DOCSLIB.ORG

Oversight of the Federal Housing Administration's Reverse Mortgage

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Oversight of the Federal Housing Administration's Reverse Mortgage OVERSIGHT OF THE FEDERAL HOUSING ADMINISTRATION’S REVERSE MORTGAGE PROGRAM FOR SENIORS HEARING BEFORE THE SUBCOMMITTEE ON INSURANCE, HOUSING AND COMMUNITY OPPORTUNITY OF THE COMMITTEE ON FINANCIAL SERVICES U.S. HOUSE OF REPRESENTATIVES ONE HUNDRED TWELFTH CONGRESS SECOND SESSION MAY 9, 2012 Printed for the use of the Committee on Financial Services Serial No. 112–123 ( U.S. GOVERNMENT PRINTING OFFICE 75–729 PDF WASHINGTON : 2012 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate Nov 24 2008 18:28 Sep 18, 2012 Jkt 075729 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 K:\DOCS\75729.TXT TERRIE HOUSE COMMITTEE ON FINANCIAL SERVICES SPENCER BACHUS, Alabama, Chairman JEB HENSARLING, Texas, Vice Chairman BARNEY FRANK, Massachusetts, Ranking PETER T. KING, New York Member EDWARD R. ROYCE, California MAXINE WATERS, California FRANK D. LUCAS, Oklahoma CAROLYN B. MALONEY, New York RON PAUL, Texas LUIS V. GUTIERREZ, Illinois DONALD A. MANZULLO, Illinois NYDIA M. VELA´ ZQUEZ, New York WALTER B. JONES, North Carolina MELVIN L. WATT, North Carolina JUDY BIGGERT, Illinois GARY L. ACKERMAN, New York GARY G. MILLER, California BRAD SHERMAN, California SHELLEY MOORE CAPITO, West Virginia GREGORY W. MEEKS, New York SCOTT GARRETT, New Jersey MICHAEL E. CAPUANO, Massachusetts RANDY NEUGEBAUER, Texas RUBE´ N HINOJOSA, Texas PATRICK T. MCHENRY, North Carolina WM. LACY CLAY, Missouri JOHN CAMPBELL, California CAROLYN MCCARTHY, New York MICHELE BACHMANN, Minnesota JOE BACA, California THADDEUS G. McCOTTER, Michigan STEPHEN F. LYNCH, Massachusetts KEVIN McCARTHY, California BRAD MILLER, North Carolina STEVAN PEARCE, New Mexico DAVID SCOTT, Georgia BILL POSEY, Florida AL GREEN, Texas MICHAEL G. FITZPATRICK, Pennsylvania EMANUEL CLEAVER, Missouri LYNN A. WESTMORELAND, Georgia GWEN MOORE, Wisconsin BLAINE LUETKEMEYER, Missouri KEITH ELLISON, Minnesota BILL HUIZENGA, Michigan ED PERLMUTTER, Colorado SEAN P. DUFFY, Wisconsin JOE DONNELLY, Indiana NAN A. S. HAYWORTH, New York ANDRE´ CARSON, Indiana JAMES B. RENACCI, Ohio JAMES A. HIMES, Connecticut ROBERT HURT, Virginia GARY C. PETERS, Michigan ROBERT J. DOLD, Illinois JOHN C. CARNEY, JR., Delaware DAVID SCHWEIKERT, Arizona MICHAEL G. GRIMM, New York FRANCISCO ‘‘QUICO’’ CANSECO, Texas STEVE STIVERS, Ohio STEPHEN LEE FINCHER, Tennessee JAMES H. CLINGER, Staff Director and Chief Counsel (II) VerDate Nov 24 2008 18:28 Sep 18, 2012 Jkt 075729 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 K:\DOCS\75729.TXT TERRIE SUBCOMMITTEE ON INSURANCE, HOUSING AND COMMUNITY OPPORTUNITY JUDY BIGGERT, Illinois, Chairman ROBERT HURT, Virginia, Vice Chairman LUIS V. GUTIERREZ, Illinois, Ranking GARY G. MILLER, California Member SHELLEY MOORE CAPITO, West Virginia MAXINE WATERS, California SCOTT GARRETT, New Jersey NYDIA M. VELA´ ZQUEZ, New York PATRICK T. MCHENRY, North Carolina EMANUEL CLEAVER, Missouri LYNN A. WESTMORELAND, Georgia WM. LACY CLAY, Missouri SEAN P. DUFFY, Wisconsin MELVIN L. WATT, North Carolina ROBERT J. DOLD, Illinois BRAD SHERMAN, California STEVE STIVERS, Ohio MICHAEL E. CAPUANO, Massachusetts (III) VerDate Nov 24 2008 18:28 Sep 18, 2012 Jkt 075729 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 K:\DOCS\75729.TXT TERRIE VerDate Nov 24 2008 18:28 Sep 18, 2012 Jkt 075729 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 K:\DOCS\75729.TXT TERRIE C O N T E N T S Page Hearing held on: May 9, 2012 ....................................................................................................... 1 Appendix: May 9, 2012 ....................................................................................................... 31 WITNESSES WEDNESDAY, MAY 9, 2012 Bell, Peter H., President and Chief Executive Officer, National Reverse Mort- gage Lenders Association (NRMLA) ................................................................... 6 Coulter, Charles, Deputy Assistant Secretary for Single Family Housing, U.S. Department of Housing and Urban Development ............................................. 5 Fenton, Daniel, Senior Housing Director, Money Management International, Inc. (MMI) ............................................................................................................. 