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The Mortgage Professor Launches New Approach to HECM origination
In my recent discussions with Jack Guttentag or The Mortgage Professor he mentioned a new product he is developing; the kosher reverse mortgage. For those unfamiliar with the term kosher can mean a product or food is certified as acceptable meeting particular requirements, often religious. Last week Mr. Guttentag outlined the particulars of the program. First he begins with the need for specific HECM certification of reverse mortgage professionals. I couldn’t agree more. Today those seeking to enter the reverse mortgage space are required to pass the national NMLS and state-specific tests mostly centered on traditional mortgage lending. Typically nationally exams have zero or one or two HECM specific questions. As the HECM is a complex financial product being offered to a protected class who can ill afford a financial misstep, a HECM specific certification would go a long way in protecting the consumer and our industry’s reputation.
Here are a few highlights of the Mortgage Professor’s Kosher Reverse.
1- Loan officers would make efforts to counter the bias toward excess cash withdrawals…
Download a transcript of this episode here.
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9 Comments
I could not agree more. I have been a proponent of specific reverse mortgage licensing or having an additional licensing requirement for those who originate reverse mortgages for a long time. Similar to those who obtain a drivers license and then have to get a CDL designation if they wish to drive trucks or school buses. It is very frustrating to me to have to take all of the CE that I do and very little of it is applicable to the reverse mortgage industry. When I here forward mortgage originators talking about reverse mortgages and their desire to originate them it is not to assist seniors, not to aid in retirement planning, not to help them settle into the right dwelling, nor for all of the other benefits a reverse mortgage can provide……it is only for the commission that they can receive (notice I didn’t use the word earn)by selling a product they know very little about. Why? Because our regulators are too busy regulating things caused by those who were ill equipped to do it the right way or for the right reasons in the first place. They are few in numbers and there is little financing available at the state level to allocate towards additional licensing time and expense. Especially for an industry as small as ours. Why can’t we self police and require all originators to enroll in the CRMP program or to develop a national program like S1L’s Home Equity Retirement Specialist program? We don’t have to wait for the” regulators”.
I totally agree with this approach! There are too many forward mortgage people who want to “jump into reverse” because they believe their are large profits/payoffs for themselves. I feel they need to have a “heart for seniors” and to do so must totally understand the reverse mortgage product and how to best structure it for your senior customer. A special course and certification is a great idea. Thank you professor … good work!
I love the Kosher Reverse! I agree that the implementation of these 5 steps should be mandated throughout our industry. This should be the culture in every company – to carefully structure each reverse mortgage to give clients long term financial success and a better quality of life.
I AGREE AND I AM ONLY 77 YEARS YOUNG AND I WOULD LIKE THIS APROACH FOR MYSELF ,, WHEN I GET OLD ENOUGH ,,,,,,,,,YES,,,,,,,BUT HOW DO YOU GET US ALL TOGETHER ??? THAT WOULD BE LIKE GETTING THE POLITICIANS TO AGREE,,,,,I THINK IT WOULD BE A GOOD JOB FOR SHANNON HE IS A GOOD ORGANIZER,,,,,,
Who does not disagree with the fundamental points? Yet the Mortgage Professor gave us no real solutions. He does not tell us who will label something as Kosher. He does not provide any insight as to what an acceptable financial plan would or would not entail. His plan lacks detail as well as substance.
Do not be disillusioned or overly protective of our own little industry. It has not always been the former members of the forward mortgage industry who have created our problems.
When I first came into the industry two former very successful insurance salespeople were in the industry convincing seniors that if they got a HECM, they could use up the proceeds over three years, do a HECM to HECM refinance getting even more proceeds in the future, and then refinance with a new HECM every three years thereafter. Their seeming legitimate reasoning was that home values in California were rising and HUD was consistently raising the lending limit. This tactic worked for almost five years. In that time they did approximately one thousand HECM closings and those who cloned their successful approach several thousand more.
Do you really think it was forward mortgage folks that were putting seniors into questionable deferred annuities? If you believe it was forward mortgage salespeople who were charging additional fees for estate planning, you need to take another look at the facts leading up to positions taken by senior advocates, lawmakers, HUD, and eventually our own little industry. We have never shown any real ability to self regulate the industry.
Our industry has seen its fair share of individuals trying to create their “kosher” style of branding of originators. Some have offered two day, one day, or even four hour courses on reverse mortgages. A few even provided an exam and you were certified as some kind of reverse mortgage specialist. They were great at charging fees but like the NRMLA CRMP, the credential had no weight outside of its small membership but members were charged nice upfront and annual fees for their designations.
Jack is floating an idea but who is going label you or me as a “kosher” reverse mortgage originator? Is it Jack or an organization that Jack will oversee?
While I fully support state licensing through the NMLS system specific to reverse mortgages, I find all other designations and certifications as little more than “club memberships” within the industry with no real recognition of accomplishment from other professions or most importantly, the general public 62 years old and older.
Quite frankly, I find the cited needs as fundamentally sound but the timing of their citing, stale. Most of the issues were well addressed over a decade ago with no resolution. It is not the need for solution which I question but rather who will be deciding what is “kosher” and what is not.
As to orginators, the NRMLA CRMP is not a sound answer as it is not origination specific. One does not even need a NMLS license to become a CRMP. Designations controlled by one lender or any other entity other than the governmental bodies now over seeing the NML Sytem seem more profit centered than gatekeeper.
(The opinions expressed in this comment are not necessarily those of RMS or its affiliates.)
I agree. I want to help seniors not end up like my parents who had no retirement funds. It’s a retirement planning tool with the home as the collateral. It should be used as such and not a way to make commissions only for loan officers. I do retirement planning with this as a tool.
Not only do I agree, planning to enable clients to have a sustainable, comfortable home for the rest of their lives is what I strive for with my clients. The coordination of the various parts of their retirement resources in order to maintain as much equity in their home for as long as possible is the goal.
The problem we have in our industry is the Call Center where folks see an old actor on TV and call the 800 number. They get a phone sales person who’s interest is to “sell” for the greatest commission. Instead of mandating Face-to-Face Counseling, it should be Mandated that you can’t purchase financial products over the phone, The requirement should be for the Loan Officer to be Face-to-Face when taking the application, not just a voice on the phone. That would make the greatest difference for our industry and for the best interests of the borrowers. You are welcome to let me know if you agree (or not).
So, Mr. Guinn, since you agree, who do you think should be labeling things as kosher and how much should it cost? While Dr. Guttentag may be the right guy (why I am not sure), he is not a young man and what happens when he is no longer with us?
You need someone who the public will accept at face as a real authority on the subject. Please suggest the right labeling party.
Make your agreement practical.