The Reverse Reporter

written by
MORTGAGE EXPERT
8 · 10 · 09

A Florida firm is going after the wholesale customers of two reverse mortgage lenders that are closing. As one traditional mortgage lender ventures into reverse lending, a reverse mortgage lender is venturing into traditional lending. In other reverse activity, new reverse mortgage regulations include one state’s elimination of yield spread premiums on home-equity conversion mortgages and the government is warning about reverse mortgage fraud.

In Mortgagee Letter 2009-21, the Department of Housing and Urban Development indicated FHA’s refinance insurance authority and the benefit of a reduced initial mortgage insurance premium has been extended to HECMs that have been assigned to HUD. The agency also said that FHA will collect a 2 percent initial mortgage insurance premium on the difference between the maximum claim amount on an existing HECM and the maximum claim amount after a refinance.

HUD noted that housing counseling requirements can be waived on HECM refinances if the borrower receives the required HECM Anti-Churning Disclosure form, the new loan is increased by at least five times the amount of closing costs and there is no more than five years between the original HECM closing and the refinance application.

The Federal Bureau of Investigation said in its 2008 mortgage fraud report that senior citizens are being recruited through local churches, investment seminars and advertising to purchase distressed properties from straw buyers. After 60 days, the senior obtains a reverse mortgage using inflated appraisals — though ringleaders and closing attorneys often abscond with the funds.

“As more members of the ‘baby boomer’ generation turn 65, their vast and expanding real estate holdings make reverse mortgage fraud an increasingly attractive scam for perpetrators,” the FBI said.

Yield spread premiums are prohibited on New Hampshire reverse mortgages under HB 610, which has been signed by the state’s governor. Both the New Hampshire House and Senate passed the legislation in June.

Financial Freedom Acquisition LLC recently reported that it has closed dozens of purchase HECMs since the program was launched in January.

Value Financial Mortgage Services Inc. is soliciting loan correspondents of 1st Reverse Financial Services LLC and Senior Lending Network. 1st Reverse parent WSFS Financial Corp. reported last month that it would wind down the reverse lender, while World Alliance Financial Corp. — which operates Senior Lending — stopped accepting new applications on July 7.

“We would like to invite you to consider us as your HUD sponsor,” Miami-based Value said in a promotional message. “In addition to traditional HECMs, we offer the 5.56 percent fixed rate so necessary in these troubled times.”

Mike Strong, a reverse mortgage specialist with VHM/Funding Seniors in Omaha, Neb., is promoting in a marketing piece 25 percent off the origination fee when loans are referred to the reverse mortgage wholesaler. He is also recruiting associate loan officers who earn up to 25 percent of the origination fee on reverse mortgages and up to 65 percent of the fee on FHA originations.

Reverse mortgage borrowers are accessing $12,000 more up front than they were in the second-quarter 2008, according to usage data reported by Golden Gateway Financial. The data was obtained from users of its online reverse mortgage calculator.

The reverse mortgage limit was temporarily increased in 2009 to $625,500 — helping to push the initial draw up $12,000 since the second-quarter 2008, Golden Gateway said. At the same time, available monthly payments decreased by nearly half.

Golden Gateway issued a news release on July 7 indicating that Prime Alliance Solutions will use the Oakland, Calif.-based company to provide reverse mortgage solutions for its credit union customers. In addition, Boeing Employees’ Credit Union is reportedly utilizing Golden Gateway.

Live Well Financial Inc. and Generation Mortgage Co. both became charter members of the National Reverse Mortgage Lenders Association’s new wholesale lenders program. Other members of the program, which was launched on July 17, include Bank of America Home Loans, MetLife Home Loans and Genworth Financial Home Equity Access Inc.

Online reverse mortgage leads generated through Reverse Mortgage Advisor can now be verified by TARGUSinfo, a statement last month said. The enhancement identifies, verifies, scores and locates prospects and customers at the moment of contact.

The Association of Reverse Mortgage Specialists recently announced a new Web portal for its members. The new offering incorporates free social network features such as Facebook..

Traditional mortgage lender Hopkins Federal Savings Bank said in a July 20 press release that it established iReverse Home Loans as a retail reverse lender. The 88-year-old Baltimore-based bank said it has been contemplating a move into the reverse mortgage market “for numerous years” and felt now was the right time.

Kenneth J. Klawans has been tapped to create the organization, which will operate nationally under the bank’s federal charter. The company promises “an extraordinary compensation structure” for a select group of the “best” reverse mortgages specialists.

Meanwhile, reverse lender First Midwest Bank announced last month its entry into the traditional mortgage market. The Itasca, Ill.-based company serves the Chicago area.

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Mortgage Daily Staff

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