When I turned 21 (a long time ago!) I partied until the wee hours of the morning. I was not one to pass up the opportunity to enjoy a few “adult beverages” in the company of other adults, and besides, 21 was the passage into adulthood and maturity. I thought I had grown up.
The years prior to 21 were arrogant, smarter-than-my-parents days. I was self-centered and hated any kind of supervision or controls. These were halcyon days of “the good life.” I was at college and I could do anything I wanted, whenever I wanted.
This newfound freedom led to flunking out of college and getting drafted into the Army. It may sound bad, but military discipline was exactly what I needed. I learned that a lack of controls and no supervision often lead to poor-quality decisions. After a tour of duty in Vietnam, I returned to complete my college education and learned to work “within the system.” I had grown up.
What does all this have to do with the HECM turning 21 last year? Consider this: For many years prior to its 21st year, the HECM had a somewhat loosely defined set of controls and guidelines that were more than adequate; we were a very small cottage industry.
When 2006 came along and Wall Street investment bankers came into the market, it looked like our industry was going into the stratosphere. There was talk about proprietary products and how each Wall Street firm was working on their own non-HECM loan. These same firms talked about securitizing both HECMs and non-HECMs, and that is when the regulators started paying attention.
HUD and Fannie Mae began to tighten their rules and regulations, and from my standpoint as a subservicer, it was most welcome. When you serve in a supportive role to lenders and/or investors, there is nothing worse than not having everything clearly defined. My military training and discipline was a life-changing event. In the military there is no such thing as a vague order, nor is their any such thing as a suggested order.
As HUD and Fannie Mae continued providing clearer guidance to all industry participants, the loan volume garnered the attention of even more regulators and legislators at both the state and federal levels. Senators and representatives in the U.S. Congress began asking questions, and much to our dismay, one senator held a hearing that did a lot of harm by generating unwarranted and bad publicity.
More and more state legislators have jumped on the regulation bandwagon.
There are multiple states with the exact same state regulations provided at the federal level. I welcome order and controls, but there is such a thing as too much regulation. Rules and regulations cannot, and should not, attempt to completely control all aspects of the life of a 21-year-old adult – and it should be the same for our 21-year-old industry.
We have heard recent calls for civility in our country’s political rhetoric, and in keeping with that theme, I call for a return to civility and common sense when it comes to regulating our industry. Seniors warrant protection, but the vast majority of those eligible for a reverse mortgage are smart and they are comfortable making major life decisions. Let’s recognize seniors for knowing what is right for them and stop the madness of overregulation by legislators who view them as completely defenseless. Nothing could be further from the truth.
Balance and common sense was the order of the day when I returned from Vietnam, and it’s no different as our industry enters its 22nd birthday. We’re growing up too.