The Department of Housing and Urban Development restrictions against cross selling products with reverse mortgages is “extremely open ended and vague” according to Jeff Lewis, Chairman of Generation Mortgage.
Lewis told National Mortgage News he doesn’t expect to see any sort of rule from HUD since the agency has no authority over insurance or securities firms.
The prohibition stems from the Housing and Economic Recovery Act (HERA), which Congress passed and states that “neither mortgagees nor any other party may require mortgagors to purchase insurance, annuities or other additional products as a requirement for, or a condition of, eligibility for HECM insurance.”
As a result, banks cannot market HECMs against their existing customer base because of the cross selling prohibition and are being marginalized when it comes to retirement planning.
“We are trying to create opportunities for seniors to use reverse mortgage as part of a comprehensive financial plan that maximizes their financial health,” Lewis said.