Don’t Fret (Yet) About Trump’s Proposed HUD Cuts, Lawyers Say

President Trump’s proposed budget for the Department of Housing and Urban Development may seem alarming, but a pair of prominent housing lawyers say that the fight is far from over — and it’s up to the movers and shakers in industries that benefit from HUD’s programs to lobby for funding by touting the results.
“When your representative is back in the district, invite them to the ribbon cuttings,” said Amy McClain, a partner who helms Ballard Spahr’s government assisted housing practice from the firm’s office in Baltimore. “You have to get them to [see] the things are the product of of that funding source.”
Bigger-picture issues 
McClain acknowledged that the proposed HUD cuts — which would amount to a 13.2% drop in funding from fiscal 2017 if President Trump and budget director Mick Mulvaney get everything on their wish list — were striking, but also pointed out that funding for housing grants and other benefit programs has been steadily drying up for some time, even under the Obama administration.
“It’s been a progressively worsening state of affairs when it comes to the funding of federal housing programs,” McClain said.
Federal involvement in housing began in the 1930s and 1940s with an emphasis on providing government funding for the construction of homes and apartments, with a subsequent budget from Washington to maintain and improve the properties, McClain said. Over the decades, the philosophy has shifted from government stewardship to public-private partnerships, with a substantial decline in the amount of federal funding available for ongoing upkeep: McClain said that America’s public housing stock faces a $30 billion deferred-maintenance bill — and that, of course, is before Trump and the current Congress take even a single dollar away from the HUD budget.
“So while the administration’s blueprint is disheartening, in some ways, we’ve seen suffering from an ongoing reduction in funding over time,” McClain said, ”and we’re at a critical point where we need to decide: Are we going to let people be stranded living in these isolated communities…or are we going to identify a model that’s going to work in a way that’s more sustainable for the long term?”
When asked if Trump’s budget is likely to pass as is, McClain responded with a flat no, adding that both houses of Congress would need to agree on any substantive slashes to HUD and the other departments facing cuts.
“One thing I take solace in is that it takes 60 votes in the Senate to pass a budget resolution, which means that some Democrats have to vote for it, which means that the parties have to work together,” McClain said.
The current United States Senate has 52 Republicans and 46 Democrats, along with two Independents — Bernie Sanders of Vermont and Angus King of Maine — who caucus and generally vote with the Democrats. While bills only technically only need a majority of 51 votes to pass the upper chamber, parliamentary filibuster rules have effectively made a 60-vote supermajority the de facto threshold for clearing various types of bills through the Senate, including all budget measures.
By comparison, the GOP’s American Health Care Act was deliberately framed as a budget reconciliation bill, a different type of legislation that cannot be filibustered.
Details still scarce
John D. Socknat, a Ballard Spahr partner who runs the firm’s mortgage banking group in Washington, D.C., emphasized what many commentators have urged in the days since the budget proposal was released.
“There was no mention of the HECM program,” Socknat told RMD in an e-mail. “We also know that a more detailed program-by-program budget proposal is supposed to be announced in May, so we really won’t have any insight into how Trump’s proposed budget might impact the HECM program until then.”
Like McClain, Socknat pointed to Capitol Hill’s importance to the process. “Of course, ultimately it is Congress that will determine the final budget, and we know that there already is opposition to the proposed budget from members of both parties.”
However, bipartisan opposition to Trump’s budgetary slashes has largely been constrained to popular benefit programs that were fairly obvious targets for public outrage, such as the widespread scorn for the proposed elimination of Meals on Wheels — which provides food and companionship to elderly, homebound Americans — and the Low-Income Home Energy Assistance Program. How HUD plans to handle the HECM program, which is relatively little-known outside of the reverse mortgage, financial planning, and elder care communities, remains to be seen.
Call to action
That’s where McClain’s warning comes in. While it’s not necessarily the ultimate fate of the HECM program, McClain said that smaller, less-prominent initiatives are far easier for politicians to trim or excise entirely, as it wouldn’t raise the same kind of political and popular outcry as larger initiatives that touch more lives and produce immediate, tangible results.
“If it’s a small program, you really need to have folks rallying around and telling the stories,” she said.
Written by Alex Spanko


