NRMLA Asks HUD to Revise Non-Borrowing Spouse, H4P Rules

Responding to President Trump’s call for a complete overhaul of the nation’s financial regulatory structure, the National Reverse Mortgage Lenders Association last week submitted a host of requests to the Department of Housing and Urban Development, asking the agency to update non-borrowing spouse rules and other parts of the reverse mortgage program.

Specifically, NRMLA asked HUD to extend the current timeframe for non-borrowing spouses to claim the right to live in a property from 90 to 180 days, deeming the three-month window too short — and pointing out that the 90-day span isn’t mentioned anywhere in the official Home Equity Conversion Mortgage paperwork.

“Having HECM loan documents not match mortgagee letters in this regard is both burdensome to lenders and puts HUD at further risk of litigation and loss,” NRMLA’s letter reads.

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Other key requests in the letter include:

  • A provision that would allow lenders to make changes to HECM loan documents without HUD’s immediate approval. The department would then have 60 days to respond with objections to the mortgagee’s revisions to the paperwork.
  • An extension of the death-notice timeframe. Under current HUD rules, servicers must notify the department within 60 days of a borrower’s death; NRMLA claims this amount of time is “unduly burdensome and patently unfair,” as public death records are not always updated expediently. NRMLA asked HUD to give servicers at least 30 days from the receipt of public records indicating that a borrower has died.
  • The introduction of verbal occupancy certifications. Claiming that senior borrowers don’t always return written occupancy requests immediately, NRMLA asked HUD to allow a verbal confirmation suffice until.a written notice can be returned. “Placing seniors at risk, and requiring servicers to begin a foreclosure process when the servicer may have other information that the senior in fact may still live in the home, is burdensome and inefficient,” NRMLA writes.

The Washington, D.C.-based trade group also requested several changes to the HECM for Purchase program, calling on HUD to allow seller concessions and permit borrowers to apply for a reverse mortgage before receiving the certificate of occupancy on a new property. NRMLA specifically pointed out that the Federal Housing Administration allows a variety of equity and credits on traditional forward mortgage products.

“Having inconsistent requirements confuses lenders, and creates a barrier to entry in the reverse mortgage market by lenders that currently do not offer reverse mortgages, but that have decades of experience in originating forward mortgage loans,” NRMLA’s letter reads.

The 16-page list of requests comes in response to a HUD call for regulatory input from the lending community, with the specific goal of identifying regulations that impede job growth and impose undue costs — or which lenders simply deem “outdated, unnecessary, or ineffective.” The department issued the open request for comments — published in the Federal Register — under a pair of executive orders from Trump which sought to identify and eliminate a wide swath of financial regulations.

Read NRMLA’s full letter here.

Written by Alex Spanko

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  • >> requested several changes to the HECM for Purchase program, calling on HUD to allow seller concessions

    H4P’s numbers will double, when that happens. It’s the primary obstacle I encounter. Both Sellers and Lenders should be able to contribute towards costs.

    • Raymond,

      If that is true, H4P will bring annual endorsements to about 5,000 per fiscal year. While that is better, it still not be a major contributor to breaking out of the stagnation we currently are encountering.

  • Why start HUD into changes for “improvements” to HECMs for Purchase? We have many who believed and claimed in the PAST that without the changes being requested now H4Ps would expand. Then in the last couple of years, this group is claiming that it is these items that keep H4P endorsements from growing. One day one thing, the next day, another.

    Personally, no changes are preferable to these and other changes HUD will no doubt be making in this period of what HUD called not that long ago “a period of no changes for HECMs into the foreseeable future.” That proclamation was immediately followed by new rules in proposed regs that were only supposedly going to codify existing Mortgagee Letter changes already in place.

    It is troubling now whenever lenders want change, especially after how poorly their insistence for Financial Assessment turned out. So here we go again with changes that will become yet new barriers to increased endorsements. If HUD does not do it to us, we do it to ourselves.

  • First off, President Trumps call for a complete overall of the “Financial Regulatory Reform Bill” (Dodd-Frank) is long over due. The Dodd- Frank bill and the CFPB has crippled our entire financial system with over regulating it to the point of almost destroying the community banks in our country and more!

    Not only that but because of the vast over regulating implementations on business, banking and the financial industry, we have seen many small business failing, especially since 2010!

    Getting to the NRMLA list and letter to HUD, these are all good common sense requests for the most part. The one on the Non-Borrowing Spouse is a must!

    The changes to the H4P are necessary to keep it alive and to increase endorsements and interest in the program all together.

    I like this article, everything in it makes sense and NRMLA’s requests are very much needed to improve our product and increasing interest in the HECM world overall.

    This was a well written article Alex.

    John A. Smaldone
    http://www.hanover-financial.com

    • John,

      As to the recommendations NRMLA made to HUD, are those changes to the non-borrowing spouse all that needed? The date that a servicer gets notice should not be the point that a 30 day rule kicks in. It should be based on the death of the borrower, period. The surviving spouse should be the party to give notification.

      The trouble with H4P and the unreasonable expectations of its endorsement numbers is much deeper than the few changes requested by HUD. Is 2,500 or so more H4P endorsements worth other changes that HUD may make along with them??

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