With more state reverse mortgage legislation being proposed, Jeff Lewis, Chairman of Generation Mortgage told Broker Universe that there is a high level of concern about these bills and how the industry is going around state to state “putting out fires,” as these bills legislate “to the lowest common denominator”. He adds, “Something happens one time to one person, so somebody decides they need to change all the rules to protect someone from something that really isn’t common or isn’t really a big issue.”
However, Lewis admits that the industry isn’t perfect and there are some who have done things not quite right, such as some loan officers allegedly marking up reverse mortgage loans to get paid more. It is not a common practice, he said.
But what really gets him incensed is the cross-selling language inserted in the McCaskill amendment. Lewis told Broker Universe the law asks the Department of Housing and Urban Development to regulate something it normally doesn’t, the sale of investment products.
There is a concern about what people do with the loan proceeds, and advisors work with consumers to do “things that are intelligent” with the money. He suggested encouraging people to invest in income products that hedge longevity and mitigate their risk, not the wealth accumulation products with high fees that are not appropriate for seniors.
“If people are sold things that are unsuitable, it is the responsibility of those industries that those products to prevent that from happening,” Mr. Lewis declared, adding if an 83-year-old is sold a product with 12 points of sales charges, that sales person should get in trouble, no matter where the senior got the funds to purchase the product from. “It is going in the wrong direction” to blame the reverse mortgage lender for how the proceeds are used, he continued.