H. West Richards starts his week in Atlanta, Georgia, and by the time the weekend rolls around he’s lived his own version of the movie Planes, Trains and Automobiles while traveling around the country and working for the Coalition of Independent Seniors (CIS). All the way at the other end of the Eastern Seaboard, Jeff Lewis starts his week in New York City, running Generation Mortgage Company and doing his fair share of traveling as Chairman of CIS and a spokesperson for the reverse mortgage industry.
Though nearly 1,500 miles separate them, Lewis and Richards work very closely as stewards for the new and growing advocacy organization, managing its congressional affairs consultants, strategizing and planning the next key meeting with influential regulators and policymakers in Washington, and ensuring industry and affiliated partners are aware of the goings-on in the nation's capital that impact the way their members do business.
“Washington is making decisions right now that will have an impact on seniors across the country that are considering reverse mortgage products to support their financial independence,” Lewis says. “We’re trying to ensure that when it comes to the federal Home Equity Conversion Mortgage (HECM) program, Congress knows that it benefits seniors by offering them solid financial products to help access their equity wealth.”
Bringing Voices Together The Coalition for Independent Seniors was launched in 2010 when Lewis and Richards determined that midsize lenders could partner with other advocacy groups to protect financial options for seniors looking to stay in their homes longer and tap into their equity wealth. CIS is dedicated to identifying and cultivating those partners in order to strengthen all the voices advocating for seniors and their financial well-being.
“We’re working hard to bring added value to the efforts already happening around seniors’ financial security and reverse mortgages,” Richards says. “We’re on the ground cooperating and coordinating with our friends at NRMLA and their team working the federal bureaucracy to look out for seniors and the industry.”
The organization prides itself on being a nonpartisan, nonpolitical, public advocacy coalition. Its goal is preserving independence, financial stability and economic security for seniors while protecting their ability to live financially independent lives.
Even in these early months of the Coalition, partnerships have been forged. CIS has worked with a seniors’ advocacy organization, RetireSafe, to highlight changes to the HECM program administered by the Federal Housing Authority (FHA). With nearly 500,000 members, RetireSafe is a grassroots organization that advocates and educates on behalf of America's seniors on issues regarding Social Security, Medicare, health and financial well-being.
“It’s a natural fit,” says RetireSafe (retiresafe.org) President Thair Phillips. “Both organizations are working to ensure financial independence for seniors so it makes sense to combine forces on matters that threaten or support that goal.”
The organizations recently teamed up to reach out to members of Congress regarding bankruptcy rates among seniors and what that means for seniors with reverse mortgages. In addition to RetireSafe, CIS is reaching out to other groups to find ways to partner on important issues. Working with an expert on seniors’ issues, CIS is making the rounds to other seniors’ organizations to introduce themselves and offer help and support and the potential to partner with these groups.
“Building a coalition of like-minded groups, formally or informally, is a central priority for CIS,” Lewis says. “We’re tremendously grateful to RetireSafe for working with us and we look forward to a long and productive partnership.”
Board Members Are Key CIS is organized around a central board, with members coming from various reverse mortgage lenders and affiliated industries. The board’s main function, aside from steering the direction of the organization, is to serve as spokespeople for the industry and ambassadors for the reverse mortgage products.
“Because our board members run real companies that employ real people, we feel they can provide real-world experience and insight to members of Congress and regulators,” CIS Executive Director Richards says. “There’s nothing more effective than someone coming into a congressional office and saying, ‘Hey, I employ 100, 200, 300, people in your district and here’s something I want to bring to your attention.’”
To that end, one of the central CIS actions is quarterly lobby days where dozens of meetings with legislators are scheduled over two to three days and CIS board members go to Washington to practice some old-fashioned shoe-leather lobbying. Each board member visits a handful of offices, builds on existing relationships and seeds new relationships, all with the central purpose of educating members and their staff about the benefits of reverse mortgages and countering some of the negative publicity and perceptions of the industry.
“CIS has opened a lot of doors in the last 18 months and we’ve visited with many decision-makers in Washington that otherwise we’d never meet,” says Bob Yeary, CEO of RMS and CIS Board Secretary. “The lobby days are efficiently run and strategically developed. We identify the folks we need to talk to and the team makes it happen.”
But it’s not all meetings and lobbying. CIS’ philosophy is centered on relationships. The quarterly lobby days allow CIS board members to build stronger relationships among themselves and learn more about each other’s businesses, which in turn makes them better spokespeople for the industry.
The CIS team orchestrates other opportunities for the board as part of the agenda. July’s board meeting included a briefing on campaign finance law for board members conducted by a leading elections law attorney; a breakfast with financial services reporters from Bloomberg News Washington Bureau, and a media training conducted by a public relations professional in preparation for the breakfast. The lobby days also include organized group meals for participants to get to know each other, discuss their meetings and track their collective progress.
“Our goal is to provide value to our board and members,” Richards says. “We like to add something different and interesting to each lobby day schedule to give participants an enhanced experience. Anything from a guest speaker to meetings with reporters who cover the industry makes the experience more rewarding and memorable.”
Going to Work Though the HECM program has been around for years, many members of Congress are unaware of the program’s benefits, requirements and impact. Each CIS member is briefed on a simplified “elevator pitch” explanation that highlights the benefits of the program in plain language and a short time frame. They put those messages to work in the meetings with members of Congress and staff to clearly communicate CIS positions on legislative and regulatory matters.
