Reverse mortgages have been around for several decades, yet they remain one of the most widely misunderstood financial products even to this very day. In efforts to address the persistent misperceptions surrounding the product, a new book provides answers to the most common questions about reverse mortgages for consumers, lenders, as well as other financial professionals.
There exists a significant knowledge gap between reverse mortgage industry professionals and the seniors they strive to reach. While the most recent changes to the Home Equity Conversion Mortgage (HECM) program have served to increase protections for borrowers and their non-borrowing spouses, these new updates have also widened the education gap for lenders who have been tasked with educating their own personnel internally, as well as externally educating other senior influencers, including financial advisers and Realtors.
“There has always been the nagging feeling that people just don’t get reverse mortgages,” says Dan Hultquist, an Atlanta-area certified reverse mortgage professional and training manager with Open Mortgage, and also author of Understanding Reverse (2016).
The 158-page Understanding Reverse, which answers the top 35 questions Hultquist receives as a reverse mortgage loan originator and corporate trainer, includes several updates that address the most recent regulatory changes that have transpired in the HECM program.
New chapters in the 2016 edition include “What is Financial Assessment?”, “What are the different uses for reverse mortgages?”, “When is a reverse mortgage NOT a good option?”, and “What should I expect during servicing?” The updated edition also includes a chapter on the most recent industry guidance on HECM-to-HECM refinancing, as well as the inclusion of a comprehensive glossary of terms.
Originally written with the audience of senior homeowners in mind, Understanding Reverse has become “lender neutral” in the sense that it also serves as a reference guide for reverse mortgage professionals.
“My intent was to explain the nuts and bolts of the HECM program to borrowers, homeowners and their heirs because they’re the ones who don’t clearly understand the product,” Hultquist tells RMD. “But, I found the book is just as appropriate for industry personnel.”
In fact, some of the most popular buyers of Understanding Reverse, which is currently available for purchase on Amazon, are other reverse mortgage professionals, Hultquist notes. Within the book, lenders can find thorough documentation of where information can be found in its original form, such as the Code of Federal Regulations, Mortgagee Letters and Department of Housing and Urban Development handbooks.
“I wrote the content for the borrower, but I put in the references for industry professionals—and I think they have appreciated that because our industry has references for multiple sources,” Hultquist said.
The structure of Understanding Reverse also works well as a training guide, he says, largely due to the book’s sequence of questions, which are ordered in such a way that flows from the simple “What is a reverse mortgage?” to detailing the recent changes that have affected the HECM program.
“Questions tend to flow in the proper order the way people would normally ask them,” Hultquist says. “For example, you find that when someone asks a question on the non-recourse feature, their follow-up question is ‘what happens to heirs?’ Then the follow-up to that question usually is ‘what are maturity events?’”
Hultquist, who also co-chairs the Education Committee with the National Reverse Mortgage Lenders Association, believes that the best reverse mortgage originators are educators. To help these professionals further their ability to educate older homeowners, Understanding Reverse describes, in plain english, the various ins-and-outs of reverse mortgages and the regulations governing them.
“With a product that is clearly misunderstood by the masses, if a loan originator cannot answer the most common questions compliantly, it hurts the homeowner as well as the industry,” Hultquist says. “Reverse mortgages are complex products that are not fully understood, both inside and outside of the industry. Hopefully, this book will clarify some of those concepts.”
Written by Jason Oliva