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With the shift in the secondary market for reverse mortgages from Fannie Mae over to Ginnie Mae, issuers themselves now bear the responsibility and risks associated with managing the real estate owned process, a sea change for some of them.
In addition, home prices are falling and continue to fall, which makes handling these special real estate-owned assets particularly challenging, according to Darren White, vice president for default/foreclosure/REO/claims at Reverse Mortgage Solutions Inc. in Spring, Texas.
"Even for those with past REO experience, in the 'forward' mortgage market it is a very different process in the reverse world; we call it a 'niche within a niche.' If you try to handle REO in the reverse world the same as the forward market, you will lose money," White told National Mortgage News.
"The HECM REO is truly a square peg and the forward REO process is simply a round...