President Obama signed the Reverse Mortgage
The bill, co-sponsored by Reps. Denny Heck, D-Wash., and Michael Fitzpatrick, R-Pa., gives the Federal Housing Administration new powers to regulate its troubled HECM program via mortgagee letters.
H.R. 2167 also requires lenders to conduct financial assessments of HECM applicants for the first time. It allows FHA to set limits on the first draw a senior can take on a HECM loan and require escrow accounts or set-asides for property taxes and homeowners insurance, if necessary.
Ideally, Department of Housing and Urban Development officials want to implement the changes by Oct. 1, the start of the government’s new fiscal year.
“But there are a number of steps HUD needs to take first before the industry can start preparing for the changes,” said Peter Bell.
The president of the National Reverse Mortgage Lenders Association noted that HUD has to update the language in its model documents, which lenders use in their loan documents. HUD has to update the counseling protocol and see that counselors are retrained. And they have to update their management information systems.
Reserve mortgage lenders have to update their systems and their marketing literature. “There is a lot of work that needs to be done by Oct. 1,” Bell said.
The NRMLA president attended the White House signing ceremony on Aug. 9. FHA commissioner Carol Galante, along with the bill sponsors—Heck and Fitzpatrick—also witnessed the president sign the
