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Volume 11 - Number 20

October 5, 2018

FHA Requires Second Appraisal on HECMs with Inflated Collateral

The reverse mortgage industry is supporting an FHA move to require a second appraisal for certain Home Equity Conversion Mortgage loans. FHA did not seek public comment on the interim policy change, which subjects all HECM loans, effective Oct. 1, to a collateral risk assessment to ensure the appraisal of the property is not inflated. The new policy has wide support in the reverse mortgage industry. A study conducted by the Department of Housing and Urban Development last year found that 37 percent of appraisals on approximately 134,000 HECMs tested positive for over-valuation. The inflated HECM appraisals were at least 3 percent higher than estimates by FHAís proprietary automated valuation model, according to FHA Commissioner Brian Montgomery. The same study also found that higher-than-expected losses in the HECM program could be attributed in part to ...

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With loan volumes declining, does your shop have plans to enter the non-QM lending market in 2019?

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