Professionals not providing all options can have devastating consequences
“Failing to provide a client with viable options can be just as damaging, if not worse than providing poor advice”
Such is the case in a recent post I read on LinkedIn from Florian Steciuch. He wrote “ My definition of heartbreak – meeting with an 82 year old client who was given a 30 year mortgage when she bought her new town home last year. Recently she lost her part-time job, now has Social Security of [sic] $1300 with a mortgage P+I of $700. She already missed her property tax payment. She provided a down payment of 50% – this is a prime example of why the FHA HECM for Purchase was a far superior loan option. She would have had NO mortgage payment. She was not offered this option because her bank did not offer it. 80 year old home owners should not be taking on the risk of 360 months of mortgage payments if they have a substantial down payment.”
Perhaps this 82 year old would have averted disaster had she read an article similar to Jack Guttentag’s, aka ‘The Mortgage Professor’ latest contribution in the Huffington Post, “Purchasing a House with a HECM Reverse Mortgage: How to Do It Right”. Guttentag opens stating “Purchasing a house with a HECM reverse mortgage has the great advantage that it does not impose a monthly payment burden on the borrower.”
1 Comment
Actually the forward mortgage loan officer did exactly the right thing. Some may not like it but mortgage loan officers are not fiduciaries. Our standard of care is GENERAL. That means our first loyalty is not to the customer but to our employer. It is not the job of loan officer to explain loans that the employer does not offer unless the employer requires it.
Now although HUD has taken the position that we need to present all HECM products to borrowers, yet there is nothing stated by HUD that we need to discuss forward mortgages. I know that my competency does not currently extend beyond HECMs.
Perhaps those who must legally hold to a fiduciary standard may be right to request that those who are not required to hold that standard be required to state that they always place the interests of the customer above all else, except when their own interests would be harmed in any way.
I know many will disagree but unless you are legally required to keep a fiduciary standard, as an employee your first obligation is to your employer under a legally required general standard of care.