ATTENTION: If you, family, or client are following this bill because you have previously been short to close on a reverse mortgage with today's lending limits, have waited for improved loan terms, or would like to purchase a home utilizing the HECM (Home Equity Conversion Mortgage) please complete our online request and we will keep you up to date on the progress of this bill and provide you an illustration of how much you may be qualified to receive once these enchancements take place

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(07/23/2008) House Passes HR3211

Late yesterday, the House passed HR 3221, the “Housing and Economic Recovery Act of 2008,” by a floor vote of 272 (yes) to 152 (no). This House version includes amendments that were negotiated since the passage of the Senate version two weeks ago. The Bill will now go back to the Senate for a vote and, assuming this passes without delay in the Senate, the Bill will then go to the White House for final approval. We believe there will not be any more amendments and that there is support for this version in the Senate.

The expectation is that the Bill will be approved by the Senate this week in a weekend session (although this can be difficult to predict). We believe Congress and the White House want this done before Congress (the House) begins a summer recess on August 4th. While the White House is not pleased with some aspects of the Bill, yesterday the Administration acknowledged the importance of the GSE provisions as a means to restore confidence and facilitate stability in the markets. Primarily for its interest in the GSE provisions, the Administration released a formal statement indicating that it would approve the Bill as amended by the House. This is a positive development and will help influence a positive outcome in the Senate.

As the Bill relates to the FHA HECM product, the provisions in the House Bill include:

1. - A single national loan limit of $ 417,000 that can increase up to as much as $ 625,500 in high cost areas.

2. - Home Purchase product authority.

3. - Co-op product provisions.

4. - Origination fees of 2% on the initial $ 200,000 loan amount and 1% on the balance thereafter with a cap of $ 6,000

5. - Prohibitions on requiring the purchase of annuities and other financial products.

6. -Restrictions around cross selling financial products.

7. - Requirements on counseling protocols, funding and practices that promote independence and quality in counseling.

As the legislation passes through the Senate and becomes final, we will release a more detailed summary and analysis of the bill as it becomes final. In the meantime, we wanted to alert you to this significant milestone.

(07/25/2008) Update: Senate to Vote on Housing Bill Tomorrow

Released from NRMLA (07/24/2008)

"Earlier today, the Senate voted to end debate on the housing bill in what is known as a "cloture" vote. The bill is now ready to go to the floor and will be brought up tomorrow in a highly unusual Saturday session of the Senate. Since cloture was passed by an 80-13 vote, we expect final passage by the Senate to go through without a hitch. Once the Senate approves the bill, it will be sent to the White House for the President's signature. We are not sure whether he will sign it immediately upon receipt or schedule a White House signing event for sometime next week. The changes in the law will then have to be implemented by Mortgagee Letter(s) to be issued by HUD, probably within the next 30-60 days. It is my understanding that in implementing the legislative provision placing the new limitation on origination fees, HUD will probably also implement an increase in the floor. I believe this increase will be from $2,000 to $2,500. We will, of course, keep you posted as things proceed, bringing you the up-to-date, accurate information that you can count upon from NRMLA"

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(7/26/2008) Senate Passes Housing Bill; President Expected to Sign Immediately

Earlier today, the Senate passed HR 3221 by a vote of 72-13. We expect the President to sign the bill into law immediately.
Our most current interpretation is that the loan limit will go to $417,000 once HUD issues a Mortgagee Letter, and that the high cost area adjustments to a max of $625,500 will take effect on January 1.
In addition to raising loan limits, HR 3221 includes:

• Home Purchase product authority.
• Co-op product provisions.
• Origination fees of 2% on the initial $200,000 in maximum claim amount and 1% on the balance thereafter with a cap of $6,000
• Prohibitions on requiring the purchase of annuities and other financial products.
• Restrictions around cross selling financial products.
• Requirements on counseling protocols, funding and practices that promote independence and quality in counseling.

NRMLA will issue a more detailed memo next week. In the meantime, rejoice.

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(7/28/2008) Seniors Considering Reverse Mortgages to Benefit Greatly from Housing Legislation

Washington, D.C. – Landmark housing legislation (H.R. 3221) passed by Congress this weekend will make substantial improvements to the federally-insured reverse mortgage program and greatly benefit senior homeowners who may want to utilize home equity to help finance their retirement years.

“Instantly, reverse mortgages have become a more viable retirement finance option for a broader audience of seniors who could receive higher benefits at a lower cost,” said Peter Bell, president of NRMLA. During the last federal fiscal year, ending September 30, more than 107,000 homeowners took out a reverse mortgage, compared to 76,351 the year prior and 7,781 in 2001.