8 Lewis, Jeffrey M., Chairman and Chief Executive Officer, Generation Mort- gage ....................................................................................................................... 10 Sanders, Anthony B., Distinguished Professor of Real Estate Finance, George Mason University, and Senior Scholar, Mercatus Center at George Mason University ............................................................................................................. 12 Shadab, Houman B., Associate Professor of Law, New York Law School .......... 14 Stucki, Barbara, Ph.D., Vice President, Home Equity Initiatives, National Council on Aging (NCOA) .................................................................................... 16 Trawinski, Lori A., Ph.D., Senior Strategic Policy Advisor, AARP Public Policy Institute ................................................................................................................ 17 APPENDIX Prepared statements: Bell, Peter H. .................................................................................................... 32 Coulter, Charles ................................................................................................ 45 Fenton, Daniel .................................................................................................. 55 Lewis, Jeffrey M. .............................................................................................. 63 Sanders, Anthony B. ........................................................................................ 76 Shadab, Houman B. ......................................................................................... 85 Stucki, Barbara ................................................................................................. 92 Trawinski, Lori A. ............................................................................................ 99 ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD Biggert, Hon. Judy: April 2012 study by the Center for Retirement Research at Boston Col- lege entitled, ‘‘How Important is Asset Allocation to Financial Security in Retirement?’’ ............................................................................................. 107 Letter to Congressman Gary Miller from Wendy Bucknum, Governmental & Public Affairs Manager, Laguna Woods Village, dated May 7, 2012 ... 135 Study entitled, ‘‘Reversing the Conventional Wisdom: Using Home Equity to Supplement Retirement Income’’ by Barry H. Sacks, J.D., Ph.D., and Stephen R. Sacks, Ph.D. ....................................................................... 137 (V) VerDate Nov 24 2008 18:28 Sep 18, 2012 Jkt 075729 PO 00000 Frm 00005 Fmt 5904 Sfmt 5904 K:\DOCS\75729.TXT TERRIE VerDate Nov 24 2008 18:28 Sep 18, 2012 Jkt 075729 PO 00000 Frm 00006 Fmt 5904 Sfmt 5904 K:\DOCS\75729.TXT TERRIE OVERSIGHT OF THE FEDERAL HOUSING ADMINISTRATION’S REVERSE MORTGAGE PROGRAM FOR SENIORS Wednesday, May 9, 2012 U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON INSURANCE, HOUSING AND COMMUNITY OPPORTUNITY, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. The subcommittee met, pursuant to notice, at 2 p.m., in room 2128, Rayburn House Office Building, Hon. Judy Biggert [chair- woman of the subcommittee] presiding. Members present: Representatives Biggert, Hurt, Dold, Stivers; Gutierrez, Sherman, and Capuano. Chairwoman BIGGERT. This hearing of the Subcommittee on In- surance, Housing and Community Opportunity will come to order. Good afternoon, everyone. I am glad to see all of the witnesses here. We have quite a distinguished panel here. And let me just say, without objection, all Members’ opening statements will be made a part of the record, and I am going to recognize myself for an opening statement. I would like to welcome our panel of witnesses today for the hearing entitled, ‘‘Oversight of the Federal Housing Administra- tion’s Reverse Mortgage Program for Seniors.’’ During the 112th Congress, this subcommittee has been system- atically reviewing the Federal Housing Administration, or FHA, in today’s mortgage financial, market. We also have examined ways to reduce the government’s role and increase private sector partici- pation in mortgage finance. Today, we will continue our work with an examination of FHA’s Home Equity Conversion Mortgage Program, or HECM. This pro- gram offers seniors a 100 percent government-backed reverse mort- gage product. For some seniors, reverse mortgages are a great financial tool that will allow them to convert the equity in their home into cash for a variety of uses. That said, reverse mortgages are not for ev- eryone. That is why seniors are required to secure housing coun- seling prior to obtaining a reverse mortgage. In recent years, more seniors, particularly baby boomers, have used the program to turn the equity they have in their home into income. The HECM program also has seen an increase in delin- quencies and claims which have consistently exceeded the FHA’s original projections. (1) VerDate Nov 24 2008 18:28 Sep 18, 2012 Jkt 075729 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 K:\DOCS\75729.TXT TERRIE 2 Today, we will hear from witnesses about the strengths and weaknesses of this government program as well as reverse mort- gage products, and we will address a number
Load more

Recommended publications
  • Homeowners and Reverse Mortgages
    MLA :: 1-color logo :: PMS 1807c Maryland Legal Aid Offices Anne Arundel County Montgomery County 229 Hanover Street 600 Jefferson Plaza Annapolis, MD 21401 Suite 430 Reverse (410) 972-2700 Rockville, MD 20852 Maryland Legal Aid: Who We Are (800) 666-8330 (240) 314-0373 Mortgages Baltimore City (855) 880-9487 Maryland Legal Aid is a non-profi t law fi rm You should not take out a reverse mortgage if: 500 E. Lexington Street Northeastern Maryland Baltimore, MD 21202 Cecil, Harford 1911 since Maryland in All for Justice and Rights Human Advancing dedicated to providing high-quality legal • You feel rushed or pressured to take out a Telephone Intake Lines: 103 S. Hickory Avenue advocacy to protect and advance human rights reverse mortgage by someone, or do not (410) 951-7750 Bel Air, MD 21014 (866) MD LAW 4U (410) 836-8202 for Maryland’s most vulnerable low-income understand the loan. For example, some reverse (or 866-635-2948) (800) 444-9529 mortgage sellers promise to complete home individuals, families and communities. Business Line: Southern Maryland repairs, but then they do not complete the repairs. (410) 951-7777 Calvert, Charles, St. Mary’s You should talk to a lawyer if that has happened to (800) 999-8904 15045 Burnt Store Road Homeowners Baltimore County P.O. Box 249 What is a Reverse Mortgage? you. You can also fi le a complaint with the Maryland Hughesville, MD 20637 215 Washington Avenue Offi ce of the Attorney General (301) 932-6661 Suite 305 A reverse mortgage is a type of home loan for (877) 310-1810 (1-888-743-0023), the Consumer Financial Towson, MD 21204 and Reverse homeowners who are 62 years of age or older.
    [Show full text]
  • Reverse Mortgage Servicing & Foreclosure: Emerging Issues
    Reverse Mortgage Servicing & Foreclosure: Emerging Issues ISSUE BRIEF • APRIL 2017 Odette Williamson, Attorney, National Consumer Law Center The National Consumer Law Center The National Consumer Law Center uses its expertise in consumer law and energy policy to work for consumer justice and economic security for low-income and other disadvantaged people, including older adults and people of color. NCLC works with nonprofit and legal services organizations, private attorneys, policymakers, and federal and state government and courts across the nation to stop exploitive practices, help financially stressed families build and retain wealth, and advance economic fairness. Introduction Reverse mortgages allow older homeowners to convert equity in their homes into cash without having to move out and without having to make monthly mortgage payments. The mortgages allow older homeowners to age in place by supplementing income, providing funding for repairs or modifications to the home, or funds to meet other necessary expenses. Cashing out the equity in the home does come with some risks and costs. Recently there has been an uptick in reverse mortgage foreclosures due to default on property-related charges (e.g., taxes and insurance) and other issues despite options to cure these types of default and reinstate the mortgage. The challenges homeowners face in fulfilling the requirements of the mortgage have been exacerbated by poor or inadequate loan servicing. Poor servicing leads to quick foreclosure and ejectment of the elder from the home. Ms. Brown filed for bankruptcy after her loan servicer repeatedly refused to allow her to enter into a repayment plan to cure her property charge default and scheduled her home for sale.
