National Mortgage Professional Magazine published a great interview with Ken Scholen, the “godfather” of the reverse mortgage industry. Atare Agbamu sat down with the man responsible for the first reverse mortgage R&D project and discusses the state of the industry and the history of the product.
During the interview, Scholen provides some great insight into the program, specifically in regards to the health of the industry. Scholen said that:
It’s not enough to assert that the predators only operate on the fringes of the market or that the loan product per se is no the problem. The reality is that the predators wield an enormous influence over the public image of the product and the market and, therefore, the health of the industry.
I agree with what he is saying but he follows it up with:
So the health of the industry is directly tied to the safety of the consumer, and halfway measures to restrain the predators will only result in halfway protection for consumers and the industry
It’s the first I’ve heard of anyone suggesting that the health of the industry is tied to the safety of the consumer, but I think he could be right.
He also brings up counseling and says that:
A strong HECM counseling program can be a major factor in protecting consumers and the industry. But all the efforts to strengthen the program will mean little unless an independent source of reliable and adequate funding can be created to support it.
Amen to that, lets just hope that the new counseling protocols are funded accordingly. At the end of the interview, Scholen talks about the opportunity he sees from lower cost reverse mortgage products.
Loan costs are a serious barrier to market growth. Consumers who would be willing to accept lesser loan benefits of various types in exchange for much lower costs are the major untapped segment of the reverse mortgage market.
I couldn’t agree more and Meg Burns, Director of the Office of Single Family Program Development at HUD said that a HECM "mini" is under development at the MBA’s Reverse Mortgage Conference in San Diego.
