FHA Doing Everything Possible to Sustain HECM, Industry Must be Ready to Adapt

Buffeted by lower lending limits, higher insurance premiums and some unsympathetic lawmaking, the reverse mortgage business could be reasonably described as under significant pressure today. Yet, far from being downcast and defeated, practitioners on the front lines remain resolute in their determination to turn lemons into lemonade, a trait typical of successful entrepreneurs.

“A lot is happening right now and not for the better,” says Michael Banner of Loan Well America in Clearwater, Fla., who adds darkly: “The year will get worse before it gets better.”

So, he believes, “the industry is going to be forced to change; the product is being re-defined.” By the end of this year, as Banner sees it, “more certified financial planners, insurance agents, attorneys, Realtors and other professionals are going to get involved.”

He says this will help change the image of reverse mortgages from a “needs-based, last-ditch product” to one that is used by middle-to-upper income Americans, which, he notes, “is what it was designed to be; namely a financial planning tool.”

Agreeing with this view, Michael Gruley, 1st Financial Reverse Mortgages, says market changes “are giving all of us an opportunity to move in the direction we ultimately need to go to achieve profitability and prosperity.”

While this change may cause some to cringe, Gruley is forthright: “It may feel bad right now, but once we accept it, embrace it and be honest with ourselves, it is all good. We’re just moving along the evolutionary trail,” he says philosophically.

And, the industry can take heart in the support offered by sponsoring agencies in Washington, D.C., among them the FHA. Erica Jessup, housing program policy specialist, HUD, declared recently that: “FHA is doing everything [it can] to sustain the HECM program.” But she noted, “we have to be pro-active and be ready for just about anything,” an allusion to pending budget appropriation requests in the federal FY2011 budget. “Oct. 1 is fast approaching,” said Jessup, referring to the start of the new fiscal year.

Acknowledging that appropriations may not be fully approved, she assured listeners that, “we have begun holding discussions to identify other alternatives.”

Written by Neil Morse

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