Colorado’s First Certified Reverse Mortgage Specialist  - (303) 467-7821

Reverse Mortgage Blog

Collateral Risk Assessment Update

- Tuesday, November 06, 2018
Collateral Risk Assessment Update

At the end of October, I attended the National Reverse Mortgage Lenders Association (NRMLA) annual conference.  We discussed FHA’s new “Collateral Risk Assessment (CRA) at length and I wanted to update you on what I learned.

You can read a quick overview of the program by going to my blog from October 2, 2018, here.

Early results from just less than a month in, show that one in five appraisals are being pulled for a 2nd appraisal.  Of those 2nd reviewed appraisals, one-third are coming in with a higher value than the first, one-third are lower and one-third right about the same.  Unfortunately, the lenders are required to use the lower value, even if the 2nd appraisal comes in higher.

I understand the concern from FHA’s viewpoint, but the reports I saw of 37% of the appraisals reviewed that were in question were appraisals from 8-10 years ago before we had Home Value Code of Conduct, (HVCC).  HVCC was a law that became effective in 2010 to prevent loan officers from trying to persuade appraisers to increase the value of the home.  Also, appraisals completed 8-10 years ago were done during a market downturn that could have affected the overall value the appraiser ultimately decided upon.

My whole issue with the HECM changes over the last 4-5 years is that FHA does not allow previous changes to take effect before they decide to make more. 

In 2013, FHA made the largest adjustment to the principal limit factors, (PLF) to that point.  Reductions to the PLF table lower the amount of money a borrower can receive.  Just 18 months later, they came out with financial assessment, making it more difficult for borrowers with limited income and/or credit issues to qualify.  Then just 18 months after that, October 2017, FH came out with another lowering of the PLF table, (the fourth since 2009), as well as lowering of the floor rate, which dramatically reduced the amount a borrower can receive from a reverse mortgage.  Now this Collateral Risk Assessment change, with the hint of more changes on the horizon.

I don’t know for sure, but to my understanding, these changes are mostly based on the book of business from about 2006 – 2014.  Most of these loans were made before CVCC and all were made before financial assessment (FA) began.  In my opinion, we should let the old book of business age out and compare it to what’s happened since FA before we make so many changes to the program that it’s not even worth it for customers to do. 

What is maddening from a loan officer’s point of view is that it is very difficult to do business when the rules are constantly changing.   The one bright spot to all these changes FHA is making is that it’s opening the market for more proprietary loan programs that are not reliant on the federal government.

Please stay tuned and I’ll make sure to keep you up to date on all relevant changes in this constantly changing industry.  Also, if you are considering a reverse mortgage, now is a great time to take a closer look while rates are still low and values are still strong…and before any more changes take place.

Free Reverse Mortgage E-Book

Colorado Reverse Mortgage Guide.

All the facts you need to make an informed decision whether a reverse mortgage is right for you.

Subscribe to: P - 7 Mistakes To Avoid Subscribe to: Newsletter
I would you like a Free Consultation to get all of my questions answered.

Bruce Simmons
I absolutely love what I do - working with senior homeowners to help them live a more comfortable, flexible and secure retirement. I have the absolute best customers in the world, and even though I worked in the forward mortgage business for a number of years, I could never go back to doing conventional loans. I'm a 100% reverse mortgage specialist.
 

Comments

Comment


No Very





Captcha Image

FREE REVERSE MORTAGAGE E-BOOK

Colorado Reverse Mortgage Guide.

Get this 28 page Consumer Guide packed with all the facts you need to make an informed decision to see if a reverse mortgage is right for you.

Subscribe to: P - 7 Mistakes To Avoid Subscribe to: Newsletter

I would like a Free Consultation to get all of my questions answered.




Recent Posts


Tags


Archive

Contact Info

Bruce Simmons Reverse Mortgage Specialist

American Liberty Mortgage, Inc.
Bruce E. Simmons, CRMP
Reverse Mortgage Manager
NMLS #409914

1932 W 33rd Ave
Denver, CO 80211

Direct: (303) 467-7821
Cell: (303) 513-2748
Toll Free: 1-877-467-7801

Fax: (303) 600-7871
bruce@almortgageinc.com

Licensing: Colorado LMB #100036937 // American Liberty Mortgage, Inc NMLS #1462
Denver Website Design IOBI Systems