With no immediate program changes coming down the pike for the foreseeable future, reverse mortgage lenders can finally concentrate on growing, rather than adjusting their businesses to the new regulatory environment. Even on this new plateau, the traditional ways of doing business in the reverse mortgage industry are changing, requiring market participants to broaden their influence among prospective borrowers and the financial professionals working with them.
Policy changes like the Financial Assessment, along with a slew of financial planning research in recent years, have shifted reverse mortgages from their previous function as a loan of last resort to what has now become a more practical solution within the highly complex retirement planning puzzle.
As reverse mortgage professionals continue their efforts to hammer home the message of the new and improved Home Equity Conversion Mortgage (HECM) for financial advisers and other senior stakeholders, it is important for them to understand how a reverse mortgage fits into Americans’ retirement plans today and convey that effectively convey that message to non-industry professionals.
“There is so much interest in learning what the research is showing in terms of reverse mortgages in the scope of financial planning,” says Jenny Werwa, director of public relations for the National Reverse Mortgage Lenders Association (NRMLA).
Rather than reading about the various reverse mortgage research online, attendees of NRMLA’s Eastern Regional Meeting in New York City April 4-5 will be able to learn about this critical research firsthand from the financial planning experts behind it.
Financial planning takes center stage
Two sessions at this year’s regional event are helmed by some of the industry’s most prolific financial planning experts on the topic of reverse mortgages.
Just last week, NRMLA announced Wade Pfau, Ph.D., CFA, professor of retirement income at The American College in Bryn Mawr, Pa., as a speaker. Pfau, who also works as director of retirement research for McLean Asset Management in McLean, Va., has been highly active in writing and researching reverse mortgages and how they fit into a retirement income plan. Much of his work has been published by Forbes and covered in trade publications such as the Journal of Financial Planning.
In the past several weeks alone, Forbes has published a series of Pfau’s commentary on reverse mortgages. These articles ranged from the stigmas that give reverse mortgages a bad reputation, to more technical aspects of HECMs, including how to calculate loan proceeds and upfront costs.
At the NRMLA regional next month, Pfau will share insights from his research and will provide simulations that demonstrate the effective use of reverse mortgages and how they enhance long-term financial planning.
“This is cutting edge research to hear about the way reverse mortgages have been shown to really improve portfolio survivability,” Werwa told RMD. “Dr. Pfau’s research and Monte Carlo simulations that show how often a reverse mortgage makes a portfolio last longer is exciting and we know NRMLA members and industry personnel want to think about how valuable reverse mortgages are in different settings.”
While Dr. Pfau has been widely circulated in the press, his speaking at a reverse mortgage industry conference gives NRMLA members and other market participants a chance to actually have the data presented and analyzed by the researcher himself, said NRMLA Executive Vice President Steve Irwin.
“It speaks to NRMLA’s position over the past several years that we want to present our members with new and current research,” Irwin told RMD. “We are excited about Dr. Pfau’s willingness and ability to participate.”
Also on the financial planning topic, Jamie Hopkins, Esq., JD, CLU, RICP, Pfau’s colleague from The American College, and another frequent Forbes contributor, will present a session on forging relationships with financial planners.
During his session, Hopkins will share insights into the language of the financial planning world, giving reverse mortgage professionals the tools they need to approach financial planners about the important role reverse mortgages can play in retirement planning strategies.
“Hopkins is presenting on how to really talk about these concepts in a way that is appealing to members of the financial planning community,” Werwa said.
Rather than talking about HECMs with someone from the financial planning community in all “reverse mortgage industry speak,” Werwa said Hopkins will help reverse mortgage pros talk about HECM in “financial planning speak.” The intent is to help planners embrace reverse mortgages by persuading them to take a HECM seriously and encourage their clients to consider this product as part of their retirement plan.
Practical takeaways for attendees
Apart from financial planning discussions at the two-day Eastern Regional event, attendees can expect to learn about helping families fund caregiving with the use of a reverse mortgage, as well as a refresher course on the fundamentals of HECM loan calculations.
For the first time, NRMLA is bringing together senior management from member wholesalers along with legal counsel from Weiner Brodsky Kider PC to discuss compliance issues and hot spots to avoid. The panel includes NRMLA General Counsel Jim Brodsky and Co-General Counsel Jim Milano, alongside wholesale account executives from American Advisors Group, Reverse Mortgage Funding and Liberty Home Equity Solutions.
There will also be an opportunity for attendees to hear from reverse mortgage servicers, including Celink and Reverse Mortgage Solutions, who will be clarifying Federal Housing Administration regulations that impact non-borrowing spouses.
“There has been a slew of new non-borrowing spouse guidance since our Annual Meeting last November,” Irwin said. “This is the first time since then that we will be presenting servicers who will navigate all these new non-borrowing spouse procedures. It is important for NRMLA membership to hear about this.”
In line with clarifications on this recent policy change, key members from the Department of Housing and Urban Development will provide an update on the HECM program, including a summary of the important program changes that took effect in 2015. HUD staff will also provide HECM program performance statistics and discuss future priorities.
NRMLA also plans to provide attendees with an update on its ongoing activities and efforts for 2016, including more information on the recently announced Education Week initiative, which the Association is spearheading April 18.
“We are going to inform attendees on how NRMLA will be approaching other professionals to work with potential reverse mortgage borrowers,” Werwa said. “We will also be encouraging NRMLA members to invite non-industry contacts to attend these educational sessions, where relevant.”
Finance & Investment Forum
When the Eastern Regional Meeting ends April 5, the Finance & Investment Forum begins. The Forum, for which attendees have the option to obtain registration for both events or just one of them, will host a variety of sessions focused on broker-dealers operating in the HECM mortgage-backed securities (HMBS) sector.
The keynote speaker for this year’s Forum is Michael Drayne, Ginnie Mae’s senior vice president of the Office of Issuer and Portfolio Management.
“It has been a couple of years since Michael Drayne has addressed our attendees,” Irwin said. “It’s important for our members to hear what’s happening at Ginnie Mae in both the long-term and short-term.”
Hosting a panel on innovative secondary market transactions, Mike McCully of New View Advisors will lead a discussion featuring representatives from Nationstar Mortgage (NYSE: NSM), Barclays (NYSE: BCS) and Moody’s Investor Service.
Also on the Forum agenda, Live Well Financial CEO Michael Hild will moderate a discussion with broker-dealers from Bank of America (NYSE: BAC), Nomura (NYSE: NMR) and Brean Capital.
The NRMLA Eastern Regional Meeting and Finance & Investment Forum is taking place April 4-5 at the Hotel Intercontinental New York Times Square.
Written by Jason Oliva