Last week, reverse mortgage subservicer Celink announced that it had been awarded the Federal Housing Administration (FHA) Single Family Secretary-Held Home Equity Conversion Mortgage (HECM) Assets contract and will provide loan servicing for HECM reverse mortgage loans sponsored by FHA. For all future HECM loans assigned to HUD once they reach 98% of the maximum claim amount (MCA), Celink will assume the duties of servicing those loans.
The selection of a new HECM servicing contractor has been sought by HUD since at least 2020 — during the previous administration — but servicing issues have consistently been one of the most-discussed pain points by reverse mortgage industry participants for an extended period of time. Borrowers have been feeling frustration around servicing, as well, according to data gleaned from the Consumer Financial Protection Bureau (CFPB)’s Consumer Complaint Database.
Immediate industry reactions to the news appeared positive. Conversations between industry participants and RMD were optimistic, and some lenders and other industry participants shared their direct perspectives on the news.
Lender reactions to the news
Leading reverse mortgage lender Finance of America Reverse (FAR) related encouragement about the news, and congratulations to Celink for the award of the contract according to the lender’s president, Kristen Sieffert.
“Finance of America Reverse offers our congratulations to Celink on this important partnership for HECM servicing,” Sieffert told RMD. “Delivering a positive servicing experience to all of our borrowers remains a core facet of FAR’s mission, as does our commitment to supporting and walking alongside customers and their families throughout the entire life of the loan. We are thrilled to see others in the industry working hard to equip customers with lifechanging products and further enhance the borrower experience from start to finish.”
Longbridge Financial CEO Chris Mayer acknowledged servicing difficulties the industry has had in the past, and his optimism about the new contract.
“We are so happy for our partners at Celink and for the reverse mortgage industry that they are taking over the HUD contract,” Mayer said. “One of the challenges our industry and FHA has faced is that the borrower experience once the FHA takes over servicing deteriorates. With Celink taking over servicing, there is a strong opportunity for improvement.”
Adding to the optimism at Longbridge is Richard Burke, the lender’s head of servicing.
“We are very excited to learn that Celink was awarded the HUD contract,” Burke told RMD. “I think this is a great opportunity for Celink to make all the necessary process improvements to make the assignment process for the customers a much better transition. Celink understands the obstacles faced when assigning loans for its clients and can use that knowledge to help make the total process the best possible experience for all customers.”
Also encouraged by the news is Kim Yowell, EVP of servicing at Fairway Independent Mortgage Corporation.
“Celink is an excellent choice and I am excited about this growth opportunity for Celink – a company long and solely dedicated to the reverse mortgage business and to providing excellent service to reverse homeowners,” she said.
The persistence of servicing issues is a problem that has needed to be addressed for some time, according to Dan Hultquist, national reverse mortgage sales training director at Fairway.
“Proper servicing is vitally important to the health of the reverse mortgage industry,” he says. “Unfortunately, poor HUD servicing has created stiff headwinds for our salesforce. Consider that over 20% of the reverse mortgage CFPB complaints in 2021 were directly tied to HUD’s servicing contractor. Awarding Celink the HUD servicing contract may be the most significant industry change since the 2014 protection of non-borrowing spouses. This is not just a way to address losses on the back end, it is a way to begin repairing damage to the reputation of the product.”
Hultquist also shared a recent interaction he had with an affected reverse mortgage borrower.
“Yesterday, I was on the phone with a gentleman who had just lost his wife and has had trouble sleeping and eating since her death,” he says. “He desperately needed to reach out to our industry’s current HUD servicer. After multiple 90-minute wait times, he was never able to get through. He called me this morning sobbing because he’s sure he’ll lose his home. This isn’t a Fairway client, but we need to address it to prevent a ripple effect that will further damage the industry.”
Broader reverse mortgage industry reactions
Wendy Peel, managing director and partner in reverse lending at BlackFin Group, conveyed congratulations to Celink and to NRMLA on their efforts to facilitate this transition.
“Congratulations to Celink and NRMLA for persistence in demonstrating compelling data for HUD to make such a change,” Peel told RMD. “For years, many investors have suggested HECM servicing would benefit from having subject matter experts. Ultimately, it is the senior/borrower who should expect to see consistency in customer service. Perhaps equally important, future borrowers may have the benefit of lower fees. This is an exciting time in reverse mortgages.”
Elly Johnson of All Reverse Pro and co-chair of NRMLA’s HUD Issues Committee was also pleased to hear about the new contract.
“This is great news, and something that many in our industry have advocated for, for quite some time,” she told RMD. “This is another step in the right direction. Celink’s expertise in servicing the HUD HECM assets will go a long way in helping to sustain the product and provide a greater level of customer service.”
The importance of developing a process for servicing reverse mortgages was emphasized in comments from Jeffrey Birdsell, VP of loan programs at reverse mortgage loan origination system (LOS) provider ReverseVision.
“Servicing reverse mortgages is a very specialized process and takes years to develop a system to support this type of servicing,” Birdsell explained. “It also takes years to put together a staff and processes to support seniors and their use of their reverse mortgage. Being able to deeply understand HECM products and how the servicing affects seniors is also something learned over time. If the loans are not serviced correctly or timely, it is a reflection on HUD, HECMs and the industry.”
Understanding the general complexity of reverse mortgage servicing process development, the likelihood of difficulty is high particularly to any organization with more limited reverse mortgage familiarity, Birdsell said. That’s why the naming of Celink should prove encouraging to the industry, he explained.
“Hearing about Celink being awarded the contract brings a great deal of comfort to the industry knowing that there will be no transition period as a new servicer gets up to speed, and [the industry knows] that Celink is already an expert at working with seniors, families and estates with these loans as they go through the maturity process,” he said. “This is a big win for HUD, the industry, and most importantly for the seniors that have and rely on their HECM loans.”