Improvements to the Federal Housing Administration (FHA)-insured Home Equity Conversion Mortgage (HECM) program, which will take approximately 60-90 days to implement, will include:

1. A single national loan limit of $417,000 that can increase up to as much as $625,500 in high cost areas. (Currently, limits vary by county and range from $200,160 to $362,790.)
2. Ability to use FHA-insured reverse mortgages to purchase homes.
3. Ability to get a HECM on a co-op property.
4. Reduced origination fees of 2% on the initial $200,000 of maximum claim amount (lesser of the home value or county lending limit) and 1% on the balance thereafter with a cap of $6,000. (Lenders’ fees are currently capped at 2% of maximum claim amount.)
5. Prohibitions on requiring the purchase of annuities and other financial products.
6. Restrictions around cross selling financial products.
7. Requirements on counseling protocols, funding and practices that promote independence and quality in counseling.

“Seniors recognize the value of using reverse mortgages to access the wealth they have accumulated in their homes to pay off existing mortgages and other debts (thus avoiding foreclosure in some situations), pay for healthcare, make needed repairs, or to supplement retirement income,” added Bell.

Reverse mortgages are becoming a more mainstream financial planning tool for older homeowners. A reverse mortgage enables older homeowners (generally age 62+) to convert part of the equity in their homes into income without having to sell the home, give up title, or take on a new monthly mortgage payment. The reverse mortgage is aptly named because the payment stream is “reversed.” Instead of making monthly payments to a lender, as with a regular mortgage, a lender makes either one or more payments to the borrower. The loan is repaid when the borrower moves out of the property.

About NRMLA (www.reversemortgage.org)
National Reverse Mortgage Lenders Association (NRMLA) represents the reverse mortgage industry, serving as an educational resource, policy advocate and public affairs center for lenders and related professionals. NRMLA was established in 1997 to enhance the professionalism of the reverse mortgage business

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(07/30/2008) President Bush Signs Housing Bill Into Law; Work on Interpretation and Implementation Underway

At 8:30 this morning, President Bush signed into law two bills, the Clean Boating Act of 2008 and, our long awaited, Housing and Economic Recovery Act of 2008. The President’s signing of the housing bill, finally passed by the Senate on Saturday as the “Senate agreement to the House amendment to the Senate amendment to the House amendments to the Senate amendment to H.R. 3221” (No joke, that’s what it is really referred to in Congressional communications!), brings to an end the long saga of FHA modernization legislation, including our HECM amendments. Now, Act II, “the implementation” begins.
The Housing and Economic Recovery Act of 2008 is several hundred pages long and includes many different items that will have to be implemented by HUD in the days, weeks and months ahead. Some sections of the bill take effect immediately. Other sections require issuance of mortgagee letters or new regulations. Some items are to be implemented by October 1, 2008, while other provisions kick in upon the December 31 expiration of the economic stimulus bill passed earlier this year.

The new FHA loan limits for “forward mortgage” programs, for example, set at 115% of area median home values, up to $625,500, kick in once the current $729,000 loan limit established in the stimulus bill expires on 12/31. As far as HECM loan limits are concerned, we still do not have a definitive answer as to whether the bill establishes a single national loan limit at $417,000, or $625,500, or instead implements a range of SMSA-based limits ranging from $417,000 to $625,500 and set at the 115% of area median value standard. Because one section of the bill points to another, and then the other section references prior legislation, etc., there is some confusion and variation of opinion on exactly what the language in the bill means. We have had great legal minds interpreting it on our behalf and have been in constant discussion with Hill staffers and FHA. In the end, the conclusion drawn by HUD’s counsel, in consultation with Congressional staff, will determine where we have come out.

The Department has invited senior executives from the various housing trade associations to a briefing via conference call tomorrow afternoon at 2:30 Eastern time and we are anxiously awaiting that event to get more definitive answers. We will, of course, report to you via email immediately after that call. NRMLA is also hosting a conference call to brief Member Delegates on the bill next Tuesday, August 5, at 2 p.m. Eastern time. Invitations for that call will be sent out after tomorrow’s briefing by HUD. A recording of the call will be made available to members.
While we’ll learn more tomorrow, it is my understanding that the new loan limits, limitation on origination fees and a new “floor” on origination fees, will be implemented simultaneously by a Mortgagee Letter to be issued by HUD, as soon as possible, but still probably several weeks away. The Department must make some significant changes to management systems, etc. to implement the new loan limits. Please recognize this to be the case and be patient as we all work to implement the provisions of this new legislation as expeditiously as possible.

