NRMLA ETHICS ADVISORY OPINION 2013-03 ETHICAL REFINANCING OF HECM SINGLE DISBURSEMENT LUMP SUM PAYMENT OPTION LOANS AND ANTI-CHURNING PRACTICES October 17, 2013 The Ethics and Standards Committee (the "Committee") of the National Reverse Mortgage Lenders Association ("NRMLA"), the trade association of the reverse mortgage lending industry, enforces the NRMLA Code of Ethics and Responsibility (the "Code of Ethics"). All NRMLA Members are required to comply with the Code of Ethics as a condition of their continued membership in NRMLA. If the Committee determines that a NRMLA Member has not complied with the Code of Ethics, sanctions may be imposed, up to and including the termination of NRMLA Membership. Committee decisions enforcing the Code of Ethics may be made public. The Committee also interprets the Code of Ethics, and, from time to time, proposes changes to it for consideration and approval by the NRMLA Board of Directors. On September 3, 2013, HUD published Mortgagee Letter 2013-27 (Changes to HECM Program Requirements). Under its authority, and effective September 30, 2013, borrowers seeking HECM reverse mortgage loans could select a new HECM loan option (among others): a Single Disbursement Lump Sum Payment Option Loan. As described in Mortgage Letter 2013-27, a HECM Single Disbursement Lump Sum Payment Option Loan is a HECM loan under the terms of which only a single disbursement is permitted, only at loan origination, the amount of which may not exceed the greater of 60% of the HECM loan Principal Limit, or the permissible Mandatory Obligations plus 10% of the Principal Limit. This Ethics Advisory Opinion 2013-03 describes important limitations upon the refinancing of such HECM Single Disbursement Lump Sum Payment Option Loans and imposes related anti-churning restrictions affecting such loans that the Committee has concluded are necessary and appropriate under the NRMLA Code of Ethics, and that NRMLA Members, accordingly, are required to honor and comply with as they advise consumers and originate, purchase, sell and securitize such loans. This Ethics Advisory Opinion 2013-3 addresses only HECM loans that are Single Disbursement Lump Sum Payment Option Loans. 58
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