Scott Norman’s career has taken him on a very unique trajectory from political aide to a Texas politician to one of the fiercest, most effective advocates for the reverse mortgage product category that the industry has fighting for it. Norman was instrumental in bringing the Home Equity Conversion Mortgage (HECM) for Purchase to the state of Texas for the first time, and also originated the state’s very first HECM loan.
Beyond his activities that have centered largely on advocacy on behalf of reverse mortgages, Norman’s effectiveness as a communicator and facilitator between the industry and local, state and federal government has allowed elected officials to have a greater understanding of the realities inherent with a reverse mortgage loan. On top of that, Norman’s leadership at the National Reverse Mortgage Lenders Association (NRMLA) as a co-chair along with his role at Finance of America Reverse (FAR) have placed him at the forefront of the industry’s forward momentum.
This is why we are honored to include Scott Norman in RMD’s inaugural class of Changemakers for 2020.
Do you thrive on the concept of making change in your course of work? Why or why not?
I wouldn’t say I thrive on making change for the sake of change. If I thrive on anything, I’d probably say I thrive on the idea of being in the arena, and wanting a seat at the table that is making the decisions that will help drive an industry or an idea forward. And if that leads to positive change, then that’s a really good outcome.
There’s always a benefit in trying to be in the arena. It’s when you’re out of the arena that change does not happen.
What do you think you would identify as traits or skills that you have that can help facilitate making change?
I’d like to say patience and persistence, but I probably would say that mindset is the trait that is most important. I always tend to go to my favorite LBJ quote, ‘the doers and the builders take up the front line.’ Those words, to me, are the difference between those who want to serve and those who don’t. If you don’t have the right mindset going into a challenge, you’re probably already behind the eight ball before you even get started.
What do you think helps you to have the right mindset? Sometimes it’s difficult for people to psych themselves up for a task that needs accomplishing. What helps you to put your ‘game face’ on, so to speak?
You have to try to be consistent every day. You’re not always going to have a good day, you’re not always going to be in a good mood, not everything’s going to go your way. It doesn’t matter if you’re trying to work on your diet or you’re trying to run a marathon. It’s easy to be negative, and it’s hard to be positive. I think therein lies the challenge, and challenge breeds opportunity.
If something does not end up working out, do you believe that it’s beneficial to ‘fail fast’ so that you can move on to something else quickly? Or, would you prefer something else to go down if something bad has to happen?
‘Fail fast’ is an interesting phrase. And I guess the easy answer is yes, you probably fail fast and get it over with. No one wants to fail, but you also need to be able to know when you can cut your losses. To me, it’s about the speed [with which you] change direction.
You’ve got to be able to recognize that something isn’t working out, but you also have to recognize that sometimes you’re going to have to just persevere through some challenges and fight through it. It’s not always evident when you need to cut your losses and move on. Or, if you need to just keep fighting the good fight.
What do you think are the downsides that come with making change, and how do you try to avoid them?
Certainly change can be disruptive. Interrupting the natural cycle, I think, is perceived to be the downside. But yet, I think you’ve got to look at it by understanding that the upside can actually lead to real progress. If you’re not in the arena, you can’t make change. Nobody wants to fail, and of course in American society no one ever wants to look stupid. And I know that’s a cliche. But if you’re not willing to do the things that others won’t, you’re not going to be in a position to ever make any change.
When it comes specifically to the reverse mortgage industry, do you believe that it is changing fast enough today?
I do. Customers are asking for more products to age in place, and lenders are trying to provide those products. I think that if you look at the world that we live in today, home equity is going to be at the forefront of almost every financial decision that the average homeowner in or near retirement is going to make.
Where do you think the industry might be lagging, and also, conversely, where do you think it might be ahead of the curve?
Well, I think the easy answer as it relates to lagging is in education, which is always going to be an issue. But as it relates to what we are doing right? I always point to the development of the proprietary products, and how much the industry has matured over the last 18-to-24 months. And I think that what you’re going to see is the industry continuing to mature, and take off to heights that it hasn’t seen in over 10 years.
In what ways do you see the proprietary landscape elevating the whole industry? Do you think that’s the most transformative change that’s been introduced that has the biggest potential to ‘expand the umbrella’?
Absolutely. From where we stand today, the industry is going to see innovations that will make the product almost unrecognizable in the next 5 years. The is no doubt in my mind that proprietary development will be the key – and it’s coming at the perfect time when you consider the economic damage state and local governments have endured over the last five months. In the next few years, we are going to see some wholesale changes in the way all governments handle their budgets, especially in around pension and general retirement perspectives.
We’ve seen major changes in retirement since Congress approved the Revenue Act back in 1978, and over the next decade, we are going to see the country turn more and more to home equity extraction.
How would you say you have changed personally and/or professionally since making the reverse mortgage industry such an important part of your life?
I got into the reverse mortgage industry when I was in my 20s. So, to some extent, it’s been the only real industry I’ve ever been a part of. I’ve been really fortunate to work for some great companies, and to work for some great mentors. Jim Mahoney at Financial Freedom sticks out quickly. The Bart Johnsons, the Peter Bells, the Jim Brodskys, I’ve had some great mentors that really helped to raise me, if you will.
When you are younger, you’re looking for the definition of leadership. To have somebody like Jim Mahoney take you under his wing is a really big deal because he can teach you so much about life. So, I hope that I’ve matured a lot, but I also know what I need to work on.
Almost across the board, they ingrained in me two things: The importance of fostering great relationships and always treating your borrowers like you would your own parents. Never does a day go by when I don’t think about both.
If modern Scott Norman had a chance to talk to the Scott Norman from right before he got into the business, is there anything you would like to have been able to tell yourself in your younger years before you jumped in?
