the decumulation stage of their retirement planning,” says Jason Miller, a partner at Crewe Advisors in Scottsdale, AZ. He notes that people don’t have to make regular payments, but the entire amount is due when they move out, sell the home or die. The article also notes that federal regulations have made reverse mortgages safer than they used to be. “For instance, the loan amount can’t exceed the home’s market value. If the home’s value dips too low, the lender’s insurance will cover the difference, so the borrowers [or their heirs] aren’t responsible for it.” Read the full article at https://bit.ly/3FHJv7n. Inflation Remains a Concern for Retirement Plans Kiplinger magazine conducted a survey that found more than 70 percent of individuals 50 and older are concerned that inflation will cause serious economic hardship during their retirement. In a September 2 article, Kiplinger senior editor Sandra Block reports that one remedy to consider is taking out a reverse mortgage line of credit. “The line of credit will create a buffer during market downturns, providing a source of funds to pay expenses until your portfolio recovers,” says Wade Pfau, professor of retirement income at the American College of Financial Services. “You won’t have to pay the money back as long as you remain in your home.” While rates have moved up recently, they’re still historically low, Pfau adds. “However, if you’re contemplating a reverse mortgage, you may not want to put it off much longer, because rates are expected to continue to rise as the Federal Reserve moves to squelch inflation.” Read the full article at https://bit.ly/3fHEbpI. In Washington, they’re talking about … HUD Publishes Proposed Rule on LIBOR Transition The U.S. Department of Housing and Urban Development (HUD) published a proposed rule on October 19 that would replace the London Interbank Offered Rate (LIBOR) with the Secured Overnight Financing Rate (SOFR) as an approved index for the Federal Housing Administration-insured adjustable-rate mortgages (ARMs), including HECMs. Public comments were due by November 18. NRMLA, in coordination with the HMBS Issuer Committee, submitted comments on behalf of its members. HUD’s proposed rule would establish a spread-adjusted SOFR index as the Secretary-approved replacement index to transition existing forward and HECM ARMs off LIBOR. The proposed rule would also clarify the HECM monthly ARM regulation and establish a lifetime five percent interest rate cap for monthly adjustable-rate HECMs. FHA Updates HECM Due and Payable Requirements The Federal Housing Administration (FHA) changed its requirement for mortgagees to notify a borrower’s estate and heirs that a HECM has become due and payable from within 30 days of the date of the borrower’s death to within 30 days of providing notice of the borrower’s death to the Secretary of the U.S. Department of Housing and Urban Development (HUD). Details were provided in Mortgagee Letter (ML) 202215, published August 31. The change aligns the notification requirements for all HECMs, regardless of the case number assignment date or the due and payable status. ML 2022-15 fixes an issue that had been causing problems for HECM servicers. Because it can sometimes take more than 30 days to find out a borrower has died, HUD penalized servicers for not distributing due and payable notices to the estate within the required 30-day time frame. The policy change provides more time now that the due and payable letter can be sent after the HUD Secretary is informed of the borrower’s death. A joint statement issued by Gail Balettie and Rex Lamb, both of Celink, states: “We are thankful that HUD has addressed this long-standing issue that causes HECM servicers and investors to suffer unfair losses. We are still hopeful that HUD will open a path for HECM servicers to recover debenture interest curtailed for this reason.” NRMLA President Steve Irwin adds, “NRMLA has long advocated for a resolution to this programmatic requirement, which in many cases was operationally What’s News continued from page 7 8 REVERSE MORTGAGE / JANUARY–FEBRUARY 2023
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