WE’RE HEARING from and about different segments of the mortgage market, any one of which may open the door for expanding a broker or loan officer’s bottom line. Hopefully the recent spike in interest rates will not slow things down too much but if they do there are always opportunities out there if you can find them. One niche mortgage loan product which may be underutilized is the reverse mortgage.
I belong to a professional organization known as NAELA or the National Academy of Elder Law Attorneys. Today I noticed that they are having an upcoming two-hour webinar on the reverse mortgage product, “Myths vs. Reality.” The webinar is aimed at looking at the RM in a new light. Rather than using the RM to help cash strapped elderly homeowners make ends meet the speaker at the webinar will explain how to use it as a retirement planning tool.
The reverse mortgage seminar will also look at how financial planners advise clients on options to receive RM loan proceeds and how they are using the HECM saver loan. In case you have not already figured it out financial planners would be a good source of referrals since their clients have money to manage and in many cases have or are looking for a second home.
Going in the opposite financial direction, there is word out of Fannie Mae about their new tool to make short sales go more smoothly. Perhaps you have stayed away from borrowers who were buying a short sale home due to the slow process involved. After all time is money.
The new tool is designed to allow Fannie to work more closely with Realtors. One thing which sounds helpful is the ability for a Realtor to “escalate” a deal when there is a valuation dispute or delays by a loan servicer or subordinate lien holder. By “escalating” a deal, Fannie is then supposed to “engage” with the Realtor or loan servicer to address challenges. Hopefully people will not abuse the process and escalate every single deal.
Another niche would be to find private lenders to work with and originate loans for them. I was reminded of this when I recently came across an opinion out of the Tennessee Court of Appeals. Then again this decision may discourage private lending, at least in the great state of Tennessee. In this case, Sparks v. Dillingham, filed on June 4, a private workout loan was arranged for someone in foreclosure in 2008.
The private loan was for $200,000 and included paying off the existing mortgage loan in foreclosure and cash out to the borrower of over $96,000. Well things went south and the work out loan was foreclosed in 2010. The borrower then sued the private lender alleging they violated provisions of the Tennessee Home Loan Protection Act. This act, enacted in 2006, was designed to prevent predatory lending.
The trial court held that the private lenders were not “lenders” as defined under the act, and therefore were not subject to its terms. Case dismissed. However, the appeals court disagreed, ruling that the private lenders were covered by the act. To make things worse for the private lenders they essentially conceded they violated some but not all provisions of the protective statute. Apparently they were pretty confident the act was not going to be applied to them. As the old saying goes, loose lips sink ships.
Based in Chelsea, Mich., John McDermott is a real estate and elder care attorney who represents both consumers and businesses. He can be emailed at
