"It specifically wants to reduce paperwork and increasing borrower flexibility while maintaining protections against defaults. NRMLA wrote that since its introduction in 2015, the HECM financial assessment has helped reduce reverse mortgage foreclosures due to property tax and insurance defaults. NRMLA said it supports maintaining FA's effectiveness, but it asks for streamlining procedures, reducing documentation burdens, and aligning HECM underwriting with FHA's forward mortgage program."
"The trade group recommended allowing borrowers to pay off unsecured debt, such as credit cards or personal loans, at closing. The practice, which is already authorized under the 2017 HECM Final Rule, would reduce post-closing defaults and make HECMs more competitive with proprietary reverse mortgage products. NRMLA also called for simplifying income verification. Current rules require two forms of Social Security verification, but the group suggested allowing a single proof of income."
NRMLA proposed multiple changes to HECM and HMBS programs, centering on streamlining the HECM financial assessment (FA) process to reduce paperwork and increase borrower flexibility while preserving protections against defaults. NRMLA credited the FA, introduced in 2015, with reducing foreclosures tied to property tax and insurance delinquencies and supports retaining FA effectiveness. The group recommended aligning HECM underwriting with FHA forward-mortgage standards, permitting payoff of unsecured debt at closing to cut post-closing defaults, simplifying income verification through single SSA proof or electronic verification and waivers for low-risk, high-FICO borrowers, shortening HOA payment history requirements, and easing retirement-asset documentation for older borrowers.
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