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Wrong-Headed Assumptions



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My definition is that assumptions are mental shortcuts we take to save us time and energy. But they may in fact be hurting our business and personal lives. Many of these assumptions are hard-wired in us based on our past experiences. Without awareness we will continue to make them.Here are just a few assumptions we can make and should avoid. One…just ignore the problem and it will go away.  A great way to move the offending issue of your mental to do list but in reality problems tend to fester and worsten without prompt attention…




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  1. This is one of those days, I wish I did not read so much about FHA and HECMs. What I had assumed was true about FHA was in large part turned on top of its head.

    A GAO (Government Accountability Office) report just came out to explain to Congress why HUD just went on its High Risk Area list. When it came to risk and risk assessment, here is a short summary of what it says on Pages 18 and 19:

    “1. FHA’s risk-assessment strategy was not integrated throughout the organization….

    2. Contrary to HUD guidance, the Office of Single Family Housing had not conducted an annual, systematic review of risks to its program and administrative functions since 2009….

    3. The Office of Single Family Housing’s risk-assessment efforts did not include procedures for anticipating potential risks presented by changing conditions….”

    The HECMs which are under the microscope are those which are in the MMI Fund which generally only include endorsed HECMs with case number assignment dates after September 30, 2008. The substantial rise in Fixed Rate HECM Standards took place after September 30, 2009, just as HUD stopped doing formal annual reviews of risk.

    What can be inferred from the report is that FHA never fully assessed the impact of the rise of fixed rate Standards in a falling home value market. If that is true (and after reading the HUD annual reports to Congress on HECMs, one must conclude it was) is it so shocking that the HECM program is in the mess it is?

    At several NRMLA Conventions the problems in the HECM program were glossed over with the reasoning that the office of risk management was addressing risk issues. Now it appears that the office had the name risk management in it but after 2009 did not have information needed to identify or manage risk.

    An old adage goes something like this: “Assumptions make a donkey out of you and a donkey out of me.” Here donkey should be a three letter word for donkey. Trusting that FHA was really managing its risk, I certainly feel like a donkey today.


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