|  |  |  | | | | | Reverse Mortgage Daily | | | | | | | | | | | | | | | | | | |  Falling property values, rising business costs, fraud and greater regulatory scrutiny are among the biggest changes affecting reverse mortgages today according to an op-ed article from Bob Yeary, CEO of Reverse Mortgage Solutions.
Where does that leave the reverse mortgage market? Clearly, the business is changing. Yet it can also be rewarding for those who are up to the challenge according to Yeary. In addition to the social benefit, the fundamental financial logic behind future growth in the reverse mortgage business remains convincing. Currently, there are 34 million Americans aged 65 or older. By 2030, that number is expected to more than double, to 71 million, or 21% of the population. Moreover, there are presently more than 12 million seniors in the U.S. who own their homes free and clear, owning an estimated $4 trillion in equity. That is a lot of collateral to be tapped. What's more, the industry has achieved only 2% market penetration. So, there’s clearly a lot of room to improve, but for whom and how? The reverse mortgage business is still largely a “cottage” industry, with exceptions like Bank of America and Wells Fargo, and other big lenders are also starting to take notice. For example, Quicken Loans recently moved into reverse mortgages through One Reverse Mortgage, an existing company it acquired and retooled. Read the rest at the link below. The Continued Evolution Of Reverse Mortgages  | | | | | | | | | | | | | | | | | | | | | | | | | The Mortgage Bankers Association (MBA) is requesting that the Department of Housing and Urban Development revise the penalty structure for servicers who fail to initiate foreclosure by the agency prescribed deadline. Over the years, HUD has placed servicers under increased performance pressure by reducing the timeframe to initiate foreclosure from 12 months to 6 months according to the MBA. "This change has provided HUD with significant cost savings, but has increased the risk for servicers that must now manage loss mitigation and foreclosure timelines concurrently," said John Courson, MBA President and CEO. ”As partners with FHA, we believe it is appropriate and desirable to create a penalty structure that is commensurate with the loss to FHA. Servicers who fail to perform should be required to make FHA whole for any losses resulting from their delay in getting the property conveyed to HUD.” The MBA is requesting a maximum penalty of 30 days of interest for each month the initiation of foreclosure is delayed because of the increased complexity of managing both the loss mitigation and foreclosure timeframes and their competing objectives. HUD currently curtails debenture interest when a servicer doesn’t begin a foreclosure within six months of default. The MBA feels the penalty is arbitrary and in need of revision.  | | | | | | | | | | | | | | | | | | | | | | | | | Research released by the National Association of Home Builders (NAHB) shows that benefits of housing related tax deductions, including mortgage interest deductions, generally decline in value as taxpayers get older. These findings are a counter argument to the claims that mortgage interest deductions exclusively benefit high-income households, as this research clearly shows that younger, first-time homeowners seem to benefit greatest. “Opponents falsely argue that the deduction is only for the wealthy but it is clear that the mortgage interest deduction is also of great value to younger homeowners,” said Robert Dietz, Assistant Vice President for Tax and Policy Issues for NAHB. “Any tampering with this deduction would have a disproportionate impact, as a share of household income, on younger homeowners who have relatively higher mortgage interest payments. These are households who have growing demand for homeownership due to marriages and children.” Conducted for the first time by the NAHM, the research outlining how various tax deductions are used by different age groups using data from the Internal Revenue Service Statistics of Income (SOI). Results showed that the biggest beneficiaries of the various tax deductions in general are younger households, which typically have bigger mortgages, smaller amounts of home equity, and expanding family size. The average mortgage interest deduction is at its peak for taxpayers from 35 to under 45, followed by the 18 to 34 age group and declines as taxpayer age increases. The reason for this result is that mortgage interest deductions peak soon after the taxpayer switches from being a renter to a homeowner and declines over time as the homeowner pays down their existing mortgage debt and increase their home's equity. Research also found that the largest share of those claiming deductions for mortgage insurance was the 18 to under 45 age group, at 59 percent. However, for smaller tax deductions, like state and local real estate tax, the value of real estate tax deductions increase as the taxpayers get older. This can be attributed to the increase in home value, as the household income and wealth increase. Both housing deductions, mortgage interest and real estate taxes, are considered a share of household income for these older taxpayers. On the other hand, non-housing deductions, such as medical expense, charitable contribution, and investment interest expense deductions, increase for taxpayers in the 65 and older age group. To read the full NAHB Report, “Housing Tax Incentives: Most Helpful to Younger Households” see here. Written by Kelly Mellott  | | | | | | | | | | | | | | | | | | | | | | | | |  Looking to spark more interest in the reverse mortgage market, India's National Housing Bank is talking with the Life Insurance Corporation (LIC) to enter the business.
RV Verma told the Financial Chronicle that if LIC would join, other life insurers who remained on the sideline could choose to offer the product. "We are talking to LIC to impress upon them the need to consider tying up with a bank to offer a reverse mortgage product. LIC's entry would send the right signals to the market. That should help reinvigorate the market," Verma said. Despite being over a year old now, the new revised mortgage scheme that was worked out as a tie-up between an insurer and banks, Star Union Dai-ichi Life Insurance (SUD) has been the only life insurer that has ventured into the scheme. However, several banks, including Central Bank of India, State Bank of India and Punjab National Bank, have joined hands with SUD to offer the product. The revamped reverse mortgage, which was devised by NHB, was launched in October 2009. Read more here.  | | | | | | | | | |  | |  | |  |
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