Brookings Report Boosts Reverse Mortgages NRMLA Supports the Recommendations By Steve Irwin, President, National Reverse Mortgage Lenders Association AS WE ARE keenly aware, housing wealth remains one of the greatest assets for the vast majority of the ever-increasing population of older homeowners in the United States. And the ability to access that equity, under the right circumstances, is the key to enabling a more secure retirement. How then can we, as an industry, broaden the accessibility to reverse mortgage programs in a boldly creative, yet responsible way? Are there product enhancements that might materially improve many of our older homeowners’ standard of living? It is interesting to note that the Brookings Institution, the think tank that conducts research across various social sciences, has recently published a set of proposals that it refers to as “a new paradigm for retirement” (www.brookings.edu). One of the seven key components of this new paradigm is a focus on better access to reverse mortgages. The Brookings report, however, notes that reverse mortgages can be costly, require preventative servicing and would benefit from more efficient conversions from forward mortgages to reverse mortgages. NRMLA and its Board of Directors agree with this report’s reverse mortgage recommendations. In fact, we will continue to advocate for solutions that will directly address the cost of our products. Some potential solutions to addressing the cost of reverse mortgages might include: • Reducing the initial mortgage insurance premium (IMIP) for a defined portion of the available maximum claim limit. As borrowers in lower-valued homes are faced with higher closing costs as a percentage of available loan proceeds and relatively higher upfront costs remain a barrier to accessing equity for many lower- to moderate-income older adults, such an adjustment in IMIP may enable many more of our older homeowners to effectively age in place. • Increasing incentives to the borrower to use reverse mortgage proceeds to fund home improvements that increase energy efficiency and/or modifications that help ensure the subject property can properly accommodate the borrower’s ability to continue to age in place. • Increasing incentives for borrowers who only wish to access a smaller portion of their available equity. Ginnie Mae has taken a step in incentivizing such program developments by reducing the mandatory pool size, and HECM program enhancements might also be recommended to provide the smaller dollar amounts many older homeowners need to help close any retirement financing gaps. These approaches are but a few of the improvements NRMLA and its Board of Directors continue to recommend. Through the support and participation of our membership, we will continue to work to advance these essential changes. Moving Forward Steve Irwin “Knowledge is the only kind of wealth that multiplies when you give it away.”—Peter Schwartz, business executive, futurist, author and co-founder of the Global Business Network 4 REVERSE MORTGAGE / MAY-JUNE 2024
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