Who Must Follow The HECM Reverse Mortgage Rules and Laws?

I am on the verge of raising the red flag of surrender. Confusion is overtaking clarity.
Understanding industry directional bearings is important if one is to grasp where the reverse mortgage industry is heading.

 When our industry acts like an octopus on roller skates, it is difficult to decipher what all the movement means. Recent activity by the big banks and NRMLA  appears to be  antithetical to the plain meaning of ML2008-28 is just a case in point. This Mortgagee Letter was written in direct response to the passage of HERA (Housing & Economic Recovery Act 2008). Section 2133(3)  prohibits any lender funding of counseling. NRMLA'spress release of January 7th and Marty Bell's  NCOA article comments on the January 6 article in  RMD  suggest that the intent to fund the program through various lenders is genuine, and done with the best of intentions. If intentions (without appropriate waivers) can supersede rules and laws, then there are effectively no rules and no laws.

For many reasons, (all of which have been previously discussed in prior posts), including the iniquitous results of the SAFE Act, along with the wrongful implementation of HUD’s Final Rule 5356-F-02 as set forth in ML2010-20, the lenders along with a complicit federal agency, and as economists would say, a rationally ignorant Congress, apparently do what they want when they want simply because they want.

It is for the little fella to follow the letter and the spirit of the law. Should it not be followed they do so at their own peril.

Comments

[James E. Veale, CPA MBT]

The description that was provided in the RMD article sounded more like the claims of those who realize something is wrong than a declaration why their actions were correct. Simply stating that a specific HUD waiver had been obtained by each lender would have answered all questions. Instead we read about a lunch, best intentions, expeditious help for seniors, and other irrelevant information. The issue is why Mortgagee Letter 2008-28 was not violated either in fact or in its spirit by payments totaling $130,000 made to one counseling agency, NCOA, to create a pilot program for a specific type of counseling associated solely with the HECM program. Worse of all it is the association which oversees ethical industry conduct which is making these irrelevant statements.

Then there is the ridiculous statements allegedly made to the U.S. News Reporter by someone at HUD and far worse by the executive of a counseling agency. Both could have cited the estimate made by the HUD OIG of up to 20,000 technical defaults. There was no need to state that the extent of the problem is unknown or worse citing an alleged industry study that puts total noncompliance at 20% of all outstanding HECMs. Some have been angered that NRMLA failed to respond to allegedly numerous phone calls but that is a topic for another article.

This is like the tip of an iceberg. Who knows what other crazy things are going on without proper vetting? For such a dinky industry with such large, dominant players, it is very odd to see things spinning in such irresponsible ways.

This may seem odd to some, but in some ways the structure between the IRS and the tax community is more rational than the relationship of HUD with our industry. Until recently I never thought I would ever reach such a conclusion.