Scott Tucker's Reverse Mortgage Marketing Blog

"CCCS of Greater Atlanta to Offer Free Reverse Mortgage Counseling..."

2010-01-19T18:57:34-06:00

Beginning immediately, Consumer Credit Counseling Service (CCCS) of Greater Atlanta will offer free reverse mortgage counseling sessions nationwide.

The decision comes as a result of a $1.8 million grant from the U.S. Department of Housing and Urban Development (HUD), which was awarded to the national nonprofit counseling agency late in 2009.

While most of the agency's other services are offered free to consumers, reverse mortgage counseling has historically required a consumer payment.

This new grant funding will allow CCCS of Greater Atlanta to provide more than 12,500 reverse mortgage counseling sessions at no cost through September 2010.

"A reverse mortgage can offer seniors greater financial security," said Suzanne Boas, president of CCCS of Greater Atlanta. "It can be used to supplement social security or meet unexpected medical expenses, allowing seniors to remain in their homes. However, it can be an expensive option, and is not the right solution for everyone."

"We hope seniors across the country will take advantage of this opportunity," Boas continued. "Obtaining this free counseling from a reputable and qualified nonprofit agency will help them understand all aspects of a reverse mortgage loan, and make an informed decision that is best for their unique situation."

HUD requires all reverse mortgage lenders to provide homeowners a list of nonprofit counseling agencies that provide reverse mortgage counseling.

CCCS of Greater Atlanta is one of a small number of counseling agencies designated by HUD to provide counseling nationwide.

Seniors can schedule a reverse mortgage counseling session by calling CCCS of Greater Atlanta directly at 866-616-3716, seven days a week, in English and Spanish. Counseling can also be initiated online at www.cccsinc.org/reverse.

All of the agency's reverse mortgage counselors are college graduates, have completed the Home Equity Conversion Mortgage (HECM) qualification exam approved by HUD and participate in reverse mortgage education classes.

To learn more, visit www.cccsinc.org and click on "I'm looking for information on a reverse mortgage" in the "Get Help Now" menu. There you will find a step-by-step guide to evaluating a reverse mortgage as well as helpful resources from organizations such as AARP.

"HECM Program Not Subsidizing the Rest of FHA Say Analysts..."

2010-01-19T18:50:34-06:00

New View Advisors published an interesting analysis on the risk profile of the Federal Housing Administration’s reverse mortgage program (HECM).

Using an actuarial analysis published by IBM in October 2009 and FHA’s Annual Management Report (AMR) for FY 2009, New View anticipates that we can expect a tightening of ending standards across FHA’s entire program, both forward and reverse.

For years there has been a group of people who believe that due to the frontloaded MIP structure of the HECM program, the cash generated has been used to subsidize other parts of FHA’s business.

However, New View writes that the dramatic increase in the HECM Loan Liability Guarantee (LLG) which is used to estimate the present value of projected income and costs make it clear that the HECM program is not subsidizing the rest of FHA.

According to the AMR, the LLG rose alarmingly from $19.3 billion in FY 2008 to $33.9 billion in FY 2009, up 75%.

HECM accounted for $4.4 billion of this increase, not an insignificant amount. Overall, HECM LLG nearly quadrupled, from $1.5 to $5.9 billion.

This amount represents, in effect, the negative net present value of the HECM program, and exceeds the total amount of MIP ever collected. Most of this is concentrated in the GI fund, not the MMI fund.

The AMR attributes says this “increase in liability is primarily due to the drop in house price appreciation projections … [which] results in lower recoveries from future HECM assigned assets which increase the liability.”

True, but the reversal of fortune for the LLG surely also reflects the house price depreciation that began in 2007 and continued through FY 2009.

Therefore, given the uncertain state of the housing market, and its diminished capital position, FHA was justified in reducing the HECM principal limits says New View.

"NRMLA presents free webinar to curb deceptive advertising practices..."

2010-01-19T18:40:31-06:00

As part of its mission to help seniors borrow with confidence, the National Reverse Mortgage Lenders Association (NRMLA) presented a free Webinar for members on Jan. 12 in which a panel of experts presented specific examples of unacceptable advertising.

The panel included Volky Garcia, deputy director of the FHA’s Quality Assurance Division, who kicked-off the discussion with examples of phrases that can lead to investigation and potential punitive actions.

