Originators) (the Mortgagee Letter), HUD referred to the applicable provisions of HERA, that added to the National Housing Act new Sections 255(n)(1) and (n)(2). In essence, these HERA provisions provide for additional protections for seniors participating in the HECM reverse mortgage loan program, by barring certain arrangements that may provide incentives for the sale to such seniors of other financial or insurance products that do not meet their needs (the HERA Goals). They do so, in general, by requiring that there be appropriate firewalls or other safeguards to inhibit such inappropriate incentives, and also by prohibiting such a senior, as a condition of obtaining a HECM loan, from being required also to purchase such a financial or insurance product. In the Mortgagee Letter, HUD noted its intention to provide definitive guidance with respect to HERA Section 255(n), following the receipt of comments from interested parties. NRMLA and others have provided such initial comments to HUD, and the Committee intends to amend this Ethics Advisory Opinion as and when and to the extent that such definitive guidance, subsequently issued by HUD, affects it. In the interim, and until such HUD definitive guidance is issued, the Mortgagee Letter “advises that mortgagees must not condition a HECM mortgage on the purchase of any other financial or insurance product, and should strive to establish, consistent with the new law, firewalls and other safeguards to ensure that there is no undue pressure or appearance of pressure for a mortgagor to purchase another product of the mortgage originator or mortgage originator’s company.” In this Ethics Advisory Opinion, we refer to this HUD advice as “HUD’s Interim Guidance.” Ethical and Unethical Product Offering Examples and Safeguards. These Code of Ethics Values and Rules, singly and together, HUD’s Interim Guidance, and a consideration of the HERA Goals, support the Committee's conclusions that the following practices constitute, respectively, Ethical Product Offering and Unethical Product Offering under the NRMLA Code of Ethics. First, a NRMLA Member engages in Ethical Product Offering if it has is in place at least one of the following Product Offering Safeguards, and other applicable requirements of this Ethics Advisory Opinion also are met. (1) The Separate Originator Safeguard. The NRMLA Member shall separate those engaged in the offering, marketing and origination of reverse mortgages from those engaged in the offering, marketing and origination of other financial and insurance products, and take reasonable steps to assure that no one engaged in either of such activities receives, directly or indirectly, incentives or compensation for being engaged in the other. In this Ethics Advisory Opinion, this Safeguard is referred to as the Separate Originator Safeguard. Under the Separate Originator Safeguard, the NRMLA Member may offer both reverse mortgages and financial and insurance products concurrently, as long as those engaged in the offering, marketing and origination of all such products also are appropriately licensed to do so and comply with all
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