HUD Suspends Reduction of FHA Mortgage Insurance Premiums

The Department of Housing and Urban Development (HUD) is suspending previous guidance that permitted a reduction of annual mortgage insurance premium rates for certain Federal Housing Administration (FHA) mortgages, the agency announced via Mortgagee Letter 2017-07 published Friday.
Effective immediately, Mortgagee Letter 2017-07 supersedes guidance published earlier this month that reduced the annual MIP by 25 basis points for FHA Title II forward mortgages with a closing/disbursement date on or after January 27, 2017.
“FHA is committed to ensuring its mortgage insurance programs remains viable and effective in the long term for all parties involved, especially our taxpayers,” states ML 2017-07. “As such, more analysis and research are deemed necessary to assess future adjustments while also considering potential market conditions in an ever-changing global economy that could impact our efforts.”
The move arrives one week after HUD first announced the reduction, and just hours after President Donald Trump was sworn into the U.S. Presidency on Friday, January 20.
While Trump nominee for HUD Secretary Ben Carson has not yet been confirmed into this position, during a nomination hearing last week Carson said he would take a look at current housing policies, including the MIP reduction that was first announced just days before he appeared before the Senate Committee on Banking, Housing and Urban Affairs.
“Certainly, if confirmed, I’m going to work with the FHA administrator and other financial experts to really examine that policy,” Carson said during the hearing.
FHA plans to issue a subsequent Mortgagee Letter at a later date should this policy change.
Written by Jason Oliva


Friday Round-Up: Walter Exits Reverse Mortgage Originations, HUD Issues Final Rule for HECMs

It has been a busy week for reverse mortgage news, to say the very least.
The parent company of a top-10 industry lender announced its exit from reverse mortgage originations, and the Department of Housing and Urban Development (HUD) finally released its final rule detailing a variety of changes to the Home Equity Conversion Mortgage (HECM) slated to take effect this year. And those were only two breaking news headlines the industry saw over the last few days alone.
In case you missed the rest, here are the top reverse mortgage news stories grabbing the attention of RMD readers during the past week:
Walter Shuts Down RMS, S1L Reverse Mortgage Originations—Walter Investment Management Corp. (NYSE: WAC) announced this week that the company is exiting the reverse mortgage origination business, including its wholesale and retail channels under the Reverse Mortgage Solutions (RMS) and Security One Lending brands. Walter, however, will continue to maintain its reverse mortgage servicing operations under RMS, the company told RMD.
HUD Finally Issues Long-Awaited Program Changes for Reverse Mortgages—Eight months since it issued proposed rules for the HECM program last May, HUD finally issued its final rule on Thursday, in which the agency spelled out several program changes the agency has slated to take effect September 19, 2017. The final rule codifies several significant changes to the FHA’s HECM program that have been implemented over the years, and makes additional regulatory changes.
HUD to Launch New Loan Review System for Reverse Mortgages—Earlier in the week, HUD announced plans to roll out a new loan system for reviewing certain FHA loans, including reverse mortgages. Mortgagee Letter 2017-03 described FHA’s plan to implement a new Loan Review System, which will be used to manage Title II Single Family Loan Reviews, Title II Single Family Mortgagee Monitoring Reviews, and Mortgagee self-reporting of fraud, misrepresentation and other material findings.
Trump Treasury Pick’s Ex-Firm Subject of New Reverse Mortgage Investigation—New York Attorney General Eric Schneiderman opened an investigation into the reverse mortgage practices at a company formerly owned by Steven Mnuchin, just days before the Trump pick for U.S. Secretary of the Treasury testified during a nomination hearing before a Senate finance committee. Specifically, the N.Y. Attorney General’s Office is currently examining practices related to the servicing of reverse mortgages at Financial Freedom, the reverse mortgage unit of Mnuchin’s OneWest Bank.
Reverse Mortgage-Backed Securities Market Shrinks for First Time—The HECM mortgage-backed securities (HMBS) market shrank for the first time as a record level of prepayments drove total outstanding HMBS to just under $55 billion, according to the latest market commentary from New View Advisors.
Written by Jason Oliva