The FHA representative was joined on the panel by Jean Noble, a reverse mortgage industry marketing specialist; attorney Arthur Axelson from ReedSmith; Rick Peters, a marketing consultant for MetLife; and NRMLA president Peter Bell.

Half a dozen ads containing misleading or inappropriate language were scrolled on the participating viewers’ computer screens and the panel criticized the copy.

Included were ads falsely designed to look like official government documents, a definite “no-no” and cause for fine or suspension of license or worse.

Exaggerated promises (“No monthly payments,” “Stay in your house forever”) were also pointed out.

The session was the first in a series of four free webinars NRMLA is presenting between now and early March to advocate best practices on Hot Button topics--areas of the business that are frequently criticized.

“We want seniors as well as politicians and the press to be aware we are policing from within,” says Bell. “Our membership is a fervent advocate of senior consumer protection. And we will continually educate them on responsible lending practices.”

Future Hot Button topics include:

► Jan. 26—Managing Appraisals
► Feb. 10—Ethical Pricing
► March 2—Comprehensive Counseling

For more information, visit www.reversemortgage.org.

"Top 10 Reverse Mortgage Myths..."

2010-01-19T18:14:05-06:00

Recent headlines pointing to the detriments of reverse mortgages aren't getting the story straight.

One of the nation's leading reverse mortgage lenders, Generation Mortgage Company™, wants to separate fact from fiction.

"Because so many Americans over the age of 62 are facing significant financial stress due to dropping retirement and savings account balances, as well as higher healthcare costs, many groups are targeting seniors under the guise of helping them," said Scott Peters, CEO and President of Generation Mortgage.

"HECM reverse mortgages are Federal Housing Administration-insured products and are heavily scrutinized by regulators and legislators looking to protect seniors' best interests.

As a result, more than 600,000 American seniors have obtained reverse mortgages that have enriched their lives by allowing them to stay in their homes and pay off their bills."

According to Generation Mortgage, the most common reverse mortgage myths are:

Myth: If I take out a reverse mortgage the lender will own my home.

Fact: False. Homeowners still retain title and ownership to their homes during the life of the loan, and can choose to sell the home at any time. As long as the house is maintained and property taxes and homeowners insurance are paid, the loan cannot be called due.

Myth: My children will be responsible for the repayment of the loan.

Fact: False. Reverse mortgages are non-recourse loans. That means, if the property is sold to pay-off the loan when the homeowner passes away or decides to leave the home for other reasons, there will be no mortgage debt for the family and heirs to repay. The maximum amount owed is the current market value of the house. If the homeowner's heirs want to keep the home, they would pay the balance in-full to the reverse mortgage lender.

Myth: I cannot get a reverse mortgage if I have an existing mortgage.

Fact: False. With enough equity, you may be able to pay off your existing mortgage or other debt with the reverse mortgage. The reverse mortgage must be in a first lien position, so any existing mortgage must be paid off. Seniors who take out reverse mortgages are free to do anything they want with their reverse mortgage proceeds. Paying off an existing mortgage is the number one reason most of our clients take out a reverse mortgage.

Myth: Only low-income seniors get reverse mortgages.

Fact: False. Although some seniors may have a greater need than others for the monthly proceeds or lump sum funds reverse mortgages offer, most simply prefer to be free of monthly mortgage payments. Without monthly mortgage payments, many homeowners find they can maintain their existing quality of life and build their savings to help with future expenses. A growing number of people who have no immediate need are taking out these loans so that they have a financial cushion for future expenses.

Myth: If I outlive my life expectancy, the lender will evict me.

Fact: False. Reverse mortgage lenders put no time limit on how long seniors can stay in their homes. Since homeowners still own the property, lenders cannot evict them, provided they follow the program guidelines.

Myth: Reverse mortgage lenders pressure seniors to buy additional financial products.

Fact: Generation Mortgage offers only reverse mortgage products; it does not sell seniors any other financial products. Not every reverse mortgage lender operates that way. In fact, Generation has a policy to safeguard seniors from buying unsuitable financial products with reverse mortgage proceeds.

Myth: There are no objective advisors available to seniors trying to decide if a reverse mortgage suits their needs.

Fact: False. Borrowers are required to work with independent, third party counselors approved by the U.S. Department of Housing and Urban Development (HUD) in their local communities. This educational session helps them make the right decision for their unique situations.

Myth: There are restrictions on how reverse mortgage proceeds may be used.

