|  |  |  | | | | | Reverse Mortgage Daily | | | | | | | | | | | | | | | | | | | Reverse mortgage originators hoping that the Federal Reserve’s final interim rule ending the Home Valuation Code of Conduct would eliminate the use of Appraisal Management Companies are out of luck. According to the Department of Housing and Urban Development, the Fed’s final interim rule has no direct implications on the agency's appraisal independence guidelines so far. ”We are still reviewing the Interim Rule as well as the Dodd-Frank Bill and at this juncture do not anticipate the need for any significant policy changes,” said Lemar Wooley, spokesperson for HUD in an email to RMD. AMCs active in the industry tell RMD they haven’t seen any changes that will drastically change alter the business. “Much of the Fed policy solidifies the rules our industry has been guided by for over a year with a few minor differences,” said Erik Richard, CEO of Landmark Reverse, an AMC that focuses on the reverse mortgage industry. ”We are curious how our competitors will work to comply with the customary and reasonable fee language in the new regulations.” In 2009, HUD published its own requirements to ensure there is a buffer or firewall between the appraiser and loan originators as well as a “reasonable and customary” free requirement. The Fed’s final interim rule is designed to be consistent with HUD’s guidance but changes a bit according Richard. The Fed requires appraisers be paid a customary and reasonable fee for services performed in the geographic market in which the property being appraised is located. These rates are established by objective third-party information, including fee schedules, studies, and surveys prepared by independent third parties such as government agencies, academic institutions, and private research firms. “Our business model has always been you get what you pay for, so we pay our appraisers a premium to work with us,” said Richard. ”It would seem that other AMCs will have to either raise appraisal fees or cut their profit margins up to 50% unless they can convince the government that $200.00 is a reasonable fee for an assignment.”  | | | | | | | | | | | | | | | | | | | | | | | | | Ginnie Mae announced it's increasing net worth requirements for Single Family issuers for the second time in three months to ensure its requirements align with the rapidly changing housing finance market. Ginnie Mae is increasing the current $1 million base net worth requirement to $2.5 million and changing the formula for calculating additional requirements above the base. Previously, net worth requirements were calculated as $2.5 million plus one percent for mortgage-backed securities (MBS) outstanding principal balance between $5 and $20 million and 0.2 percent above $20 million will be phased in for all current single-family issuers. Now, additional net worth will be calculated as .2% of the issuer's remaining principal balance, plus the amount of available commitment authority. Institutions seeking issuer approval will be required to meet the new minimum net worth requirements immediately, while existing issuers will have until October 1, 2011. Ginnie Mae's liquid asset and institution-wide capital ratio requirements will remain the same as announced in August. It's not clear whether these changes apply to HMBS issuers and calls to Ginnie Mae were note returned at press time. Lenders have been waiting for the new requirements after approval of new HMBS issuers was suspended to review the risks associated with the program.  | | | | | | | | | | | | | | | | | | | | | | | | | Lawsuits can bring out some interesting information and the latest against Seattle Mortgage is a perfect example. Bank of America acquired Seattle Mortgage’s reverse mortgage division in 2007 which included a portfolio of over $4 billion reverse mortgages, approximately 400 SMC employees as well as a retail sales force of more than 200 associates in 25 states. Terms of the deal were not disclosed until now… Business Journal is reporting that court documents show Bank of America paid $220 million for Seattle Mortgage. The information comes after three former employees of Seattle Financial Group are suing to recover $5.5 million they lost in 2009 after their employment was terminated. The former employes are seeking up to $3.6 million apiece that they expected to receive from a company investment, called the Phantom Stock Plan. According to the documents filed Friday, the issue relates to actions in 2006 involving the plan. The board voted to redeem the shares of two of its own members after Seattle Bank sold its reverse mortgage unit to Bank of America for $220 million, the Friday suit alleges. In addition to the companies, the suit names Benjamin Smith, his son-in-law and Seattle Financial CEO Robert Story Jr., David Smith and Robert Smith, Sr. Seattle Financial Group is a family-owned business owned by the Smith family. Seattle Financial Group board members were compensated $74 million, using money from the BofA sale, for their 52 percent stake in the stock plan. Other board members, including Seattle Financial's CEO, received $6 million in dividends from their shares. According to Friday’s complaint, the fine print in the plan said the entire investment plan should have been terminated at that time and all investors paid because such a large redemption had been made. Seattle Financial sued by old employees  | | | | | | | | | | | | | | | | | | | | | | | | | Data from the S&P Case-Shiller shows a deceleration in annual growth rates in 17 of 20 MSAs and the 10 and 20 City Composites in August compared to what was reported for July 2010. The 10-City Composite was up 2.6% and the 20-City Composite was up 1.7% from their levels in August 2009. However, home prices decreased in 15 of the 20 MSAs and both both Composites in August from their July levels. During August, 12 of the 20 MSAs posted negative annual growth rates two more than what was reported in July. While still negative, three of the 20 MSAs saw improvement in year-over-year growth rates in August as compared to July. They are Charlotte, Cleveland and Las Vegas with annual growth rates of -3.4%, -0.4% and -4.5%, respectively. Annual growth rates slowed down in the three California cities, with Los Angeles, San Diego and San Francisco posting annual gains of +5.4%, +6.9% and +7.8%, respectively – a significant drop from the +7.5%, +9.3% and +11.2% reported for July. 
