Familiar with the doubt and misunderstanding about reverse mortgages that emanates from outside, industry insiders may be surprised at the discord fomenting within their own ranks toward the product. One major trade association executive dismisses them almost entirely. “There is not a demand for it,” asserts Kevin Cuff, executive director, Massachusetts Mortgage Bankers Association. “[Any] demand is being created by a ‘sales subculture’ – there is no suitable demand based on seniors’ need for the product,” Cuff insists.
Going up the ladder, even a HUD official tells RMD: “The industry is pressuring [everyone] to expand the product but we’re getting the opposite message from regulators.” The official points to “the FBI, FTC, state entities and other federal banking regulators [who] are all watching this program like a hawk. The industry,” this official complains, “pushed for higher loan limits, but HUD is suffering [as a result]. There needs to be some recognition by the industry to focus on getting all its ducks in a row and then expanding,” the official declares.
On the other hand, some industry leaders believe conditions are better than ever for seniors to consider the reverse product. One is Jeff Lewis, senior managing director, Generation Mortgage Co., New York, N.Y. (Guggenheim is the majority owner of Generation and Lewis oversees their investment in that firm.) He says: “We all have a great challenge to convey to people with some urgency that our product is so good for them and the opportunity [to get a reverse mortgage] is not going to get better.” Fresh evidence of growth is the number of reverse mortgages insured by FHA in March this year, which rose to 11,261, up 17 percent from a year earlier.
The last word goes to attorney Neil Garfinkel of Abrams Garfinkel Margolis Bergson in New York, who says “anyone who has any respect for [our] business knows reverse mortgages are not for everyone. The most compelling reason [to get one] is having a lot of equity and a lack of cash availability by a senior who wants to stay in their home for the long haul. Absent those,” Garfinkel says candidly, “I would not encourage someone to do it.”
Neil J. Morse has been a communications professional working in the mortgage finance industry for more than a decade, currently specializing in the reverse mortgage sector. He can be reached at [email protected]