The focus of the July lobby days was the proposed budget cuts to FHA that would essentially eliminate federal support for mandatory counseling programs. Congress has proposed reducing funds for counseling programs by $88 million, but left in place the mandatory requirement for counseling.
CIS board members’ objective was to convey the important consumer protections afforded seniors by the counseling program. When given the opportunity, they told lawmakers and regulators that HECMs are designed to allow seniors 62 and older to access their equity wealth and maximize their financial independence. The program is backed by the FHA and provides important consumer protection to borrowers, including counseling from independent advisors about HECM loans.
For many seniors a reverse mortgage is a life-changing, positive option. Some access their equity wealth to cover unexpected health costs and medical bills, complete a home improvement or simply give them the financial peace of mind they deserve in their retirement years. Many HECM borrowers use their equity to pay off their mortgages, eliminating the worry of monthly mortgage payments.
Like any financial product, reverse mortgages work for seniors with the financial capacity to meet the requirements of the loan, including paying taxes and insurance costs as they would with a conventional mortgage. HECM counseling ensures that seniors can rely on independent information to make the right financial choices for themselves and their families.
The out-of-pocket cost to seniors expected from the federal budget rescissions is a compelling argument. Because most reverse mortgages are backed by the FHA, the federal rules governing these loans require seniors to receive third-party financial counseling before exercising this important financial tool. The proposed budget cuts leave intact the requirement for counseling, but eliminate the funding – transferring the cost of counseling to seniors.
“A new out-of-pocket cost for counseling puts seniors at a distinct financial disadvantage because it is often the case that seniors seeking reverse mortgages may not have readily available cash to pay for upfront fees,” says Lewis.
These upfront counseling fees are required whether the senior chooses a reverse mortgage or not. For seniors on fixed incomes, with limited cash reserves, the out-of-pocket cost will present an unfair obstacle to accessing their own money.
“We’re working alongside other nonprofit organizations like NeighborWorks to support the restoration of funding for federal housing counseling programs,” Richards says. “Seniors shouldn’t have to pay to access their own money or to fund a federal mandate. Furthermore, a rescission in funds could lead to a far less efficient and less effective counseling mechanism. Such a reduction in resources could lead to bottlenecks that slow the education process down, not to mention deliver less robust counseling.”
CIS argues that restoring the counseling funds will save taxpayer money in the long run. By providing the right information and advice, housing counseling programs can empower seniors by helping them access their equity wealth to stay in their homes longer and continue to live financially independent lives instead of turning to entitlement programs to meet their financial needs.
“With the country in the midst of a financial and housing crisis, it is shortsighted to take away a basic consumer protection and limit housing choices and options for seniors, especially one that extends financial independence and keeps seniors in their homes longer,” says Lewis.
A Plan to Grow Compared to other coalitions or advocacy groups, CIS is in its infancy, but has already achieved success. With more than 100 Capitol Hill, agency and media meetings under its belt, the organization is already building its profile among the leading decision-makers in Washington.
The plan is to be even more aggressive in the coming months.
CIS hopes to add numerous new memberships at all levels in the near future. This powerful and growing organization plans to offer an annual membership to all participants in the reverse mortgage space within the next three months. This membership will include quarterly updates, newsletters and direct access to upcoming events.
CIS has seen growth already. Members joining in 2011 include Appraiserloft and ReverseVision, both top vendors supporting the reverse mortgage industry with key appraiser and technology resources.
“I joined because I could see the effectiveness CIS is playing in the public policy arena,” says Gregg Smith, President of One Reverse and CIS Board Treasurer. “I wanted to be part of something new, something energetic, something that is getting to the heart of what our industry is about: financial independence and security for seniors.”
CIS hopes that the success of the July lobby days will be noticed by companies and leaders considering joining the group.
“By providing meaningful and direct contact with key legislators and agency folks, our members feel like their voice is being heard,” Richards says. “This is a value-added benefit for a modest investment in CIS – our members get a lot in return.”
Planning for the Future There’s no question these are challenging times for the reverse mortgage industry. Skeptical journalists continue to paint the industry in a negative light – though progress has been made with the media in recent months. Meanwhile, two of the “big three” lenders, Bank of America and Wells Fargo, have decided to exit the reverse mortgage market, while MetLife has decided to sell off its banking arm, fueling questions about the future of the industry.
Fortunately, even with two of the three big banks being gone, and MetLife’s banking arm in flux, the industry still thrives under many of the original industry players. During the last 20 years, it is interesting to note that Bank of America was in the game for less than three years and Wells Fargo for just 10.
CIS is delivering a positive message to Congress and FHA: The departure of the big three isn’t a problem, it’s an opportunity. Midsize lenders can step in and service the market demand, they say, and the product is still something seniors want.
“There’s no question the way they left didn’t do the industry any favors,” says Lewis. “We’re working to let people know that the industry still exists, is still growing, still employs thousands of Americans and can still provide a quality product to a solid market. There’s no reason for Congress or FHA to give up on the HECM program.”
The independent lenders are different from the big banks in that reverse mortgages are what they offer exclusively. With experienced mortgage lenders and a focus on reverse mortgages, these lenders will continue to be successful.
“In terms of the market, the sales cycles in the reverse mortgage industry are complex; they take a long time; multiple family members are involved; and transactions can be emotional. This is all outside the traditional comfort zone of banks, and at the end of the day, this industry requires too much effort for many banks to justify the investment,” Lewis says. “However, we predict that when the market turns and the RM industry continues to grow on an impressive trajectory, large institutions are likely to jump into the space again, especially as seniors turn to the product more as a sound tool for financial security.”