HUD Finally Issues Long-Awaited Program Changes for Reverse Mortgages

The Department of Housing and Urban Development (HUD) issued its final rule on Thursday, spelling out several program changes the agency is making to Home Equity Conversion Mortgages (HECMs) set to take effect later this year.
Published in the Federal Register on Thursday, the final rule titled “Strengthening the Home Equity Conversion Mortgage Program” codifies several significant changes to the Federal Housing Administration’s (FHA) HECM program that were previously issued by HUD under the Housing and Economic Recovery Act of 2008 and the Reverse Mortgage Stabilization Act of 2013.
The provisions of this final rule, which are scheduled to take effect September 19, 2017, also make additional regulatory changes to the HECM reverse mortgage program, including new origination and servicing policies, among other changes.
Under the final rule, mortgagees will be required to inform potential HECM borrowers of all of the HECM products, features and options that FHA insures, “in a manner acceptable to the [FHA] Commissioner, irrespective of the particular HECM products offered by the mortgagee,” the rule states.
On limiting disbursements during the first 12 months of the HECM, HUD stated that while FHA does not intend to change the current limits of 60% and 10% at this time, this final rule provides “flexibility for this limit to be changed in the future to respond to market changes or other factors.”
“Specifically, this rule revises the regulations such that the 60% cap will never be modified to be less than 50%, and the additional percentage will never be modified to be less than 10% absent future rulemaking,” the final rule states.
HUD also spells out changes related to the acquisition and sale of property, stating that the final rule replaces the requirement that the property be sold for at least 95% of the appraised value with a “more flexible provision” which allows the FHA Commissioner to lower this amount as necessary to adapt to market conditions and other factors.
This rule also requires that the closing costs from the sale be no more than the greater of 11% of the sales price, or a fixed dollar amount as determined by the Commissioner through Federal Register notice.
HUD also made an important change to the HECM for Purchase program related to the existing prohibition on interested party contributions.
“The rule permits the seller to pay fees required to be paid by the seller under state or local law and fees that are customarily paid by a seller in the locality of the subject property and to purchase the Home Warranty Policy,” the rule states. “The rule also allows the Commissioner to define the types and parameters of other allowable interested party contributions through Federal Register notice for comment.”
The final rule follows publication of a May 2016 proposed rule and takes into consideration the public comments received on the proposed rule since that time.
During one of these public commenting periods, a commenter suggested that HUD should require mortgagees to assign a HECM to FHA if the outstanding loan balance is equal to or greater than 98% of the maximum claim amount—a proposal for which HUD later opened up an additional, supplementary public comment period.
“HUD is deferring its final determination as to whether to adopt the commenter’s proposal at this time, and after HUD fully reviews and takes into consideration the comments received, HUD will issue, or choose not to issue, its final determination of this proposal through a subsequent final rule,” the final rule states.
HUD also stated that it will defer making its final determination on the proposed rule to impose a 5% cap on interest rate adjustments for monthly adjustable HEMC products—a rule considered controversial by many reverse mortgage industry members.
After months of uncertainty around HUD’s rule making process, the long-awaited final rule from HUD was welcomed by the reverse mortgage industry, including the National Reverse Mortgage Lenders Association (NRMLA).
“Personally, I am glad to see this final rule get out the door. It implements some important program changes that will enhance the HECM program’s ability to operate on a financially self-sustaining basis, which is critical for assuring the program’s long-term viability,” said NRMLA President and CEO Peter Bell in a statement provided to RMD. “NRMLA will have further analysis once we’ve had time to read and digest the entire rule.”
RMD will continue to update this story.
View the final rule published in the Federal Register here.
Written by Jason Oliva


FHA Issues New Guidance on Reverse Mortgage Claim Assignment Requests

This week, the Federal Housing Administration (FHA) provided updated guidance regarding the submission of Home Equity Conversion Mortgage (HECM) assignment requests to HUD.
Mortgagee Letter 2017-05, published Wednesday, consolidates policy found in various existing mortgagee letters and handbooks for mortgagees submitting HECM assignment requests by initiating a Claim Type 22 (CT-22) in HUD’s Home Equity Reverse Mortgage Information Technology System (HERMIT).
“By consolidating this information into one source, FHA is making it easier for mortgagees to locate the information needed to submit a HECM assignment request,” FHA stated in a memo issued Wednesday. “This, in turn, may help improve accuracy of HECM claim submissions and improve processing times for claim requests; thus, contributing to the overall goal of making it easier to do business with FHA.”
While ML 2017-05 does not contain new policy specific to assignment eligibility, the stacking order of items needed for the various documentation packages has changed.
As noted in the mortgagee letter, mortgagees submitting documentation packages in support of their Assignment Request must look loosely at the requirements and ensure all documents required are included, and that they are in the correct stacking order.
“If any documents are missing and/or are not in the correct stacking order, the assignment request will be denied and the mortgagee will have to resubmit the request,” FHA states.
Servicers are able to implement guidance in ML 2017-05as early as the publication date for all new HECM CT-22 Assignment Requests, but no later than 90 days after the publication date.
View Mortgagee Letter 2017-05 here.
Written by Jason Oliva


