While reverse mortgage originators have reported a relatively smooth transition to the latest round of program changes under the Department of Housing and Urban Development, third party vendors, too, play a strong role in ensuring loans are timely processed and the entire chain of command is up to speed.
The changes are an opportunity for vendors, lenders and borrowers to refresh their reverse mortgage understanding, says Roger Beane, CEO of LRES. And the latest changes serve to make a lasting impact beyond changes of the past.
“With these changes taking effect, we have to look at the training of the associates that are seeking loans, processing them, underwriting and closing,” Beane says. “Then it’s the education of the borrower and adapting quickly to educate the borrower as to how the rules are going to apply.”
LRES, which by the company’s count, works with a majority of the leading lenders in the reverse mortgage market at some stage in the loan process, sees the most recent shift as one the industry has long awaited. But it’s not just education for the those who are familiar with the reverse mortgage product, it’s for anyone who might potentially come into contact with a borrower—appraisers included.
“We work with multiple origination companies, and on the appraisal side, we want to make sure appraisers understand these are senior borrowers. If someone forgets about the appointment, for example, we don’t charge for the additional trip fee,” Beane says.
The industry has worked for borrower education in the wake of changes. Originators and counselors have long known about the non-borrowing spouse protections and changes in principal limit factors and have been able to prepare.
Counseling agencies have reported a smooth transition, though they acknowledge that like any time HUD implements reverse mortgage change, there is a learning process that must take place.
Other parties need to know about the product specifications, too, Beane says. That includes new entrants to the industry, which recent data from ReverseVision show are up in their count year over year. It also includes financial planners, some of whom have begun to recommend the product to their clients—a push reverse mortgage lenders have long worked for.
Yet there is a danger in those participants not being up to speed.
“Everyone has to be in sync,” Beane says. “No. 1, you have to be updated. Compliance is a part of it. If you’re originating and you’re not aware, it can be an expensive mistake. This isn’t a huge industry, but there’s no way to miss [this change]. The industry is working diligently to correct and protect the borrower. There’s a cost to misinformation, and we need to make sure we are pushing that message.”
Written by Elizabeth Ecker