"A disappointing report. Home prices broadly declined in August. Seventeen of the 20 cities and both Composites saw a weakening in year-over-year figures, as compared to July, indicating that the housing market continues to bounce along the recent lows," says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. "Over the last four months both the 10- and 20-City Composites show slowing growth, after sustaining consistent gains since their April 2009 troughs. "The month-over-month growth rates tell the same story. Fifteen of the 20 MSAs and the two Composites saw a decline in the month of August as compared to July levels. The 10- and 20-City Composites fell 0.1% and 0.2%, respectively. Indeed, the housing market appears to have stabilized at new lows. At this time, it does not seem that any of the markets are hanging on to the temporary momentum caused by the homebuyers' tax credits."  | | | | | | | | | | | | | | | | | | | | | | | | | Existing home sales jumped 10 percent in September to a seasonally adjusted annual rate of 4.53 million according to the National Association of Realtors. While two months of increases in home sales is good sign, the seasonally adjusted rate remains 19.1 percent below the 5.60 million-unit pace in September 2009, when first-time buyers were ramping up in advance of the initial deadline for the tax credit last November. "A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium," said Lawrence Yun, NAR chief economist. "But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions." The national median existing-home price for all housing types was $171,700 in September, which is 2.4 percent below a year ago. Distressed homes accounted for 35 percent of sales in September compared with 34 percent in August; they were 29 percent in September 2009. Another survey from NAR shows that first time home buyers purchased 32 percent of homes in September, almost unchanged from 31 percent in August. Investors were at an 18 percent market share in September, down from 21 percent in August; the balance of purchases were by repeat buyers. All-cash sales were at 29 percent in September compared with 28 percent in August. Single-family home sales increased 10.0 percent to a seasonally adjusted annual rate of 3.97 million in September from a pace of 3.61 million in August, but are 19.5 percent below the 4.93 million level in September 2009. The median existing single-family home price was $172,600 in September, down 1.9 percent from a year ago. Existing condominium and co-op sales rose 9.8 percent to a seasonally adjusted annual rate of 560,000 in September from 510,000 in August, but are 16.2 percent lower than the 668,000-unit level one year ago. The median existing condo price5 was $165,400 in September, down 6.2 percent from September 2009. For more information on the numbers, see here.  | | | | | | | | | | | | | | | | | | | | | | | | | After the initial roll out of the HECM Saver, Vick Bott, Deputy Assistant Secretary for the Department of Housing and Urban Development said the agency would like to see it represent a minimum of 30 percent of all reverse mortgages it insures. Released earlier this month, the product provides consumers with less in proceeds but at a much lower cost compared to the traditional Standard HECM. During an interview with Reverse Fortunes, Bott said the decision to develop the HECM Saver was two fold. First, even before she joined HUD, the market had been asking for a low cost product that didn't require borrowers to leverage all the equity in their home. Second, when the Obama Administration released its FY 2011 budget, the program was reported to need a $150 million subsidy to break even for the year. The creation of the Saver product will address the needs of the marketplace and have a positive net effect on the ongoing risk association with the traditional product. “It’s important that the industry provides seniors the Saver product because it subsidizes the standard product,” she said. In recent years, data from the Department of Housing and Urban Development shows the average reverse mortgage borrower is getting younger and Bott said the HECM Saver is likely to appeal to this group of seniors. ”It absolutely trends towards the younger senior, someone looking to supplement money that they lost in the stock market,” she said. Even with all this potential, Bott admits it could take some time for the industry to fully adopt the new product, but the agency hopes to get a better idea about where volume will end up by January or February. ”We certainly know the demand is there,” she said.  | | | | | | | | | | | | | | | | | | | | | | | | |  Reverse Fortunes Weekly Podcast Episode #126
Final segment of an interview with Vicki Bott, HUD’s Deputy Assistant Secretary, where she discusses the new PLF factors, HECM Saver, and her outlook on the reverse mortgage industry. To listen login or become a free member to listen to past & current episodes Talking Points: - Goodbye HVCC?
- Harder to compete: YSP and smaller lenders
- Urban acquires the biggest brand image for reverse mortgages
- Banks resume foreclosures in many states
Knowledge & Insight: Knowledge & Insight: Part 3/3 of our exclusive interview with Vicki Bott, HUD Deputy Assistant Secretary of Single Family Housing. Outlook for the coming year, new lending ratios and the HECM Saver. Listen Now "Reverse Fortunes is the ultimate resource for reverse mortgage professionals providing the technology, training and marketing to grow your business. We are your one-stop resource for those committed to taking their business to the next level."  | | | | | | | | | | | | | | | | | | | | | | | | |  As part of the Wall Street Journals Encore Report or the newly titled "Next" section, the publication features a quick note about the new HECM Saver.
With lower upfront fees, the product is better for people with short-term needs, says Barbara Stucki, vice president of home-equity initiatives for the National Council on Aging, a Washington, D.C., advocacy group. According to the WSJ, the new section is about finance, health, travel and lifestyles—have always sought to educate and inspire. The Journal believes the name better conveys the overall mission: to help people dream about, plan for and enjoy the next phase of their lives.  | | | | | | | | | |  | |  | |  |
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