FHA Issues New Guidance on Reverse Mortgage Claim Assignment Requests

This week, the Federal Housing Administration (FHA) provided updated guidance regarding the submission of Home Equity Conversion Mortgage (HECM) assignment requests to HUD.
Mortgagee Letter 2017-05, published Wednesday, consolidates policy found in various existing mortgagee letters and handbooks for mortgagees submitting HECM assignment requests by initiating a Claim Type 22 (CT-22) in HUD’s Home Equity Reverse Mortgage Information Technology System (HERMIT).
“By consolidating this information into one source, FHA is making it easier for mortgagees to locate the information needed to submit a HECM assignment request,” FHA stated in a memo issued Wednesday. “This, in turn, may help improve accuracy of HECM claim submissions and improve processing times for claim requests; thus, contributing to the overall goal of making it easier to do business with FHA.”
While ML 2017-05 does not contain new policy specific to assignment eligibility, the stacking order of items needed for the various documentation packages has changed.
As noted in the mortgagee letter, mortgagees submitting documentation packages in support of their Assignment Request must look loosely at the requirements and ensure all documents required are included, and that they are in the correct stacking order.
“If any documents are missing and/or are not in the correct stacking order, the assignment request will be denied and the mortgagee will have to resubmit the request,” FHA states.
Servicers are able to implement guidance in ML 2017-05as early as the publication date for all new HECM CT-22 Assignment Requests, but no later than 90 days after the publication date.
View Mortgagee Letter 2017-05 here.
Written by Jason Oliva


New Reverse Mortgage Jobs Available—Apply Today

Reverse mortgage lenders nationwide continue their search for qualified personnel in 2017 by offering a variety of jobs across a range of industry expertise.
This week’s listings on the RMD Job Board include available positions for reverse mortgage loan processors, underwriters, originators, as well as a variety of sales roles.
Longbridge Financial LLC, Preferred Reverse LLC, iReverse Home Loans and Nationwide Equities are just a few companies looking to add skilled reverse mortgage professionals to their teams—but they aren’t the only ones.
Click the following opportunities that are now open to find out more. Or for a complete list of jobs, visit the Reverse Mortgage Daily Job Board.

Reverse Mortgage Loan Processor – Longbridge Financial LLC
Underwriter – Longbridge Financial LLC
Underwriting Manager – Longbridge Financial LLC
Reverse Mortgage Originator – Preferred Reverse LLC
Unique Opportunity for ONE Reverse Mortgage Specialist (Nevada-based) – iReverse Home Loans
Regional Sales Manager – Nationwide Equities Corp.
Licensed Inside Sales Loan Originator (Base Pay + Commission + Benefits + Leads) Reverse Mortgage Funding LLC
Reverse Admin/Lock Desk – HighTechLending d.b.a. AmericanSenior
Reverse Mortgage DE Underwriter – HighTechLending d.b.a. AmericanSenior
Reverse Mortgage Loan Processor – HighTechLending d.b.a. AmericanSenior
Underwriting Manager – American Advisors Group
Processing Manager – American Advisors Group
Sales Manager – American Advisors Group
Reverse Mortgage Loan Officers – Liberty Home Equity Solutions

Visit our website for additional opportunities in the reverse mortgage industry.
The best and the brightest read RMD. Want them to join your team? Post your jobs to the Reverse Mortgage Daily Job Board today!
Written by Jason Oliva


