Reverse Mortgage Industry Boosted by New HECM Service Agreement

Last week, reverse mortgage sub-service Celink announced that it had obtained the Single Family Secretary-Held Home Equity Conversion Mortgage (HECM) asset contract from the Federal Housing Administration (FHA) and would provide a lending service for FHA-sponsored HECM reverse mortgages. For all future HECM loans issued to HUD once they reach 98% of the Maximum Claim Amount (MCA), Celink will assume servicing functions for those loans.

The selection of a new HECM service contractor has been sought by HUD since at least 2020 – during the previous administration – but service issues have always been one of the most discussed pain points by participants of the reverse mortgage industry for a long time. Borrowers are also feeling frustration with the service, according to data gleaned from the Consumer Financial Protection Bureau’s (CFPB) consumer complaints database.

The industry’s immediate reactions to the news seemed positive. Conversations between industry participants and RMD were upbeat, with some lenders and other industry participants sharing their direct views on the news.

Reactions from lenders to the news

Kristen Sieffert

According to Lender President Kristen Sieffert, leading reverse mortgage lender Finance of America Reverse (FAR) expressed encouragement on the news and congratulations to Celink on being awarded the contract.

“Finance of America Reverse congratulates Celink on this important partnership for the HECM service,” Sieffert told RMD. “Providing a positive service experience to all of our borrowers remains a core facet of FAR’s mission, as does our commitment to support and accompany clients and their families throughout the life of the loan. We are excited to see others in the industry working hard to equip customers with life-changing products and further improve the borrower experience from start to finish.

Longbridge Financial CEO Chris Mayer acknowledged the service challenges the industry has faced in the past and his optimism about the new contract.

“We are so happy for our partners at Celink and for the reverse mortgage industry that they are taking over the HUD contract,” Mayer said. “One of the challenges that our industry and the FHA have faced is that the borrower experience once the FHA takes over the service deteriorates. With maintenance taken over by Celink, there is a strong opportunity for improvement.

Chris Mayer

Adding to the optimism at Longbridge is Richard Burke, the lender’s maintenance chief.

“We are very happy to hear that Celink has won the HUD contract,” Burke told RMD. “I think this is a great opportunity for Celink to make all the necessary process improvements to make the assignment process for customers a much better transition. Celink understands the hurdles encountered when making loans to its customers and can use this knowledge to help make the entire process the best possible experience for all customers.

Kim Yowell, executive vice president of services at Fairway Independent Mortgage Corporation, is also encouraged by the news.

“Celink is a great choice and I’m excited about this growth opportunity for Celink – a long-standing company solely dedicated to the reverse mortgage industry and providing excellent service to reverse homeowners,” he said. she stated.

danhultquist_fairway
Dan Hultquist

Persistent service issues have been an issue that has needed addressing for some time, according to Dan Hultquist, national director of reverse mortgage sales training at Fairway.

“Proper service is vitally important to the health of the reverse mortgage industry,” he says. “Unfortunately, HUD’s poor maintenance has created headwinds for our sales force. Consider that over 20% of CFPB’s reverse mortgage complaints in 2021 were directly related to HUD’s contractor. Attribution to HUD’s service contract celink may be the most significant change in the industry since the non-borrowing spouse protection of 2014. It’s not just a way to fix losses in the background, it’s a way to begin to repair the damage done to the reputation of the product.”

Hultquist also shared a recent interaction he had with an affected reverse mortgage borrower.

“Yesterday, I was on the phone with a gentleman who had just lost his wife and who had trouble sleeping and eating since her death,” he says. “He desperately needed to contact our industry’s current HUD repairman. After several 90-minute waits, he was never able to get through. He called me this morning sobbing because he’s sure that he’s going to lose his house. He’s not a Fairway customer, but we need to address that to avoid a ripple effect that would further hurt the industry.”

Wider reactions from the reverse mortgage industry

Wendy Peel, Managing Director and Reverse Lending Partner at BlackFin Group, commended Celink and the NRMLA for their efforts to facilitate this transition.

Wendy Peel, Managing Director and Reverse Lending Partner at BlackFin Group
Wendy Peel

“Kudos to Celink and the NRMLA for their persistence in demonstrating compelling data for HUD to make such a change,” Peel told RMD. “For years many investors have suggested that the HECM service would benefit from having subject matter experts present. Ultimately it is the senior/borrower who should expect to see consistency in customer service.Perhaps equally important, future borrowers can benefit from lower fees.It’s an exciting time for reverse mortgages.

Elly Johnson of All Reverse Pro and Co-Chair of the NRMLA’s HUD Matters Committee was also thrilled to hear about the new contract.

“This is great news, and something many in our industry have been advocating for some time,” she told RMD. “This is another step in the right direction. Celink’s expertise in maintaining HUD HECM assets will go a long way in maintaining the product and providing a better level of customer service.

The importance of developing a process for managing reverse mortgages was highlighted in comments by Jeffrey Birdsell, vice president of loan programs at reverse mortgage (LOS) origination system provider ReverseVision.

“Managing reverse mortgages is a very specialized process and it takes years to develop a system that supports this type of management,” Birdsell explained. “It also takes years to put staff and processes in place to support seniors and their use of their reverse mortgage. Being able to deeply understand HECM products and how maintenance affects seniors is also something that is learned over time. If the loans are not handled properly or in a timely manner, it is a reflection on HUD, HECMs and the industry.

Understanding the general complexity of developing the reverse mortgage management process, the likelihood of difficulty is high, especially for any organization with more limited knowledge of reverse mortgages, Birdsell said. This is why the appointment of Celink should prove encouraging for the industry, he explained.

“Hearing that Celink has won the contract brings a lot of comfort to the industry, knowing that there will be no transition period as a new repairer gets up to speed, and [the industry knows] that Celink is already an expert at working with seniors, families and estates with these loans through the maturity process,” he said. “This is a big win for HUD, the industry, and especially for seniors who have and depend on their HECM loans.”

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