The Most-Read Reverse Mortgage News Stories of 2016

With 2016 coming to a close, it’s that time of year where RMD recaps the most popular reverse mortgage news stories of the year.

A lot happened in the reverse mortgage industry this year. Federal regulators proposed new rules and consumer protections for the Home Equity Conversion Mortgage program; an industry player decided to shutter its reverse mortgage operations; and a mustachioed Hollywood star entered the ranks of reverse mortgage product spokesmen.

In other news stories, the CEO of a top industry lender was ousted as part of a company-wide management shakeup, and one nationally syndicated personal finance columnist publicly changed her tune on the role reverse mortgages can play in retirement.

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Without further ado, here are the top-10 most-read reverse mortgage news stories in 2016:

10. December 1 — Reverse Mortgage Loan Limit to Increase in 2017

After several years of stagnant reverse mortgage lending limits, the Federal Housing Administration announced it will raise limits “slightly” in 2017. For Home Equity Conversion Mortgages, the maximum claim amount will rise to $636,150, up from $625,500, for reverse mortgage case numbers issued on or after January 1, 2017. These new limits will be in effect throughout the year ending December 31, 2017.

9. August 4 — BNY Mellon to Shutter Reverse Mortgage Operations

After two years in the reverse mortgage business, Bank of New York Mellon called it quits in 2016 and announced plans to fully liquidate its holdings in the sector by the end of August. The decision to terminate reverse mortgage operations, the company told RMD, stems from BNY Mellon’s desire to put greater focus on its core asset management business, which primarily includes institutional and intermediary retail investment solutions. Though BNY did not originate reverse mortgages, the company purchased HECMs and served as a closed loan buyer to Mahwah, N.J.-based reverse lender Longbridge Financial.

8. September 18 — HUD Proposed Rule Would Bring ‘Catastrophic Losses’ to Reverse Mortgages

A proposal this year that would require HUD mortgagees to assign HECMs to FHA once they reach 98% of the maximum claim amount (MCA), industry advocates argued, would adversely impact the future of the HECM program by exposing market participants to higher costs and potentially catastrophic losses. Group such as the Mortgage Bankers Association and the National Reverse Mortgage Lenders Association voiced their opposition to the supplemental proposal from HUD, in efforts to dissuade the agency from adopting this suggested policy into its formal rulemaking.

7. May 19 — Reverse Mortgage Industry Digests FHA’s Latest HECM Changes

FHA proposed a number of substantial changes to the HECM program in May, including a requirement that would force lenders to assign HECMs to FHA once they reach 98% of the MCA. As the industry digested the latest series of rule updates, popular belief suggested that the new proposals will affect virtually every aspect of doing business in the reverse mortgage sector.

6. April 27 — FOIA Request Sheds New Light on Financial Freedom Reverse Mortgage Foreclosures

Following a partially granted Freedom of Information Act (FOIA) request issued by HUD, a California-based non-profit group called for a moratorium on any additional reverse mortgage foreclosures by CIT Group, Inc. (NYSE: CIT) and its subsidiary, Financial Freedom. The call for a moratorium was based, in part, on new data that the California Reinvestment Coalition obtained from HUD, which indicated that Financial Freedom/CIT Group’s share of reverse mortgage foreclosures since April 2009 is more than twice as much as the company’s market share.

5. June 1 — AAG Names Tom Selleck as New Reverse Mortgage Spokesman

In reverse mortgage celebrity news, American Advisors Group (AAG) made headlines this summer when it announced the choosing of Emmy and Golden Globe award-winning actor Tom Selleck to be the company’s newest reverse mortgage spokesman. Selleck, who at the time was starring on the hit CBS series “Blue Bloods” (2010-2016), joined AAG as the national spokesman in the midst of the company launching a multi-faceted marketing campaign, which included new advertisements, a new AAG tagline and updated collateral.

4. January 4 — Why This AARP Columnist Changed Her Mind on Reverse Mortgages

Thanks to various program changes in recent years, reverse mortgages have been winning over everyone from financial advisors to community banks and the mainstream press, and even one nationally recognized personal finance commentator who admittedly changed her view on the product. Personal finance writer Jane Bryant Quinn (AARP, The Washington Post, Newsweek) chatted with RMD this year upon the release of her sixth personal finance book to discuss the biggest challenges retirees face today and the factors contributing to her change of heart on reverse mortgages.

3. October 14 — RMS President Ousted in Major Walter Leadership Shake-Up

Top-10 reverse mortgage lender Reverse Mortgage Solutions (RMS) made industry headlines this fall, following an announcement from its parent company, Walter Investment Management Corp. (NYSE: WAC), that nine executives would be leaving the company, including the President of RMS, the reverse mortgage subsidiary of Walter. The terminations, according to Walter, were part of the company’s plans to “flatten” its operating team, with the goal of improving company communication and simplifying its management structure.

