I thought summer was supposed to be full of exotic vacations, special memories with family and friends, blissful laziness and the general pursuit of stress relief. Did we miss something this year?
From a HECM industry perspective, the shapes and sizes of summer fun haven’t been so relaxing.
One can hardly lie on a beach without wondering what current market volatility is doing to your pipeline. While we have all experienced minor rate fluctuations in the last few years, most were anticipated as the result of industry events that came and went. Admittedly, these fluctuations temporarily raised our stress levels and tested our ability and willingness to adjust to change. As professionals, we fortified our resolve to continue assisting seniors.
However, I am concerned that this summer, ability and willingness is edging toward gloom and doom for some. The stress of what appears to be long-term market volatility is upon us. Unlike volatility in the past, this long-term event is fueled by overall changes in product mix combined with an uncertainty regarding the health and longevity of the HECM program.
Add the looming uncertainty that surrounds Congress’ pending determination on whether or not to grant HUD full authority to make HECM changes, and it looks like the usual relief fall brings may just be an extension of more hot summer days.
So how do we “underwrite” our ability and willingness to weather the current and anticipated events that will play out over the next few months? With the anticipation of a mortgagee letter (indicating granted authorities to make changes) before this August issue of The Reverse Review hits the street, let’s reaffirm our resolve to continue assisting seniors and review a helpful checklist of “to do” items that will aid us in this goal.
As a loan originator: -How prepared am I to engage financial assessment? -Do I know how to review a credit report? -Am I familiar with calculating debt ratios? -Do I need to revise my pre-qualification checklist? -In matters of income, credit and living expenses, what are the second and third questions I need to ask my borrowers? -Will my marketing perspective and the resources I currently use require updates or change? -What do I really know about the Saver’s features and benefits? -Do I know how to educate ARM Margin, floor, ceiling and PLF attributes? -Can I explain principal limit lock? -What and how will I communicate with my referral network regarding program changes? As a manager or owner: -Do I need one large plan or a separate plan for sales and operations? -What is the product education level of my team? -What specific team weakness have I identified to direct company resources toward? -How will I implement the changes with my sales force? -How will I implement the changes with my operations staff? -What technology, job aid and matrix resources do I need to provide to take my team to a more granular approach to prequalification? -What support can I access from my investors? -How will my consumer marketing materials need to be updated? -How will the company communicate changes to the current HECM program? -How do I protect my pipeline?
As an industry, we are not adverse to change. To date there has been little rally to discontinue the program, but rather to seek a level of health and stability to continue to provide the senior with an option to remain in their home and attain financial stability. Unfortunately, the forecast is for continued heat and hopefully minor storms for some time going forward. Luckily, preparing for good and bad weather is something we do well.