    [Show full text]
  • Reverse Mortgages a Discussion Guide
    Reverse mortgages A discussion guide Consumer Financial Protection Bureau About this discussion guide This guide gives an overview of many key concepts of reverse mortgages. A qualified reverse mortgage counselor can help you learn more. If you’re interested in considering a reverse mortgage, but haven’t spoken with a counselor yet, call (800) 569-4287 to find a U.S. Department of Housing and Urban Development (HUD), hud.gov approved reverse mortgage counselor today. A detailed discussion with a counselor will give you important information to help you decide whether a reverse mortgage is right for you. HUD- approved reverse mortgage counselors have the latest information on reverse mortgages. In order to get the most out of your counseling session, come prepared to talk about: § Your financial needs and goals § Your spouse or partner’s future housing and financial needs § Other family members or dependents living with you and their future housing needs § The reasons you’re considering a reverse mortgage § The alternatives to a reverse mortgage you may have considered Alert Most reverse mortgages today are called Home Equity Conversion Mortgages (HECMs). HECMs are federally insured by the Federal Housing Administration (FHA). This guide covers typical features and requirements for HECM reverse mortgages. Non-HECM reverse mortgages may have different requirements and features. 1 How is a reverse mortgage different from a traditional mortgage? Traditional mortgages With a traditional mortgage, you usually borrow money to pay for the home at the time of the purchase, and pay it back over time. With each payment, you build your equity and your loan balance goes down.
    [Show full text]
  • Reverse Mortgages: Forwards and Backwards
    REVERSE MORTGAGES: FORWARDS AND BACKWARDS Bruce Levitt, Esq. Levitt & Slafkes (Maplewood) Victor Medina, Esq. Medina Law Group (Pennington) WRPP03136 © 2016 New Jersey State Bar Association. All rights reserved. Any copying of material herein, in whole or in part, and by any means without written permission is prohibited. Requests for such permission should be sent to NJICLE, a Division of the New Jersey State Bar Association, New Jersey Law Center, One Constitution Square, New Brunswick, New Jersey 08901-1520. Thank you for logging in – the webinar will begin shortly. WHAT EVERY ATTORNEY NEEDS TO KNOW ABOUT REVERSE MORTGAGES Using The Online Classroom 1. All Attendee phone lines are muted. 2. Questions may be submitted Via Chat on the right hand side of your screen. Questions will be answered periodically during the presentation Note: Attendees with dial up connections will see a slower response. Asking Questions – Easy as 1,2,3 3. See your messages here 1. Type your question here. 2. Send SEMINAR MATERIALS AND CLE FORMS • TO ACCESS SEMINAR MATERIALS, ATTENDANCE VERIFICATION AND CLE FORMS PLEASE GO TO: WWW.NJICLE.COM/WEBINAR ATTENDANCE VERIFICATION • PLEASE FAX OR E-MAIL YOUR ATTENDANCE VERIFICATION FORM TO NJ ICLE • FAX: 732-249-1428 • E-MAIL: [email protected] REVERSE MORTGAGES Reverse Mortgages - Two Parts • What Is It and How Does It Get Set-Up? • How Do They Go Wrong Reverse Mortgages - What Are They • Bank loan for people 62 and older against their home equity. • Repayment is deferred until you sell or die, or some other trigger of default. • Amount available depends on equity, age, prevailing interest rates.
    [Show full text]
  • World Bank Document
    Policy Research Working Paper 9134 Public Disclosure Authorized Reverse Mortgages, Financial Inclusion, and Economic Development Public Disclosure Authorized Potential Benefit and Risks Peter Knaack Margaret Miller Fiona Stewart Public Disclosure Authorized Public Disclosure Authorized Finance, Competitiveness and Innovation Global Practice January 2020 Policy Research Working Paper 9134 Abstract This paper examines the state of reverse mortgage markets constraints are equally relevant, in particular high non-in- in selected countries around the world and considers the terest costs, abuse concerns, and the inability of reverse potential benefits and risks of these products from a financial mortgages to cover key risks facing the elderly, particularly inclusion and economic benefit standpoint. Despite poten- health and elder care. In developing countries, constraints tially increasing demand from aging societies—combined are likely to be even higher than in advanced economies, due with limited pension income—a series of market failures to high transaction costs and lack of consumer knowledge constrain supply and demand. The paper discusses a series and protection. The enabling conditions for such markets of market failures on the supply side, such as adverse selec- to develop are outlined, along with examples of regulatory tion, moral hazard, and the costly regulation established oversight. The paper concludes that these still seem to be to address these problems, leading to only a small number largely products of last resort rather than well-considered of providers, even in developed markets. Demand-side purchases as part of good retirement planning. This paper is a product of the Finance, Competitiveness and Innovation Global Practice. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world.