Fact: False. There are no restrictions. The cash proceeds from the reverse mortgage can be used for virtually any purpose and borrowers should be cautious of lenders attempting to cross sell other products. Many seniors have used reverse mortgages to pay off debt, help their kids, make ends meet or to have a financial reserve.

Myth: Reverse mortgage lenders take advantage of seniors.

Fact: False. Seniors who have been victims of reverse mortgage lending schemes are extreme exceptions and typically victims of unsavory lenders. As a consumer, you should only work with lenders who are Better Business Bureau and National Reverse Mortgage Lenders Association (NRMLA) members and adhere to those organizations' strict Code of Ethics and Standards for Trust.

Myth: I've heard I won't qualify for a reverse mortgage because of my limited income.

Fact: Unlike a traditional mortgage where mortgage payments must be made each month, a reverse mortgage pays you. Because of this, many seniors who do not qualify for traditional financing are eligible for a reverse mortgage.

"FINRA goes after member for reverse mortgage promotion..."

2009-12-17T11:00:00-06:00

The Financial Insurance Regulatory Agency (FINRA) ordered Virginia Beach, Virginia member avid Allen Abbott to pay $20,000 for promoting the sale of reverse mortgages, and for soliciting various types of investments, from senior citizens.

According to FINRA, Allen's firm prohibits engaging in any reverse mortgage business, including the promotion and sale of reverse mortgages.

FINRA found that Abbott used communications in the seminars without a registered firm principal's prior written and dated approval, and failed to file slides used in his presentation with FINRA's Advertising Regulation Department.

FINRA also found that Abbott's seminar invitation failed to disclose the broker-dealer's name.

Based on its findings, FINRA has barred David Allen Abbott from associating with any FINRA members for 60 days.

Sincerely, your friend,

Scott Tucker

P.S.: Please go here right now to get my free, updated audio CD interview on reverse mortgages with Shannon Hicks.

"Using appraisal management companies to ensure appraiser independence..." [reverse mortgage]

2009-12-16T11:00:00-06:00

Earlier this year FHA announced that it would adopt language from the Home Valuation Code of Conduct (HVCC) to ensure full alignment with the Government Sponsored Enterprise (GSE) standards.

FHA is not requiring the use of an Appraisal Management Company (AMC), or other third party providers, but it does require that reverse mortgage lenders take responsibility to ensure appraiser independence.

With a proposed rule putting the responsibility of correspondents on FHA mortgagees (lenders), wholesalers such as MetLife are requiring that brokers use AMCs to ensure they remain compliant.

A notice MetLife sent to brokers...

"Effective on all loans with case numbers assigned on or after December 18th, 2009, the appraisal orders must be placed with an Appraisal Management Company (AMC) to ensure that the appraisal reports are prepared by an FHA Roster appraiser who has not been selected, retained or compensated in any manner by the mortgage broker or any member of the lender's staff who is compensated on a commission basis tied to the successful completion of a loan."

The company is requiring that appraisals be ordered through ServiceLink, Equifax, or National Real Estate Information Services.

MetLife isn't the only wholesalers who's requiring that brokers use an AMC.

Other wholesalers, such as Live Well Financial, will also be utilizing AMCs to ensure compliance with FHA guidelines.

In an email to RMD, Brett Ludden, Senior VP at Live Well Financial, said the appraisal ordering process will be integrated directly into its proprietary origination system to make the process easy for correspondents.

Even if wholesalers can make the new process easy, many reverse mortgage brokers are concerned that the AMC requirement will increase the costs of an appraisal for their customers.

"The costs on AMC-managed appraisals for conventional-forward mortgages has gone from $225 to a minimum of $405 up to $680," said Jack Belles, President of Reverse Mortgage of New England.

The company does a few "forward" mortgage loans, and said he sees no reason why the costs won't go up when wholesale reverse mortgage lenders start requiring the use of AMCs.

Sincerely, your friend,

Scott Tucker

P.S.: Please go here right now to get my free, updated audio CD interview on reverse mortgages
with Shannon Hicks.

"NCOA is expanding HECM (reverse mortgage) counseling..."

2009-12-15T11:00:00-06:00

The National Council on Aging (NCOA) has promoted Barbara Stucki, PhD, to the position of VP, Home Equity Initiatives.

Stucki previously served as director, Reverse Mortgage Counseling Network, and Home Equity Initiatives.

"Barb's extensive research and leadership in the home equity field has positioned NCOA as a leading advocate for older adults who are leveraging their home equity to remain independent," says Jim Firman, president and CEO of NCOA.