Trump Treasury Pick’s Ex-Firm Subject of New Reverse Mortgage Investigation

New York Attorney General Eric Schneiderman has opened an investigation into the reverse mortgage practices at a company formerly owned by Steven Mnuchin, President-elect Donald Trump’s pick for Secretary of the U.S. Treasury, reports The Wall Street Journal.
Mnuchin, a former Goldman Sachs executive, was the co-founder of OneWest Bank Group LLC, which acquired reverse mortgage lender Financial Freedom in a 2009 purchase from The Federal Deposit Insurance Corporation. In 2011, OneWest announced the company was exiting the reverse mortgage business and shutting down Financial Freedom. OneWest was later sold to CIT Group Inc. (NYSE: CIT) in August 2015 for approximately $3.4 billion in cash and stock.
The N.Y. Attorney General’s Office is currently examining practices related to the servicing of reverse mortgages at Financial Freedom, particularly looking at whether the company employed tactics that pushed senior reverse mortgage borrowers into foreclosure, according to the WSJ report, which cites an unnamed person familiar with the investigation.
The examination of Financial Freedom dates back to 2012, when Mnuchin was serving as chairman of OneWest. The investigation, according to the WSJ, began in December and was “prompted in part by complaints the attorney general’s office received both before and after Mr. Mnuchin’s nomination by President-elect Donald Trump.”
“We’re sure any ‘investigation’ is about nothing more than politics,” Mnuchin spokesman Barney Keller said in a statement to the WSJ.
Since his nomination, Mnuchin has been in the spotlight for his past affiliations in the reverse mortgage business, particularly landing in the sights of consumer groups who allege that Financial Freedom used questionable reasons to foreclose on reverse mortgage borrowers.
One group, the California Reinvestment Coalition, last week filed a Freedom of Information Act (FOIA) request about the reverse mortgage foreclosures conducted against seniors by Financial Freedom.
The non-profit organization alleges the company foreclosed on seniors due to “non-occupancy” when the senior borrowers lived in their homes secured by the reverse mortgage loan, and that Financial Freedom foreclosed on borrowers who failed to pay property taxes or homeowner’s insurance without giving them an opportunity to pay.
An earlier FOIA request the Coalition received from the Department of Housing and Urban Development (HUD) last year revealed that Financial Freedom/CIT Group’s share of reverse mortgage foreclosures since April 2009 was more than twice as much as the company’s market share.
While the company services as estimated 17% of the reverse mortgage market, according to the FOIA request, data from HUD indicated that Financial Freedom was responsible for 39% of the 41,237 Home Equity Conversion Mortgage foreclosures that occurred from April 2009 to March 2015.
Although Financial Freedom has not originated any new reverse mortgage loans since May 2011, the company’s servicing portfolio is of “significant size” and will take a number of years to wind down, stated Fitch Ratings in a 2013 analysis of the company.
The investigation from Attorney General Schneiderman’s office is the latest scrutiny from New York State regulators concerning reverse mortgage servicing.
In August 2016, the New York State Department of Financial Services began an investigation into the reverse mortgage servicing operations at Nationstar Mortgage (NYSE: NSM) and Reverse Mortgage Solutions, Inc., following a story from the New York Post, which revealed a number of consumer complaints about the companies lodged with the NYDFS.
Reverse mortgage reforms were also a subject of New York Governor Andrew Cuomo’s (D) comprehensive plan unveiled earlier this month in efforts to strengthen legislation meant to protect senior homeowners with reverse mortgages.
Written by Jason Oliva


HUD Awards $15 Million for Senior Housing Aging in Place Initiative

The Department of Housing and Urban Development (HUD) on Friday awarded approximately $15 million to select owners of HUD-assisted senior housing developments as part of a new initiative to help low-income seniors age in place and delay or avoid the need for nursing home care.
In these select developments, HUD will cover costs related to hiring a full-time Enhanced Service Coordinator and a part-time Wellness Nurse to connect the elderly with the supportive services they need to maintain independent living in their own homes.
“It is so important that we afford our seniors the opportunity to live independently,” said HUD Secretary Julián Castro. “These grants will help owners of HUD-assisted senior developments to offer the services that will allow seniors to remain in their homes for as long as they can.”
Funded through HUD’s Supportive Services Demonstration for Elderly Households in HUD-Assisted Multifamily Housing, these three-year grants will aim to produce evidence about the effectiveness of this enhanced supportive services model for elderly households. The agency will also evaluate the value of enhanced service coordination paired with affordable housing for seniors.
The Demonstration will be independently evaluated to determine the impact of this enhanced supportive services across on a variety of areas, including aging in place in HUD-assisted senior developments; avoiding early transitions to institutional care; and preventing unnecessary and often costly health care utilization, such as emergency room visits and hospitalizations.
Both HUD and the U.S. Department of Health and Human Services collaborated on several research initiatives to inform the design of this demonstration.
Various senior housing develops located in California, Illinois, Maryland, Massachusetts, Michigan, New Jersey and South Carolina will receive funding from the three-year grants.
Written by Jason Oliva