    [Show full text]
  • Fannie Mae Single-Family Reverse Mortgage Loan Servicing Manual June 12, 2019
    Fannie Mae Single-Family Reverse Mortgage Loan Servicing Manual June 12, 2019 June 12, 2019 Fannie Mae Copyright Notice (1) © 2019 Fannie Mae. No part of this publication may be reproduced in any form or by any means without Fannie Mae’s prior written permission, except as may be provided herein or unless otherwise permitted by law. Limited permission to reproduce this publication in print in whole or in part and limited permission to distribute electronically parts of this publication are granted to Fannie Mae-approved lenders, servicers, and other mortgage finance professionals, strictly for their own use in originating mortgages, selling mortgages to Fannie Mae, or servicing mortgages for Fannie Mae. Fannie Mae may revoke these limited permissions by written notice to any or all Fannie Mae-approved users. Trademarks are the property of their respective owners. A full version of this publication is available on Fannie Mae's website. If there should ever be a difference between this publication as it appears on the AllRegs® website and the version published by Fannie Mae, the difference is an error. In such event, the Fannie Mae version of this publication shall be deemed the correct authoritative version. Material discrepancies between the two versions, identified by Fannie Mae or otherwise brought to our attention, may be addressed by Announcement. (2) Disclaimer: This publication is posted on the AllRegs website of Mortgage Resource Center, Inc., (“MRC”) under license from and with the express permission of Fannie Mae. MRC is the exclusive third-party electronic publisher of this publication. Fannie Mae makes no representation or warranty regarding any of the features, functionality, or other contents of the AllRegs website.
    [Show full text]
  • What the New High Cost Mortgage Protections Mean for Consumers
    JANUARY 10, 2013 What the new high-cost mortgage protections mean for consumers If a lender offers you a high-cost mortgage, where the annual percentage rate (APR) or points and fees charged exceed certain threshold amounts, the Home Ownership and Equity Protection Act (HOEPA) provides you with special consumer protections. Starting in January 2014, stronger protections will apply to these types of loans. For example, before making a loan, your lender must: • Provide you with information in advance that explains you are getting a high-cost mortgage, and stating the terms, costs and fees associated with the loan. • Certify that you have received homeownership counseling about the particular high-cost mortgage the lender is offering you. These special protections apply to any of the following types of mortgages that also meet HOEPA’s coverage thresholds: • The first mortgage to buy your home • A loan to refinance the mortgage on your home • A home equity loan or home equity line of credit (HELOC) What’s a high-cost mortgage? You’ll get additional consumer protections if your loan is: • For a first mortgage, and your APR is more than 6.5 percentage points higher than the average prime offer rate, which is an estimate of the rate people with good credit typically pay for a similar first mortgage. • For less than $50,000, is for a personal property dwelling (such as a manufactured home), and has an APR more than 8.5 percentage points higher than the average prime offer rate for a similar mortgage. • For a second, or junior mortgage, and your APR is more than 8.5 percentage points higher than the average prime offer rate for a similar second mortgage.
