Reverse Mortgage Originators Wake Up to a Post-October 2 World

As the deadline for major reverse mortgage changes came and went Monday, originators across the country exhaled — sometimes for the first time in a month.

“Last week was finals week of your senior year in college, or right before your finals when you’re working on your master’s or something,” reverse mortgage specialist Laurie MacNaughton told RMD. 

MacNaughton, who works for Atlantic Coast Mortgage, said she worked until as late as 2 a.m. on Thursday as she worked with borrowers looking to lock in higher principal limit factors before the October 2 change. 


She spent September working 30 days straight, calling anyone who’d ever expressed interest in a reverse mortgage in the past to alert them of the impending change. Like many folks, some of her clients had inquired about Home Equity Conversion Mortgages but had other things get in the way — people had health problems, for instance, or were unable to coordinate meetings with trusted family members.

“There’s no sense of urgency when you think something’s always going to be there,” MacNaughton said.

Meanwhile, at Peoples Home Equity in Alcoa, Tenn., branch manager Loren Riddick found himself frustrated at his team’s inability to advertise the impending rule changes in local newspapers, fearful of running afoul of regulations that prevent reverse mortgage advertisements from implying a sense of urgency.

“Even though it’s urgent, even though it’s a last-chance-for-romance kind of thing, yeah, I can’t say anything,” Riddick told RMD.

Still, Riddick emphasized that he remains upbeat about the future of the program going forward, though he expressed doubts about the viability of HECMs for needs-based borrowers in the near future.

“Do you look at the glass half full, or do you look at the glass half empty?” Riddick asked. “And that’s probably the best way to sum it up.”

Beth Paterson, executive vice president at Reverse Mortgages SIDAC in St. Paul, Minn., told RMD that her team helped secure case numbers for all of the potential borrowers who wanted to access the old principal limit factors, but others naturally were left behind.

“Less funds will be available for some who had inquired perviously and decided to wait, which means they likely won’t qualify if or when they do decide to proceed,” Paterson said via e-mail.

The same thing happened at 1st Nations Reverse in Owings Mills, Md., where executive vice president Josh Stein said some potential borrowers fell short and couldn’t get counseling appointments in time.

“The time and effort required for people to call numerous agencies to get an appointment was too much for some people,” Shein said. “In light of the very short timeframe we all had to work with, we did the best job we possibly could, but certainly more time would have allowed us to help more customers.”

Shein and the team at 1st Nations Reverse will continue to work with borrowers who missed the deadline to see if they can qualify under the new PLFs, he said.

“It was extremely busy over the last few weeks trying to help as many consumers as possible within the short window we had,” Shein said.

There were some positive stories to come out of the process: MacNaughton said she told her clients to call counseling firms twice an hour to inquire about any last-minute openings; one would-be borrower didn’t start the process until Thursday, but still managed to get a same-day appointment after a cancellation.

“I can’t even begin to tell you how heroic I see them,” MacNaughton said of the nation’s HECM counselors. “My unending gratitude goes out to you.”

And in the end, like Riddick, Paterson had a positive outlook for the future.

“After being in the industry for so long and seeing so many changes, I’m just remaining positive and focusing on the program as it is for borrowers, and continuing sharing the benefits,” she said.

Written by Alex Spanko

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  • The world has not come to an end, it has just started to open up a bunch of new doors!

    Look at the amount of equity in the hands of senior homeowners, look at those with low to loan value ratios and look at those with no lien on their property at all!

    My friends, we are now in the business to help plan a seniors retirement for them with the equity sitting there in tier home.

    We can improve their quality of life, give them a nest egg that they can rely on and one that grows in amounts monthly. Don’t forget the HECM as a valuable hedging tool for a seniors other investments in their portfolio! Plus there are many other tools we have available!

    We have many opportunities out there to get plenty of business from fee based fiduciaries and advisors. Look at the HECM world as a new professional business you are entering that will give you more satisfaction than ever before!

    I truly believe everything I just said from the bottom of my heart!

    John A. Smaldone

    • The post 10-2 world may not be coming to an end, but it is surely a very different place.

      I called back a very qualified and informed lead today and was given the opportunity to compete for their business. All I have to do is provide a margin lower than 2% and/or a larger lender credit.

      I know I’m probably just being a whiner, but I did not expect to have to compete on margin so quickly. Talking about what might happen to pricing is not
      the same as seeing what did happen on paper.

      Need to find those new doors!

  • “New administration ( republican ), time for change!” How is that new guy Ben Carson stacking up now?!!! Our industry just got our shiny butts kicked in a very disrespectful manner. We and the very customers we are trying to assist have good reason to be pissed off! This is not about the actual change itself, but the brutal way it was dished out… as Dangerfield ( who should have been our industry spokesperson ) said it… “I don’t get no respect!”

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