A little more than a year ago, I wrote an article for The Reverse Review that compared the history of recent mortgage regulations to Greek mythology. That article was written at a time of great uncertainty in both the reverse and forward mortgage markets. We again face an unpredictable future in the reverse industry, so I will once again take to the keyboard and attempt a timely Greek analogy.My previous article, titled “A Tale of Regulators and Originators,” equated the slew of mortgage regulations and congressional acts with mythological Greek gods and heroes, from HERA to MDIA (pronounced “Medea”), culminating with Dodd-Frank, which I referred to as Zeus. A year ago, we were waiting to see what effects Dodd-Frank would actually have, and now in 2012 we are finally seeing the acceleration of these anticipated regulatory changes.
Two significant events for reverse mortgage originators are due in July. Zeus’ first lightning bolt is the release for comment on a set of new Mortgage Loan Originator Compensation rules that are required by Dodd-Frank to take effect by January 21, 2013, under the jurisdiction of the new CFPB. The other significant event, less a lightning bolt than a gathering of thunderheads, is the July 21 release of a report to Congress on the reverse mortgage program, also under the jurisdiction of the CFPB. Both events promise to bring with them additional rulemaking, regulatory burdens and, as always, extreme uncertainty for reverse mortgage lenders, brokers and their loan officers.
The outcome of these events will be further complicated by the general public’s mistrust of the program along with detractors in the media, a great number of financial “experts” who don’t agree with the program for one reason or another, and, of course, plenty of adult children of reverse mortgage-eligible borrowers.
At this point, you might be asking yourself what in the world this has to do with Greek mythology. Bear with me a bit longer.
Being an avid reader, I recently committed to a book widely regarded as one of the best of the 20th century, Ayn Rand’s Atlas Shrugged. And if you’re wondering, no, I have no idea as to the true and correct pronunciation of her first name. And no, I actually don’t know how it ends, as I’m only on page 800, and though I appreciate the journey as much as a story’s conclusion, I would never and have never skipped to the end of a book (not counting books I was assigned to read in school). What I do know is that Atlas Shrugged has been called her masterpiece, a supposedly brilliant story and philosophical work of some note.
Atlas Shrugged tells the story of several business leaders who, not liking the way they see the world working, decide that by quitting and going into hiding they will “stop the motor of the world.” The point is that they are like Atlas, the mythical Titan who was sentenced to hold up the world for eternity as punishment for fighting against Zeus and the Olympians. One of the main characters clarifies the connection, stating that Atlas, exhausted and disenchanted by new regulations, tough laws and public complaints, is shrugging underneath the weight of the world.
This leads to the central point of this article, which is that in light of increasing regulation, extreme uncertainty about the future and chronic questions and myths portraying the reverse mortgage program in a bad light, we reverse mortgage originators should not follow Ayn Rand’s characters’ plan. While unpredictability abounds and increasing regulations make life more difficult, we should not and cannot shrug and go into hiding.
I should remind you that I have not yet finished the book. If you’ve seen this 1,000-page tome, you understand why it spends more time as a bookshelf decoration than in the hands of readers. However, the width of the binding and the tiny writing are not the only stumbling blocks in finishing this monumental task. The theme of Atlas shrugging and dropping the world because of a few regulations, a few detractors of note, and an often mistaken public opinion, is absurd. I’m not sure how the book ends, and this will be a spoiler alert if you have the time and inclination to tackle the reading of this monstrosity, but the protagonist has declined to join the shruggers so far. Who knows, maybe Ms. Rand and I will agree in the end.
Perhaps this comparison is something of a reach. I suppose those of us in the reverse mortgage business are not really holding up the weight of the world, and maybe the new regulations will be beneficial for our seasoned consumers and our veteran originators. Maybe the uncertainty that I see is not shared by all and maybe it’s not actually so ambiguous. And maybe public perception improves and our detractors retreat. Like the rules from a year ago, maybe they will be largely helpful and this will turn out to be much ado about nothing for the good players in the mortgage industry.
Atlas shrugging in Rand’s novel involves business chiefs, leading thinkers in various industries and professions simply disappearing and letting their businesses fail and wither away with no plan for succession. They see many problems and believe things are not right with the way the world is working, so they give up. The colloquial term for this that is often used on the playground is “take your ball and go home.” But we’re not on the playground anymore, nor are we aloof characters in a ’50s novel. We have a serious responsibility to our customers.
The reverse mortgage business right now is tough. There is renewed competition from many different sources vying for a rather small subset of the mortgage business. The looming regulations in July could make life significantly more difficult for lenders, brokers and loan officers. Our ability to generate revenue, compensate our salespeople and most of all, offer the customer the best possible loan options may change completely. We don’t know how the reverse mortgage report to Congress will read, and we don’t know if the public will ever truly embrace this program.
Regardless, it is important for us to not shrug off our responsibility as the originators and original caretakers of this program. Our customers need us too much, as evidenced by the thousands of fantastic testimonials and the numerous studies that show extreme customer satisfaction with the program, and most especially the thank-you notes and Christmas cards that tell stories of how we saved someone’s home, retirement livelihood and way of life.
We’ve been through this before. Changes in regulations, laws and public opinion will come and go. We as an industry are strong and we will find a way through it all again. Surely if one Greek Titan can hold up the entire world for all eternity then we can suffer through another year of confusing new regulations and concerns about future stability.
Ayn Rand begins the book by asking about the leader of shruggers, writing, “Who is John Galt?” To this we say, “Who cares? We’re not him.” As stewards of this important program, we have a tremendous responsibility to fulfill, and no matter the obstacles, we mustn’t shrug.