Advisory Opinion 2016-1 Page 3 under applicable HECM variable rate loan requirements of the FHA (which HECM loan, as a result, may be offered on relatively favorable terms and conditions to such borrower) to be followed by the prepayment of all or part of such drawn proceeds at a later date (which then, for example, may permit the borrower to establish a revolving line of credit under the terms of the existing HECM loan) generally would be classified as a planned prepayment HECM loan within the meaning of this Ethics Advisory Opinion 2016-1 that NRMLA Members are advised would be an Unethical Planned Prepayment HECM Loan that they may not offer or provide or assist in arranging, as doing so would be inconsistent with their obligations under the Code of Ethics. However, in contrast and as a further example but not limitation, an understanding or agreement, formal or informal by and between a HECM loan borrower and a lender or originator that, as part of an aging in place or retirement planning strategy the borrower shall make periodic, planned, partial prepayments over time of any portion of the amount permitted to be drawn at the closing of the HECM loan generally would not be classified as an unethical planned prepayment loan within the meaning of this Ethics Advisory Opinion 2016-1. In such situations, NRMLA Members further are advised to retain appropriate documentation of the bases of their actions. NRMLA Members routinely and overwhelmingly engage in ethical HECM loan activities for the benefit of the seniors they are pledged to serve. All the more reason, then, that there is no place in NRMLA for NRMLA Members that offer or originate Unethical Planned Prepayment HECM Loans. NRMLA Members, seniors, and others are urged to bring to the attention of NRMLA's President and the Committee concerns they may have about potential violations of the NRMLA Code of Ethics, including of this Ethics Advisory Opinion 2016-1, directly or indirectly by NRMLA Members, for consideration and action in accordance with the procedures described in the NRMLA Code of Ethics. A form for that purpose also may be found at the NRMLA website, at NRMLAOnline.org. 76
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