Go West, Young HECM: Reverse Mortgage Volume Grows in CO, TX, CA

Western states continue to drive reverse mortgage origination growth in the United States, according to new data from Reverse Market Insight, Inc.
Month-to-month comparisons of Home Equity Conversion Mortgage endorsement growth may not necessarily reflect big-picture trends in the reverse mortgage industry, but RMI’s January regional data presents a good picture of where the industry is heating up after a lackluster 2016.
“HECM endorsements started the year off higher than last January, which makes for a lot of good growth comparisons around the country,” RMI noted in its data commentary. As RMD reported earlier this month, overall HECM endorsements rose 17.7% from January 2016 to January 2017, though the overall numbers masked a month-to-month drop in wholesale endorsements from December 2016 to January 2017.
Of the top 10 states by endorsement volume, eight saw gains from January 2016, with a jump of 84.8% for Colorado, 54.9% for Texas, and 34.8% for Florida; only North Carolina and New Jersey had declines, of 2.8% and 15.0%, respectively.
Over on RMI’s top-10 list of cities by volume, several southern and western locales posted impressive gains: Endorsements in Las Vegas were up 185.7%, while San Antonio HECM endorsements rose 150.0% and volume in San Diego was up 53.1%.
RMD noted a potential connection between growth in the Western states — which continue to represent the most consistent areas of gains in RMI’s endorsement heat map — and generally rising home equity levels on the left coast and in the Mountain West states in a piece published earlier this month.
It’s important to note that the small numbers at play this early in the data year contribute to the high percentages; for instance, Las Vegas earned its 185.7% increase by turning in 40 HECM endorsements, while San Diego’s 53.1% gain came from 49 loans.
They also reflect rises from a historically bad January 2016, when just 3,889 mortgages were endorsed, compared to 4,936 in January 2015.
Back in the present, HECM refinances accounted for 13% of endorsements in the first month of 2017, the same percentage as January 2016 but a 20% gain in absolute volume numbers. Familiar names still populate the list of top 10 reverse mortgage lenders, but Reverse Mortgage Funding leapt three positions from this time last year to claim the number-two spot behind American Advisors Group and one notch ahead of Quicken’s One Reverse Mortgage.
Written by Alex Spanko


Digital Reverse Mortgage Marketing Gains Importance, But TV Remains Strong

The reverse mortgage industry has long been known for its TV commercials. In fact, an Ohio State study released last year revealed that just under half of surveyed reverse mortgage borrowers heard about the loan from a TV ad.
But in today’s digital world, will traditional marketing strategies give way to Internet campaigns as lenders work to reach an increasingly tech-savvy base of senior consumers? Some reverse marketing pros say no.
Teague McGrath, chief marketing officer at AAG, says TV still reigns supreme for the lender.
“From our perspective, TV has always been the dominant channel for leads and provides this umbrella of awareness for AAG and for reverse mortgages,” he says. “We do surveys and no one has ever said to us, ‘Oh, I saw your banner ad on that website.’ They all say, ‘I talked to AAG because of the television commercials,’” he says. “That is how most consumers are initially made aware of us.”
But while McGrath says the lender’s TV ads are the “primary driver” for leads, he does consider other media valuable. “We do supplement that campaign through other channels that help us support our TV ads.”
While TV campaigns may spark a consumer’s initial interest, the digital component is important because nowadays, consumers often go online to learn more. This is where a lender’s Internet presence counts.
Tom Evans, VP of marketing at Finance of America Reverse, says digital marketing is a great way to connect with consumers who want to research the loan independently.
“The Internet is a great mechanism for educating the consumer. If I think I know what a reverse mortgage is and I’m not interested in being on a phone call with someone pressuring me to buy something, the Internet is my playground,” he says. “I can find everything I need without talking to someone.”
Evans says one bonus about a digital campaign is that it can allow you to collect a consumer’s contact information so that you can stay in touch with them throughout the process.
“It allows you to nurture them in a variety of different ways over time. You can use social media to reach out to people you’ve already made contact with, you can use email drip, you can even use phone calls from non-sales-based personnel to say, ‘Hey, I want to make sure you got all the information you requested,’” he says.
“All of our advertising strategies are about making a lasting connection with a consumer. They are all good in doing that, but the digital strategy does give you a little more flexibility to guide them through the process.”
Still, Evans says FAR continues to utilize traditional marketing strategies in addition to its digital campaign. Online marketing, he says, has become just one more way to reach consumers, who are increasingly selective about how they want to get their information.
“Some folks absolutely do not want to talk to anyone, they just want to learn as much as they can before they make any decisions. On the flip side of that are people who don’t even want to talk to someone on the phone, they want to have that face- to-face engagement; they want to talk to someone they feel they can build trust with,” Evans says. “It’s so amazing how varied the rainbow of purchasers is, there are so many ways people look for information and for products, and as a marketer you have to figure out how to taste the rainbow—to steal a good marketing slogan.”
Written by Jessica Guerin


