Have the New HUD Rules for HECM Loans Also Affected Your Qualification Filters?

By: Jeroen Rozenberg

ReviMedia Will Help You Target and Access the Right Borrowers 

FHA-approved lenders such as yourselves are potentially still trying to grasp the effects of the new reverse mortgage rules enacted by HUD at the beginning of October. The rules had been announced in recent months as an attempt to future-proof the Home Equity Conversion Mortgages (HECM) program. Highly popular among senior homeowners, HECM has suffered from budgetary issues that have turned it into a liability for taxpayers in recent years. The new rules are intended to put the program back on track, by increasing insurance premiums and slashing the amount of cash borrowers can access.

Tough New Measures

Reverse mortgages still remain a popular loan product for lenders to offer home equity financing that will allow senior homeowners to defer repayment of their existing home loans until death or sale of their home. Since the 1980s, HUD has been backing reverse mortgages through its HECM program. This program contains provisions that, among other things, protect seniors from owing more on their reverse mortgage than their property is actually worth. Unfortunately, partly because of volatility over interest rates and higher numbers of foreclosures, the program has been losing money for years. As of 2016, it was $7.7 billion in the red.

This summer, HUD Secretary Ben Carson announced sweeping revisions to help fix the ailing HECM program. Starting October 2, upfront insurance premiums on HECM reverse mortgages hiked from as low as 0.5% to a flat 2.0% of the balance. The new rules require insurance premiums to be more heavily front-loaded, which means lenders now face higher upfront costs on behalf of borrowers. Plus, loan amounts are now significantly reduced – dropping on average from about 64% to 58% of the home’s value, according to reporting by The Wall Street Journal. In other words, under the revised the program, lenders and borrowers are forced to make do with less.

ReviMedia, the Wise Investment

Marketing budgets are often the first areas to feel the squeeze whenever the belt is tightened. At the same time, with reverse mortgage lenders now facing tougher obstacles, marketing has never been more important. The best solution is to choose a highly efficient, data-driven marketing solution.

ReviMedia offers exactly that. We specialize in a performance based suite of lead generation services. Through owned and operated web properties like LoansOnline.com, it effectively captures valuable information on user intent. Its sophisticated lead generation platform PX, allows lenders to optimize their marketing campaigns through patented lead scoring technology. Invalid leads are filtered out so no precious marketing resources are wasted. With ReviMedia, lenders enjoy an excellent return on their marketing investment. Even with the current market changes ReviMedia will allow you to adjust your targeting easily and refocus on the consumers that make the most revenue for you.

Contact our team of mortgage performance marketing experts.