What Happened at NRMLA West
More than 260 reverse mortgage professionals from 100 firms convened at the Hyatt Regency Huntington Beach Resort & Spa in Huntington Beach, California, for the 2016 Western Regional Meeting, May 10-11, to catch up on current news and trends and to network with their peers.
Here are some highlights:
Western Region Leads Economic Recovery The economy’s “not that bad, but it’s not that good,” said Jordan Levine, an economist with the California Association of Realtors, during the opening session.
Despite this moderate opening assessment, Levine went on to paint a promising picture of where the country’s economy has gone and where it is going, led by West Coast states where the job market is recovered and is “handily outpacing the rest of the country” in growth.
What does all this mean for housing and specifically for reverse mortgages? Despite a renewed willingness among bankers to lend more, and increased mortgage availability as a result, the older generation does not seem to be moving at rates comparable to earlier eras, according to Levine. An influencing factor here may be fear of capital gains taxes. But as values increase and people remain in their homes, they build more equity, which could be influential in encouraging reverse mortgage take-up.
Caregiving Costs Need New Support As a society, we are facing a “collision between myth and reality” when it comes to the need for long-term care, according to Dr. Gretchen Alkema, vice president for policy and communications at the SCAN Foundation, who spoke about long-term care financing policy recommendations. On one hand, more than half of those questioned in a recent survey expect their loved ones to need long-term care in the next five years. On the other hand, only 24 percent of them think they will ever need help.
With 70 million boomers reaching retirement age, there is an emergency national need for non-medical functional support or help with activities of daily living, such as getting out of bed, bathing and dressing. Such care is paid for by those without assets or sufficient income by Medicaid, but it’s not covered for the overwhelming number of elder adults who depend on Medicare to cover health expenses. On average, people will spend $138,000 out of pocket for long-term care in their lifetime.
Currently, there is no existing program to help pay for this, which is causing consumer uncertainty and confusion. “This will not be solved by current tools,” Alkema said. “It will require new tools, systems of care and policies.” This dilemma seems to indicate that, next to paying off forward mortgages, the most common usage of reverse mortgages over the next 25 years may well be to pay for long-term care needs.
HECM Borrowers Open Up A group of four solidly middle-class borrowers, each over 62 years old, met for the first time while walking up to the dais to participate in a panel discussion about their perceptions of reverse mortgages and how the loan has impacted their lives.
Dennis Galloway, a successful real estate consultant, used to travel across the country every week until a few years ago when he underwent a triple bypass surgery that grounded him (at his family’s insistence). Around the same time, the housing market slowed and so did Galloway’s workload and cash flow. It was his accountant who referred Galloway to a local reverse mortgage loan originator who explained the features and responsibilities of the product and prepared him for the application process. “It was a great decision and more people should take it seriously,” Galloway told conference attendees.
For Randy Stultz, it was his mother’s need for in-home care services that convinced them to get a reverse mortgage. Stultz lived with his mother, and his name was also on the title to the home, so together they got a reverse mortgage with a line of credit that continues to impress him. He excitedly shared, “The credit line growth is stable and for me has grown $60,000, while my other investments are only up $20,000 in the same time period.”
Leo Corono used the proceeds from his first HECM loan to cover the cost of health insurance until he became eligible for Medicare.
Donna Adam, a former wealth manager, told the group that she was incredibly reluctant to take her reverse mortgage, but has found that it was the right thing to do for her situation, and she’d recommend a HECM loan to any client if she thought it would meet their needs. The panelists also answered audience questions about the fees associated with their counseling sessions (it was a range), where they did their research (mostly online), and what the industry can do better (too much mail!).
Ethics Committee Tackles Unethical Planned Prepayments
The Standards and Ethics Committee published Ethics Advisory Opinion 2016-1, which discourages NRMLA members from offering or providing “planned prepayment HECM loans,” with some exceptions.
Unethical planned prepayment HECM Loans are generally characterized in the advisory as transactions where the borrower may receive favorable loan terms and conditions after coming to an agreement or understanding with the loan originator about the amount of loan proceeds to be drawn at closing and then prepaid at a later date.
The committee clarified that not all planned prepayments are unethical. As part of an aging-in-place or retirement planning strategy, the borrower may make periodic, planned, partial prepayments over time.
The Committee referenced its previous Advisory Opinion 2015-2 (October 30, 2015; Ethical Refinancing of HECM Reverse Mortgage Loans and Anti-Churning Considerations—New Requirements) because of its related purpose to “help foster the development and vitality of the secondary market for such HECM loans.” Visit nrmlaonline.org to view Ethics Advisory Opinion 2016-1 and other previously published advisories. Reverse Mortgage Education Week a Huge Success NRMLA reached more than 1,200 professionals during our inaugural Reverse Mortgage Education Week from April 18-22 and succeeded in its effort to help other professionals who work with seniors understand how a reverse mortgage can help meet their clients’ needs.
Through NRMLA’s own webinar and events with the American Society on Aging, the Mortgage Bankers Association, the National Association of Realtors, and an in-person meeting with staff from the Office of the Comptroller of the Currency, we reached caregivers, CPAs, elder law attorneys, estate planners, financial advisors, gerontologists, mortgage bankers, real estate agents and other professionals who work with older adults.
Because we’ve posted event recordings and materials online in our Reverse Mortgage Education Week Recap, reverse mortgage professionals can continue to point their professional contacts to NRMLA to learn more about HECM loans. Check out the recap at nrmlaonline.org.
DAS Zadareky Leaving HUD Deputy Assistant Secretary for Single Family Housing Kathleen Zadareky, who supervised the implementation of Financial Assessment and other critical HECM reforms beginning in 2013, departed from HUD at the end of May.
“Kathleen is a smart, analytical and open-minded executive and her tenure as DAS has been good for the HECM program,” says NRMLA President & CEO Peter Bell. “Program changes implemented under her direction have laid a foundation for the long-term viability of HECM.”
Former U.S. Treasury official Bob Mulderig, who came to HUD in 2015 to serve as Zadareky’s deputy, took over as Acting Deputy Assistant Secretary for Single Family.
In the Press
- An NBC Nightly News segment on reverse mortgages aired April 22 to 8 million viewers with the Web tagline, “Consumer advocates now say that taking out a reverse mortgage could be a smart way to bring in more money.” The piece emphasizes new consumer protections for borrowers and includes an interview with Greg McBride of bankrate.com, who said, “Reverse mortgages are going to be a lifeline for millions of retirees who are under-saved for retirement.”
- “Incorporating Home Equity into a Retirement Income Strategy,” by retirement planning expert Wade Pfau, was an article published in the Journal of Financial Planning that explores six different methods for incorporating home equity into a retirement income plan through the use of a reverse mortgage.
- “Reverse Mortgage Solutions for a Cash-Short Retirement,” written by nationally syndicated personal finance writer Scott Burns, describes three ways retired couples can increase their spendable income using a reverse mortgage.
New CRMPs NRMLA congratulates the following people for achieving the status of Certified Reverse Mortgage Professional (CRMP):
- Susan E. Caffine, Reverse Mortgage Funding LLC, Melville, New York
- Jamie Longe, Reverse Mortgage Solutions, Houston, Texas
- Todd Woodcock, Responsible Reverse Mortgage, Inc., Port Charlotte, Florida
New Members NRMLA welcomes its newest members:
- Allegiant Reverse Services, Roseville, California
- National Tax Search, LLC, Chicago, Illinois
- LowerMyBills, Inc., Playa Vista, California
