And, on October 17, 2013, it published both Ethics Advisory Opinion 2013-3 (Ethical Refinancing of HECM Single Disbursement Lump Sum Payment Option Loans and Anti-Churning Practices), and Ethics Advisory Opinion 2013-4 (Ethical Considerations Affecting HECM Loan MIP Premium Decisions). Important principles and requirements described in these earlier Ethics Advisory Opinions have been brought forward and updated through this current Ethics Advisory Opinion 2014-1. Other Ethics Advisory Opinions published by the NRMLA Standards and Ethics Committee (all available through the NRMLA website at www.NRMLAOnline.org) also continue to be relevant and required reading for NRMLA Members. This Ethics Advisory Opinion 2014-1. The Code of Ethics embraces certain Values and requires conformity to certain Rules that embody those Values. Among those Values are Fairness and Integrity. Among those Rules are Rule 107 ("NRMLA Members shall describe to consumers the range of programs and products generally available in the marketplace that may provide a bona fide advantage to such consumers") and Rule 301 ("NRMLA Members shall accurately describe both the costs and benefits of products presented to consumers"). This Ethics Advisory Opinion 2014-1 provides additional and updated guidance to NRMLA Members as to the manner in which the Values and Rules of the Code of Ethics--and, particularly, Rules 107 and 301-- apply, and inform and restrict the choices NRMLA Members make as they offer HECM programs and products to consumers including, in particular, the opportunity to refinance such HECM loans with additional HECM loans (HECM-TO-HECM Refinancing). Ethics Advisory Opinion 2010-1 concluded, in part, that: (a) the bona fide advantage standard of Rule 107 may not be met by a NRMLA Member unless a HECM-to-HECM refinance occurs after six (6) months after the closing of the prior HECM loan being refinanced; and (b) for a HECM-to-HECM refinance, the bona fide standard of Rule 107 may be met if the NRMLA Member also is able to show that certain additional requirements with respect to funds made available to the consumer and the "total cost of refinancing" also are met (and included the establishment of a "5 to 1" cost limitation restriction in certain circumstances, and related "anti-churning" requirements). Ethics Advisory Opinion 2010-1 also expressly noted that although meeting such stated restrictions, limitations and requirements is "not the only way for a NRMLA Member to establish that it meets its obligation under the NRMLA Code of Ethics to provide a bona fide advantage" to consumers, absent the ability of a NRMLA Member to demonstrate its compliance with such requirements in the manner described in Ethics Advisory Opinion 2010-1, the NRMLA Member "would be subject to sanctions under the NRMLA Code of Ethics." In addition, in Ethics Advisory Opinion 2011-2 (Ethical Refinancing of Reverse Mortgage Loans), NRMLA Members also are reminded of the importance of documenting the bases of all of their required bona fide advantage determinations. Please see Ethics Advisory Opinions 2010-1 and 2011-2 for additional details. The Standards and Ethics Committee has determined, and experience has confirmed, that the requirements and restrictions described in Ethics Advisory Opinion 2010-1 are effective overall and remain important elements of the ethical provision of HECM-to-HECM refinance loans by NRMLA Members. 65
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