Walter Shuts Down RMS, S1L Reverse Mortgage Originations

Walter Investment Management Corp. (NYSE: WAC) is exiting the reverse mortgage origination business, including its wholesale and retail channels under the Reverse Mortgage Solutions and Security One Lending brands. Walter will maintain its reverse mortgage servicing operations under RMS, the company confirmed to Reverse Mortgage Daily.
The changes are effective January 17, 2017, a Walter spokeswoman said.
“We plan to honor all existing commitments and continue to fulfill loans in our originations pipeline,” said Whitney Finch, vice president of corporate communications at Walter. “We remain committed to our Reverse Mortgage Servicing Business which includes funding undrawn amounts that are available to borrowers in our servicing portfolio. This action is expected to impact fewer than 200 employees.”
RMS/Security One recorded 1,996 Home Equity Conversion Mortgage endorsements year-to-date in 2016, according to recent industry data tracked by Reverse Market Insight.
The move arrives after Walter saw its reverse mortgage losses widen during 2016, a year in which the company continued to explore “strategic opportunities” amid recent changes to its leadership and operational structure.
Walter took significant actions to alter its business in October 2016, when it announced the departures of nine company executives as part of its plan to “flatten” its operating team, with the goal of improving company communication and simplifying its management structure.
Among those departures was then-Chief Executive Officer of RMS, Christopher Mullins, a reverse mortgage industry veteran who joined RMS in October 2015. He was replaced by Walter executive Jeff Baker.
The decision to exit reverse mortgage originations is the latest action from Walter to focus on its core servicing and origination businesses.
Earlier this month, the company announced the sale of its indirect wholly-owned subsidiary, GTI Holdings Corp., which is the holding company of Walter’s primary licensed insurance agency, Green Tree Insurance Agency, Inc., to a wholly-owned subsidiary of Assurant, Inc. for a purchase price of $125 million in cash.
Walter acquired RMS for $122 million in November 2012. The company later completed a deal to acquire Security One Lending in May 2013 for a purchase price of up to $31 million.
Previously, RMS was long the top industry issuer of Ginnie Mae HECM-backed securities (HMBS), until the company was surpassed by American Advisors Group in July 2015. RMS ranked fifth among all HMBS issuers in 2016 with $868 million of HMBS issuance and a total market share of 9.45%.
Written by Jason Oliva


Reverse Mortgage-Backed Securities Market Shrinks for First Time

The Home Equity Conversion Mortgage-backed Securities (HMBS) market shrank for the first time, as a record level of prepayments drove total outstanding HMBS to just under $55 billion, according to the latest market commentary from New View Advisors.
HMBS issuers created 97 pools in December 2016, totaling $715 million, according to data compiled by New View Advisors from publicly available Ginnie Mae data as well as private sources. The pools were divided into 49 original pools and 48 tail pools.
Compared to the previous month, production of original new loan pools was up $515 million, an increase from November’s $504 million and roughly the same as December 2015’s totals.
December’s tail issuance was approximately $199 million, which New View Advisors recognizes as the third-lowest monthly issuance total in 2016—a year that tallied $9.187 billion in total issuance volume.
Original pools are HMBS pools backed by the first participation in a previously uncertificated HECM loan, whereas tail HMBS pools are created from the Uncertificated Portions of HECMs that have already had their original HMBS issuance.
New View Advisors estimates that December’s change in HMBS balance was composed of approximately $173 million in negative amortization, plus the $715 million in new issuance, minus a “whopping” record $943 million in payoffs. By comparison, December 2015 payoffs totaled only about $653 million.
“Payoffs have exceeded new issuance for four months in a row,” states New View Advisors. “Payoffs figure continue to climb as more Claim Amount. Further shrinkage in outstanding HMBS float could continue throughout 2017.”
Read the New View Advisors commentary here.
Written by Jason Oliva