Advisory Opinion 2016-1 Page 1 NRMLA Ethics Advisory Opinion 2016-1 Unethical Planned Prepayment HECM Loans May 6, 2016 The Ethics and Standards Committee (the "Committee") of the National Reverse Mortgage Lenders Association ("NRMLA"), the trade association of the reverse mortgage lending industry, enforces the NRMLA Code of Ethics and Responsibility (the "Code of Ethics"). All NRMLA Members are required to comply with the Code of Ethics as a condition of their continued membership in NRMLA. If the Committee determines that a NRMLA Member has not complied with the Code of Ethics, sanctions may be imposed, up to and including the termination of NRMLA Membership. Committee decisions enforcing the Code of Ethics may be made public. The Committee also interprets the Code of Ethics, and, from time to time, proposes changes to it for consideration and approval by the NRMLA Board of Directors. This Ethics Advisory Opinion 2016-1 (Unethical Planned Prepayment HECM Loans) is such an interpretation of the Code of Ethics. In NRMLA Ethics Advisory Opinion 2015-1 (February 4, 2015; Freedom of Choice Remaining Draw Options After 12 Months/Ethical Obligations and Restrictions), the NRMLA Ethics and Standards Committee (the “Committee”), in part in reliance upon HUD Mortgagee Letter 2014-11 (June 18, 2014), advised NRMLA Members that under provisions of the NRMLA Code of Ethics and Professional Responsibility (the “Code of Ethics”) they generally were required to honor the right of all HECM loan applicants and borrowers to determine “in their discretion and according to their views of their needs and without “encouragement” from mortgagees to do otherwise,” the amount and timing of, among other things, the respective draws available to them under the terms of their HECM loans. This Ethics Advisory Opinion referred to these borrowers’ rights in that regard as their “Freedom of Choice.” 74
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