Taking a page from the reverse mortgage market in the United States, the Senior Australians Equity Release Association of Lenders (SEQUAL) said it’s working to establish a model similar to the HECM counseling requirement for reverse mortgage borrowers in Australia.
Money Management reported last week the association plans to establish a model in two different phases. First, SEQUAL is working with the Treasury and industry organizations to develop cost-effective financial advice regarding reverse mortgages.
During phase two SEQUAL said it’s working with bodies such as the Financial Planning Association and the Australian Securities and Investments Commission to define the scope of advice appropriate for using reverse mortgages.
“I think the important work here is to determine whether there is a subset of a full financial plan that would be appropriate to these transactions and to scale it to these deals,” said Kevin Conlon, chief executive of SEQUAL.
They hoped by doing so to reduce the cost of financial advice on reverse mortgages and increase its access for consumers. Conlon said there had been a reluctance in the past from consumers to seek out full financial advice regarding the use of reverse mortgages because of the costs associated with the advice. He hopes an equity release financial advice model would emerge that was similar to the model used in the United States market.
Despite a challenging market, reverse mortgage volume was up 9% during 2009 according to a Delloite report released earlier this month.