“Gray Divorce” on the Rise in America, Says Pew

Divorce among the 50-and-over set remains relatively uncommon according to a new survey from the Pew Research Center, but the rate of splits in that age group is rising faster than all others.
At first blush, the numbers seem shocking: Divorce rates more than doubled among Americans aged 50 and older between 1990 and 2015, and just about tripled over that span for those older than 65. The gaudy percentages, however, are the result of the small numbers at play. Out of every 1,000 married people age 50 and up, five got divorced in 1990, as opposed to 10 out of every 1,000 in 2015.
For folks older than 65, those numbers rose from about two in 1,000 back in 1990 to six in 1,000 by 2015.
Pew points the finger squarely at the aging baby boomer population, drawing parallels between their generation’s “unprecedented levels of divorce” during the 1970s and 1980s to the rising rates of “gray divorce” as they age.
“Their marital instability earlier in life is contributing to the rising divorce rate among adults ages 50 and older today, since remarriages tend to be less stable than first marriages,” Pew said in its analysis. “The divorce rate for adults ages 50 and older in remarriages is double the rate of those who have only been married once.”
Those divorce stats still pale in comparison to those in younger generations: For instance, 24 out of every 1,000 married people aged 25 to 39 got divorced in 2015, down from 30 back at the start of the 1990s. Among their counterparts in the 40-49 age bracket, that number was 21 out of 1,000 in 2015, up from 16 in 1990.
Pew speculates that the downward trend among younger couples corresponds the rising overall age of first marriage. According to a separate set of data, the median age of first marriage for men rose from 26.1 in 1990 to 29.5 last year; for women, the change was 23.9 to 27.4. 
“In addition, those who do end up marrying are more likely to be college-educated, and research shows that college-educated adults have a lower rate of divorce,” the Pew report said.
The trends could be of interest to those who work in the reverse mortgage space, as later-in-life splits could result in the loss of significant hard financial assets — and potentially prompt spouses who received the house in a divorce to explore their home equity as a retirement funding solution. As RMD reported earlier this month, the topic of divorced women and reverse mortgages will be discussed at the National Reverse Mortgage Lenders Association’s Eastern conference and exposition in early April.
Written by Alex Spanko


