Bank of America (BOA), a leading Reverse Mortgage wholesale Lender, discontinued it’s Broker Advisory program last week, August 15, 2008. The program suspension is directly related to passage of the Housing and Economic Recovery Act, the landmark legislation that will ultimately have a revolutionary impact on the mortgage industry based on the more we learn everyday about the 800+-page bill.
Although the legislation did not specifically prohibit transacting reverse mortgage business through Broker Advisory networks, i.e., allowing non-FHA approved Realtors and Brokers to “partner” with FHA approved Brokers and Correspondents to originate HECM loans, there is strong language in the bill that discourages such arrangements. HUD is expected to issue a Mortgagee Letter very soon outlawing what had become this fast-growing business practice.
Now that Reverse Mortgages are on the national radar like never before (a considerable portion of the Home Economic Recovery Act is designed to improve the HECM program), Congressional leaders want to have more oversight on the direction and growth of the program (protecting the FHA insurance fund), and most importantly, they want to have absolute authority over who is allowed to work directly with consumers to sell it.
Don’t be surprised if the Broker Advisory program, and with it, the origination of HECM products by anyone other than an FHA Brokers become only a footnote to history in the evolution of Reverse Mortgages. The dust ain’t cleared yet.
Aj Gilmore – Senior Financial Corp