    [Show full text]
  • Structured Finance
    Structured Finance Reverse Mortgage Criteria STANDARD & POOR’S President Leo C. O’Neill Executive Vice Presidents Hendrik J. Kranenburg, Robert E. Maitner, Vickie A. Tillman STANDARD & POOR’S RATINGS SERVICES Chief Rating Officer Vickie A. Tillman Executive Managing Directors Edward Z. Emmer, Corporate Ratings Clifford M. Griep, Financial Institutions Ratings Joanne W. Rose, Structured Finance Ratings Vladimir Stadnyk, Public Finance Ratings Roy N. Taub, Insurance Ratings Petrina R. Dawson, Senior Managing Director & General Counsel RATINGS INFORMATION SERVICES Managing Director Jay S. Kilberg Vice Presidents Andrew Cursio, Product Management Robert Frump, Production & Electronic Distribution Paul Stanwick, Editorial David A. Collins, Director, Asia-Pacific Therese Robinson, Director, Europe Susanne Barkan, Product Manager Sara Burris, Director, Design, Production, & Manufacturing Jean-Claude Bouis, Editor, Franchise Products Donald Shoultz, Editor, Policy & Operations Editorial Jennifer O’Brien, Managing Editor Doug French, Audrey Kennan, Donald Marleau (Tokyo), Cynthia Michelsen, Jackie Rodgers (London) Miriam Stickler, Lisa Tibbitts (Editorial Managers) Jennifer Bale, Maureen Cuddy (Copy Editors) Design & Production Sandy Fong, Beth Russo, Michael V. Wizeman (Senior Managers) Elizabeth McCormack, Steve McLure (Senior Designers) Rosalia Bonanni, Barrie Cohn, Heidi Weinberg (Designers) Maura Gibbons (Junior Designer) John J. Hughes, Alicia E. Jones, Robin Tucker, Leonid Vilgorin (Managers) Christopher Givler, Dianne Henriques (Production Coordinators) Stan Kulp, Michelle McFarquhar, Michele Rashbaum (Senior Production Assistants) Subscription Information Hong Kong, (852) 2533-3535 London, (44) 171-826-3510 Melbourne, (61) 3-9631-2000 New York (1) 212-438-7280 Tokyo, (81) 3-3593-8700 Web Site www.standardandpoors.com/ratings Published by Standard & Poor’s, a Division of The McGraw-Hill Companies, Inc. Executive offices: 1221 Avenue of the Americas, New York, N.Y.
    [Show full text]
  • CFPB Reverse Mortgage Examination Procedures Servicing
    CFPB Reverse Mortgage Examination Procedures Servicing Reverse Mortgage Servicing Exam Date: [Click&type] These examination procedures apply to reverse mortgage Exam ID No. [Click&type] Prepared By: [Click&type] servicing and are a stand-alone resource to complete a reverse Reviewer: [Click&type] mortgage servicing review. Prior to using these procedures, Docket #: [Click&type] however, examiners should complete a risk assessment and Entity Name: [Click&type] examination scope memorandum. Depending on the scope, in conjunction with the compliance management system and consumer complaint response review procedures, each reverse mortgage servicing examination will include one or more of the following modules: Module 1 Servicing Transfers, Loan Ownership Transfers, and Escrow Disclosures Module 2 Account Maintenance, Payments, and Disclosures Module 3 Consumer Inquiries, Complaints, and Error Resolution Procedures Module 4 Maintenance of Escrow Accounts or Set-Asides and Insurance Products Module 5 Information Sharing and Privacy Module 6 Events of Default and Death of Borrower Module 7 Foreclosures Module 8 Examiner Conclusions and Wrap-Up Examination Objectives In consultation with Headquarters: 1. To identify acts or practices that materially increase the risk of violations of Federal consumer financial laws in connection with reverse mortgage servicing and other risks to consumers. 2. To gather facts that help to determine whether a regulated entity engages in acts or practices that violate the requirements of Federal consumer financial laws. 3. To determine if a violation of a Federal consumer financial law has occurred and whether supervisory or enforcement actions are appropriate. CFPB October 2016 Procedures 1 CFPB Reverse Mortgage Examination Procedures Servicing Background Reverse Mortgage Origination A reverse mortgage is a special type of loan that allows older homeowners to borrow against the equity (wealth) in their homes.
