It will be a time period we will talk about for years: a most critical and exhausting series of events that started in August 2013 with the Reverse Mortgage Stabilization Act and appears to be coming to some sort of conclusion with the implementation of Financial Assessment.
Of course, there were events that led up to the policy changes. And of course, changes will continue, but Financial Assessment marks the end of a very turbulent but important era for our industry.
Look at some of what WE as an industry accomplished during this relatively short time period: . Elimination of HECM Standard and Saver products . Modification of PLF tables (again) . Introduction of new MIP design based on draw amount . Establishment of limited initial draws . Introduction of a new lump-sum payment option . New non-borrowing spouse policies . Financial Assessment
And WE accomplished all of this while dealing with new federal and state legislation and regulation, new advertising rules, changes in leadership at HUD and changes in the GNMA program—all while originating and servicing loans, our day jobs.
As a servicer, we have never made a larger investment in people, processes and our platform as we have in the past 18 months. Creating accurate specs from evolving requirements and upgrading our platform to execute all of the new enhancements was the first step. The second step was training everyone and putting new procedures and people in place to manage it all.
As an example, this is what happens for servicers every time a new HUD mortgagee letter comes out:
Analysis Once an ML is released, our analysts work with our operations team to understand the implications for our system and often seek clarification from HUD.
Boarding changes Servicing clients must be notified of the new data to be collected.
Platform interface and logic changes Most MLs require extensive changes to the system logic and interface. The new certification letter process is particularly taxing as all third-party vendors must be engaged. Typically, new regulations have tight implementation deadlines, which delays other projects.
Testing Extensive quality checks and test scripts must be created and User Acceptance Testing performed.
Implementation There is the typical break-in period where process is refined and code changed as users learn what is needed to support the new requirements.
Are we all feeling a little fatigued? Yes. But is it worth it? You bet it is. Remember, all these changes have been set into place to create a sustainable HECM program.
The alternative to embracing change doesn’t have a happy ending. So what about our ending? It’s easy to be a cynic after years of declining volume and all these program issues. Are we all working on borrowed time? Nope.
Here’s why. The last 18 months have tested many aspects of our business model and have provided answers to some frequently debated issues:
-Congress believes our product and service are important.
-Our critical partners—FHA, HUD and GNMA—are willing to make the changes necessary to sustain the program.
-NRMLA is an outstanding trade association that will keep us relevant.
-Our industry has strong leaders and great companies that will forgo the competitive nature of business to rally together to share ideas, resources and funds to protect our borrowers and enhance our value proposition to the market.
We are not only going to survive, we are going to grow again. Why? Because we are helping solve a big social problem. As government cuts increase, society is going to need industry to step in and fill the void. Industries that can successfully align their value proposition to global societal issues will thrive. As reverse mortgage business leaders, we realize that we have cumulative impact, and over the past 18 months we have proven that we can come together and provide cumulative solutions. We are allies, not competitors. And that is how we will do our part in helping solve our nation’s retirement crisis.