We reverse mortgage lenders are in this business for a reason. Each one of us believes in the significance of the products we offer and the benefits we provide our nation’s elderly community. However, even as we continue to develop our businesses there has been a flurry of negative media attention calling into question the need and safety of our reverse mortgage products.

 

The concern is understandable. Over the last two years the housing market has been weakened, at first by loans going bad that were offered to borrowers who could not afford them and now by the overall impact of the weakened economy and continued job loss. Nobody wants to see a reoccurrence of these events and we all want to make sure the mistakes made in the past do not resurface in our future business operations. However, there is a fine line between protecting borrowers and cutting off valuable options available to them.

 

At MBA’s Reverse Mortgage Conference in September, I met with many of my colleagues and kept hearing the same resounding message loud and clear - now more than ever we need to protect the integrity of this vital industry. During our conversations, my colleagues spoke of their work with borrowers who want desperately to stay in their homes, but need the extra funding for their daily living expenses or to pay the bills after an unexpected illness. They spoke of how working with these borrowers re-instills every day their belief that these products are invaluable and without them many borrowers would be forced to sell their homes.

 

These conversations reminded me of why I am so proud to be a mortgage banker and I’m sure why you feel the same. After all, this business is about serving those borrowers who were able to stay in the home they’d lived in for 40 years or offering someone the ability to pay their medical bills and living expenses when their savings were depleted in a weakened economy.

 

However, should we still consider fraud a possibility? Absolutely. Right now FHA’s HECM product accounts for most of the reverse mortgage market share, but that will not always be the case. Now is the time for the industry to be proactive to ensure proprietary non-HECM products follow many of the same guidelines as the successful HECM and that borrowers fully understand the commitment for which they are agreeing. It is up to us to recognize the needs of aging Americans and make sure the products we offer aim to fit those needs.

 

So how do we protect these options and ensure they remain available in the future while guarding against potential fraud? I believe the answer is through proactive and continued discussions with lawmakers, members of the media, our industry peers and borrowers. Consumer protection is key and we need stakeholders to know lenders value it just as much as they do. By addressing the general misunderstanding and concerns surrounding this product, we can turn the tide on the negative perception and pave the way for proprietary products that make sense and benefit the population that need them most.

 

Just as it is important for lawmakers, the media and borrowers to remain informed, we too need to make an effort to remain at the forefront of issues facing the industry by attending conferences such as MBA’s Reverse Mortgage Conference to hear from industry experts and discuss these important issues with your peers. You can also stay up to speed in the latest in regulatory and process changes through industry courses such as those offered through CampusMBA’s Reverse Mortgage Central.

 

However you choose to participate in the efforts, I think we can all agree now is the time to be proactive in protecting the important work we do. We have all learned from the mistakes of the past. Let’s make the decision now to tackle these concerns head on and not allow the fear of abuse to jeopardize the future of this valuable financial tool – reverse mortgages.