NRBA “Members Only” Education Webinar
HECM REO Guidelines from RMS
Thursday December 4th 2025
10:00 am PST /12:00 Noon CST / 1:00pm EST
Join us for an informative session on HUD’s latest guidelines for managing Home Equity Conversion Mortgage (HECM) Real Estate Owned (REO) properties. We’ll cover key updates from HUD Handbook 4000.1 and recent Mortgagee Letters, including changes to post-foreclosure timelines, REO disposition strategies, and servicer responsibilities. This webinar will provide practical insights on compliance, documentation requirements, and best practices for asset managers, servicers and REO brokers navigating the evolving reverse mortgage landscape.
Hosted by our own NRBA Director – Cliff Ponte
With Special Guests: Nick Hernandez and Michele Post
Asset Managers with REO Management Solutions (RMS)
Please do not share this outside the membership
Click Here for the video
Quick recap
The meeting focused on a webinar presentation by Nick Hernandez from RMS discussing reverse mortgages and HECM products, including their unique features, borrower requirements, and financial implications. The discussion covered property management processes, marketing strategies, and handling occupied properties, with emphasis on the importance of proper appraisals, title documentation, and communication with asset managers. The session concluded with insights on property inspections, sales processes, and the challenges of managing older properties, while highlighting the need for agent relationships and proper documentation of property conditions.
Summary
Reverse Mortgage Webinar Discussion
Michael hosted a webinar with Nick Hernandez from RMS to discuss reverse mortgages and HECMs, following up on a previous discussion at the BDS in Orlando. The webinar was attended by approximately 200 registered participants, and Michael noted that the session would be recorded for a video replay next week. Despite some technical difficulties with Michelle’s access, the webinar began with Chris and Nick ready to present, while Michael worked to resolve Michelle’s connection issues.
HECM Reverse Mortgage Overview
Nick, a 15-year veteran at RMS, discussed the HECM reverse mortgage product, explaining its unique features compared to traditional REOs. He highlighted the importance of marketable title and the role of appraisers in determining property values, emphasizing that agents should meet appraisers at the property to facilitate quick agreements. Nick also covered the borrower requirements, property and financial criteria for HECM loans, and the loan trends, noting that reverse mortgages are set up to default, primarily due to the borrower’s death or failure to pay taxes and insurance.
FHA Foreclosure and Title Process
Nick explained the process of default and foreclosure for FHA-insured loans, highlighting the importance of the marketable title period for maximizing investor returns. He detailed the steps involved in establishing marketable title, including eviction dates, vacant property determinations, and the expiration of redemption periods in certain states. Nick also provided examples to illustrate the differences between pre-180 and post-180 marketable title scenarios, emphasizing the significance of valid interior appraisals and the impact of closing costs on investor reimbursement from HUD.
HUD Property Sales and Appraisal Requirements
Nick explained the financial implications of HUD-insured properties, emphasizing that investors lose money if sales prices fall below appraisal values and must cover preservation expenses after the HUD-insured window. He detailed the marketing process, noting that properties must be sold at interior appraisals during the marketable title period and that HUD may approve 95% sales, though this is rare. Nick also discussed the $2,500 HUD allowance for preservation expenses from default, highlighting that this amount has not changed since 2010 and is typically spent before REO, leading to frustration among agents who lack visibility into the 50002 process for additional funding.
HUD Occupancy Challenges and Solutions
Nick discussed the challenges with HUD’s approval process for repairs, emphasizing the need for detailed bids and photos. He highlighted the six types of occupied properties, including former borrowers, non-borrowing spouses, tenants, heirs, unauthorized occupants, and squatters. Nick noted that approximately 40% of their inventory is currently occupied and outlined the process for handling personal property evictions, with RMS using a $500 garage sale value threshold. He also mentioned initiatives to expedite the process of removing occupied properties, including cash-for-keys programs that HUD now reimburses up to $7,500 for a 30-day move-out.
HUD Cash for Keys Strategy
Nick discussed strategies for managing occupied properties, emphasizing the importance of the new HUD reimbursement policy for “cash for keys” programs, which has made them more attractive to clients. He highlighted that HECM properties are typically older homes with significant deferred maintenance, noting that approximately 80-85% of these properties are not FHA financeable. Nick stressed the need for agents to be proactive in conducting property assessments, determining repair needs, and leveraging cash for keys options to expedite the sale process. He also encouraged agents to fully understand the properties they list and to use every opportunity to promote cash for keys to potential occupants.
Eviction Management and Property Marketing
Nick discussed strategies for managing properties facing eviction, including negotiating cash-for-keys options, which are now partially reimbursed by HUD. He emphasized the importance of marketing properties while occupied, using tactics like offering gift cards to gain access for appraisals. Nick also highlighted the need to meet appraisers at properties, provide detailed property condition information, and prepare contractor bids to ensure accurate valuations. He noted that some clients are willing to pay for contractor bids upfront to avoid potential losses during extended marketing periods.
Enhancing Property Marketing Strategies
Nick discussed the importance of email communication over phone calls for tracking purposes and emphasized the need to notify asset managers of unusual circumstances, such as fires or significant property issues. He stressed the significance of high-quality MLS photos, especially for online buyers, and highlighted the necessity of updating photos after property improvements. Nick also outlined the expectations for agents regarding utility management, task updates, and the completion of sales contracts within specified timeframes. He emphasized that marketing higher-value assets requires more detailed preparation and professional photography, and he discouraged agents from requesting repairs that could increase property values beyond the client’s expectations.
Real Estate Management Best Practices
Nick explained the seriousness of contract terminations and reassignments in real estate, emphasizing that they are not personal but sometimes necessary for fresh perspectives. He highlighted the importance of attention to detail, such as proper MLS photos and property maintenance, as asset managers often notice issues that could affect client satisfaction. Cliff and Michele discussed the challenges of managing properties, including dealing with trash and the need for regular inspections, and Michele encouraged agents to stay active and maintain communication with the team to ensure continued utilization.
HUD Property Management Strategies
The meeting focused on property management and sales processes, particularly for HUD properties. Michele and Nick discussed the need for coverage in rural areas and emphasized the importance of regular property visits and timely responses to issues. They addressed questions about staging properties, with Michele noting that while staging can help attract interest, physical staging should only be done with approval. The discussion also covered short sales, the REO Central platform, and title issues, with Nick explaining that while there is a hard deadline for marketable title, extensions are sometimes allowed in specific cases.
HUD Property Inspection Process Updates
The meeting focused on discussing various aspects of property inspections, appraisals, and sales processes for HUD properties. Nick and Michele explained that appraisers should contact agents for property access, and agents should notify asset managers if appraisers fail to do so. They clarified that special assessments for condos are typically not paid by HUD or clients, except for arrearages up to the date of closing. The group discussed the challenges of dealing with older properties, including potential lead-based paint issues and the rarity of 203K loans on these properties. Michael praised Nick’s client presentation, noting its clarity and high level of information. The conversation ended with a discussion on the lack of a centralized site for listed properties and the importance of agent relationships with preservation vendors.