Careless Advice

The following commentary is by James E. Veale | CPA, MBT

Proper Use Of Reverse Mortgages

Advice About Reverse Mortgages

The more I read and hear so called financial advisors presenting the use of reverse mortgages, the more troubling it becomes.  For example, one California reverse mortgage broker who allegedly provides retirement advice has issued press releases declaring that seniors are getting reverse mortgages to allow their portfolios and (401k and IRA) retirement accounts time to recover from recent investment losses.  Continue reading

Can HECM Regulators Act Unethically Toward the Reverse Mortgage Program?

Tell the woman who can no longer obtain a reverse mortgage because the program benefit cuts prevent her from getting rid of her conventional mortgage (she never could afford)-that Washington supports the program; Tell the man who desperately needs the reverse mortgage and yet was turned down because underwriting guidelines prefer that the properly executed power of attorney be called into question by an artificial standard-that Washington supports the program

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HUD’s new Financial Interview Tool: Will it prevent borrower problems?

HUD's New Financial Interview ToolCommentary:

I read with great interest and anticipation just what our prospective reverse mortgage borrowers would face with HUD’s new counseling protocol which includes a Financial Interview Tool [Update: Shortly after writing this commentary the NCOA FIT & Benefits Checkup are no longer available without a secure login] . Reverse Mortgage Daily was kind enough to include the above-mentioned link in their article.

 

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Time Magazine: Another ignorant smear piece on reverse mortgages

Time Magazine: Ignorant Smear Piece On Reverse MortgagesI couldn’t read this “journalistic” (too use the term loosely) hit piece (Six Problems the Consumer Financial Protection Bureau Should Tackle First) and not respond. Below is my letter to the editor of Time Magazine requesting a retraction…

Dear Editor,

As a reverse mortgage professional I am writing about your publication’s recent story published July 6th highlighting reverse mortgages as one of the six problem areas that the new Consumer Financial Protection Bureau needs to address. After reading my comments I would ask that your publication publish a retraction or correction in fairness to your readers who deserve the truth. Unfortunately, such retractions are much like trying to pick up feathers scattered in the wind.

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Did we just dodge a bullet?

If a mental picture comes to mind for the reverse mortgage industry it is the character “Neo” in the Matrix leaning back impossibly as he dodges bullets in slow motion. The question is, have we as an industry just dodged a bullet with the recent approval of the $150 million…

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Mortgage brokers no longer allowed to order FHA appraisals…

Federal Housing Administration Policy Changes

Federal Housing Administration Policy Changes

The Federal Housing Administration (FHA) today announced several significant policy changes that are intended to improve their exposure to risk.  The changes, effective January 1, include:

  • Modification of Procedures for Streamline Refinance Transactions
  • Adoption of Home Valuation Code of Conduct Guidelines (some not all)
  • Updated Appraisal Validity Period
  • New Appraisal Portability Regs
  • New Requirement of Lenders to Submit of Audited Financial Statements for Review
  • Adjustments to the Approval Process for Participation in FHA Loan Origination
  • Increased Net-Worth Requirements for Lenders

Grabbing the attention of mortgage professionals was FHA’s decision to adopt language from HVCC appraisal guidelines. The HVCC, which has been the subject of heated debate within the industry, was implemented by Fannie Mae and Freddie Mac on May 1, 2009. At that time the FHA decided not to adhere to the policy. This undoubtedly increased demand for FHA loan products as originators quickly learned of the multitude of problems associated with HVCC. The new requirements will prohibit any commissioned based lender staff member from ordering an FHA appraisal.

FHA will not require the use of AMCs or other third party organizations for appraisal ordering, if lenders do use AMCs and/or other third party organizationsFHA-approved lenders must ensure that:

  • FHA Appraisers are not prohibited by the lender, AMC or other third party, from recording the fee the appraiser was paid for the performance of the appraisal in the appraisal report.
  • FHA Roster appraisers are compensated at a rate that is customary and reasonable for appraisal services performed in the market area of the property being appraised.
  • The fee for the actual completion of an FHA appraisal may not include a fee for management of the appraisal process or any activity other than the performance of the appraisal.
  • Any management fees charged by an AMC or other third party must be foractual services related to ordering, processing or reviewing of appraisalsperformed for FHA financing.
  • AMC and other third party fees must not exceed what is customary and reasonable for such services provided in the market area of the property being appraised.

FHA issued five new mortgage letters explaining the policy changes. Here are links to each mortgagee letter:

Mortgagee Letter 09-28: Appraiser Independence

Mortgagee Letter 09-29: Appraisal Portability

Mortgagee Letter 09-30: Appraisal Validity Periods

Mortgagee Letter 09-31: Strengthening Counter Party Risk Periods

Mortgagee Letter 09-32: Revised Streamline Refinance Transactions