November is a month where days seem to be moving a little faster, closing in on the holidays, and allowing less time for research, writing, and blogging. In addition, November is a month where we are reminded to give thanks, reflect on the year, and begin planning for next year.
With this in mind, I’d like to offer this summary of reverse mortgages in 2015, and highlight updates for which I am personally thankful. Simply click on the sub-title for more information on the corresponding topic.
Recently, over 500 of my industry colleagues gathered for the National Reverse Mortgage Lenders Association (NRMLA) Annual Meeting held in San Francisco. There it was reported that the regulatory changes have accomplished what they were intended to do – improve the health of the Mutual Mortgage Insurance Fund (MMIF) while making sure the program is only offered as a sustainable solution for the right borrowers.
While in San Francisco, I also had the honor of sharing the stage with Jim Brodsky, Daniel Mooney, and Jim Milano as we discussed federal law and the 2015 regulatory changes.
I’m thankful that an “eligible non-borrowing spouse” (NBS) may now be eligible for additional rights as a “homeowner” following the death of the borrowing spouse. This is a significant change that will give peace of mind to homeowners who are married to individuals under the required age of 62.
I’m thankful that the Financial Planning community is recognizing that the reverse mortgage can be used to manage a homeowner’s adjusted gross income, social security timing, portfolio management, longevity risk, and health care needs. Tax and financial planning experts like Dr. Barry Sacks, Dr. Wade Phau, and Dr. Tom Davison continue to explore the many advantages reverse mortgage hold for those that establish a growing line of credit early in retirement.
I wrote the book, Understanding Reverse, because of the widespread misunderstanding of the product. Our trade association (NRMLA) has also recognized this issue and formed the NRMLA Education Committee, and I consider it an honor to co-chair this committee with Jim Cory of Live Well Financial. Our mission is “To create a better understanding of the reverse mortgage product by building quality educational resources and making them available to industry members, affiliates, and consumers.”
This regulatory change was rolled out in April as a way to make sure that every Reverse Mortgage borrower had the capacity to pay their property charges, either by themselves or through a portion of their equity that is set aside to pay those property charges each year. While most reverse mortgage lenders saw a significant decrease in loan volume, we believe the reverse mortgage should only be considered when it is a sustainable solution for all parties involved.
This is slowly being understood by a handful of Realtors in a couple key retirement states. Those professional are finally recognizing that the Home Equity Conversion Mortgage (HECM) product can be used by older homeowners to RELOCATE to be closer to family members, DOWNSIZE to a more manageable home, or even UPSIZE to a retirement dream home on the beach, golf course, or active adult community.
The book, Understanding Reverse, (as well as this blog) is now 1 year old. I want to personally thank Harlan Accola of Fairway Independent Mortgage Corp. and Ed O’Connor of FirstBank for recognizing that the book works very well as a training resource for other mortgage lenders.
There are many more personal reasons to be thankful this holiday season, which I will gladly post using other social media. However, 2016, is looking good as we assist older homeowners with a sustainable plan for aging in place.