We want to thank everyone who attended NRMLA’s Virtual Summer Meeting this week. Nearly 300 reverse mortgage professionals from 100 companies participated in the event, which featured many outstanding presentations on sales, servicing and other compliance issues. Here are some highlights:
New DAS Highlights Importance of HECM
- In her first public remarks before the reverse mortgage industry, Deputy Assistance Secretary for Single Family Housing Julienne Joseph gave an uplifting speech about the importance of the Home Equity Conversion Mortgage program and how a reverse mortgage she originated early in her professional career for a couple in southern Virginia benefited them.
- “Earlier in my career, I heard about an African American couple residing in the Tidewater area of Virginia — which is where I’m from, I’m from the Virginia Beach area — and their home was paid for, but they needed a little extra boost to their retirement income,” she said. “And to remain in their home and to continue to live independent self-sufficient lives, they needed to find a little bit of help.”
- After going through counseling, and weighing options, they decided to get a reverse mortgage. DAS Joseph added, “Both of them were able to stay in their home and age in place during the golden years of their lives, which is what we all aspire to do. When they passed, the outstanding HECM balance was repaid and there was still a modest amount of equity remaining that was passed on to their adult children. So, in my opinion, this is what makes the HECM just a good option for seniors who can tap into the equity in their homes to allow them to remain in them.”
- She promised to work with the industry to improve the efficiency of the HECM program and reiterated the Department of Housing and Urban Development’s commitment to assisting homeowners who need help staying in their homes. DAS Joseph concluded her remarks by thanking the attendees for the work that they do. “This is sincere, thank you for the work that you do. This is mission work. The fact that you continue to fight for seniors is invaluable.”
- A panel of servicing experts reminded attendees that reverse mortgage borrowers need to know their responsibilities: maintaining the property; timely signing and returning the annual occupancy certification form; and timely paying their property charges. Borrowers must maintain contact with their servicer if they experience an issue that will prohibit them from fulfilling any of their obligations (such as being financially impacted by COVID). Servicers also recommended that loan officers share copies of the CFPB’s new resource, “You have a reverse mortgage: Know your rights and responsibilities.”
- Servicers noted that the foreclosure moratorium expires July 31 at which time they must proceed with foreclosure actions as applicable; and
- Borrowers who are in default or facing default soon due to a COVID-related financial hardship must raise their hand ASAP by contacting their servicer by September 30, if they wish to have a six-month extension on having their loan called due and payable or proceeding to foreclosure.
Regulatory Considerations When Working With Financial Planners
- NRMLA’s outside counsel Jim Milano and Shelley Giordano of Mutual of Omaha Mortgage commented that financial planners are not “one size fits all.” Unlike mortgage companies and mortgage loan officers, financial planners have differing certifications and registrations. There can be certified financial planners, insurance agents, registered investment advisors, and each can have different regulators, including self-regulatory bodies such as the Financial Industry Regulatory Authority (FINRA), and other federal agencies, like the Securities and Exchange Commission (SEC), and/or state insurance departments. In this regard, the regulatory rules and regulators for financial planners are not as cohesive or homogenous as those for mortgage companies and mortgage loan officers. Mortgage loan officers need to understand that these regulatory regimes for financial planners are different and bring different restrictions and challenges.
- The rules around working with financial planners are different, have evolved and continue to evolve – which makes discerning clear rules at any point in time a little murky. But the trend line has been for the financial planning community more generally to begin to recognize that home equity must be taken into account in considering financial and retirement plans.
- Both presenters said they see a lot of effort today by reverse mortgage loan officers to educate more broadly, such as by writing newsletter articles (some to be published in financial planning journals) about how a reverse mortgage may be beneficial in financial and retirement planning. In doing so, mortgage loan officers need to be careful. Here is a list of do’s and don’ts as presented by Milano and Giordano in their concluding remarks.
Reverse Mortgage Sales: What Are Your Missing Pieces?
- Some borrowers will close despite an incomplete sales presentation. If loan originators want to maximize sales – and, more importantly, maximize the impact on the lives of their clients – they need to have all the pieces in the right place. That means you need to be able to educate the client on the important terms and key disclosures, do more than qualify the client, explain complex concepts in a simple way and ask the right questions. That’s according to a very informative presentation by sales trainers Barbara Cripple, CRMP, and Sue Haviland, CRMP, of Finance of America Reverse, and Dan Hultquist, CRMP, of Fairway Independent Mortgage.
- Cripple summarized key concepts that loan originators should be educating their clients about upfront, such as borrower responsibilities, the differences between a fixed and adjustable rate loan, what happens when the loan matures and repayment options.
- Haviland touched on referral partners and the value proposition that each offers in building your business. She also stressed to attendees that they follow all NRMLA ethics guidelines, as well as your own company marketing and compliance guidelines, when building a professional referral network.
- Hultquist noted three advanced topics where he often sees weaknesses in the sales presentation: Non-Borrowing Spouse, Financial Assessment and Line of Credit (LOC) growth. He described FA as follows when speaking to a client: We need to examine your credit history, property charge history, and residual income to make sure we are providing a sustainable solution for you and your family. To ensure sustainability, we sometimes need to set-aside a portion of your principal limit so that we can pay critical property charges on your behalf.