Home Equity Conversion Mortgage originations fell dramatically in the second quarter, raising the possibility of a long reverse-mortgage winter in 2018, according to an Inside FHA/VA Lending analysis of HECM data. HECM production fell a whopping 40.9 percent in the second quarter from the previous period. Total HECM originations stood at $8.6 billion by the six-month mark, down 8.3 percent from the prior year. Traditional HECMs, which exclude purchases and refinances, accounted for 80.5 percent of FHA-insured reverse mortgages originated during the first half of 2018. The amount of funds available at loan origination for the first six months totaled $4.7 billion. Analysts blame the low HECM originations on the new lower Principal Limit Factors (PLFs) for HECMs, which became effective in FY 2018. Under the HECM final rule issued last year by the Department of Housing and Urban Development, principal limits [Chart]
One housing lobbyist dismissed the bill as misguided, adding: “This is like someone laying on their death bed after drinking and sinning and finally realizing they need to get baptized.”
The Department of Treasury has signaled that the CFPB should work with other federal agencies and state regulators to create consistent mortgage servicing regulations across the industry. In a recent report on nonbank issues, Treasury expressed its concern regarding inconsistency in mortgage servicing regulations that could create compliance headaches for residential loan processors while increasing costs. “In light of that, the CFPB is taking the lead ...
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