Gherardi’s New Firm Acquires HERMIT Reverse Mortgage Software

Reverse mortgage industry veteran Kevin Gherardi only launched his new software company, Reverse Technology Group, this past August, but he already has a major new acquisition under his belt: the Department of Housing and Urban Development’s central software system.
RTG purchased the Home Equity Reverse Mortgage Information Technology (HERMIT) platform from Walter Investment Management Corporation in December of last year, Gherardi said in an interview with RMD. Gherardi just announced the acquisition last week after a probationary period expired, he said, though he would not disclose the purchase price.
HERMIT essentially serves as the reverse mortgage nerve center for the Federal Housing Administration, managing the origination and servicing of all Home Equity Conversion Mortgage loans in the Mutual Mortgage Insurance fund — from origination to Mortgage Insurance Premium collections to claims and terminations. Under the terms of the acquisition, RTG has full ownership of the systems and source code associated with HERMIT, which it is currently licensing to HUD for a five-year term that began in December. Reverse Market Insight, a Dana Point, Calif.-based research firm, also provides joint services for HERMIT as part of the agreement.
Gherardi said the HERMIT deal was only the first step for his fledgling company, which he launched in August 2016 after leaving Reverse Mortgage Solutions, the company he co-founded in 2007. (Walter, which acquired the formerly independent RMS in 2012, shut down its origination efforts earlier this year, and the brand currently lives on only as a servicing firm.)
He already has 25 employees working on multiple new software platforms that RTG plans to introduce by the second quarter of 2017, with a primary focus on allowing mortgage originators to service their own loans. The staff is split fairly evenly between employees with HECM experience and those with programming backgrounds.
“I’m a true believer that you need both business and technology people to make anything work,” Gherardi told RMD.
RTG is currently focusing on the development of software products that would allow reverse mortgage lenders to service their own loans without the help of third parties. The first program would attempt to fully automate the servicing process in order to prevent missing key HUD-required benchmarks, which Gherardi called out as a major potential pitfall for lenders.
“If you don’t service these loans to HUD’s guidelines and stay on top of them, you put yourself out of business very, very fast,” Gherardi said.
Another program would automate the claim-filing process when loans are reassigned to HUD in order to expedite repayment and avoid errors. All of RTG’s software will be compatible with both HERMIT and programs developed by the San Diego-based ReverseVision, Gherardi said.
“There’s no reason why everyone can’t service their own loans if the want to,” Gherardi said. “I see it as an opportunity for people not to subservice, to keep their own loans.”
Written by Alex Spanko


Hedge Fund Manager Bets Big on Walter, Loses

It’s a maxim that even novice investors can parrot with confidence: “Diversify your portfolio.”  But players in the high-powered world of hedge fund investing sometimes go long on a single stock with perceived growth potential — a strategy that led to a very bad week for one hedge fund manager who thought Walter Investment Management Corporation (NYSE: WAC) was worthy of betting the farm.
As RMD reported last week, Walter’s stock plummeted after an earnings call revealed massive quarterly and annual losses, as well as a pair of Department of Housing and Urban Development subpoenas into the Tampa, Fla.-based company’s reverse mortgage operations.
On March 13, the day before the announcement, Walter’s stock closed at $2.70 per share; the next day, WAC tumbled to $1.65, starting a downward spiral that concluded with a close of $1.10 per share on Friday. Standard & Poor’s downgraded Walter’s credit rating from B to CCC on Friday, and Seeking Alpha reported that an analysis by Compass Point, a financial and research firm, puts Walter’s odds of entering some kind of bankruptcy protection at 50-50. As the Tampa Bay Business Journal pointed out, both “B” and “CCC” ratings qualify as Walter’s stock as junk.
Walter’s stock was as high as $7.35 per share as recently as early December, and hit a five-year peak of $47.29 back in March 2013.
This tumble made waves throughout the reverse mortgage community, but hedge fund trader Vadim Perelman might have been the individual most affected: According to Forbes, Walter has been the only U.S. stock in Perelman’s Baker Street Capital Management portfolio since the end of 2015.
Perelman invested nearly $90 million in Walter in early 2014, according to Forbes, even as the mortgage servicer’s stock slid from $35 to about $28. Baker Street’s exposure to Walter then continued to increase as its stock continued its inexorable decline, with Perelman remaining a tireless cheerleader for the company’s prospects.
Forbes cites a Baker Street presentation from July 2015 called “The WACkiest Disconnect Between Price and Value,” in which Perelman claimed that the stock was wildly undervalued: At a time when WAC was hovering in the teens, Perelman assigned a fair value of $54.
“Over the next 24 months, we believe WAC can grow its servicing business by 40% without using any of its own balance sheet capital,” Forbes reports the presentation as saying. This growth, of course, did not materialize.
Interestingly, this isn’t Perelman’s first all-in bet on a stock with shaky growth prospects. Back in 2013, stock in steadily declining Sears Holdings accounted for 87% of Baker Street’s U.S. portfolio, with Perelman arguing that the embattled retail chain’s extensive real estate holdings were worth far more than its market cap.
“But by June 2015, Perelman had significantly reduced Baker Street’s exposure to Sears Holdings and his U.S. stock portfolio started to diminish,” Forbes wrote.
Written by Alex Spanko


