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Loan Officers Torn Between Borrower Need & Product Restrictions
After reconnecting with a friend who had reentered the reverse mortgage space after a year and a half absence I told my wife “you know what I love about the folks I work with? They are mission-driven”.
Most of the reverse mortgage professionals like those of you watching are mission-driven individuals. Certainly we want to succeed, make a good living and a healthy income but never at the expense of our mission to help older homeowners have a more comfortable and secure retirement. Being mission driven does have it’s downside: the angst of caring. Beyond the challenges of overlapping regulations, numerous product changes and the financial assessment is the frustration encountered when we simply cannot help those who don’t qualify.
I can recall hundreds times sitting in the kitchens of…
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2 Comments
The greater good is what is good for the borrower in the long term, and that could mean looking for non-reverse mortgage options for them. It is a hard reality for the mission-driven loan officer; but it is the greater good.
My personal argument is that financial assessment was never intended to help the MMI Fund but rather to help lenders avoid the costs of default on property charges on those HECMs which were securitized through GNMA (but not those which were purchased by FNMA before 2011). It is helpful that a positive spin can be made for financial assessment but that was not what drove it. I am just thankful that it will potentially save thousands of seniors from financial ruin.
Yet the purpose of lower principal limits through eliminating the fixed rate Standard and later all Standards in Mortgagee Letters (MLs) 2013-01 and 2013-27 (as amended by ML 2014-12) was driven by the need to get rid of HECMs which were of a high risk nature to the MMI Fund. The primary problem for the MMI Fund is not property charge defaults from the current HECM (Saver v.3) but rather the risk of loss from HECMs with high balances due.
The addition of the first year disbursements limitation was to ensure that fixed rate HECMs with their closed end feature would not end up once again dominating our market and the new limitation has worked out well for HUD. The risk of fixed rate Standards has all but destroyed the program with Congress. $7.7 billion in losses for fiscal 2014 was so embarrassing to the FHA Commissioner who was projecting a positive result for fiscal year 2014 back in December 2013, that before the end of fiscal 2014, she had resigned and gone to teaching.
Yes, the origination business is harder than ever but hopefully we will find that some of the new strategies that have been developed to help seniors manage retirement financially better through the use of HECMs will find root and become a recognized benefit that senior homeowners should entertain and get a HECM early in retirement so that it can be of greatest financial benefit throughout their retirement.