    [Show full text]
  • Reverse Mortgages a DOB Connects Webcast
    Massachusetts Division of Banks Reverse Mortgages a DOB connects webcast Panelists Kevin Cuff, Deputy Commissioner Ruth Barry, Chief Director Aimee Desai, Chief Director Moderator Cindy Begin, First Deputy Commissioner Kevin Cuff ׀ Ruth Barry Who is the Division of Banks? A Massachusetts state regulatory agency DOB Mission: To ensure a sound, competitive, and accessible financial services environment throughout the Commonwealth of Massachusetts Regulates state-chartered banks and credit unions Also regulates mortgage lenders, mortgage brokers, mortgage loan originators, debt collectors, retail installment sales finance companies, insurance premium finance companies, motor vehicle sales finance companies, small loan companies, check cashers, check sellers, foreign transmittal agencies and ATM machines. Areas of focus: Regulations and supervision of depository and non- depository institutions Consumer protection What are Reverse Mortgages A special type of mortgage loan for seniors (generally age 62 and older) that pays a homeowner loan proceeds drawn from accumulated home equity. Unlike a traditional home equity loan or second mortgage loan, no repayment is required until the borrower(s) moves, sells, dies, or is out of the home for more than 12 consecutive months. What are Reverse Mortgages? A reverse mortgage loan is a special type of mortgage loan for seniors (generally age 62 and older). • Pays you loan proceeds drawn from your home's equity (HECM Max: $822,375 – adjusted annually) • No repayment is required until you no longer live in the mortgaged home • Interest is calculated as compound interest • Mandatory reverse mortgage counseling Why a Reverse Mortgage? Growth in home equity In 2020, Americans age 62 or older hold an estimated $20 trillion of home equity according to the NRMLA/Hollister Reverse Mortgage Market Index.
    [Show full text]
  • Report-Reverse-Mortgages-2009.Pdf
    SUBPRIME REVISITED How Reverse Mortgage Lenders Put Older Homeowners’ Equity at Risk October 2009 NATIONAL CONSUMER LAW CENTER® National Consumer Law Center® 7 Winthrop Square, 4th Floor Boston, MA 02110 (617) 542-8010 www.consumerlaw.org Subprime Revisited: Written by How Reverse Mortgage Tara Twomey Lenders Put Older Of Counsel Homeowners’ Equity National Consumer Law Center at Risk Rick Jurgens Contributing Author ACKNOWLEDGMENTS The authors would like to thank Odette Williamson for overseeing the writing and editing and coordinating the release of this report; Carolyn Carter and Willard Ogburn for their valuable guidance and input to early drafts; Julie Gallagher for designing and formatting the report and its graphics; Denise Lisio for editorial assistance; and Eric Fletcher for assistance with footnoting. This report was enriched by the support, insight and expertise of attorneys Daniel Claggett, Prescott Cole, Frank Kautz, Dan Murphy, Mark Redmond, David Mandel, Daniel Mulligan, Megan Tighe and Bill Brennan as well as advocates Len Raymond, Bronwyn Belling, Ken Scholen and Roberta Levitan. Among the many seniors and family members who shared their experiences with the authors were Margaret Keast, Janet Altenbaugh, Brenda Holder, Miguel Posada, Marvin Kidwiler and Eugene Burson. Others provided information and opinions about the reverse mortgage market, including Neil Granger, George Lopez, Jeffrey Nash, W.L. Pulsipher and Jeffrey Taylor. TABLE OF CONTENTS I. Introduction 1 II. Reverse Mortgage Basics 2 HECM Loans 3 III. Origins and Evolution of Reverse Mortgages 4 IV. “The Senior Market is a Goldmine” 5 V. A Multi-Billion Dollar Opportunity 6 The Lenders 6 The Brokers 8 Wall Street and the Securitization Spigot 9 VI.
    [Show full text]
  • Considering a Reverse Mortgage?
    Considering a reverse mortgage? Proceed with caution Don’t sign the loan documents unless you understand how a reverse mortgage works. Know your options—you may have a better choice. Have a serious talk with a federally approved housing counselor who specializes in reverse mortgages. What is a reverse mortgage? How does a reverse A reverse mortgage is a special type of home mortgage work? equity loan sold to homeowners aged 62 and After years of paying down your mortgage, you older. The loan allows homeowners to access have built up equity (the amount your property a portion of their home equity as cash. In a is worth today minus the amount you owe on reverse mortgage, interest is added to the loan your mortgage and any home equity loan or balance each month, and the balance grows. line of credit) in your home. With a reverse mortgage, you borrow against your equity. The loan must be repaid when the last borrower, co-borrower or eligible spouse sells the home, The loan balance grows over time. You don’t moves out of the home, or dies. Most reverse have to pay back the loan while you or an eligible mortgages today are called Home Equity spouse live in the home, but you still have to pay Conversion Mortgages (HECMs). HECMs are taxes, insurance, and maintain the home. federally insured. If you are interested in a reverse mortgage, first see a HECM counselor. When both you and any eligible spouse have passed away or moved out of the home, the loan must be paid off.
    [Show full text]