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(07/31/2008) HUD Briefing On New Law

Source: NRMLA (www.reversemortgage.org) Earlier this afternoon, we participated in a telephone briefing on the new FHA Modernization legislation conducted by FHA Commissioner Brian Montgomery and his staff. Here is what we have learned:

Maximum HECM Loan Limit – HUD’s lawyers have still not resolved whether the bill creates a single national loan limit at $417,000 or $625,500, or area limits at 115% of area median home value, with a floor of of $417,000 and a cap of $625,500. If, in the end, the lawyers conclude that there is a single national loan limit at either of the two option levels, HUD will be able to implement that fairly quickly, probably with a Mortgagee Letter issued by October 1 that would take effect on November 1. If the lawyers conclude that the maximum loan limit will be based on the 115% of area median standard, it will take until January 1, 2009 to implement. We hope to get the lawyers’ final decision within the next day or so. HUD expressed serious concern about companies marketing with new loan limits before the Department actually figures out what those limits might be. Companies that do so might find themselves subject to disciplinary action for false or misleading advertising, so we advise you to wait until the issue is resolved before sending out any marketing information based on new loan limits. Also, such advertising would be a violation of NRMLA Code of Ethics & Professional Responsibility, leading to sanctions by the Association.

New Limitation on HECM Origination Fees – The new formula for maximum origination fees -- 2% of first $200,000 of maximum claim amount, plus 1% of the balance above $200,000, to a maximum origination fee of $6,000 – will become effective concurrently with the implementation of the new HECM loan limits. The Mortgagee Letter that will be issued to implement this will raise the “floor” on HECM origination fees, probably to $2,500. A Mortgagee Letter will implement the origination fee limitations and the new loan limits simultaneously.

HECM for Home Purchase can be implemented fairly quickly and should be operational by November 1.

HECM for Coops will be implemented by a Mortgagee Letter that covers coops under both FHA forward and reverse mortgage programs. That M.L. is probably a few months away.

Elimination of Waiver of Upfront MIP for LTC Insurance - The authority allowing HUD to waive the upfront mortgage insurance premium in cases where the proceeds from a HECM would be used to purchase long-term care insurance has been repealed. This provision had been on the books since the 2000 Housing Act, but was never implemented.
The McCaskill Amendments have resulted in a few new provisions being added to the law:

Elimination of HECM Advisor Programs - HUD will be issuing a Mortgagee Letter within the next 30 days eliminating any so-called “HECM Advisor” programs. Because the law requires that, “All parties that participate in the origination of a mortgage to be insured under this section shall be approved by the Secretary,” once the forthcoming M.L. is issued and takes effect, only employees of FHA-approved lenders and correspondents will be permitted to participate in the origination of HECMs.

Payments for Counseling - Effective upon issuance of a Mortgagee Letter within the next thirty days, lenders will no longer be permitted to pay for HECM counseling, either directly or indirectly, under any circumstances whatsoever. Sometime this Fall, HUD will also begin requiring all individuals on the roster of approved HECM counselors to have passed the counseling exam. Individuals currently doing HECM counseling will have up to six months to pass the exam; new counselors will have to pass before beginning counseling. New counseling protocols will also be implemented this Fall.
The law calls for HUD to consider utilizing some of its FHA Mortgage Insurance Premium income to pay counseling costs, but HUD’s lawyers have determined that this provision is flawed and would violate federal credit reform requirements and is impossible to do.

Cross Sales of Financial and Insurance Products - As far as the new language requiring lenders to have “safeguards and firewalls” to make sure individuals do not have any incentives for cross-sales of other financial or insurance products with HECMs, HUD will be issuing a Federal Register notice soliciting industry input on how to implement this provision. It will take a few months before they can do this. However, in the meantime, NRMLA members should be forewarned that the new law is in effect -- even though no guidance will be issued for a while -- so you are advised to consult with your own counsel and take steps to assure you do not run afoul of this legislative language.
As soon as we learn more about the HECM loan limits and any other outstanding issues, we will report to you.

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ATTENTION: If you, family, or client are following this bill because you have previously been short to close on a reverse mortgage with today's lending limits, have waited for improved loan terms, or would like to purchase a home utilizing the HECM (Home Equity Conversion Mortgage) please complete our online request and we will keep you up to date on the progress of this bill and provide you an illustration of how much you may be qualified to receive once these enchancements take place

Stay Informed & Join our Newsletter Here!

All Reverse Mortgage Company - Toll Free (888) 801-2762 .Ext 1