New ‘Understanding Reverse’ Issue Highlights $1 Million HECMs
Product guide to reverse mortgages Understand the opposite has just released its 9th Annual Edition which includes information on a number of product changes and updates effective January 1st, 2023. These include a new Home Equity Conversion Mortgage (HECM) limit of more than $1 million and other programs and rate details.
So far, 2023 is shaping up to be a year of change for the industry, even if it hasn’t even started yet. Adding to the historically high line, the exit and consolidation of major lenders has led product educator and author Dan Hultquist to believe the need for reverse mortgage education is more acute than ever.
To get an overview, RMD sat down with Hultquist for a chat that will be featured in an upcoming episode of the RMD Podcast.
The ninth time is the charm
The year 2022 marks the tenth anniversary of Hultquist’s work on what would later become the book Understand the oppositewith the publication of the first edition in 2014.
Much has changed in the landscape of reverse mortgage products since then, including regulations from major lenders, the U.S. Department of Housing and Urban Development (HUD), and the Federal Housing Administration (FHA). , the Consumer Financial Protection Bureau’s regulatory stance and more.
A notable change for 2023 is the increase in the HECM limit to $1,089,300, an all-time high that could lead to more revenue from FHA-sponsored reverse mortgage loans for higher-quality homeowners. While HECM was once limited to private label options, it may now be available as a reverse mortgage option.
“[The new limit] It opens the door for us to work with borrowers who have much more valuable homes,” he said. “[In places like] California, New York, a little bit of Florida and there are areas of the country where someone who has a very high end home is looking for patented products.”
Many of the questions Hultquist and other industry educators receive have to do with regulations. Loan officers and other industry participants have told Hultquist that regulatory updates are one reason they are updating to a revised version of the book.
“We get our regulations from so many different sources that it’s helpful for the lender, the lender, the underwriter, the seller and the servicer to know where the regulations are written,” Hultquist said.
Hultquist typically doesn’t start writing next year’s updates until very late in the year, as guidance and mortgage letters on the new FHA and HUD limits are shelved along with new details. in the FHA’s annual report to Congress.
“Due to HUD’s fiscal year, there are regulatory changes that often occur in the first week of October,” Hultquist said. “And then we usually get a letter from the mortgagee announcing the new HECM limits for next year. [around that time]. So I usually wait until we get that ML drop to complete any changes, which is usually the first week of December.”
Industry change and a renewed need
Citing recent changes in the industry, Hultquist noted that a by-product of exiting the reverse mortgage funding (RMF) business and consolidating Finance of America Reverse (FAR) and American Advisors Group (AAG) is that effective trainers in the industry will lose their jobs. . But in the challenging business environment, it is imperative to have good product trainers in the company.
“I think the reverse mortgage educators and coaches are some of the most valuable people in our field because most people don’t understand what [the product] it is,” he said. “Even some regulators don’t quite get it, so they buy the book too. We trust educators, so it’s always important for us to publish the new edition so everyone knows the new rules.”
The industry didn’t expect rates to change as actively as they do in 2022, so the new edition also includes a broader scope in its rates section, Hultquist said.
“On the front end, they call them LTV. But on the other hand, we call them PLF, or principal limit factors, because they take into account the borrower’s age,” Hultquist said. “So we have a much wider range of rates and ages this year through 2023 just because we don’t know what the market is going to do.”
An advanced guide
Given the relatively small size of the reverse mortgage industry, a long-standing debate revolves around the advisability of bringing more mortgage professionals on board.
Because of the education imperative for 2023, Hultquist believes that advanced professionals are likely to be hired in the new year and that they will need accurate information resources.
“We have so many advanced creators panicking at this point, wondering how [they can] to diversify [their] product offerings,” said Hultquist. “We saw things really take off in January.”
Hultquist works at Fairway Independent Mortgage Corporation as a nationwide reverse education sales specialist and teaches regular reverse investing courses to prospective professionals.
“We’re a big Forward office here in Fairway, so we found that our class size was starting to double or triple. [at the beginning of the year]said Hultquist. “We have so many traditional home equity lenders looking to diversify their product offering and need a resource. They need something they can trust to find answers to their questions.”
Short chapters dedicated to answering questions about reverse mortgages help increase the book’s appeal, he said, and Hultquist hopes advanced professionals will want to diversify their product offerings in 2023.
Hear the full conversation with Hultquist on the next episode of The RMD Podcast.