TheMReport

MReport May 2018

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TH E M R EP O RT | 49 SERVICING THE LATEST O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T Protecting Veterans New legislation will permanently extend foreclosure protections for veterans and their families. T he United States Senate has passed a legislation designed to help protect military servicemembers, veterans, and their families from foreclosure. Sponsored by Sen. Sheldon Whitehouse (D-Rhode Island), the legislation was included as part of the larger banking regulation bill passed by the Senate and makes permanent a one-year foreclosure grace period for service members leaving active duty. "Those who serve our country ought to be given a fair chance to get their financial affairs in order when they return home," Whitehouse said on the passing of the legislation. "That's why I've fought for years to extend and make permanent important foreclosure protection for servicemembers and veterans. I'm proud my bill to help recognize the noble work of our men and women in uniform is one step closer to the finish line." Following a report by the Commission on the National Guard and Reserves, Congress first extended the period of foreclosure protection from 90 days to nine months in 2008, working under the auspices of the Servicemembers Civil Relief Act. According to that report, "the threat of foreclosure is a stressor that need not be placed on members of the armed forces during the first months of their return to civilian life." The foreclosure grace period for servicemembers was extended to one year beginning in 2012, but it was initially instituted as a temporary measure. The grace period was set to expire in 2019, but Sen. Whitehouse was working to pass legislation that would upgrade it to permanent status for several years. Erik Wallin, Executive Director of Operation Stand Down Rhode Island, said, "Senator Whitehouse's bill is particularly important in Rhode Island because we have one of the most deployed National Guard forces in the country. This bill provides servicemen and women with the relief they need as they transition from periods of active duty back into civilian life." Addressing Reverse Mortgage Concerns HUD faces advocacy group concerns about HECM program. R everse mortgages have become a popular—and sometimes controver- sial—way for Americans to make use of the accrued equity in their homes, especially for older homeowners. The latest controversy surrounds HUD foreclosures on homes participat - ing in the home equity conversion mortgage (HECM) program, and more specifically foreclosures that involve the spouses of deceased borrowers. Now a pair of advo - cacy groups have raised concerns about the program, and HUD has responded. According to the California Reinvestment Coalition and Jacksonville Area Legal Aid, of the nearly 600 non-borrowing spouses who requested aid from HUD to avoid foreclosure on their homes, 317 received assis - tance and 132 were denied. The two advocacy groups arrived at those figures via HUD data retrieved through a Freedom of Information Act request. Another 142 requests were still shown as pending. (This is only a small portion of those non-borrowers who could theoretically request assistance after the death of their spouse—the Washington Post estimates there may be as many as 12,000 non-borrowing spouses under the HECM program.) Based on the HUD data, the top three reasons applicants were denied assistance under the program included requests for assistance that were submit - ted more than 120 days after the borrower's death, instances where the loan balance and net principal limit did not meet FHA's toler - ance levels, and cases of "deficient documentation." "We can all agree that we should do everything we can to keep widowed seniors in their homes and to prevent all unnecessary foreclosures," said Kevin Stein of the California Reinvestment Coalition. "It is not acceptable that any senior should fall through the cracks into home - lessness due to inadequate public policy. We must fix this problem." The advocacy groups have recommended HUD immediately begin sending notice letters to all borrowers and non-borrowing spouses, explaining what is need - ed for non-borrowing spouses to remain in the home in the event of the death of their spouse. However, HUD representatives say that the problem is overstated, largely due to a misinterpretation of the data. HUD public affairs specialist Brian Sullivan told Reverse Mortgage Daily, "Based upon data we gave them, they put two and two together and got something other than four." According to Sullivan, the HUD stats quoted by the advocacy groups only represent "applica - tions for loan assignments under the 'mortgagee optional election' (MOE), a program in which HUD pays the insurance claim but quali - fied non-borrowing spouses are allowed to remain in the home." Sullivan explained that the data is only used "to signify the num - ber of the assignments or requests for these assignments, as opposed to the number of borrowers being kicked to the curb." Sullivan also referenced HUD mortgagee letters which explain the subject and requirements in detail. "That is why counseling is so critical in the origination of these mortgages," Sullivan told Reverse Mortgage Daily. "People have got to understand what a reverse mortgage is."

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