COMBINED-Code of Ethics and Advisory Opinions 02132024

This new Initial Disbursement Limit is calculated under Mortgagee Letter 2013-27 as the amount equal to the greater of 60% of the Principal Limit (or $120,000 for this new HECM refinance loan) or Mandatory Obligations plus 10% of the Principal Limit ($120,000 plus $20,000), thus yielding $140,000 as the Initial Disbursement Limit of this new HECM loan. (See, for example, the calculation of the Initial Disbursement Limit provided through Example 4 of Mortgagee Letter 2013-27). With the prior HECM loan (in the amount of $120,000) paid off as a Mandatory Obligation through the Single Disbursement Lump Sum Payment at the closing of this new HECM loan, the consumer then would have received, as a result of having obtained this second planned HECM refinance loan (with its new Initial Disbursement Limit of $140,000) an additional $20,000 in cash (the difference between the Initial Disbursement Amount of $140,000 for this new HECM loan and the required Mandatory Obligation payoff of $120,000 of the initial HECM loan)--with that additional $20,000 in cash distributed to the consumer at the closing of the second planned refinance HECM loan being added to the $70,000 in cash distributed to the consumer at the closing of the initial HECM loan. And, the initial HECM loan unexpectedly would have been pre-paid within twelve months of its origination. Even considering all or part of the costs associated with the origination of the second HECM loan (some or all which might be paid or absorbed by those originating or purchasing that loan), it is the view of the Committee that such planned or other refinances of HECM Single Disbursement Lump Sum Payment Option Loans into other HECM loans within twelve months is inconsistent with the applicable provisions of the NRMLA Code of Ethics. NRMLA Members routinely and overwhelmingly engage in ethical HECM loan refinancing, and not in unethical churning activities, for the benefit of the seniors they are pledged to serve and in keeping with their professional obligations under the NRMLA Code of Ethics. All the more reason, then, that there is no place in NRMLA for NRMLA Members who engage in impermissible HECM Single Disbursement Lump Sum Payment Obligation Loan refinancing and churning practices. NRMLA Members, seniors, and others are urged to bring to the attention of NRMLA's President and the Committee concerns they may have about potential violations of the NRMLA Code of Ethics, including the limitations and restrictions of this Ethics Advisory Opinion 2013-03, directly or indirectly by NRMLA Members, for consideration and action in accordance with the procedures described in the NRMLA Code of Ethics. A form for that purpose also may be found at the NRMLA website, at www.NRMLAOnline.org. 61

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