The National Reverse Mortgage Lenders Association introduced three new resources for potential borrowers on Tuesday, each geared toward different stages of the lending process, from consideration to the closing to the time the mortgage comes due.
“We certainly have recognized that there’s been an interest in getting more information to borrowers even ahead of counseling,” said Jenny Werwa, the Washington, D.C.-based trade group’s director of public relations.
The idea for a comprehensive set of consumer information was inspired by a California law that requires potential borrowers to fill out a detailed checklist with their mortgage counselor before they can be approved for a home equity conversion mortgage product.
“We thought the intentions of this worksheet are very good, except that the information provided seems to not go far enough to be clear and comprehensive,” Werwa said.
The first guide thus takes the form of a questionnaire, asking potential borrowers a battery of questions in order for them to consider how they’d use the proceeds of a reverse mortgage, whether they understand the responsibilities inherent in taking out a HECM loan, and if they have explored other potential options for retirement planning and funding.
The second provides a range of information for current HECM borrowers, including a description of the handoff process between originator and servicer, an expansive list of responsibilities — such as the payment of property taxes, homeowners’ association fees, and insurance — and advice for special circumstances, such as medical problems that prevent the borrower from living in the home over an extended period of time.
The third and final tool walks borrowers through the maturity of the loan, explaining how the payback process works — along with dedicated sections for both spouses and children.
All three pamphlets were developed with extensive input from both originators and servicers, Werwa said, along with outside legal counsel. NRMLA then made an internal introduction of the content to its members at its annual meeting in Chicago in November.
“We consulted professionals from all areas of the industry to ensure the information we are sharing is clear, comprehensive, and responsive to the most common questions posed by borrowers and their families,” said NRMLA CEO Peter Bell in a statement explaining the new resources. “We hope to see a broad adoption of the guides by policy makers, consumer advocates, and other professionals whose clients can benefit from learning more about reverse mortgage loans.”
Written by Alex Spanko