The triad of very recent changes emanating from the reverse mortgage industry includes the continuation of the current HECM loan limits; lower expected rates; and the unveiling of the HECM Saver program. While this is indeed a propitious start to HUD’s new fiscal year, the question remains whether this will be enough to shake the program out of its somnolent state, as the industry experienced a precipitous 31% drop in endorsements this past fiscal year.
These three changes, while important, are entirlely focused upon available proceeds and concomitant costs. Besides perhaps recapturing some potential customers that were lost to the last principal limit reduction, it does nothing to open the process to eligible borrowers who through no fault of their own remain shut out of the program. I have addressed this point before.
If the industry is to remain the steward over our elders’ financial well being stringent controls, like the one promulgated by NRMLA in their latest ethical opinion must become the norm.. The concepts and points therein contained need to be adopted by HUD and all the lenders, without delay. Otherwise, I would expect HUD’s OIG to investigate every refi in the same manner that it is currently scrutinizing every fixed rate loan closing.
While the SAFE Act has made the reverse mortgage industry a bit safer, there still remain too many incorrigible originating companies who believe that our trusting elders are ripe for the picking. I am afraid that HECM to HECM refinancing could make an insidious comeback for the sole purpose of garnering a double dip of the originating fee. The Office of Inspector General must be put on alert and take swift action against these miscreants. Special Agent Stolworthy will be one busy boy. Should these unnecessary refis become news, the industry will have to battle the media on yet another front. So let’s nip this in the bud now, so the focus can remain on the effect the innovating avatars are having on HECM product redesign and consumer interest.
While some strident dissatisfaction with the configuration of the HECM Saver product remain, I can see the program evolving into a “lighter” program for individuals who wish to take out even smaller amounts. I would agree that we need a more definitive contrast between the Saver and Standard program.
The above notwithstanding, I would suggest that it is a good start.
A recent study of Baby Boomers finds that while the Boomers have experienced the struggle their parents are facing with long-term care, few are doing anything to acquire their own coverage. The results of the survey show that more needs to be done to educate and motive Baby Boomers to seek long-term care coverage sooner, rather than later.
The online survey, conducted by the research firm of Mathew Greenwald & Associates, was taken by 1,073 Americans between the ages of 46 to 64. The survey revealed that personal experiences, such as the current economic hardship or watching their parents age, have inspired many Boomers to take hold of their financial future, including seeking out long-term care coverage. Thanks for the post!
Posted by: Aaron | December 19, 2010 at 11:53 PM