"Her knowledge and passion has elevated the issue of reverse mortgages on the national stage, and allowed NCOA to fund new research and services for older adult homeowners."

In her new role, Dr. Stucki will oversee the expansion of NCOA's Reverse Mortgage Counseling Network, which she developed from a pilot program.

The network is a rapidly growing national housing counseling intermediary funded by HUD.

Prior to her work at NCOA, Dr. Stucki was a senior policy analyst for the American Council of Life Insurers.

She also worked for 6 years at AARP as a consumer issues policy analyst.

Sincerely, your friend,

Scott Tucker

P.S.: Please go here right now to get my free, updated audio CD interview on reverse mortgages with Shannon Hicks.

"HUD to remove cap on origination fee for FHA-insured loans..."

2009-12-14T11:00:00-06:00

American Banker is reporting that HUD is planning on lifting the 1% cap on origination fees for FHA mortgages...

HUD says that competition will prevent fees from rising too much.

If borrowers think they're being overcharged, they can shop around for a better deal and take their business elsewhere.

Phillip Schulman, partner in the K&L Gates, LLP law firm told American Banker, "HUD feels the marketplace will drive origination fees down once the 1% cap is removed."

HUD had indicated last year that it might remove the cap when it completed RESPA changes for 2010.

It's doubtful that HUD would lift the cap on its FHA-insured reverse mortgages at this time, but that would be a welcome free market reform to that program.

Sincerely, your friend,

Scott Tucker

P.S.: Please go here right now to get my free, updated audio CD interview on reverse mortgages
with Shannon Hicks.

"The Consumer Financial Protection Agency would regulate reverse mortgages..."

2009-12-13T07:21:42-06:00

HR 4173 passed in the U.S. House of Representatives on December 11th by a vote of 223-202.

The Reverse Mortgage Amendment proposed by Rep. Jan Schakowsky (D-IL), and Rep. Dina Titus (D-NV), was included.

Their amendment passed by a vote of 277-149, with bi-partisan support.

Rep. Schakowsky released a press release saying...

"We have an obligation to protect our seniors from malicious fraud & prosecute anyone who means to do them harm... Many seniors are turning to reverse mortgages and they need to feel safe and secure in their decision. We must do everything in our power to ensure the fidelity of the system and shield our parents and grandparents from being cheated or misled."

HR 4173 provides for the creation of the Consumer Financial Protection Agency (CFPA), and would give the CFPA authority to regulate reverse mortgages.

To become law, the bill still must pass the Senate and be signed by the President.

Your friend,

Scott Tucker

P.S.: Please go here right now to get my free, updated audio CD interview on reverse mortgages with Shannon Hicks.

"HUD: New condo guide's for FHA-insured reverse mortgages..."

2009-11-18T07:16:00-06:00

HUD has issued new condo guidelines effective December 7th, 2009.

However, HUD's making several temporary exceptions to the new rules due to "volatility" in the condo market.

The new FHA policies included in ML 2009-46B cap the number of condo units in a building that can be financed with FHA insured loans at 30%.

And 50% of units must be owner-occupied to be eligible for FHA financing.

However, ML 2009-46A allows exceptions to the FHA concentration & owner-occ. requirements until December 31st, 2010.

It's as simple as "government healthcare." :o)

HUD's also extending “spot loan approvals,” due to concerns about the condo market, and the new effective date for the elimination of the spot condo approvals is for all FHA case number assignments on or after February 1st, 2010.

Clear as mud?

Reverse mortgage lenders have voiced concern over the risk involved with their Direct Endorsement underwriters authorizing a condo without proper guidance from HUD, so hopefully the new Mortgagee Letter will help alleviate those concerns.

According to ML 2009-46B, lenders will have 2 condo project approval processing options.

The applicable documentation requirements will be the same for each option:

1. HUD Review & Approval Process (HRAP).

2. Direct Endorsement Lender Review & Approval Process (DELRAP). This option is only available to lenders who have unconditional Direct Endorsement authority and staff with knowledge and expertise in reviewing and approving condo projects.

Under DELRAP, lenders must provide the condo approval or denial documents to FHA within 5 business days of final disposition.

These documents must be uploaded using .pdf format through FHA Connection.

Sincerely, your friend,

Scott Tucker

P.S.: To get a free CD on reverse mortgages, please go here right now.