Rate Hike to Have Mixed Effect on Reverse Mortgages

The Federal Reserve raised the federal funds rate for the third time in a little more than a year last week, an expected move that experts say will have a mixed effect on the reverse mortgage market in the coming months.
“The recent rate increases by the Fed are probably not much of a surprise to those in the lending industry, since the economy has been showing signs of improvement in recent months,” said Mike Gruley, executive vice president of reverse mortgage lending at 1st Nations Reverse Mortgage in Ann Arbor, Mich., in an e-mail to RMD.
Borrowers looking for a fixed rate, one-time draw will likely see the most immediate effects, as rising interest rates mean a lower principal limit, which could possibly turn off needs-based consumers who have to cover immediate expenses with the Home Equity Conversion Mortgage proceeds. Michael McCully, partner at New View Advisors, said declines in principal limits could lead to a dip in origination volume as interest rates rise. 
These trends also put competitive pressure on originators as margins decline: Gruley notes that borrowers could previously get the maximum principal limit amount at a margin of 3.25%, but now that number is closer to 2.5%. This puts lenders in a bind, Gruley said, as offering the maximum principal limit increasingly hamstrings their ability to sweeten the deal with reduced origination fees and lender credits; but were they to set rates that exceeded the expected rate floor in order to achieve a higher margin, any credits or reduced fees they’d offer would be offset by the resulting lower principal limit.
“Eventually, in a higher interest rate market, originators will have to make a competitive decision to either quote rates and margins that provide borrowers with the maximum funds at closing, or maintain their revenue margins by exceeding the floor,” Gruley said.
Shelley Giordano, chair of the Funding Longevity Task Force at the American College of Financial Services, said rising interest rates are a prime example of why the industry needs to market reverse mortgages as retirement tools, and not just as one-time fixes for the desperate.
“The fact that the rates will go up and the principal limit will go down [illustrates] even more that people should have diversified their business, and be appealing to people who don’t necessarily so-called ‘need’ a reverse mortgage,” Giordano told RMD.
She noted that when she started in the reverse mortgage industry, interest rates were almost 9%.
“I would say that it’s not a mortal blow to have higher interest rates,” Giordano said. “We’ve had higher interest rates over the years.”
McCully noted that modestly rising interest rates could be a good thing for HMBS issuers, as it quickens the pace of negative amortization — the rate at which interest is added onto the loan balance. In turn, the loans would reach 98% of the home’s value and see reassignment to HUD faster, potentially reducing loss exposure to issuers. 
However, rising rates could also lead to lower valuations on adjustable-rate HMBS, which McCully said would likely put a damper on new HECM originations.
Written by Alex Spanko


