NRMLA Co-Chair Scott Norman Talks 2019 Priorities for Reverse Mortgages

When the Board of Directors of the National Reverse Mortgage Lenders Association (NRMLA) elected Finance of America Reverse executive Scott Norman as one of their co-chairs, the organization further solidified its confidence in one of the reverse mortgage industry’s biggest and longest-serving advocates.

RMD spoke with Norman about his recent ascension to the role of NRMLA co-chair, and asked for him to give us his perspective on what the association’s priorities are going to be over the next year, along with recent major industry news items like the new appraisal rule’s implications on the industry and the recently-released Mutual Mortgage Insurance (MMI) fund report.

Reverse Mortgage Daily: What do you see as NRMLA’s outlook going forward after the release of this year’s MMI information, and HUD’s words about the reverse mortgage books of business?

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Scott Norman: Well, if you look at where the industry is today and go back in time about five years, the product is almost unrecognizable from where it was then. I think that you’d have to look at all the changes that have been made, and frankly all of the thought that has been put into those changes, and I believe you have to be bullish on where the industry is going to go from here. I think we’ve got a great amount of leadership up in Washington, D.C. right now that understands the need to look at home equity as a retirement option.

I certainly think you’ve got the wave of retirees that are getting larger and larger every day. And, I think that there is a great opportunity to really look at this as a public policy forum, looking at home equity release being in the form of a reverse mortgage, or really anything as it relates to equity lending.

RMD: Is there anything that’s been happening in the industry recently that you feel needs to be addressed by NRMLA?

SN: NRMLA’s done a magnificent job over the last two or three years keeping the industry moving on a forward trajectory. I don’t really see anything outstanding that needs to be resolved today or tomorrow. I think that there’s always going to be an issue as it relates to product awareness, and making sure that we get the word out as to exactly what a reverse mortgage is versus what it is not.

I think that one thing that NRMLA is going to do that is going to be extremely helpful for the general members is that we’re going to have much deeper member engagement to really go out and ask questions. Questions like, ‘What can NRMLA be doing better?’ There’s always a place to improve. Whether it’s the biggest lender in the country or the smallest broker in the smallest state, there is a place for everybody to be under our tent.

I know that’s going to be something that we’re really going to push for in the coming year. I think that in this industry, NRMLA is the association you need to be connected with, and we want to make sure that this is something that is a benefit for every company and every originator.

Lastly, what certainly hasn’t changed, and likely won’t change for the foreseeable future, is that we’re going to advocate on behalf of our members before Congress and the various think tanks, agencies and state and local governments to explain and defend our case as it relates to reverse mortgages as a part of a larger, bolder retirement strategy.

RMD: On the point of member engagement: What does it look like right now, and in what ways can you see it evolving positively?

SN: I think member engagement right now has been very strong. When you look at how much the industry has gone through over the past five years, with so many different changes to it, sometimes you just have to pick your fights. We have to go out and make sure that we are being an advocate before the agencies. And now, because most of the changes are behind us, I think that gives us an opportunity to continue to focus on things we’ve talked about.

But, I believe that member engagement is going to be one of the three primary focuses that we’re going to have moving forward. We want to make sure that we are both heard and hearing every member company, every originator, every processor and every service settlement provider in terms of getting everybody under one roof. If we can get this entire industry rolling in the same direction and leaning in the same way, I think that you’re going to see the best years of the reverse mortgage industry lie in front of us, and not something that we just saw in 2008.

RMD: In regards to the new appraisal rule, what are your thoughts on how the industry adopts that as it moves forward?

SN: Well, it’s still early and I think it’s yet to be seen. But, I think that the early indications are that the industry has absorbed it like they’ve absorbed prior changes, in a very professional and prudent fashion. I think it’ll likely be another six to nine months down the road before we can get a much stronger feel as to how it’s going to play itself out. Right now, I just think it’s a little early to give any real indications on where we are. But, I think that the industry is absorbing it very, very well.

RMD: I know you remarked that it’s still early, but is your intuition telling you anything about whether this is long-term, or rather a short-term fix?

SN: I’d probably say that it’s somewhere in between. It’s hard to comment on something without having all the pieces in front of you, but I think that HUD has done a really strong job of trying to be upfront with the industry, and trying to be very transparent. I think that as long as you have agencies that are willing to be transparent like that, it gives you a pretty good indication of what the future holds.

And, like I said, I believe that’s going to be very positive. And I think, ‘let’s do this for a year,’ and, like a lot of other things, we can have an opportunity to really re-evaluate and see if it is a short-term fix, or if it’s a long-term overall strategy. But, I will say that HUD’s been extremely thoughtful in virtually every decision they’ve made, and I think that as long as they can continue to be thoughtful and transparent, we certainly look forward to working with HUD and every other agency that would cross our path.

RMD: What do you think the wider industry’s outlook is for 2019?

