Reverse Mortgage Broker Advisor Fees Eliminated

by Luke Helm on September 3, 2008

In response to the Housing and Economic Recovery Act of 2008 (HR 3221), Bank of America has announced that it will no longer accept reverse mortgage applications containing a broker advisor agreement. I suspect that other reverse mortgage lenders are likely to interpret the new law in the same way and follow suit. This means that non-FHA approved brokers will no longer be able to receive the common 25% “application assistance fee” (read: referral fee) on the FHA reverse mortgage.

If you do not work under an FHA-approved broker and have been offering reverse mortgages to your clients, this means that you better find an FHA-approved broker to work under (or have your broker obtain FHA –approval).

The good news is that this same bill will increase the FHA 203(B) (HECM reverse mortgage) lending limit. This means that senior homeowners, whose homes are currently worth more than the lending limit for their area, will likely see an increase in the amount of money available to them under the FHA HECM reverse mortgage. The specific increases for each county are still under review with HUD.

Luke
Reverse Mortgage Pro

Tagged as: housing and economic recovery act, hr 3221, national housing act, reverse mortgage

  • "I suspect that other reverse mortgage lenders are likely to interpret the new law in the same way and follow suit. "

    Luke, you are correct. I was on a conference call with HUD on August 4th for FHA Modernization HR 3221 and they plainly stated no more 'broker advisor program' for non-approved shops.
  • Hi, my name is Aubrey, I spent 15 years in the mortgage business and got out around three years ago. Reverse mortgages were just taking root then and the majority of LO's sold against them.

    I was wondering in wake of the current land devaluation aren't speculative loans bad for the mortgage industry as a whole? I mean, FHA is being stretched to the limit trying to keep up with demand and stay solvent. What happens when all of these houses come to term?
  • I am glad to see the elimination of the broker advisor agreement. I think it eliminates the misguided information seniors are receiving from brokers uneductated on the reverse mortgage product. Brokers are receiving compensation for turning over the name and number to a lender without doing the work involved in the transaction. This allows the senior to deal directly with a reverse mortgage originator who is experienced in handling thier transaction.
  • "This means that senior homeowners, whose homes are currently worth more than the lending limit for their area, will likely see an increase in the amount of money available to them" Yay!

    Mortgage Broker Perth
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