S1L Task Force Joins Texas Tech on Reverse Mortgage Initiative

In its ongoing efforts to eliminate reverse mortgage misconceptions among financial planners and regulators, the Funding Longevity Task Force recently teamed up with Texas Tech University to bring new home equity conversion mortgage (HECM) program changes to light.

Joined by certified financial planners and university directors, professors and students of all levels, the Task Force led discussions at Tuesday’s event on industry buzzwords, including non-borrowing spouses and the upcoming financial assessment.

The Lubbock, Texas-based school has long been associated with the reverse mortgage industry, as it is home to Professor of Practice Harold Evensky and Associate Professor John Salter — researchers whose work has appeared in the Journal of Financial Planning and has been influential in the reverse space.

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Hosted by Salter, members of the Funding Longevity Task Force continued its reverse mortgage outreach efforts, which began when the group was formed by Security 1 Lending and Reverse Mortgage Solutions in 2013.

Alex Pistone, senior vice president and the national retail leader at Security 1 Lending led a discussion Tuesday on HECM program changes, noting that non-borrowing spouse provisions provide stronger consumer protection than is found in the traditional “forward” mortgage market.

Additionally, Pistone said the financial assessment more closely aligns the HECM program with traditional mortgage underwriting while supporting the stability of the HECM program.

Also focusing on the upcoming financial assessment — which will take effect for HECM case numbers assigned on or after April 27, 2015 — Don Graves of Security 1 Lending discussed life expectancy set-asides.

However, the Task Force also expressed some concerns, including the common marketing assertion that the HECM line of credit is “guaranteed to grow,” which the group hopes will be revised by the industry to reflect Department of Housing and Urban Development (HUD) changes.

Previously, the group’s research has been the foundation for change in the industry. Last year, for example, the Financial Industry Regulatory Authority (FINRA) stopped describing reverse mortgages as a “loan of last resort,” a move the Task Force said was attributable to its research.

Written by Emily Study

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  • Since when has the line of credit on a HECM ever been guaranteed to grow? HUD disputes that claim as do servicers and many financial experts who understand how the HECM line of credit changes from month to month. Stating that the growth in the line of credit is not only false but it is also misleading.

    An alleged “growing line of credit” is but another example of industry generated myth which in this case was promoted to overcome the problem of trying to explain how the line of credit actually works.

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