Telling Our Story: Rolling Out the New Reverse Mortgage In July, we will begin our national education campaign about the new reverse mortgage. In the Extreme Summit pilot markets (Denver, Philadelphia and Seattle) via a television commercial, newspaper ads, a new website and a public relations outreach, we will launch a widespread effort to explain to elder Americans and their families that the reverse mortgage is now a better product and worth investigating further.

To those of us working in the industry who have followed the evolution of the HECM program, we know in our hearts that this is a legitimate claim. The opportunity to assess a potential borrower’s financial circumstances and the likelihood of them being able to fulfill their obligations, the limitation on upfront draws that helps extend the life of remaining proceeds, and the addressing of potential predicaments for non-borrowing spouses all merge to yield a safer product and a more secure future.

But to those who do not follow the day-to-day journey of reverse mortgages as we do (which is nearly everyone outside of the business), saying reverse mortgages are new is one thing, but proving it is another. “New” is a popular and perhaps overused tag in America. Convincing the general public that we deserve to call a reverse mortgage “new” is not going to be a short-term endeavor. It is going to require some patience. And it is going to require a lot of evidence.

At NRMLA, we believe it is our responsibility to chronicle the evolution of the new reverse mortgage. We know we are going to have to commit the next few years toward this effort and we happily will. To acquire the evidence we are going to need, we must reach out to you for help.

When you close a loan with a borrower who has responsibly planned their retirement and is utilizing their proceeds to extend the life of their assets, or who had a retirement funding plan on track but was derailed by the Great Recession, or who is using a HECM for Purchase to move into a new home that better serves their needs as they age, please ask them if they are willing to tell their story for public consumption. And, if so, if they will permit us to contact them. We intend to build a large volume of these stories in Reverse Mortgage magazine and use them as testimonials on our websites.

By enabling us to tell the story of a responsible borrower, you are giving confidence to future borrowers, helping the industry as a whole and, as a result, helping your own business going forward. We believe we are going to have a good story to tell, but none of us can tell it thoroughly alone. We all need to tell it together.

To share the stories of your borrowers, please contact me at [email protected].

In the Press The Tampa Bay Times ran a piece in May largely sympathetic toward local borrowers who utilized all the proceeds from their loan, collected a tenured payment for seven years, then stopped paying real estate taxes for three years and faced foreclosure. The piece was also picked up by The Boston Globe. NRMLA was told its response, this letter to the editor, will run in the Tampa newspaper.

To the editor:   A recent front-page article [“Complexities of Reverse Mortgages Snag Homeowners,” May 30, 2014] told a very unfortunate story of one family’s experience with a reverse mortgage. That story, while very sad, is not the norm for reverse mortgage borrowers, most of whom report satisfaction with the product.   Reverse mortgages, like other mortgages or loans or other financial products, come with responsibilities. As the author correctly noted in the piece, all potential reverse mortgage borrowers must meet with a certified counselor to ensure that they understand the terms before they move forward.   In this case, the borrowers admit they signed paperwork without “paying much attention to the terms” and later went three years without fulfilling their responsibility of paying their homeowner’s insurance.    In the event that borrowers find themselves in a tough situation where they are unable to meet the terms of their loan, the best thing to do is to contact the loan’s servicer so that they can work with the lender to develop a solution.   Reverse mortgages are a useful and beneficial retirement financing tool for many Americans, and historically the Department of Housing and Urban Development has responsibly observed the experience of borrowers and made adjustments to improve the program.    The situation faced by these borrowers is much less likely to occur in the future as a result of the changes already implemented and soon to be implemented (limitations on upfront draws, financial assessment) as a result of the Reverse Mortgage Stabilization Act of 2013. 

Peter Bell President and CEO, National Reverse Mortgage Lenders Association Washington, D.C.

On the Docket: Non-Borrowing Spouse HECM Litigation Continues Apace The Bennett and Plunkett HECM non-borrower spouse (NBS) cases continue to be litigated at an accelerated pace in the U.S. District Court for the District of Columbia, with another important filing by HUD on June 4 (a “determination” of the FHA commissioner to provide no relief to the individual NBS in the Bennett case), and, most significantly, to fully honor HUD’s insurance obligations to lenders in those cases), and with another court hearing June 10.

HUD also filed a status report on the results to date of FHA Info 14-19 (April 21, 2014), the permitted 60-day extension of foreclosure timeframes for certain NBS. In its report, HUD noted (based on information provided by servicers) that, as of May 28, 280 requests for such extensions had been received and approved, and that from January 1 through May 15, 2014, FHA received 6,550 notices of the initiation of foreclosure.

The court still has before it a request (which HUD is vigorously opposing) that it certify a nationwide class of NBS, and a challenge to the HUD determination to provide no relief to the individual NBS. Additional rulings on this and related matters are expected soon.

HUD (including the FHA commissioner) and its attorneys are clearly expending a significant amount of time and energy in thinking through the best approach to resolving these NBS issues in a manner that best serves the interests of seniors and HECM program participants, and that preserves and strengthens the HECM program in the years to come.

NRMLA remains fully supportive of that effort and will continue to closely monitor developments in this litigation and seek to participate in it if and when that appears to be appropriate.

In the States Louisiana: The state’s legislature recently enacted House Bill 807, which revises the Secure and Fair Enforcement of Mortgage Licensing Act of 2009 by requiring mortgage servicers (including reverse mortgage servicers) to become licensed.

The bill defines “mortgage servicing” as the collecting or remitting of payments for another, or the right to collect or remit payments for another, of any of the following: principal, interest, tax, insurance or other payment under a mortgage loan. 

Although HB 807 is effective June 30, 2014, servicers do not need to obtain a license until June 30, 2015.

California: Testifying before the Senate Banking and Financial Institutions Committee in the California General Assembly, NRMLA President and CEO Peter Bell said the reverse mortgage industry supports legislation that protects and informs consumers, but Assembly Bill 1700 could potentially harm senior consumers unless it is amended.

NRMLA has concerns about the proposed seven-day cooling-off period after counseling, information provided in the Reverse Mortgage Worksheet Guide, and the restriction on who must provide the Important Notice to Reverse Mortgage Loan Applicant disclosure.

Bell testified that processing times can take several months, thereby giving potential borrowers ample time to decide whether a reverse mortgage is the appropriate product for them and negating the need for a cooling-off period. “In some cases,” he added, “a seven-day delay could exacerbate timing issues, such as when the reverse mortgage is being used to save a senior’s home that is in foreclosure, or when the reverse mortgage is being used to purchase a home.”

The Reverse Mortgage Worksheet Guide, added Bell, conflicts with the recently published Mortgagee Letter 2014-07, which, starting August 4, protects non-borrowing spouses by allowing them to continue living in their homes after the mortgagor passes away. The Worksheet Guide also does not fully explain the breadth of responsibilities of reverse mortgage counselors, which may confuse some clients.

AB 1700 requires the Important Notice to Reverse Mortgage Loan Applicant to be handed out by the lender to the client prior to counseling. Bell testified that this proposal doesn’t account for circumstances where the senior attends counseling prior to engaging a lender. This creates the “unintended but potential effect of tying a senior to one lender instead of being able to shop for a reverse mortgage loan,” he noted.

Still, the Banking Committee approved the bill and sent it to the Judiciary Committee for further consideration. NRMLA continues to argue its viewpoint before that committee.

New members This month, NRMLA welcomes two new international members: Australian Seniors Finance Pty Ltd Melbourne, Australia

Heartland Bank Limited Auckland, New Zealand

Consumer site visits Reversemortgage.org, the website that contains your member listings, welcomed 28,484 unique visitors in May.