Industry Must Educate Consumers on All Reverse Mortgage Options says Lewis

Not one to mince words, Jeff Lewis put it bluntly to a ballroom-full of industry practitioners at the NRMLA Annual Meeting in November when he urged them to fairly offer the new HECM Saver to customers. The senior managing director, Guggenheim Partners and chairman of the board of Generation Mortgage Company, warned in staccato cadence:

“If we create Savers that are just springboards into future Standards that are excessively fast. If we put people into fixed who could have used the Saver. If we don’t tell people about the options that are available to them because of what suits us, we are going to damage the industry for a long time. If we don’t educate them, then we are doing them and us a disservice,” Lewis warned.

Some audience members clapped, others sat on their hands wondering whether they would be the new bad guys. Michael Gruley of 1st Financial Reverse Mortgages agreed with the recommendation, but with a qualification. “As an industry, it is our duty to promote the virtues of the HECM Saver equally with all other HECM options, because it is simply the right thing to do for our clients and our industry as a whole. Beyond that, it is up to consumers to decide what solution makes the most sense for them.”

FHA designed HECM Saver as a second, initial mortgage insurance premium (MIP) option for the purpose of lowering upfront loan closing costs, for mortgagors who want to borrow a smaller amount than what would be available with a HECM Standard.

Angella Conrard, reverse mortgage advisor with the Orange County, Calif. National Aging in Place Council, was more doubtful of Lewis’ contention. “I do not think we will ruin the market [by not offering Savers], but I think that a regulation saying we need to offer all – or at least a certain variety of – options that are at our disposal, is fair, for the context that we are currently in.”

Self-described as “not one for many regulations that inhibit a market or free choice,” Conrard prefers regulations that “support education and freedom of choice and market. This supports the consumer and the industry,” she explains, adding that “it would be unfortunate to see our industry regulated to the point of impairment” and that some of her “more sophisticated clients become a little disgruntled” with having to go through the extensive, new counseling protocols. “But, I remind them,” Conrard reports, “that less than 25 percent of Americans have any kind of education in this area and that this is a good regulation for everybody.”

Written by Neil Morse

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