Since the Federal Housing Administration still has no confirmed commissioner — and the industry is still sorting out the effects of the last major set of rule changes — RMD decided to ask reverse mortgage professionals what they’d do with the keys to the FHA for the day.
For Ed O’Connor, the marketing manager for the HECM division at FirstBank in New York, simplifying the roughly 100-page reverse mortgage loan application would be a start.
“For the people who understand the paperwork, it’s a lot,” he says. “For the people who don’t, it’s nearly impossible. ”It’s unfair to the consumer to put all these different, and sometimes redundant, disclosures in front of them and have them sign. I’m in favor of regulations and laws that are meaningful and useful, not just for sake of another piece of paper to sign.”
As far as principal limit factors go, O’Connor says he does not necessarily think that increasing the available principal limit will lead to a better program — but he suspects that the sweet spot is a slightly higher than where it is currently.
However, those only using 60% or less of their total principal limit should be rewarded with lower mortgage insurance premiums, he said.
“Less usage should equal less costs all around,” he says.
Tim Nelson, reverse mortgage sales manager for VIP Mortgage in Arizona, says he would act as an intermediary between various stakeholders in the reverse mortgage space if he were to become FHA commissioner for a day.
“To me, the commissioner needs to have our industry, NRMLA, and other industry leaders very involved in the changes going forward,” he says.
The rollout of Financial Assessment in 2015 was a concrete example of collaborative success, Nelson says.
“That is a perfect example of a time we worked together,” he says. “We worked together to make the product more sustainable, resolve issues, and set borrowers up for success. A good example of what doesn’t work well was the October changes that caught everybody by surprise. Both sides need to work together so both sides create a product good for the consumer and for HUD.”
Nelson would also put loan subservicers in place for loans that are reassigned back to HUD.
“This could eliminate significant losses because of HUD’s [availability] to service them,” he says. “We need HUD to say, ‘We’ll take the loan back on paper, but allow someone else to subservice the loan and the liquidation process, if it’s necessary.’”
Jesse Brewer, a reverse mortgage specialist with Resolute Bank in Nevada, would spend his day as commissioner evaluating the FHA’s core mission as it relates to senior homeowners and the program, confirming that the reverse mortgage plays a critical role in the plan for senior financial security.
“We have to get the mission squared away immediately,” he says. “Then, if we’re evaluating the health of the program, we have to look at the impact of principal limit changes since 2009.”
Secondly, he says the FHA would need to evaluate HECM endorsement volume.
“I would want to determine the appropriate market share for the FHA in the reverse mortgage space as it relates to non-FHA products,” he says.
Written by Maggie Callahan