A prospective, large-scale public relations campaign promoting reverse mortgages and promulgated by an industry trade association would be funded through a $15 per-loan assessment by wholesalers on reverse mortgage originators (i.e. broker, correspondent) whom they fund.
According to several people familiar with the proposal, it will be formally considered at a board meeting of the National Reverse Mortgage Lenders Association in Atlanta this week, during one of the group’s regular “road show” events.
In advance of the vote, some members have expressed concern, one saying he disagrees with “the size and scope” of the campaign and adding: “It could have been done with a combat battalion” rather than a full-scale “military assault”.
This member reports that “BofA [Bank of America], Wells [Fargo Home Mortgage], Financial Freedom and MetLife are on board [with the $15 assessment], but a lot of brokers are on the edge [financially]” and in no position to be taxed in this manner. He believes that “it’s likely ‘the big four’ eventually will have to fund” the campaign themselves, because of resistance among these smaller, front-line originators.
Yet, another member who claims to have spoken to “brokers and others,” about the prospective new fee, conceded: “You’re never going to please 100 percent of the people, but,” he insisted, “the [NRMLA] membership will decide,” noting: “If there is a better funding solution, someone ought to raise their hand and speak up.”
The urgency of a PR initiative may be driven, in part, by deepening dissatisfaction among reverse mortgage practitioners with a waterfall of recent new restrictions cascading out of Washington, D.C.
Jeff Lewis, senior managing director, Guggenheim Partners, told RMD in blunt terms: “We are clearly dealing with an FHA that does not like HECMs or brokers. They are cutting the PLFs [principal limit factors], raising the mortgage insurance premium, increasing capital requirements for brokers,” according to Lewis, who advised practitioners somewhat caustically, to “follow what [government regulators] do, not what they say!”
Responding, Vicki Bott, HUD’s deputy assistant secretary for single family housing, issued this statement to RMD: “These changes to FHA’s programs are intended to balance the need to manage risk while continuing to provide mortgage capital to underserved communities. It is absolutely imperative,” she continued, “that FHA continues to support the recovery of our nation’s housing market and in order to ensure the financial health of the insurance fund, we find it necessary to undertake these prudent measures. Many of these changes will bring FHA into conformity with industry standards.”
Written by Neil Morse