‘Dream bigger as a thought leader. Words matter.’ While being aggressive and being ambitious sounds good, if you are not thinking about tomorrow, you are going to miss the big idea. If you can think bigger of things that haven’t happened yet, you’re always going to be better off.
When an operational or developmental change comes up in the course of your work, how do you tend to approach those kinds of changes?
If you’ve been in this industry more than a few years, you realize pretty quickly that change is not only inevitable, but it’s probably going to happen a couple of times each year. When you can be prepared for it and you know what’s going to happen, you certainly have your go-to people that you can really walk through and bounce ideas off of. We also have an opportunity to know what we’ve gone through over the last 10 or 20 years and where we would like to see the industry continue to go.
Would you say that flexibility in adapting to change quickly is something that’s really important for people in the reverse industry to nurture and maintain?
Absolutely. If you can’t be flexible in this modern world, you’re probably going to have a lot of struggles. Any time you can be flexible, and have a little bit of a sense of humor to go with it, it’s going to help you.
Everything that this country and frankly, the world has gone through for the last six months has been really, really awkward and painful. And so, I look forward to where this industry can go in the coming years. I really do believe that home equity lending and specifically reverse mortgages are going to be such an important piece of the average American’s retirement.
In terms of your role in broadening the availability of reverse mortgage products in Texas like HECM for Purchase, when you look back on the totality of the events and ultimately in succeeding and originating the first reverse mortgage in the state, what comes to your mind when you think back on that whole situation?
In fairness, I must admit that I get more credit than I deserve as it relates to Texas. There were so many people that were a part of that original team back in 1999. There were dozens of people in the House and Senate, and at Fannie Mae who made the process work. So, I can’t answer that question without recognizing how many people helped me and that original team bring reverse mortgages to Texas.
But I also remember how hard it was. I literally lived in the Capitol for a few years. In the end, it took us 20 years and four different constitutional amendments to get to where we are now. In fact, the process to bring HECM for Purchase to Texas took five years and dozens of editorial board visits across the state. And Texas is a big state.
It’s been an amazing journey, but frankly, the hard work is just beginning. Had Texas never had reverse mortgages? Well, history has proven that the people of Texas would have been worse off.
On the other side of the coin, what would you say is an example of a changemaking effort you were a part of that did not work out?
There were certainly a number of aspects to the Texas legislation that we would have liked to have seen come across faster. That took longer, and it didn’t really work. But all in all, I don’t really see a downside. I think the one piece that is interesting is that I was fortunate enough to testify before the Minnesota Legislature. It’s been over a decade now, when the state was going to try to use reverse mortgages as a benefit for the state where they were actually going to be the back-end lender.
They were going to let people take out a reverse mortgage and use it to try to keep them off of Medicaid and Medicare as long as they possibly could, so they really could utilize their own assets and their own resources. That was right when the 2008-2009 crash happened. Because of that, the financial viability of a state getting into the reverse mortgage space fell apart. I regretted that because if we had had another year, I think that was going to be a very unique state and a very unique piece of legislation that would have been used, frankly, by the other 49 states.
That’s probably my biggest disappointment in the reverse mortgage industry that I’ve had in the 20-plus years I’ve been in it.
That’s really interesting. Do you think that a state’s involvement would have made a significant difference, let’s say on the educational front specifically?
I do. Keep in mind that’s been going on 11 years now, so it’s a little hard to speculate on how that would have developed. But to have an entire state on board clearly would have worked. They were also really in on the early ideas of talking about financial assessment, so it really would have been a new, modern-day product.
You play a big role at NRMLA in addition to your role at FAR. What role do you think NRMLA has played in the industry’s change and/or evolution since its incorporation?
I’m a very pro-NRMLA guy, and I was a pro-NRMLA guy before I was fortunate enough to be elected a co-chair with Reza Jahangiri. I think that if you look at what Peter Bell and Steve Irwin have done over the last 10-15 years, I don’t think that the industry would have survived if not for the work that NRMLA has done.
What it also does is it frees up the companies to do what they do best, like innovation, product development, and new servicing ideas. NRMLA takes care of educating its members and of what’s going on in Washington DC, in Congress and within the think tanks. That allows the companies to really go and try to really be innovative.
What else do you think that the industry should focus on changing or evolving in the future?
I think I may have answered that question a little bit differently six months ago than I’m answering it today, but we first need to make sure that we finish out this year with the momentum that we currently have. Going forward, if we’re talking about liquidity, servicing or product development, we have a real opportunity to change the narrative on why a reverse mortgage can benefit the country as a whole.
But, I think the industry is going to — like everybody else — re-think what the future will look like in a COVID-19 world. And she or he with the ideas has the best chance to win the game.
How would you encourage the next generation of reverse mortgage industry players to make themselves heard, and to make positive changes in the industry when their time comes?
Well, I think there is an amazing opportunity for people in their 20s or 30s to get into this space that maybe haven’t yet. I’m a believer that you’ve got so many unique people in this space that can mentor those that would come into it. So, I would say find a mentor, ask a lot of questions. When you have so many people who have dedicated so much of their life to this industry, they take it really, really personally.
Find those people – and it’s not like there are only two or three out there. There are dozens of people out there who have dedicated themselves, who’ve been in this business a lot longer than I have, and have probably done more for the industry than I’ve done. We’re going to be able to affect real change and take care of not only the taxpayers of the country or the investors, but to really make life better for a lot of people, maybe in ways they’ve never anticipated.
This gives us an opportunity to provide some real relief, emotional and financial relief that maybe we haven’t seen to some extent in over 100 years.