Welcome once again to RMD’s Friday round-up, your single place for the biggest headlines from the past week in the world of reverse mortgages.
We forgive you if national political news drove your attention away from some of the items on our list — we’d be lying if we didn’t admit to furiously refreshing multiple tabs for the latest word out of Washington, particularly toward the end of each day — but that’s why we round up the top five stories ahead of the weekend.
RMD’s Readers Pick a Familiar Favorite Name for the Reverse Mortgage — Nearly 200 RMD readers cast ballots in our poll to determine the most popular name for a reverse mortgage — should the industry ditch “reverse” and its baggage, call it by its proper Home Equity Conversion Mortgage name, or assign a more exotic moniker to the product? This story generated lively suggestions and even more impassioned comments, so be sure to add your two cents if you missed it the first time around.
Why California Could Soon See a Reverse Mortgage Surge — Home values are tracking upwards all over the country, but California presents a particularly intriguing opportunity for reverse mortgage originators: Not only do older folks find themselves sitting on substantial quantities of home equity, but unique tax laws provide a distinct advantage for staying in place instead of downsizing in retirement. According to a speaker at the National Reverse Mortgage Lenders Association’s Western Conference in California this week, this could spell a surge in demand for HECM products in the Golden State.
Financial Freedom to Pay $89M Over Missed Reverse Mortgage Deadlines — Financial Freedom on Tuesday agreed to shell out $89 million as part of a settlement with the Department of Housing and Urban Development, which accused the servicer of submitting improper reimbursement claims to the Federal Housing Administration. A little later on the week, Treasury secretary Steven Mnuchin defended his actions as head of OneWest Bank — Financial Freedom’s former owner — while testifying before a Senate committee, saying that his team self-reported the issues to HUD as soon as they were discovered.
HUD: Reverse Mortgage Industry Has “Accepted” Financial Assessment — Also at NRMLA, HUD official Phil Caulfield claimed that the reverse mortgage industry has weathered the initial storm that followed the implementation of Financial Assessment rules, pointing to higher counseling-to-origination conversion rates and slight upticks in origination volumes. Echoing her sentiments from NRMLA’s Eastern conference in April, HUD senior policy advisor Karin Hill named HECM-to-HECM refinances and appraisal quality as key areas of concern for the department in the coming year.
American Financing Looks to Grow Reverse Mortgage Channel — The Denver-based American Financing recently entered the reverse mortgage business, offering fixed-rate and line-of-credit products. Meghan Keller, the firm’s reverse mortgage manager, told RMD that American Financing decided to enter the reverse business to tap into a rising housing market and perceived demand from the rapidly aging population.
Reverse Mortgages Around the Web
We’re not quite sure why there’s been such a wellspring of reverse mortgage news from down under, but we continue to find it deeply fascinating: This week, personal finance site Mozo and the Sydney Morning Herald both featured pieces on the Australian version of the reverse mortgage.
Banks will have to cater to pensioners with mortgages — soon — In an interesting twist, Mozo writer Steve Jovcevski suggests reverse mortgages as a potential option for solving Australian retirees’ mortgage-debt issues; citing a survey that found one in five Australians expected to retire with some kind of mortgage debt, he suggests that homeowners with more equity could use a reverse mortgage to fund their retirement after paying off their remaining forward balance with savings. Jovcevski also floats the idea of a “partial reverse mortgage” that allows borrowers to make payments of their choosing — something that already exists, of course, here in the States.
How would a reverse mortgage affect my age pension? — A letter-writer asks the Sydney Morning Herald’s financial advice how a reverse mortgage would affect her government pension eligibility, and in the process reveals a lot of interesting tidbits about how the program works: For instance, banks generally only allow homeowners to tap into 20% to 25% of their home equity, and interest rates on the loans tend to be higher than those for forward mortgages — leading the Morning Herald to declare that “reverse mortgages have not proven popular in Australia.”
Written by Alex Spanko