Hot Seat: Atare E. Agbamu

Written by Atare E. Agbamu

From his boyhood aspirations and his most memorable moment to his thoughts about the reverse mortgage market, we get the facts from Atare E. Agbamu, author and reverse mortgage reformer.

Ten years from now I want grandchildren and more gray hair.

Something nobody knows about me is that I love to sing in the shower, especially after working out at the gym.

If I were a professional athlete, I would be a Kenyan marathoner.

My first car was a 1987 Honda Civic.

If I could meet anyone, past or present, it would be Jesus Christ. I’d also like to meet his spiritual cousins: Lao-tzu, Moses, the Buddha, Mohammed and others.

My favorite charities are Books For Africa (BFA) and Little Brothers—Friends of the Elderly (LBFE). BFA seeks to end the book famine in Africa, while LBFE aims to end loneliness and isolation among elders. The St. Paul-based BFA has shipped more than 32 million books to more than 49 African countries since 1988. With U.S. headquarters in Chicago since 1959, LBFE has a chapter in Minneapolis/St. Paul that brings friendship and practical services to thousands of elders who are isolated and lonely in the Twin Cities.

When I was a boy, my aspirations were to be a Catholic priest, a reggae singer (and sing with Jimmy Cliff) and a soldier. I lived through the Nigerian civil war, and my home state was a strategic target because it produces oil, Nigeria’s major revenue source. My hometown, Warri, experienced some combat action. My boyhood eyes saw the madness of war.

Every morning I give thanks for the day’s blessings and trials, and I empty my mind.

When I was a kid I wanted to see the world beyond my hometown and my native country. My father used to say that traveling is a great source of education. He was right.

I’ll never forget the day our daughter, Tejiri, was born, 15 years ago. I was in the delivery room, holding my wife’s hand and praying. We had decided not to use medical technology to find out our baby’s gender. We wanted to be surprised and we were because we had two boys before her. As soon as the nurse/midwife announced, “She’s a girl!” I fell on my knees, raised my hands and exclaimed: “Thank God, I am father of the bride!” Efe, my wife, managed a smile and the nurse laughed out loud and said: “Mr. Agbamu, it will be a while before you get there,” or something like that. Well, Tejiri will be 16 in December, and I am moving daily, step by step, toward being the father of the bride I imagined in the delivery room at Regions Hospital in St. Paul.

My first job was as a dishwasher at a restaurant. I was 13.

My parents taught me to respect myself, to respect others (especially my elders) and to work hard.

My favorite time of day is the morning, early morning.

The best lesson I’ve ever learned is that service to others and to community is the crown of life.

The most memorable moment in my life was realizing that intelligent living is impossible without the grace and knowledge of God.

I love running, singing, dancing and listening to music.

The best purchase I’ve ever made was a college education.

My favorite books are the ones I am reading at the moment: the Bible, the Bhagavad Gita and the Tao Te Ching.

If I could trade places with someone for a day, I would choose a homeless beggar on the streets of a major American city.

For success I have sacrificed success—or the delusions of success.

The future of reverse mortgages is bright, but it could be even brighter if money-center banks can be spurred to come back into the business, and if major private insurers or a consortium of private insurers can be encouraged to provide free-market competition on the HECM insurance side. To people who know more about these issues, bringing back the big banks will take changing current HMBS sale accounting rules and improving issues, such as the potential displacement of surviving non-borrowing spouses of HECM borrowers. It will also involve reforming HUD’s HECM foreclosure rules to give lenders clarity and certainty in appropriate foreclosure situations. Above all, it will take generating sustainable loan-volume growth. The catch is that for such growth to happen, the matchless resources and marketing prowess of the major banks must first be deployed. Bringing in HECM insurance competition will take congressional action. To give private insurance a fighting chance in competition with HUD insurance, the government will need to provide re-insurance to private insurers to create a level-playing field. Also HUD’s HECM regulatory role should be given to another federal agency. It should sell HECM insurance only.

I entered this industry because it presents an opportunity to serve older consumers. Reverse mortgages change lives, they give people hope and they give people peace of mind. I’ve seen it many times as a kitchen-table loan officer. I have also chronicled it in my work as a writer and student of the product and the industry. However, as we have seen with the non-borrowing spouse foreclosure-and-displacement crisis, shortsighted reverse mortgage regulations can hurt the people the product was designed to help and the lenders who are trying to do the right things. We have a humanitarian crisis on our hands with more than 12,000 older Americans marked for displacement in the coming years, unless HUD changes course and revokes Mortgagee Letter 2015-03 ASAP.

Before I entered the reverse mortgage industry I was a teacher at proprietary business schools in New York City and at SUNY’s Educational Opportunity Center in Queens. I also originated forward mortgages for more than three years before I stumbled on reverse mortgages and specialized in them.

Reverse mortgage professionals can best support the public image of reverse mortgages by doing what is right by their customers all the time, even if it hurts their bottom line in the short term. Ethical and empathetic customer service across all operational functions is a superior competitive strategy. But it involves painful unlearning of much conventional industry wisdom.

The important thing financial advisors can learn about reverse mortgages is that they are powerful, life-planning home loans for some of their clients, as several peer-reviewed studies have shown. Innovative thinkers among financial advisors are embracing this view.

  • RMMyths

    Over the years it has been interesting to hear the yarns about how HECMs have never received taxpayer support but the program is self-sustaining. Yet it never has been self-supporting.

    Unlike private insurers who have no such subsidy, the government (taxpayer’s money) pays for all operating and administrative costs of the HECM program. Not one penny of FHA MIP (Mortgage Insurance Premiums) is used to pay those costs. MIP is used for reimbursing losses between the cash received to pay off the loan and the balance due along with losses which result when the value of the collateral is less than the balance due at termination. Also certain costs and losses incurred during assignment beyond operating and administrative are also paid from accumulated MIP reserves.

    Yet things have been so bad for just those HECMs endorsed after September 30, 2008, that HUD has taken $1.7 billion from the Treasury and an additional $5.8 billion (net of $0.77 pay back) taken from forward loan capital reserves also in the MMI Fund.

    So not only have taxpayers paid all operating and administrative costs of the HECM program plus an additional $1.7 billion to cover future projected mortgage termination losses but also another $5.7 billion from MIP paid in by forward borrowers also to cover expected losses from future losses. Yet even despite all of this pumping up of the HECM portion of the MMI Fund, it was still short by $1.166 billion of having the funds necessary to cover projected future losses.

    So what private insurance company or consortium of such companies want to get involved in competing for the HECM market? Perhaps something might work but the risk for fraud would be immense.