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Overcoming Shock



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If you don’t know by now FHA has signaled their intent to suspend the Standard Fixed Rate HECM by the end of January. The key word is suspend not eliminate. Any massive industry change that effects our business can lead to a variety of symptoms: fear, helplessness, anger, sadness or paralysis. That is to be expected. The question is how can we as individuals overcome our state of shock. Now here are a few things you may find constructive #1- Acceptance. We cannot move the hand of the Senate or FHA singlehandedly. These changes while not welcomed by most are necessary to insure the program continues to serve the needs of future borrowers and provide a venue for you the reverse mortgage professional. #2- Network more than ever.


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  1. If the fixed rate program is suspended – it’s just not available. We lived without it before and will be able to live without it again. I always bring to light the many BENEFITS of a reverse mortgage no matter what type is available at the time.

  2. The LIBOR (Std) is a better product (fit) for the client in most cases. The ones who will be hurt are the ones who need a maximum benefit to pay off debt (mtg, credit cards, loans etc). It will cause some seniors to stay in the workplace longer.

  3. It is what it is.

  4. It is not clear if the Fixed Rate HECM Standard is terminated or suspended. The specific language in the letter includes:

    “2. Moratorium on the Full-draw HECM Reverse Mortgage” — This is the title of the section. Since all fixed rate HECMs are full draw, the title is odd since the body of the section clearly states that nothing will be done to fixed rate Saver HECMs.

    “FHA is preparing a policy directive that would result in the immediate cessation of the use of the Standard Fixed Rate HECM Product.”

    “Eliminating the use of the Fixed Rate Standard is an immediate stop gap measure….”

    The weakest wording was “Moratorium” and the strongest “Eliminating.”

    We also find some troubling wording in the letter beyond vague statements on set-asides but Ms. Galante also mentions longevity as a cause of the current problem. It is comforting she does not then discuss PLFs. It was also disappointing to find nothing about hybrids as potential cure and fix for the program.

  5. Hi, I was just wondering if any one knows that since the standard is being “suspended” (which is entirely crazy by the way) if the adjustable rate HECM for purchase is offered by any lenders?

    Thanks for your help. Robin

    • Ms. Faison,

      I am double checking with operations but Security One Lending has always offered adjustable rate HECMs for use with HECMs for Purchase. If I find out I am wrong about the current situation, I will make that clear in a subsequent comment.

      What is true today will radically change after the Mortgagee Letter terminating the fixed rate Standard is issued. Most lenders will be scrambling to figure how they will respond over the next 30 days and even longer.

      Enjoy the holidays and have a very prosperous 2013.

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