Change. That is the overwhelming theme for 2013, and did we ever have change in our industry this year.
Change isn’t always bad, even when it is somewhat drastic, as it has been with our industry. This year, HUD made significant adjustments to the HECM program with the hopes of ensuring the future viability of reverse mortgages. These changes have made us all more nimble and ready to help meet the needs of seniors across the country.
One of the first hurdles we had to overcome this year is the removal of the Standard fixed loan option. This change removed the ability for seniors to take a very large equity draw, which HUD believed resulted in complications with insurance and tax payments later into the life of the loans. The belief is that this modification will strengthen the program, so we must forge a new path without this loan option.
As the year progressed, there were more changes and new requirements. The signing of the Reverse Mortgage Stabilization Act brought many updates to the program, including smaller loans, first-year limits, Financial Assessment and fee changes. While many may see these changes as restrictive, there are still many seniors who will benefit from a reverse mortgage long after their initial draw.
While much has happened to the reverse mortgage program this year, one thing is clear: Our industry must remain flexible and adaptable. Remember that our goal is simple: doing everything in our power to ensure the financial well-being of our clients. Anything short of that is failure.
Financial Assessment will start January 13, 2014, and while we know this will restrict some clients from obtaining a reverse mortgage, we have to adapt. Our clients deserve to know that when they get a HECM, it is the best option for them. Assessing a client’s ability to pay their obligations after taking a reverse mortgage gives them a better chance for success in the future.
With all of the changes in 2013 and those yet to come in the new year, we will be able to bring a stronger product to our clients. The changes will help bring stability to the program and protect not only the borrower, but also the lender.
It is important for us in the industry to embrace change. For those of you who may not think the changes are positive, or if you are not able to adapt quickly, remember these words from Theodore Roosevelt: “Nothing in the world is worth having or worth doing unless it means effort, pain and difficulty.”