Reactions to Trump’s Budget in Reverse Mortgages and Beyond

Almost as soon as President Trump unveiled his proposed fiscal year 2018 budget — which would excise $54 billion in funding from most federal programs and funnel it into the military and the Department of Homeland Security — strong reactions from both sides of the aisle and various sectors of the business world flooded the media. 
Treasury Secretary Steve Mnuchin, whose department would see a 4.1% cut from the fiscal year 2017 budget if Trump had his way, was upbeat in a two-sentence statement that his office issued shortly after the announcement.
“President Trump’s discretionary budget plan released today focuses Treasury on our core missions of collecting revenue, managing the nation’s debt, protecting the financial system from threats, and combating financial crime and terrorism financing,” Mnuchin said in the statement. “It will ensure that we have the resources we need to enforce the nation’s tax laws, while investing in cybersecurity and prioritizing resources on initiatives that promote technology, efficiency, and modernization across the agency.”
Across the political spectrum, House Financial Services Committee ranking member Rep. Maxine Waters — a California Democrat known for her fiery rhetoric against the financial services industry — predictably blasted the plan in a lengthy statement that labeled the Trump budget as “harmful” and singled out proposed cuts to the Department of Housing and Urban Development.
“Those cuts — which include drastic cuts to HUD’s major rental assistance programs and the elimination of funding for the Community Development Block Grant and HOME programs — would create suffering for whole communities, increase poverty, hunger, and homelessness, and reduce economic development opportunities across the country,” Waters said in the statement.
Waters also said that the Trump budget would lead to higher flood insurance premiums and generally harm low-income and other vulnerable Americans.
“This budget blueprint illustrates that Trump is more concerned with threatening the world with another nuclear arms race and sinking billions into a border wall than ensuring that all Americans have a home, good schools, access to affordable health care, and the financial security to retire,” Waters continued.
Meanwhile, the team at real-estate tracking firm Trulia put together some firm numbers about the exact effects of Trump’s 13.2% cut to HU,  based on the minimal specifics given in the budget proposal. Trulia found that black Americans, city dwellers, and millennials would be the hardest hit, as these groups receive a proportionally greater amount of government housing benefits, such as rental assistance and federally-funded community programs.
But despite all the doom and gloom or boosterism — depending on where you looked — major players in the reverse mortgage industry emphasized patience. As RMD reported last week, National Reverse Mortgage Lenders Association president and CEO Peter Bell issued a statement urging the industry to wait until a more detailed budget was released, correctly pointing out that the proposal made no mention of the Home Equity Conversion Mortgage or the Federal Housing Administration’s mortgage insurance programs.
Shelley Giordano, chair of the Funding Longevity Task Force, had similar advice during a phone call with RMD last week, noting that HUD had generally worked to support and strengthen the HECM program across presidential administrations of both political stripes.
“In general, until somebody comes in and actually significantly cuts any of the programming, it’s all total conjecture,” Giordano said.
Written by Alex Spanko


