Spotlight Interview with Peter Bell by Aman Makkar
Written by Aman Makkar Wednesday, 17 September 2008 11:10
Peter Bell is President of Dworbell, Inc., a Washington, DC-based advocacy and communications company. Dworbell, Inc. provides comprehensive association management services to several national trade associations including the National Reverse Mortgage Lenders Association and the National Aging in Place Council.
National Reverse Mortgage Lenders Association (NRMLA) is a trade association for lenders involved in the origination and servicing of reverse mortgages.
Mr. Bell has served on numerous housing industry committees and HUD task forces and frequently testifies before Congress on housing and tax issues. He is an alumnus of Fannie Mae’s National Housing Impact Advisory Council. Mr. Bell is Treasurer of Homes for America, Inc., an Annapolis, MD-based nonprofit developer of affordable housing. He is also serves on the Board of Directors for the National Housing Conference and is a member of the Editorial Advisory Board for Housing & Development Reporter.
Outside of the housing industry, Mr. Bell serves as President of the Telluride Society for Jazz, a nonprofit organization that sponsors and hosts a major national jazz festival in Telluride, Colorado each summer. Mr. Bell is also a member of the Board of Directors for Western Jazz Presenters Network.
I wanted to take this opportunity to thank you for taking the time to talk with us. Times in the industry are crazy right now with all the changes at Fannie Mae and Freddie Mac, and the bankruptcy of Lehman Brothers. Share with us some of your thoughts regarding the current state of the industry and where you think it is headed in the near future.
Peter Bell: This is a particularly interesting and challenging time in the reverse mortgage business. We have all of the stresses of the economic malaise generally; we have the ongoing implosion around us of a number of financial institutions, a market where investors are skittish about any assets that are backed by US residential real estate, and we have a lot ethical issues and sales issues that lead people to question the integrity of the industry
It’s a challenge to deal with either of those two dynamics, either the tough financial situation alone, or the questioning of the ethical underpinnings of the business alone.
When you put the two of those together, it becomes extremely challenging. That’s the position we’re in right now. I think people have to be aware of that and attune to that and recognize that things that might have been acceptable to do in a more robust market may lead to deeper questioning and deeper scrutiny in this environment.
Reverse Review: Currently it seems we have barriers to overcome to rid the misconceptions of the reverse mortgage product, even to the so-called experts in the financial arena. What is NRMLA doing to educate professionals in the industry?
PB: We do a lot of outreach in a lot of different directions on an ongoing basis. We’re constantly reaching out to major media outlets like CNN, Forbes, Wall Street Journal, Kiplinger; outlets that we consider to be opinion makers in the financial world.
It’s a real challenge though. There are a lot of people that have a very strong opinion about reverse mortgages. They feel that the home equity is something that should be saved until the very last spending. So the concept of somebody in their mid-60’s to mid-70’s drawing on this equity for lifestyle spending instead of saving it for healthcare oriented spending…they think it’s a bad concept.
Obviously we don’t agree with that. But it is an opinion, and it’s not necessarily an invalid opinion.
It’s a very big part of what we do. Along with the policy side, the media and communications outreach is probably our largest area of activity.
RR: Can you provide us with an update on the FHA Modernization Bill?
PB: It’s a little bit hard to say exactly what’s going on because the bill is so vast. The HECM stuff is perhaps three pages in a 470 some odd page bill. HUD has the same small dedicated staff that has to work on all of these matters.
October 1st is the beginning of the new federal fiscal year. There is a very aggressive effort underway at HUD to try and implement a number of provisions in conjunction with that new fiscal year start. I do expect to see mortgagee letters popping out in the next week or two so we can have things take shape on October 1st.
On loan limits there was a lot of confusion the way the bill was drafted on just what was intended. The drafters involved on the house side had a completely different interpretation of what the language meant than the drafters on the Senate side. And folks within HUD had yet a third opinion. In the end what I think we will end up with and I hope to know this for sure later this coming week is a single national limit at 417,000.
The mortgagee letter that we anticipate will do a few things. It will say that this is the single national loan limit effective ideally October 1. Along with that it will implement the new origination fee limitation (2% of the first 200,000, and 1% of the balance thereafter up to the $6000 max). I also believe while this is not in the law, that HUD will also add into it an increase in the floor on the origination fee from the current $2000 floor. I’m hoping that will be $2500, but I’m not 100 percent sure.
RR: Speaking of origination fees; does the limit cause originators to sell higher margin products which will cost the senior more in the long run?
PB: It’s very likely that it could have that impact. We pointed that our continually through the discussions with AARP. They were just so dead set against growth in the origination fee. We said if you put pressure on the origination fee, you’re just going to force people to adjust their margins.
There is a challenge in making policy in that unfortunately you have the make policy for the lowest common denominator. You can’t make policy for the 85% of people that do things right. Unfortunately you have to create policy to keep the 15% of people that do things wrong from doing things wrong and everybody else pays the price as a result of it.
RR: What are your thoughts on the lack of production the industry is currently experiencing?
PB: I think the lack of the production is partially due to the growth in the number of originators, but I think it’s deeper. I think it’s a mistrust of the industry generally, not jus the reverse mortgage industry. It’s a mistrust of financial services and the mortgage industry overall. A sense of an economy that is slowing down
On the one hand if you really understand what’s going on and you think home values are falling, this is probably a good time to get your reverse mortgage, before your value falls more. On the other hand the fact that things are going down does scare people and after the whole subprime meltdown, consumers don’t trust what mortgage people tell them. So even though people tell them don’t worry, you can’t lose your home, even if it goes down in value, I think there are a lot of consumers who don’t buy it.
RR: Talk to us about the elimination of the HECM Advisor programs.
PB: HUD will be issuing a mortgagee letter for that. If people are working with advisors at the moment prior to the mortgage letter coming out, I think that’s a risky undertaking. There’s a law in the books that’s says no, even though they haven’t put out the mortgagee letter yet.
This is another example where policy had to be made for the lowest common denominator. There were a lot of very responsible uses of the advisor mechanism. [There were ] a lot of community banks which didn’t want to get fully involved in the program and chose to operate as advisors and now they’re precluded from doing it. So it’s a shame that they had to get shut out but it’s another example of that situation where HUD had to make policy based on the worst and those who were doing it right had to suffer as a result.
RR: A lot of our readers don’t know you personally. Tell us a little about the personal side of Peter Bell.
PB: Well, right now we’re in Teluride, Colorado this morning, and my wife, Sharon, of 27 years is sitting in the next room.
I have this love of music, although I don’t play. I would never practice as a kid. I took lots of instruments, but never practiced. I don’t have any kids and I’m not much of a sports guy. I like being out here in the mountains and skiing in the winter. Music is my love. I spend a lot of time going to hear music in different places.
The other thing I enjoy is meeting people. If you asked me when I was starting my career what I wanted to do, I would have said that I’d like to do something where I’m involved in discussing the issues of our times, where I get to travel, and meet lots of people, and shape the way our society is.
Closing thoughts: If you have the proper empathy for the customer in this business, you will succeed.
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