2. September 27 — New FHA Condo Rules Expand Access to Reverse Mortgages

In response to changing conditions in the condominium market, FHA proposed new rules that would allow individual condo units to become eligible for agency financing—a move that harkened back to the FHA’s previous “spot loan” days for approving HECMs on a unit-by-unit basis. The proposal, which “certainly includes HECMs,” according to a HUD spokesman, will differ from the previous “spot approvals” process, though the agency did not divulge further details at the moment.

1. May 18 — [Updated] FHA Proposes New Consumer Protections for Reverse Mortgages

The biggest reverse mortgage story of the year arrived in May, when FHA proposed a set of new rules aimed at strengthening the HECM program, including changes to the origination and servicing process. The proposed rule, which served to reinforce and codify recent HECM reforms implemented by FHA over the past several years, also intended to add new consumer protections.

Such proposed changes included making certain that required HECM counseling occurs before a mortgage contract is signed; require lenders to fully disclose all HECM loan features; cap lifetime interest rate increases on all HECM adjustable rate mortgages (ARMs) to 5%; reduce the cap on annual interest rate increases on HECM ARMs from 2% to 1%—an aspect of the proposal considered highly controversial among reverse mortgage industry members.

To date, HUD and FHA are still in the rulemaking process on the proposal.

There you have it, the top-10 RMD news stories of 2016. Thank you for all of your ongoing readership and continued support this year. Here’s looking ahead in 2016!

Editor’s note: The top stories list is based on traffic data received on Reverse Mortgage Daily content compiled January 1, 2016 through the publication date of this article.

Written by Jason Oliva

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  • “Thanks to various program changes in recent years, reverse mortgages have been winning over everyone from financial advisors to community banks and the mainstream press….” This is our conventional wisdom.

    To quibble over the veracity of the quotation is less than productive. What has yet to be made clear is how is this strategy bringing in more business? Let us focus on that for but one moment.

    We hear that the new changes may produce worse results now “but just you wait.” We heard this line of reasoning in late fiscal 2010 when Savers were introduced. We heard it again in late fiscal 2013. Finally we heard it again in the first half of fiscal 2015.

    Savers are gone. The changes of September 30, 2013 have been around for four years now and currently we are seeing and experiencing the effects of financial assessment. Yet last fiscal year endorsements were the worst of the decade (and more).

    HUD has suggested even more changes to HECMs. Perhaps that will help us win over more financial advisors, community bank leaders and those from the mainstream press but if our endorsements will fall as a result how are helping more seniors or gaining the confidence from investors in the growth in our industry.

    Our conventional wisdom is looking less and less attractive.

  • I hate to be cynical but the Cynic is right… (Happy New Year
    by the way)

    I am very guilty of being one of those who constantly states
    the product is better than ever.
    But endorsements keep going down…

    2016 was most certainly the most positive press cycle the
    reverse mortgage has ever seen.
    But endorsements keep going down…

    Financial Planners of all types are accepting this product
    more than ever.
    But endorsements keep going down…

    Realtors are more accepting of the H4P.
    And the endorsements are still pathetic…

    Everybody acts like the answer to this question is such a mystery
    because no one likes the to hear the hard truth.

    And that is, with very few exceptions, this industry just doesn’t
    want to put the effort fourth to bring the reverse mortgage any real level of success.

    Every successful product has an army of “successful” sales
    people behind it. There are no exceptions to this rule.

    The reverse mortgage industry, again with some/few
    exceptions, has a sales force that the majority of needs to retire. I know manyof them, like many of them, respect many of them, but we’re not going to grow with a salesforce who “really don’t need to work.”

    The remaining people float from company to company with one question on their minds: “do you give leads?”

    God forbid they would have to get dressed in the morning and
    go out and “create business.”

    There is only so much Tom Selleck, Fonzi and Robert Wagner
    can do. They can’t support an entire industry.

    Most large lenders and independent shops have lowered the bar so much that if you close 1 loan per quarter you are considered a great employee.

    “What’s the difference if they only close 3 or 4 loans a year?”
    “They don’t cost us anything.”

    What a great strategy to grow a successful national sales
    force…

    Sad, very sad….

    • Michael,

      Happy New Year!!

      Your comment was not cynical; it was pessimistic. If the product and qualified demand were not in equilibrium, and if it was that qualified demand was not being met, then we would see the most successful forward mortgage originators invading our industry on a scale that would drain off all such excess qualified demand.

      The high demand of fiscal years 2006-2009 is gone. All the betterments of the program you espouse have shrink qualified demand, not increased it. As the old industry saying goes, what is good for HUD is not necessarily good for endorsement volume.

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