NRMLA Ethics Advisory Opinion 2014-1 Ethical Refinancing of HECM Reverse Mortgage Loans and Anti-Churning Considerations-Updated September 26, 2014 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. This Ethics Advisory Opinion 2014-1 is such an interpretation of the Code of Ethics. New HUD Mortgagee Letters. On September 3, 2013, the U.S. Department of Housing and Urban Development ("HUD") published Mortgagee Letter 2013-27 that, among other things, established an Initial Disbursement Limit and a related Single Disbursement Lump Sum Payment Option for certain fixed rate Home Equity Conversion Mortgages ("HECMs") insured by HUD. On June 18, 2014, HUD published Mortgage Letter 2014-11 that further clarified that fixed rate HECM reverse mortgage loans may not provide mortgagors with any option for future payments beyond the amount of the otherwise permissible initial Borrower's Advance or Initial Disbursement Limit. On June 27, 2014, HUD published Mortgagee Letter 2014-12, that identified Principal Limit Factor changes for the HECM program that affected the Principal Limit Amounts, Borrowers Advance and Initial Principal Limits that may be provided to or received by HECM loan borrowers. These Mortgagee Letters, and other changes to the HECM program made by HUD, provide to both HECM loan borrowers and NRMLA lender members a new array of choices, opportunities and limitations. A goal of this Ethics Advisory Opinion 2014-1 (Ethical Refinancing of HECM Reverse Mortgage Loans and Anti-Churning Considerations--Updated) is to provide to NRMLA Members updated guidance and advice with respect to the ethical considerations under the Code of Ethics by which they are bound as they make such choices and offer and originate HECM loans for consumers. Prior Ethics Advisory Opinion Guidance. The Ethics and Standards Committee has provided similar guidance over the years, as the HECM program has been changed by HUD and in anticipation of such changes. For example, on September 30, 2010, it published Ethics Advisory Opinion 2010-1 (Ethical HECM-TO-HECM Refinancing and Anti-Churning Practices). On February 24, 2011, it published Ethics Advisory Opinion 2011-2 (Ethical Refinancing of Reverse Mortgage Loans). 64
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