MortgageReverse

Critical Stage for Reverse Mortgage Industry says MetLife Executive

Asserting that the reverse mortgage business is in “dire straits” – at a “critical stage” and “at a crossroads,” Craig Corn, vice-president reverse mortgages operations for MetLife Bank, is calling for “a new HECM product…one that offers significantly reduced proceeds.” (For the first five months of this year, MetLife Bank ranked fourth in overall originations with a 2.9 percent market share, according to Reverse Mortgage Insight, which tracks HECM origination volume.)

In a feature story under his byline appearing in the September issue of the “Mortgage Banking Magazine,” Corn states that it is “important to once-and-for-all address the perception that reverse mortgages are too expensive,” a view that he says stems from “relatively high upfront fees…and other typical third-party closing costs.” He advocates for two reverse mortgage categories – “one riskier, one far less risky,” that would provide a “greater level of product variety,” erasing what he calls “the stigma that has dogged [reverse mortgages] for years.”

A different view comes from Jeff Lewis, senior managing director, Guggenheim Partners, who says “there is nothing wrong with the [reverse mortgage] product. [Rather] we have a sales problem.” The industry, he insists, is “handling a variety of difficult circumstances well and the business will continue to thrive.” It is unfortunate, Lewis says, that federal law now prohibits cross-selling, or “bundling,” similar to what is done in the United Kingdom. “With bundling, you could sell [the reverse mortgage] as part of a senior’s financial independence plan.”

In Corn’s contributed magazine piece, he recommends an “insurance fund”-like structure that would reinvent the mortgage insurance requirement, allowing the industry to expand the product segment and “move beyond the ‘one size fits all’ mentality that has dominated its approach for so long.”

In a speech earlier this year, the FHA’s Colin Cushman described a similar proposal for variations in reverse mortgage products, called the HECM Saver, in which the government would do away with the upfront mortgage insurance premium while lowering principal loan factors (the amount of home equity that can be tapped).

Written by Neil Morse

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