What will it take for our industry to bounce back?
Despite the increasing need of retirees whose largest asset is typically their home, our industry volume continues to languish. Is it because our market is dysfunctional as the Mortgage Professor opined due to fear, confusion, and ambiguity? It is the increasing burden of regulation, product changes, and reduced lending ratios?
Mark Miller penned a column in WealthManagement.com that warrants consideration and reflection for HECM professionals entitled “Are reverse mortgages on the comeback trail?”. He asks the question, “will financial planners resuscitate the reverse mortgage?”. One could argue that recent changes to the HECM program have pushed the loan into the realm of…
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Dysfunction: abnormal or impaired functioning of a person, organ, or in our case Home Equity Conversion Mortgages. Is our market truly dysfunctional? If so, what corrections can we make to better expand our reach to eligible homeowners?
Understanding Those Opposed to the HECM Key to Market Expansion
In October 2010, the HECM Saver was introduced giving borrowers considerably lower upfront FHA insurance premiums in exchange for lower lending ratios or principal limits. Three short years later the Saver was eliminated from the Home Equity Conversion Mortgage Program. Ironically, it was this now-eliminated program that spurred considerable interest in the HECM within financial planning circles. Today, some retirement experts are calling again for a low-cost reverse mortgage.
Creativity unlocks potential markets and opens up possibilities. It also makes you a target of critics. In recent years the long overlooked principal limit growth factor (or as many refer to it as the line of credit growth rate) has garnered a second look by financial professionals and our industry as a potential means of managing risk in a retirement portfolio.
Preparation and research are key when addressing those who may oppose your closely held beliefs. This requires us to approach opposing arguments with an open mind and intellectual honesty to accurately assess the opposing argument. In recent years, much has been written in both the media and professional financial publications on the benefits of strategically using a reverse mortgage as part of retirement income planning. However not all agree.
Is our industry drinking from a firehose? Consider the last eight years that have left our industry in a continual state of flux as we grapple with the ever-increasing pace of change for the Home Equity Conversion Mortgage program. For perspective let’s examine the deluge of changes each of you and our industry has endured.
Sacred cows. Those tenets or beliefs that have been long held above reproach and which are seen as immune from criticism. For the Home Equity Conversion Mortgage, one benefit has been largely left unscathed, that is until now. 
The reverse mortgage industry continues to push against the headwinds of dwindling loan volume and increased regulation, yet there remains a silver lining: increased acceptance in the financial planning community. Robert Mauterstock is just such an advisor. With 35 years experience as a financial advisor Mauterstock recently penned a column in the Huffington Post outlining both the benefits of the HECM and the reasons behind his change of heart.
While negative new stories about reverse mortgages have diminished considerably a few media outlets continue to beat the drum on the dangers of reverse mortgages leaving vulnerable seniors without a home. Reading such articles reminds me of Winston Churchill’s quote “A life gets halfway around the world before the truth has a chance to get it’s pants on”.