Friday Round-Up: Walter’s Troubles, CFPB Slams Nationstar

The Ides of March proved turbulent for the financial industry, as President Trump’s proposed budget stirred fears of major impending cuts to the Department of Housing and Urban Development, and two players in the reverse mortgage servicing industry faced regulatory setbacks.
If you were too busy following the national financial firestorms this week, here’s a quick rundown of what happened in the reverse space and beyond, as illustrated by the top stories on Reverse Mortgage Daily:
Walter Reveals HUD Subpoenas Amid Gloomy Earnings Call — Walter Investment Management Corp. had a grim earnings call Tuesday morning; not only did the Tampa, Fla.-based firm report substantial quarterly and annual losses, Walter revealed a pair of HUD subpoenas regarding its Reverse Mortgage Solutions subsidiary’s origination, underwriting, and appraisal practices — including transactions dating all the way back to January 1, 2005. Walter’s stock has been in freefall ever since, with the folks at Seeking Alpha reporting a downside scenario that puts 50-50 odds on the firm entering some kind of bankruptcy protection.
CFPB Slams Nationstar with Record $1.7 Million Fine — Not to be outdone, Nationstar Mortgage took a $1.7 million hit from the Consumer Financial Protection Bureau over Home Mortgage Disclosure Act (HMDA) reporting errors this week, the largest civil penalty ever assessed by the CFPB over HMDA violations to date. The bureau didn’t specifically mention reverse mortgages in its announcement, but Nationstar services Home Equity Conversion Mortgages through its Champion arm.
Even with Positive Press, Pesky Reverse Mortgage Myths Persist — RMD spoke with reverse mortgage players from around the country about the myths that still pervade the industry and prevent potential clients from considering a HECM, including such timeless classics as: “Won’t I lose the house?” “Aren’t they only for desperate people?” And, of course, “Aren’t they really expensive?”
Trump Budget: Serious About HUD Cuts, But Details Scarce — The Trump administration promised massive reductions to discretionary government spending, and the White House delivered on Thursday with an austere budget that would slash $54 billion from a variety of agencies — including the Environmental Protection Agency and HUD — in order to fund substantial investment in the military. The president’s plan was light on nuts-and-bolts details, but confirmed the rumors from last week: HUD would face a $6.2 billion, or 13.2%, cut in funding from fiscal 2017 if Trump gets everything on his spartan wishlist.
Home Equity Levels Rise in Reverse Mortgage Hotspots — It may not be fully scientific, but the reverse mortgage origination hotspots of Washington, Oregon, and Colorado also saw the greatest gains in home equity between 2015 and 2016, according to new data from CoreLogic.
Reverse Mortgages Around the Web
Getting FHA Approval for a Condo — The Daily Herald, which serves the Chicago suburbs, includes an interesting HECM question from a reader in its financial advice column: A couple with no children wants to take out a reverse mortgage on their condo, but the association isn’t Federal Housing Administration-certified. The answer: Work with the association’s counsel to figure out whether or not the condo can qualify at all, and keep in mind that even with legal assistance, the property simply might not be eligible for a HECM loan.
Safety Net of Last Resort — Over in the Indiana Gazette, financial advice columnist Mary Hunt calls a the HECM a “safety net of last resort,” and specifically advises against using reverse mortgages in any circumstance other than need, citing high fees and rates of interest. “This is why you want to make sure you keep that option as your safety net or your last resort, not a means to get a pile [sic] cash the day you turn 62.” The piece notably does not mention the HECM line of credit option, though it does note that tapping into home equity “could be the difference between a joyful and peaceful end of life, and a season of misery for both you and your family members.”
Ever Thought of Buying a Home Using a Reverse Mortgage? — Steven Sless of Home Point Financial Corporation in Owings Mills, Md. takes to a real estate podcast to offer a detailed breakdown of the HECM for Purchase product.
Reverse Mortgages in India — RMD admittedly doesn’t know much about how reverse mortgages work in India, but this Q&A from the Khaleej Times — an English language paper in the United Arab Emirates — features a question from a reader in Bahrain whose mother lives in the Indian city of Bangalore and needs money to cover household and medical expenses. The paper advises the reader to explore a reverse mortgage on her house, under which she could receive payments monthly, quarterly, or annually. Interestingly, the Khaleej Times notes that the total amount of the loan, including interest, can’t exceed 40% of the home’s value, though the settlement process sounds substantially similar to the American system.
Written by Alex Spanko


NerdWallet Breaks Down Reverse Mortgage Fees

Personal-finance blog NerdWallet presented a straightforward, unbiased look at reverse mortgage fees this week, with the help of two industry heavyweights.
Paul Fiore, executive vice president of retail lending at American Advisors Group, and Dan Hultquist, author and director of education at ReverseVision, teamed up to lay out all the fees that potential Home Equity Conversion Mortgage borrowers should consider before initiating the process, from counseling to the Mortgage Insurance Premium.
NerdWallet writer Deborah Kearns splits the expenses into two categories, upfront and ongoing, with a naturally longer list of one-time fees. She quotes an average counseling fee of $125 and appraisal fees of $300 to $500 — depending on the size of the home — and then walks readers through the MIP and origination-fee structure.
“Expect to pay either $2,500 or 2% of the first $200,000 of your home’s appraised value (whichever is greater),” the article advises, noting that borrowers also typically pay 1% of the amount over $200,000.
The article additionally tells potential borrowers to request a full list of all third-party closing costs, such as credit checks and title insurance, and reminds readers that they can choose their own title company regardless of which firm the lender recommends.
Continuing into ongoing fees, Kearns dutifully covers the annual MIP, the $30 to $35 servicing fee depending on the type of loan, and long-term costs associated with maintaining the property and staying current on property taxes. While not referring to it by name, the piece refers to Financial Assessment guidelines that require borrowers to prove they can cover these key ongoing costs during the life of the loan
In all, despite raising the specter of “higher costs” and steeper interest rates compared to those associated with home equity loans and forward mortgages, Nerdwallet provides a quick, all-in-one resource for those who might be curious about getting a reverse mortgage but scared of the fees — a common barrier to potential HECM borrowers.
Read the full piece here. 
Written by Alex Spanko