COMBINED-Code of Ethics and Advisory Opinions 02132024

Advisory Opinion 2016-1 Page 2 In NRMLA Ethics Advisory Opinion 2015-2 (October 30, 2015; Ethical Refinancing of HECM Reverse Mortgage Loans and Anti-Churning Considerations—New Requirements), the Committee advised that the NRMLA Code of Ethics restricted NRMLA Members from refinancing previous HECM loans that failed to meet certain detailed requirements, both in order to serve the best interests of HECM borrowers and to “help foster the development and vitality of the secondary market for such HECM loans.” See also NRMLA Ethics Advisory Opinion 2014-1 (September 26, 2014). NRMLA Members participating directly or indirectly in the Ginnie Mae HMBS securitization program for HECM loans also are prohibited or least need to be fully knowledgeable about the Ginnie Mae restriction that bars the pooling of what Ginnie Mae describes as “planned refinance” loans, and which it defines, generally, as “premium” loans that lenders and borrowers have agreed to refinance at later dates and at interest rates lower than the current rates on such loans. See Ginnie Mae MBS Guide, Section 9-2, (G). NRMLA members are required under the Code of Ethics to originate, close and service only HECM loans that comply in all respects with all applicable requirements of FHA and Ginnie Mae, including this one. See Code of Ethics, Rule 401. The Committee acknowledges that HECM loan applicants and borrowers, in the exercise of their Freedom of Choice, may elect to elect to pay off their outstanding HECM loan balances by refinancing their existing HECM loans, or to prepay all or part of their existing HECM loan draws, at any time, as provided and described in their HECM loan documents. However, the Code of Ethics and these Ethics Advisory Opinions and this Ginnie Mae Guide restriction impose certain requirements and restrictions upon NRMLA Members as HECM loan borrowers make those determinations. Through this Ethics Advisory Opinion 2016-1 (Unethical Planned Prepayment HECM Loans) the Committee advises NRMLA Members of an additional restriction related to what it defines, below, as “planned prepayment HECM loans.” For purposes of this Ethics Advisory Opinion 2016-1, a “planned prepayment HECM loan” is one in which the HECM loan borrower generally has reached an understanding with the lender or loan originator of such HECM loan (either orally or in writing, and at or prior to the borrower’s prepayment of all or part of the drawn proceeds of such HECM loan) that the borrower shall prepay such HECM loan drawn proceeds by a later date following the closing of such HECM loan. By way of example but not limitation, an understanding or agreement, formal or informal by and between a HECM loan borrower and a lender or originator, that the borrower shall draw down any portion of the amount permitted to be drawn at closing 75

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