Should NRMLA discourage HECM-to-HECM refis? Fairway thinks so

The reverse mortgage division of Fairway Independent Mortgage Corp. has decided to end its membership with the National Reverse Mortgage Lenders Association (NRMLA), RMD has learned.

According to perspectives shared in an interview with RMD by Harlan Accola, Fairway’s national reverse mortgage director, and Dan Hultquist, Fairway’s national reverse sales training specialist, Fairway elected to leave the association because it disagreed with NRMLA’s approach to growing the industry, especially with the recent spike in reverse mortgage refinances.

“Dan [Hultquist] and I, and our entire company, feel very strongly about the need for not doing a whole bunch of HECM-to-HECMs,” Accola said. “Our main concern is for the clients – it confuses them, and the massive amount of direct mail and telemarketing cheapens the industry. And, it is not good for the investors who are funding clients’ loans and the industry by buying securities that sometimes last only a few months.”

NRMLA President Steve Irwin provided a statement to RMD which is included at the end of this story.

Why Fairway’s reverse mortgage division chose to leave NRMLA

Fairway’s contention is that NRMLA does not do enough to mitigate the spread of refinance volume, and when Accola tried to raise the issue, he said he was asked to step down from the Board of Directors.

“I publicly, in Board meetings, talked about that,” Accola said, referring to the prevalence of refinances. “And so when my term came up, they asked [operations manager] Kari Van Kleef and I to resign from the Board. It’s ‘lead, follow or get out of the way,’ so we got out of the way. We didn’t want to follow an organization that was going in a different direction than where we are going. The industry is at about 50% refinance volume. We have usually been below 10%, so that’s a pretty big direction difference.”

Members of NRMLA get access to networking opportunities with others in the reverse space and participation in exclusive industry-focused events. In addition, NRMLA advocates for the reverse mortgage industry at the federal and state level.

In an internal communication to employees, Fairway stated: “Fairway is committed to the reverse mortgage space and is currently expanding in the reverse market – both sales and operations. Fairway is concerned about the long-term health and direction of the reverse mortgage industry. Therefore, Fairway will be independently working to improve public relations, HECM policy, product education, and industry marketing ethics.”

Accola clarified to RMD: “This wasn’t a knee-jerk reaction. It doesn’t mean we’d never go back, but we just feel that there are some really big issues that Dan and I both agree on – a number of things  – that we felt could/should be fixed that we weren’t being heard on, but we don’t plan to stay out of the game.”

One of those points of disagreement was the effectiveness of NOVAD Management Consulting as HUD’s reverse mortgage servicing contractor. Accola believes that NRMLA has not advocated strongly enough for the selection of a new contractor.

Another point of contention is NRMLA’s Code of Ethics and Professional Responsibility, Accola said. Fairway has created its own code of ethics, which Accola describes as “comprehensive.” “NRMLA’s code of ethics is good. But the question is, do you hold everyone accountable to it?” Hultquist said.

Government relations, the state of retirement

NRMLA has well-established mechanisms for policy development and government outreach. Fairway said it will be turning to other memberships and association relationships to progress its reverse mortgage division and any relevant policy discussions. These organizations include the Mortgage Bankers Association (MBA) – of which the broader Fairway organization is a member – and through its previously established partnership with the National Association of Insurance and Financial Advisors (NAIFA). Accola is also engaged with federal lawmakers.

“I was on Capitol Hill yesterday talking to representatives about the retirement crisis,” he said. “I was there personally with some members of NAIFA, which is a 25,000-person organization in the financial planning area. We’re investigating what we can do in other areas to be able to influence things from an FHA and a legislative perspective outside of NRMLA, not because we feel that we can do it better than them necessarily, but differently.”

That difference comes down to diverging thoughts about which remedies to try and apply to the business going forward, Accola said.

“Our overall massive concern is retirement income for millions of Americans who should have a better retirement,” he said. “Doing 25,000 HECM-to-HECM refis  and not bringing in new clients and new avenues of referral partners, and not fixing major end-of-loan servicing issues will not change the way retirement is done in this country.”

Accola said Fairway is open to the possibility of rejoining NRMLA at some point in the future if each organization’s priorities become better aligned.

NRMLA response

In response to a request for comment, Steve Irwin, president of NRMLA, shared the association’s perspective on its role serving and growing the reverse mortgage industry:

As a membership organization focused on the best interests of its Members and the seniors they serve, and with its considerable record of achievements to date and with many more to come, NRMLA and I fully appreciate that such achievements could and would not be made without the hard work and talent of its Members and their representatives who serve on its Board of Directors—including Harlan Accola and Fairway.

As in other Associations, NRMLA members are nominated for Board positions by the NRMLA Nominating Committee and then elected by the voting member delegates of the Association for limited terms, after which they and their Member companies—if still active in the reverse mortgage space—overwhelmingly continue and renew their NRMLA membership and involvement. And we as an industry are all the better and stronger for it.

Individual Members of NRMLA make their own decisions as to how they best will compete for the loyalty and business of the seniors they serve, including whether and the extent to which they offer to refinance their existing loans. They do so in accordance with applicable legal requirements and restrictions, and, very importantly, if they are a NRMLA Member, they also have promised and are required to do so fully in accordance with NRMLA’s Code of Ethics. And on this point, that means honoring its central requirement that in this area and in all that they do, they always provide a “bona fide advantage” to the seniors they serve.

About that, and the active implementation of the Code of Ethics and its requirements, NRMLA and its Members and its Board and its staff are very serious, and actively engaged.

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