Moving Forward New Ideas Emerge for Enhancing Reverse Mortgage Products Broadening Accessibility to Products Would Help Potential Clients By Steve Irwin, President, National Reverse Mortgage Lenders Association “Be authentic. Be yourself, and work at places that really welcome who you are. You’ll get up every single morning passionately committed to making a difference. Leave your fingerprints. Really think about … what’s the impact that I had because of this job?”—Karen Lynch, president and CEO, CVS ACCORDING TO THE 2021 Profile of Older Americans, as published by the Administration for Community Living, “Of the 14.1 million households headed by persons aged 75 and older in 2019, 77 percent (or 10.8 million) owned their homes and 23 percent (or 3.3 million) rented. The median household income of older homeowners was $36,200. The median household income of older renters was $18,280. In 2019, 45 percent of older householders spent one-third or more of their income on housing costs: 36 percent for owners and 76 percent for renters.” As we all know, housing wealth remains one of the greatest assets for much 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? Some potential solutions to broadening the accessibility of the use of a reverse mortgage might include the following: 1. Reduce the initial mortgage insurance premium for a defined portion of the available max claim limit. Borrowers in lower-valued homes face 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 seniors. An adjustment in the initial mortgage insurance premium may enable many more of our senior homeowners to effectively age in place. 2. Increase incentives to the borrower to use reverse mortgage proceeds to fund home improvements that increase energy efficiency and/or home modifications that help ensure the subject property can properly accommodate the borrower’s ability to continue to age in place. 3. Increase incentives for borrowers who only wish to access a smaller portion of their available equity. The Government National Mortgage Association has already 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 senior homeowners need to help close any retirement financing gaps. These are but a few of the recommendations that NRMLA and its Board continue to carefully consider and analyze. Such creative and bold leadership is our best path forward and will further expand the reach of our marketplace so we can meaningfully impact the quality of life of so many of our aging homeowners. Steve Irwin REVERSE MORTGAGE / MAY–JUNE 2023 5
RkJQdWJsaXNoZXIy MjQ1MzY1