-
Get Ready To Tackle That Summer Beach List
Ralph Rosynek -
The Reverse Review Magazine
September - 2010 -
I’m a Reverse Mortgage Originator and Damn It, People Like Me
Michael Manfred -
Cost Effective Reverse Mortgage Marketing 101
John Sorgenfrei -
Winning Battles While Losing Wars
Jonathan J. Neal -
Reverse Mortgages: An Originator’s Tale
Sue Haviland -
Get Ready To Tackle That Summer Beach List
Ralph Rosynek -
The Reverse Review Magazine
September - 2010
Boo!
Thursday, 01 October 2009 00:00
Mention the word “October” to anyone and generally you will hear one of two things; “spring forward, fall back” or “Halloween”. Since the extra hour of sleep this month won’t even begin to make a dent in your ability to feel less tired, how about a few scary thoughts to help keep you awake!
….... Another recent Google Alert reports that other late to the party fixed rate lenders announcing their product entry into the reverse mortgage market will significantly assist in reducing extended industry processing, underwriting and closing turn times. Certainly our reverse mortgage lender history of the past has taught us a lesson, so is history really repeating itself? The scary part of this story is the failure of the turn time reporting and rescuing resources to identify what is probably the more accurate cause of delays – quality of loan file origination and processing.
Increased borrower activity largely fueled by continuing economic uncertainty and declining property values requires efficiencies to handle the demand beginning with quality efforts in complete origination and complete file processing activities. When undertaken, these efforts provide for the Underwriter to “clear to close” the file on a first pass basis in many cases.
While the ultimate solution to any industry issue is solid education and training, which leads to greater consistency and file quality, your immediate efforts to avoid many of the listed most common mistakes which Underwriters encounter will be the best tool to assist in an overall industry effort to reduce turn times:
• Take control of the borrower(s) from the beginning. Advise the borrower(s) of specific documents, verification information, and important steps required to meet their loan request need.
• Prepare your borrower(s) from the point of initial contact. Fully explain the entire reverse mortgage loan process, be realistic about the timeline to close, and advise the borrower(s) of their required assistance and activities in order to get to the closing table.
• Question, question, question!! Listen carefully to the borrower(s), ask questions during the pre-qualification and application process, and document/reference potential issues.
• Get what you need upfront, the first time, in legible complete form. The “back and forth” calls and requests waste time and add to delays.
• Do you use a checklist? With all of the paper involved and required documentation, you must have a “go to” resource to determine if you have a complete package – you need a checklist!
• Are your copies and support documents LEGIBLE, COMPLETE and CURRENT.
• Did anyone thoroughly review the credit report?
• Did anyone thoroughly review the preliminary title work?
• How about comparing the credit report to the preliminary title report?
• Did anyone review the trust documentation at the time it was provided?
• Proper verification of assets to close is a must. Real assets, with a history, that are cash or converted to cash with a trail must be in place.
• The appraisal. Do you have a review checklist? It is amazing how much a thorough review when it is received can seriously reduce the time delays resulting from basic underwriting conditions – and remember comparables assist the underwriter in determining the final value, make sure your appraiser used appropriate current comparables.
• A processor’s certification. Many timing delays result from lack of information, incomplete information or conflicting information. A processor’s certification is a great way to augment file information and provide additional detail.
….... A recent e-mail to a processor from a loan originator indicated “Please cancel the FHA casefile number and provide me with a copy of the appraisal, the borrower doesn’t like the value and has chosen to work with our company to complete the transaction.”
A big boo on this request! While a case file transfer request, properly initiated by the borrower(s) and addressing payment of the appraisal fee, is permissible, the scary part of this story is the fact that we can make a casefile number “go away” and a new improved appraisal can be ordered. Yes, in some cases a new appraisal can be ordered if the new lender determines deficiencies or protocol deviation in the present appraisal, however, just because a party “doesn’t like the value”, “it is what it is” in most cases.
..….. Recent HUD Mortgagee Letters pose some significant industry changes which will require additional education and training, and perhaps a shift in how and who has access to the reverse mortgage product. Implementation will be on a short time frame basis in some cases as well. The scary part of this story is many of us will not read or review the information until the last minute!!
While the Mortgage Letters do not go into effect until January 1, 2010, we are further required to also implement RESPA/GFE changes and Federal Licensing requirements. New Year’s Eve may not be a celebration, but rather a launch party for many into a whole new way of doing business.
For more information on the GFE/HUD/RESPA changes, please visit the HUD website at http://www.hud.gov/respa or email their office at:
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
.
To review all the HUD changes taking effect on January 1, 2010 please reference the HUD website at:
http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/ and read the following Mortgagee Letters.
a. Mortgagee Letter 09-28
b. Mortgagee Letter 09-29
c. Mortgagee Letter 09-30
d. Mortgagee Letter 09-31
The last scary part of this story is how many of these questions you are sure you know the answer to: (yes, the answers will be printed upside down in next month’s column!)
• How long is an FHA appraisal report valid?
• What action comes first, borrower counseling or ordering an FHA casefile number?
• What maximum amount of gift funds are permitted to be used for “cash to close” in an FHA HECM purchase transaction?
• How long is a current FHA appraisal value attached to the property?
• What are the basics to “good funds” verification for cash to close?
• Who can order an FHA appraisal?
• What are the required net worth minimums for FHA approval?
• What is the difference between an open ended versus a closed ended loan transaction?
• What are the seasoning requirements for chain of title for an FHA HECM Purchase versus a Refinance transaction?
• When does the FHA Spot Condo form expire?
• When does the credit report expire?
• What additional verification items are needed for a modular home?
• What term describes the other vested parties to a life estate?
• What documents does a non-borrowing spouse sign at closing?
• What “formula” is generally used to determine the minimum amount of property hazard insurance?
• What components equal the UPB of a HECM loan on the day after loan funding?
• When is a HECM loan due and payable?
• What is the amount of the filed security instrument of record and its expiration date for a HECM loan transaction?
• What are the seasoning requirements for a quit claim deed?
• How long is the POA document considered valid?