SN: Well, I certainly think that when you look at the proprietary products starting to come to the market, that’s certainly something that is a breath of fresh air. So, I think that’s something that’s got to be one of the premiere changes that we haven’t seen in a number of years. That’s a big bonus, and is going to give the industry a big shot in the arm. Also, I think that the majority of the major changes that we’ve seen over the last five years are now behind us.

That gives us a bit of an opportunity to hit ‘reset,’ recalibrate ourselves, and really start looking at drilling down and focusing on our business models and everybody else’s various business plans, and looking at an opportunity to start anew. I think that’s what 2019’s going to be, and that’ll be level-set on where the industry starts, and I think it certainly goes up from there. And, if interest rates can stabilize, then I think we’re in a position where we’re going to see the industry continue to thrive, or start to thrive again.

RMD: Jumping off of that, would you say that the proprietary products – or perhaps something else – would be one of the biggest opportunities for the industry to take advantage of in 2019? Or, is there another opportunity that you’ve been able to identify?

SN: I don’t know if I subscribe to the question, exactly. Certainly, I think, as far as the short-term is concerned, yes. I think that proprietary products are going to be a great opportunity for the larger industry as a whole. Longer term, though, I think that just the idea of equity release products [is promising]. The benefits that 10,000 seniors who are retiring every day can attach to a reverse mortgage (though, obviously not all of them will get a reverse mortgage).

But, if you start looking at that, I still think that this public policy conversation about reverse mortgages as a retirement tool is both the short-term and the long-term answer to a lot of ills that are confronting our country.

RMD: What are your specific priorities for NRMLA that you would like to see get done in 2019?

SN: Well, I certainly think that it’s important for us to continue to advocate on behalf of the members for anything related to reverse mortgages. That hasn’t changed in the nineteen years I’ve been in the business, and I don’t think it’s going to change any time soon.

I think NRMLA deserves a great deal of credit for working through some really challenging times over the last five years to keep the industry moving, to stay advocates before Congress and various federal agencies. [President and CEO] Peter Bell and [EVP] Steve Irwin have done an outstanding job. They deserve all the credit in the world for what they’ve done.

So, the ability to advocate on behalf of the members is going to be a big deal. Also, as it relates to an earlier comment about deeper member engagement, my goal is to have every lender in the country that is offering reverse mortgages to be a member of NRMLA. I think we should all have one voice, one place to go for conferences and conventions, and I think we’re the most prepared to provide the leadership for the entire industry.

If you’ll pardon an old Texas phrase, I want to get all the BBs back in the box. Every single BB, I want them in the box. I think if we can all get rolling in the same direction, it’s only going to benefit the industry and I believe it will eventually benefit the country.

RMD: Do you find that specific task to be difficult in and of itself? How does it make things more difficult when everybody isn’t under NRMLA’s umbrella?

SN: Well, anytime you’re dealing with associations, there are just going to be some lenders that maybe aren’t as familiar with NRMLA as they probably need to be. And, obviously if some companies have been consolidated, people change. They go from company to company, and sometimes there might be an opportunity for someone to slip through the cracks.

As we continue to get product awareness out into the marketplace, and make sure that we are transparent and accessible, then I think you’ll find – though there are a lot of lenders out there offering reverse mortgages – we still want their voice. We still want their membership, and we want to make sure that we are a healthy mouthpiece for them. There are a lot of banks or credit unions that may only be offering 10, 15 or 20 loans a year, but we also want those companies to be members.

RMD: Do you think that the industry could be doing anything differently to grow the market?

SN: Well, every lender company is doing everything they can to grow the market, so I certainly wouldn’t subscribe to the idea that NRMLA hasn’t done enough, by any stretch. I think that they have done a lion’s share of the work, and if we can continue to go along with the plan we have to provide legitimate product awareness, be transparent, really focus on a deeper member engagement, and continuing the advocacy we have, that will eventually continue to grow the market.

A lot of the struggles we’ve had have been affected by a lot of the changes we’ve seen over the last 3-5 years. I think that’s certainly slowed the growth path, to say the least. I think that if you start getting into 2019 – because I think we’ve got to be able to look forward and not look backwards on where we were in 2008 – that’s a whole different world ago. I think we need to ask where we are today, near Christmas 2018, and I think the future holds a very bullish outlook. And, I think NRMLA has done an amazing job of keeping the ship going in the right direction through some certainly challenging times.

NOTE: This interview has been lightly edited to enhance clarity.

Written by Chris Clow

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  • It is good to hear such optimism.

    My two questions would be:

    Where was the transparency prior to the August 29, 2018 HUD announcement, where, as far as I have heard, NRMLA and everyone got blind-sided?

    And, I just read David Stevens comments in Housing Wire – he sure thinks MAJOR changes are needed – “…policymakers should start with what they want from the program and build it from scratch to insure its longevity,” – how does this reconcile with the idea most changes are behind us?

    • Somebody had better be optimistic.

      Earlier this morning HUD posted the endorsement count for November 2018 at 2,553. That is the worst monthly total for any month since January 2004, almost 15 years ago.

