Many had just absorbed the fact that HERA (PL 110-289) was slated to reduce the maximum origination fee computation. The rational was that despite the new schedule, new business from HECMs for purchase, a single (and higher) national lending limit of $417,000, expanded manufactured home eligibility, and HECMs for coops would more than offset any loss from lower maximum origination fees. This prediction was made despite the slated loss of the so-called HECM advisor program. Few, if any, were yet discussing what the impact that the HERA mandated reduction to mortgages owned by Fannie Mae would be on our industry.

One year later, our total endorsements are only slightly higher than last year at this same time yet the maximum origination fee prior to November 1, 2008 of $7,255.80 is now only $6,000. The number of HECMs originated for homes with values above $362,790 is not near what was projected [despite the increase from the HERA lending limit of $417,000 to the ARRA (PL 111-5) lending limit of $625,500]. It is rumored that much of the so-call HECM advisor originations which supposedly involved higher valued homes have been replaced by telephone sales with home values of less than $100,000. We have no HECMs for coops or expanded manufactured home volume. The number of HECMs for purchase has been less than spectacular.

So where is all of this projected increase in sales volume that AARP pointed to as part of the rational why our origination fees should be reduced? Will AARP initiate or even just support a return to the prior origination fee structure with even a $7,255.80 maximum cap?

Our lowered origination fees are not the fault of HUD. I grind my teeth every time someone in our industry puts the blame on HUD. As an AARP/IRS income tax volunteer, the position of AARP is not only deplorable but it has forced a few of the more senior centered originators out of the industry and into better paying jobs. If the economy were better I am sure even more would be gone.

AARP was wrong then. Now they have the opportunity to correct that wrong. Will they support a much needed increase in the HECM origination fee structure? It is time to test the integrity of AARP to see if they will correct what they changed through HERA.

While we are requesting a permanent increase of the lending limit to $625,500 plus increases for inflation, we should also readdress the origination fee schedule either in a single piece of legislation or if strategically better in two. One year of mandated lost revenues justified by faulty predictions is long enough. As one long time reverse mortgage veteran told me: “Let market competition correct what seniors pay in origination fees,” not some seemingly “well intentioned” crusader at AARP.