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felt that reverse mortgage counselors should discuss this loan using a holistic perspective that looks at factors that could affect a senior’s stay in the home and their level of dependence on the loan funds. BenefitsCheckUp was developed and is maintained by NCOA. Since 2001, more than 2.4 million people have used this online tool to find benefits programs that help them pay for prescription drugs, health care, rent, utilities, and other needs. We streamlined both FIT and BCU so they do not overwhelm our clients and help them look at the big picture. Seniors who have received counseling through NCOA have all gone through this process. Many have told us how much they appreciate the additional discussion. We have never received any complaint on this approach from lenders.
JUNE 2010
CONNECTICUT MORTGAGE PROFESSIONAL MAGAZINE
NationalMortgageProfessional.com
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flags,” are important and should be added to the overall assessment of a person’s needs and goals. BenefitsCheckUp produces a customized report which describes federal, state and some local programs for which a client may be eligible; it also provides contact information to help them apply for these benefits. For many middleincome families, the types of public programs they can get may be modest. But getting help with programs, such as weatherization, home repairs or with Meals-on-Wheels, can make the difference between being able to stay at home, and not.
Is HUD going to make FIT and BCU mandatory tools for counselors? That is our understanding. HUD is partnering with NCOA and the Administration on Why is FIT an improveAging (AoA) to provide the FIT ment on existing HECM and BCU as budget tools for counseling model? reverse mortgage counselFor people in dire financial ing. Counselors will be straits, a traditional budget required to complete a analysis can be important budget with every client to solve their immediate during the counseling ses“FIT will help counproblems. HUD also recogsion based on information selors engage their nizes the long-term conseobtained from the client clients in this deeper quences of taking a reverse using these tools. As part conversation. It is a mortgage, and FIT will help of FIT, counselors will counselors engage their review their clients’ tool to promote disclients in this deeper conmonthly budget shortfalls, cussion, not just a versation. It is a tool to proincluding extra cash needchecklist.” mote discussion, not just a ed for everyday expenses, Dr. Barbara Stucki, Vice checklist. It is a way of gethealth needs, family supPresident of home equity ting people, whose judgport and property taxes. Initiative, National Council ment may be clouded by They will also review their on Aging (NCOA) immediate needs, to think need for a lump sum long-term about how they amount to pay off existing plan on staying at home so they can get debt, make home modifications, and to the full value of this loan. meet other financial goals. FIT has counselors ask seniors a series of questions relating to risk factors that may Atare E. Agbamu, CRMS is author of not be considered a normal part of the dis- Think Reverse! and more than 130 articussion in taking out a loan. For example, cles on reverse mortgages. Since 2002, he is the person living alone? Have they had a writes the nationally distributed column, recent fall? Do they live in a house with Forward on Reverse. Through his advisostairs or other barriers? ry, ThinkReverse LLC, Agbamu advises By themselves, each of these issues financial professionals, institutions, and may not be a risk, but they can add up. regulators across the country. In a 2007 For example, seniors who live alone may national report on reverse mortgages, have few other resources so they may be AARP cited Agbamu’s work. He can be overly dependent on a reverse mortgage. reached by phone at (612) 203-9434 and If they are also in poor health and their e-mail at atare@thinkreverse.com. financial needs exceed their expectations, they may soon find themselves unable to Visit author Atare E. fulfill their borrower obligations, such as Agbamu’s blog at thinkrepaying property taxes, homeowners’ verse.com for his thoughts insurance and home maintenance. These and insights on the reverse types of risks, which we call “yellow mortgage marketplace.
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pared the marketing materials, and communicated directly with investors. Tourre allegedly knew of Paulson & Company’s undisclosed short interest and role in the collateral selection process. In addition, he misled ACA into believing that Paulson & Company invested approximately $200 million in the equity of ABACUS, indicating that Paulson & Company’s interests in the collateral selection process were closely aligned with ACA’s interests. In reality, however, their interests were sharply conflicting. According to the SEC’s complaint, the deal closed on April 26, 2007, and Paulson & Company paid Goldman Sachs approximately $15 million for structuring and marketing ABACUS. By Oct. 24, 2007, 83 percent of the RMBS in the ABACUS portfolio had been downgraded and 17 percent were on negative watch. By Jan. 29, 2008, 99 percent of the portfolio had been downgraded. Investors in the liabilities of ABACUS are alleged to have lost more than $1 billion. The SEC’s complaint charges Goldman Sachs and Tourre with violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Exchange Act Rule 10b-5. The Commission seeks injunctive relief, disgorgement of profits, prejudgment interest, and financial penalties. For more information, visit www.sec.gov.
QuestSoft survey finds RESPA tops compliance concerns for second consecutive year
According to QuestSoft’s annual compliance survey of lenders, the recently enacted fee tolerance changes to the Real Estate Settlement Procedures Act (RESPA) continue to pose the greatest mortgage compliance concern in 2010. This marks the second year that RESPA has held the top spot among the lenders surveyed. The poll rated the level of concern among 464 lenders for 12 regulatory changes affecting the mortgage industry this year. Eighty percent of respondents cited the adjustments to fee tolerance rules set forth in RESPA as a major concern for lending practices. Rounding out the top three concerns were Truth-inLending Act (TILA) changes (74 percent cited major concern) and other RESPA issues (66 percent cited major concern). “Even though RESPA’s new rules have been active for a few months, lenders are still concerned with how to comply with the fee tolerance rules and properly disclose loan terms to consumers,” said Leonard Ryan, president of QuestSoft. “Lenders are also closely watching predatory lending laws and new regulations at the state and local levels.” Changes to federal, state and local lending laws remained the fourth highest concern, with 37 percent of lenders citing these potential changes as a
major concern in 2010. Increased Fair Lending Exam scrutiny rounded out the top five with 31 percent of lenders claiming it as a major concern. Ryan said one surprising result was the lack of concern for the multi-state exams many lenders will be facing by the end of 2010; with only 15 percent reporting it as a major concern. “Even though 70 percent of QuestSoft’s client base will be subject to multi-state exams by the end of 2010, it ranked at the bottom of the survey,” Ryan said. “The placement of Truth-in-Lending changes planned for this summer as the second highest concern suggests that compliance professionals are being forced to deal with one new compliance crisis at a time.” Ryan added that since lenders are so worried with the next immediate change, they will have to rely on their compliance partners to look ahead and prepare for more long-range compliance changes. For more information, visit www.questsoft.com.
RealtyTrac finds decrease in foreclosure activity in April RealtyTrac, an online marketplace for foreclosure properties, has released its U.S. Foreclosure Market Report for April 2010, which shows that foreclosure filings— default notices, scheduled auctions and bank repossessions—were reported on 333,837 properties in April, a nine percent decrease from the previous month and a two percent decrease from April 2009. One in every 387 U.S. housing units received a foreclosure filing during the month. “There were two important milestones in the April numbers that show foreclosure activity has begun to plateau—but at a very high level that will not drop off in the near future,” said James J. Saccacio, chief executive officer of RealtyTrac. “April was the first month in the history of our report with an annual decrease in U.S. foreclosure activity. Secondly, bank repossessions, or REOs, hit a record monthly high for the report even while default notices dropped substantially on a monthly and annual basis. We expect a similar pattern to continue for most of this year, with the overall numbers staying at a high level and ripples of activity hitting the various stages of the foreclosure process as lenders systematically work through the backlog of distressed properties.” During the month a total of 103,762 properties received default notices, a decrease of 12 percent from the previous month and a decrease of 27 percent from April 2009—when default activity peaked at more than 142,000. Foreclosure auctions were scheduled for the first time on a total of 137,643 propcontinued on page 11