrowers after Aug. 3 to remain in their homes following the passing away of the borrower, under certain terms and conditions. The PLFs reflect loans for borrowers who are age 62 and older, but also loans for married couples where one borrower does not meet the traditional 62-year-old age requirement.
The financial assessment for reverse mortgage borrowers, issued by HUD, will take effect for all case numbers issued on or after March 2, 2015.
The financial assessment is detailed by HUD through Mortgagee Letter 2014-22. Per HUD’s guidance, lenders must evaluate the borrower’s willingness and capacity to timely meet his or her financial obligations and to comply with the mortgage requirements.
For borrowers who do not demonstrate their willingness to meet their loan obligations, life expectancy set-asides—full or partial—will be required.
Generation Mortgage confirmed with RMD it was winding down its reverse mortgage originations business including retail and wholesale operations.
The wind-down of the business will include the elimination of jobs across Generation’s originations platform, spanning positions based in its Atlanta headquarters and nationwide. The last day for new applications will be Wednesday, October 8, though Generation is maintaining its current pipeline of loans as well as its servicing platform and business.
The company is attributing the departure to a heightened and sustained regulatory environment and having seen reverse mortgage volume fall industrywide over the last 12 months as a result.
Editor’s note: The top stories list is based on traffic data received on Reverse Mortgage Daily content compiled beginning on January 1, 2014.
Written by Emily Study