      This is a new low for endorsements following the 10/2/2017 changes, fourteen months earlier. For the last six months there has been a lot of premature talk about recovery. It started in earnest on 6/6/2018 when RMD posted an article where Reverse Market Insight declared that April 2018 with 3,345 endorsements was the bottom for endorsements after the 10/2/2018. The November 2018 endorsement count is 24% LOWER.

      Then on June 29, 2018, HUD told us that the endorsements for June 2018 was just 2,838 but the endorsement count for November 2018 is 10% LOWER. Yet after the release of the June 2018 endorsement, the talk of being on the road to recovery became even more prevalent even though the total monthly endorsements never exceeded the April 2018 count. So what are we recovering to, the lowest count in almost 15 years? It seems lenders and their vendors refuse to see what is REALLY going on.

      There were few, if any, HECMs endorsed in November 2018 that had their case numbers assigned after 9/30/2018, meaning that mostly likely, none of the HECMs endorsed before 12/1/2018 were subjected to appraisal review.

    • Quote-
      “And, I just read David Stevens comments in Housing Wire – he sure thinks MAJOR changes are needed – “…policymakers should start with what they want from the program and build it from scratch to insure its longevity,” – how does this reconcile with the idea most changes are behind us?”-End quote.

      Absolutely. There has been a total lack of strategy. This obviously leads to a total lack of confidence of all concerned in the “fixing process” of the HECM Program; and the abrupt, dictatorial manner in which the changes have been ordered doesn’t help.

      The program does seem in need of a gut renovation, starting from scratch, but then who’ll be defining what that “New and Improved” product would look like.

  • Quote from article-
    “but I think that HUD has done a really strong job of trying to be upfront with the industry, and trying to be very transparent. I think that as long as you have agencies that are willing to be transparent like that, it gives you a pretty good indication of what the future holds.-End quote.

    And the HUD transparency with regard to the “October PLF changes” was (paraphrase): -the seniors had too good of a deal before, anyway-.

    It would be an improvement to address the term “fairness” rather than “transparency.”

    As the maximum loan limit of the HECM goes up, the borrowers’ home values follows.

    The HECM contract terms of pre-October/appraisal changes should be “grandfathered-in” for borrowers holding HECMs prior to these changes. The changes should only be applied to HECM loans endorsed after the changes.

    Why? Other than just a general sense of “fairness,” that is: a “pre-changes” borrower can’t refinance to capture the benefit of the increase in their home’s value; a borrower in this situation can only refinance to the vastly inferior terms of a post-changes loan contract; exactly the same for the H4P program: “the changes” have eliminated, priced-out borrowers from even considering the H4P program.

    Yet, there has been no discussion at all about this, zero. Platitudes of “optimism” in abundance, yes. Substantive discussion and specifics, no.

  • Carmine/George/Jim,

    Proprietary products are offered in NJ, FL, & MI. Three states that have a shaky record with home appreciation, so I don’t follow your point there. It won’t be long before we are talking 25-30 states are covered, if not more.

    Let’s cover what David Stevens said that is incorrect/outdated –

    “Outrageous profits” & “Compensation caps”- HECM fixed is paying 250 points down from 1100 points at the peak. ARM margins are down from a peak in the 3’s to being in the 1’s now. There isn’t a lender that isn’t struggling right now with the 10/2 changes. With the cost of acquisition and volume in this industry, caps would all but kill for-profit companies from remaining in the space. Borrowing shopping and lender competition is at an all time high.

    “Borrower qualification and minimum credit scores” – Accomplished on 4/27/15. Min credit score requirement is not wise, because credit scores don’t take recency of delinquency into account like FA does.

    “Full draw HECMs should not be permitted” – Accomplished on 4/1/13. Unless he wants to eliminate H4P (very low numbers) or full draw to pay off mortgages. Seems ill-advised to me considering you can cash out in full after 12 months either way.

    “NBS issue” – Accomplished on 8/4/14. This is the most obvious tell that he hasn’t been following the industry.

    I’ll give him credit for addressing real problems, like predatory sales practices, home maintenance, & servicing standards. It’s just when you miss on more than half of your points…

    P.S. – sorry Scott for hijacking a nice article by RMD about you.

    • Matt/George/Jim,

      I think we all agree the former Commissioner is speaking to issues as they were in the past. It is clear he was NOT up-to-date at the time of those comments.

      As to proprietary reverse mortgages in 60 to 90 states (oops, a little carried away), we saw the same rather unwise spread of proprietary reverse mortgages in 2008 just before all of those funding new places withdrew their funds. If anything there will be states where proprietary reverse mortgages cannot be instituted due to state laws (Minnesota, Maryland, etc.). Then there are states like Iowa, Missouri, and Kentucky, where home appreciation is just too low to justify proprietary reverse mortgages. So can proprietary reverse mortgages be profitable throughout all of Oregon or Vermont and how long will they stay in most states in comparison to California?

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