Urgency for PR Campaign Increases, Vote Scheduled for NRMLA Event

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”.

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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.”

Urgency increases

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

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  • Neil,

    It is obvious your sources are not familiar with the invitation only meeting in San Diego at the end of NMRLA National Convention related to this publicity campaign. It is not just the big four that is behind this “tax.” Some other firms in the Top 10 proposed it and support it.

    I really wish people would stop the wild statements and spend as much time doing their homework as they spend spreading mere rumors. A significant segment of the brokers are carrying the burden along with the lenders for the whole industry.

    This idea that “if they will not play ball my way, I will not pay” for this publicity campaign is not just shortsighted; it is irresponsible. Of course those who are part of NRMLA and making such complaints are much better than those who do not belong to NRMLA.

    I used to think of Jeff as a real leader in our industry but I am afraid he has morphed himself into nothing more than a leader in name and someone who does not understand the relationship of HUD and FHA to Congress and the Administration. I enjoy listening to Jeff when defending the industry but lately he has given up on rationally addressing HUD to simply attacking HUD regarding far too many of the woes this industry suffers currently. This is a sad turn of events. I hope Jeff changes his tactics. I think far too highly of Jeff to believe he won't.

    • Critic,

      Really only the big four are necessary for the “tax” to work since they control over 90% of brokers business.

      What does the “invitation” only event have to do with anything? Plus, why aren't these sort of discussions open to the public or at least people who have paid to go to the event.

      • Admin,

        Closed meetings are very useful when something is actually being decided such as board meetings.

        Are you saying that you believe that the tax should be assessed at the “big four” level and passed down to the brokers? Scores and scores of these brokers are not NRMLA members. I think such action at the lender level could never be successfully instituted unless you are saying lenders only should be paying this “tax.”

        While I believe an open meeting should be held on the NRMLA road shows explaining the campaign by those who waged for its institution, NRMLA is not an open society. Many find fault with that. You are not by yourself.

  • Too little, WAY TOO LATE. Ever heard the saying “the cat is out of the bag”, or “the genie is out of the bottle”?!?!?!? How people in this industry still pretend that NRMLA has ANYTHING to say at this point, now that the MBA is involved (and in essence, in charge), is beyond me. READ BETWEEN THE LINES, folks!!! It's over. You cannot convince someone that a program that they have already deemed “not for them”, IS, regardless of the negative message that influenced them. Consumer psychology does not work this way. Anyone that heard Peter Bell's answer to my question about 'blogs, and the way to counter act them” knows that this overseeing body is misguided, WAY behind, and not even aware of the bigger problem or any potential solutions. This tax will not hurt the big boys, but it WILL be all for naught.

    • I actually totally disagree with your comment regarding Peter's response to “blogs”, I thought it was exactly what he should say. Do you have any idea how hard it would be to monitor 24/7 all of the articles written about a given topic?

      They have better things to do. I do think they could be better at responding to some things, but asking them to monitor the web for any incorrect article about reverse mortgages is crazy.

      • It is actually not hard at all – so simple, even NRMLA could do it… (or a caveman, I think)

        Simply use one intern, and set up google alerts for “reverse mortgages” to be delivered to the NRMLA inbox each day. Have a canned response that politely steers the consumers looking for more info to the NRMLA website. Every morning, you simply COPY and , PASTE the canned response to the 5 -10 sites that have new content that conflicts with the real story! It instantly counters the insane claims and adds a voice of reason to the blog, a voice from HUD. You now have an easy, NO COST solution that should take anyone with internet savvy about 5-10 minutes a day to complete. Vs. what is being done now (NOTHING), it seems rather silly that this has still yet to be done. Take that and three bucks, you can get yourself a cup o joe at Starbucks!

        By the way what “better things” are you referring to!??!?

      • Ok, yes it's not that difficult, but I'd like to think they have better things to work on.

        However, NRMLA and HUD are not the same things.

      • Kevin,

        Canned answers rarely pay off. Influencing public opinion is never easy especially with an audience that is prone to agree with naysayers. You know I do not always agree with Admin but here we see eye to eye.

        NRMLA could do better but are you willing to pay that cost? It sure does not sound like it. Cut and Paste works for some things and if it is that easy, why not start an industry initiative to do just that? Some are willing to pay thousands for positive PR. I am sure they will pick up your idea if it appears to have merit.

        I hope I am wrong and you are right. Even more if you are right, I hope some listen to you and support your idea.

      • If I planned on staying with a big bank and in this dying industry, I might have the energy to help. What everyone is missing in my comments is the fact that nothing has ever been pro-active, and at some point, it is too late. The application numbers for q1 will show that it is indeed too late!!!

      • Kevin,

        While your point is well taken, my impression is the low volume is more of an issue of reduced principal limits than bad press. What are your thoughts?

  • Jeff and other responsible industry participants know that HUD'S recent actions have not been driven by the Commissioner but by Congress's mandate on the funding of our program; just like other housing programs. HUD is our partner in preserving the HECM program for all the good it provides society in general and our seniors in particular. Changes to our program were demanded not by the Commissioner and HUD staff but by OMB requiring fiscal responsibility for this program. Working with HUD to balance our senior's needs with their fiscal responsibility is the only solution in the near term. When we take a longer view of the demographics and hopefully an improving housing market we will be in a position to get back some of what we have lost in the HECM program in coming years. NRMLA's Public Awareness program is just that not a P.R. campaign. We need to tell the story of the 90% of seniors who's lifes have significantly improved through the HECM program and get this message out to policy makers and the press.

  • Mr. Lewis knows that the RM business as it currently exists is being destroyed. Like real estate values, once it hits bottom it will stay there a few years.

  • On with the good and out with the old. As long as it strengthens this program and keeps it going for these people coming up on income/retirement negativity . We have to keep the reverse mortgage alive and if it means tweeking for now so be it. As long as we disclose properly to the client, let them make the decision because they are the ones that would suffer at the end if they don't take it out in alot of cases. I am out there to help people know about this tool…plain and simple. They have the ultimate choice if it fits their needs but being structured the way the reverse is, it has to be protected too with the costs to stay in tact. We can't loose this financial tool because we all might need it some day ourselves and that is reality now days. And yes, I would pay the cost to have alittle of life long serenity

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