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October Surprise?


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Reverse Mortgage Reform Bill Passes, Awaits President’s Signature

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August or October Surprise? FHA may be able to use a scalpel rather than an axe when it comes to making reforms to the federally insured reverse mortgage or Home Equity Conversion Mortgage program. Late last Tuesday night the Senate granted the Federal Housing Administration the authority to make changes via mortgagee letter rather than the lengthly rule making process in passing House Resolution 2167, better known as the Reverse Mortgage Stabilization Act of 2013. Now the bill awaits the President’s signature. This is a pivotal development because without this authority harsher measures may have been employed to protect the American taxpayer and FHA’s mutual mortgage insurance fund from projected losses. It is expected that FHA will issue a mortgagee letter late this month outlining changes with an implementation date of October first. One HUD official said. We are looking at issuing ML by end of August and, ideally, October 1 for implementation.


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  1. If they keep the Standard Libor I am ok with it


  3. I think it will be eliminated and we are left with the savers

  4. I will be glad to see the change on the non-borrowing spouse as long as HUD can doesn’t take away from the borrowers where both spouses are over the age of 62. I’m not sure how the escrow hold back is going to work for loans that don’t have the money to set those escrows back. I think maybe they should leave the escrow out of the equation as long as the borrowers can prove they have always paid their insurance and taxes.

  5. Keeping the Standard Libor is the key and only lowering the principal limit on those adding a younger borrowing spouse might actually be a good thing.
    As usual another saga to my 10 years in the Reverse Industry.It never gets stale !

  6. It is my personal opinion that if HUD institutes a moratorium on the LIBOR standard, or eliminates it like the Fixed standard, then we will once again see lenders who may not have the borrowers best interests at heart steer people into a fixed rate saver. That will not be in the best interests of the industry, and those additional changes could possibly signal the end of the HECM industry as we know it. I truly hope this is not the case, and HUD and Secretary Galante do not go this route. Instituting a moratorium on the standard LIBOR is a de-facto principal limit reduction across the board and will additionally hurt the very Mutual Mortgage Insurance fund these changes are supposed to support! Time will tell, but if there is indeed a moratorium on the LIBOR standard, I predict endorsements will fall once again which could cause investors to look elsewhere, depriving our industry of much needed capital to fund the program.

    This is my personal opinion and in no way reflects that of my company or others in the industry.

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