On the Docket Once again, as an industry we find ourselves facing change, and this time it is perhaps the most comprehensive change since the creation of the HECM program.
In the short run, these changes seem difficult. They require adjustments to systems, adjustments to documents, new approaches to marketing, the re-education of potential borrowers who have already begun the loan process—and all on a tight timeline with the implementation of a one-product market, initial draw limitations and a different MIP structure by October 1.
But over time, the changes not only address concerns at HUD, particularly about the sustainability of the MMI Fund, but also concerns we have heard repeatedly as we fulfill one of our primary roles: listening to our membership. As a result of these changes, we can anticipate positive trending on a number of fronts that have perpetually nagged us:
Negative press Within a week of the September 2 release of the mortgagee letter outlining HECM changes, pieces by savvy financial industry reporters Tara Siegel Bernard of The New York Times and Mark Miller of Reuters appeared arguing that while some potential borrowers will lose eligibility due to the changes, the product has shifted to more of a financial planning tool. This is a perspective on reverse mortgages for which members have been calling for at least the past four years. Many of the recurring criticisms that spread virally through the press will be significantly silenced by changes that assure a longer life span for many borrowers’ assets.
The four most hated words We should not be hearing our least favorite phrase, loan of last resort, much anymore. Many of those for whom the reverse mortgage may have been a last resort will no longer qualify due to the change in PLFs, the limitation on first-year draws and Financial Assessment. The phrase that scared and demeaned aging Americans is no longer relevant.
Engaging financial planners There has been widespread discussion within our industry about methods of attracting the interest (and clients) of financial planners, as well as a good deal of frustration about their sometimes tepid interest. But they too will be reading pieces like those by Bernard and Miller and the mere labeling of reverse mortgages as financial planning tools (rather than as the dreaded phrase above) should perk a great deal more interest.
Aggressive advertising You don’t hear complaints about the volume of car commercials on football broadcasts, probably because people who cannot afford the cars will not buy them. Hopefully what Financial Assessment (accompanied by set asides) will accomplish is protecting borrowers who cannot afford reverse mortgages from hurting themselves and, as a result, the volume of advertising may no longer be interpreted as a problem.
In the Wings In addition to listening to our members, we view one of our other key roles as providing you with insight into the reasons for change and encouraging the sharing of experiences as companies adapt. We titled this year’s NRMLA Annual Meeting & Expo “New Music: Changing the Reverse Mortgage Conversation” in anticipation of program alterations in time for the new fiscal year that begins October 1.
If you join us at the Roosevelt Hotel in New Orleans from November 4-6, you will have the opportunity to hear from the people who make the rules, colleagues who are utilizing them and those outside our industry, such as financial planners, whom they can affect. In fact, among our presenters will be financial planner Michael Kitces, who writes the Nerd’s Eye View blog at kitces.com and serves as the practitioner editor for The Journal of Financial Planning. Kitces will tell you, in light of the changes, what is the appropriate approach to engage financial planners.
To register for NRMLA’s Annual Meeting & Expo, go to nrmlaonline.org.
In Committees Following the publication of Mortgagee Letter 2013-27, the HUD Issues Committee and the Servicing Committee identified several issues that needed further clarification.
A letter was submitted to FHA requesting input on 17 different issues related to origination and servicing. NRMLA, with input from the Risk and Compliance Committee, also submitted a letter to FHA that offers suggestions on improving the agency’s Quality Assurance Process.
FHA published a notice in the Federal Register on July 9 seeking input from the lending community, consumer groups and the general public. Comments were due on September 9.
NRMLA requested that any changes adopted through the solicitation should first be published as a proposed rule, so that the industry has an opportunity to comment. The association also pointed out that HUD guidance can be hard to discern and inconsistent with what is published in handbooks and regulations, and is sometimes interpreted or applied differently among the four homeownership centers.
“Thus, before FHA makes any changes in the QAP, it should first address what some perceive to be an area for improvement in FHA review of loan endorsements,” says the letter.
On reversemortgage.org A record 23,810 unique consumers visited NRMLA’s consumer site, reversemortgage.org, in August, surpassing July’s record of 19,970.
This year, the consumer website is averaging 17,435 unique visitors a month, a significant increase from the 11,163 monthly visits averaged in 2012.
One of the popular features of the website is the “find a lender” locator, which consumers use to find reverse mortgage lenders close to them. The top 10 states visited include California, Florida, Texas, New York, New Jersey, Pennsylvania, Illinois, Arizona, North Carolina and Ohio.
Please make sure your complimentary lender listings are still current. If changes are necessary, please email them to Darryl Hicks at [email protected].
NRMLA Welcomes New Members NRMLA welcomes the following companies who recently joined the association. They include: 1st California Home Loans, Laguna Hills, California Brean Capital, New York MiLEND, Inc., Atlanta, Georgia National Field Representatives, Inc., Claremont, New Hampshire One Trust Senior Lending, San Diego, California Platinum Financial, Grants Pass, Oregon The StoneHill Group, Atlanta, Georgia
A New CRMP NRMLA congratulates Laurie Libby of Newport Beach, California, who became the third member from Liberty Home Equity solutions to earn the designation of Certified Reverse Mortgage Professional.
