Reverse Mortgage Lenders Thinking of a Hybrid

The National Reverse Mortgage Lenders Association has raised the possibility of creating a hybrid reverse mortgage loan with members of the White House staff, Peter Bell, its president and CEO told attendees at the group's eastern regional meeting in New York.

This product, which will start with a fixed-rate term before switching to a variable rate, will serve a lot of seniors' needs, he said, adding the interest the group received from the White House is giving it impetus to pursue it.

Among the policy issues NRMLA is pursuing in Congress right now is the lifting of the cap on the number of Home Equity Conversion Mortgages the Federal Housing Administration can insure. Right now, Bell explained, Congress has suspended the cap of 275,000 loans through a series of continuing resolutions.

Given that the HECM program is making more money for FHA than it is paying out in claims, NRMLA thought it would be a good time for it to ask for the cap to removed, Bell said. However, that effort is running into headwinds from the Republican House staff members, who do not want to be seen as supporting anything that could be perceived as improving the size of government.

Still, "the good news for us is that we don't have any specific needs out of Congress at this time," he said.

On the state level, Bell spoke about a law in Massachusetts passed two years ago that would require face-to-face counseling for certain HECM borrowers. He said there aren't enough counselors approved that would make something like that feasible.

There was a two-year delay created to implement that law and that delay is now expiring. Bell is hoping for an opt-out provision for seniors for that face-to-face requirement will be created.

More recently in California, a bill has been proposed that will require face-to-face counseling for all reverse mortgage borrowers.

Assemblywoman Susan Bonilla introduced the bill on behalf of a consumer group. Bell said NRMLA would be meeting with her staff very shortly to discuss this piece of legislation.