Reverse Mortgage Counselors: Clients More Informed, Resources Strained During Pandemic

Reverse mortgage clients appear to be better-prepared for their counseling sessions regarding their understanding of the reverse mortgage product category, a potential sign that the industry itself is doing an effective job of responding to the financial need that the COVID-19 coronavirus pandemic has created. However, it’s also more difficult to operate in this environment as resources for counseling agencies have been strained.

This is according to counseling professionals from three separate organizations — Agawam, Mass.-based Cambridge Credit Counseling Corp., Sugar Land, Tex.-based Money Management International (MMI) and Farmington Hills, Mich.-based GreenPath Financial Wellness — who revealed that the industry’s use of technology and less general stress from reverse mortgage counseling clients are positive developments, while limited funding resources for the organizations themselves have strained the ability for them to meet the needs of borrowers.

Less stress, more awareness of the reverse mortgage product by clients

In general, the reverse mortgage industry has become more effective in meeting the needs of consumers especially during this time of heightened financial stress for seniors, according to counselors at all three organizations in interviews with RMD.

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“The reverse mortgage industry has made great strides in using technology to meet the needs of consumers during the pandemic,” says Jackie Boies, senior director of housing and bankruptcy services at MMI. “As the senior population is the most vulnerable to COVID-19, it is more important than ever that we all embrace technology and other automated processes, so that reverse mortgages can be provided in a completely socially distanced environment.”

The industry’s higher level of contact with seniors also gives it an advantage over other sectors of the broader mortgage business, since reverse professionals are more aware of seniors’ comfort level with technology instead of promulgating a stereotype that paints them as technology-averse, Boies says.

“Seniors are often categorized as not being tech savvy or even interested in using technology and while there are some, we do a disservice lumping them all together, as more and more we’re learning that seniors are embracing technology and other means so that they are involved and in control.”

At GreenPath, counselors have been observing no discernible increase in the stress exhibited by clients in light of the pandemic on the parts of clients according to Kathy Conley, stakeholder engagement specialist at GreenPath.

“Our counselors have not reported an increase in the anxiety level of the clients they counsel for reverse mortgages,” Conley tells RMD. “It seems potential reverse mortgage borrowers are more prepared to use assets for what may be more of an economic downturn and are planning ahead. It does seem that those borrowers understand that a reverse mortgage is another tool which can help them.”

Clients also seem to understand the product category more during the current period, Conley says.

“Compared to 2019, based on reports from our counselors, it appears that clients are a little more informed and prepared for the counseling session,” she tells RMD.

The reverse mortgage industry’s quickness in responding to the needs of seniors is appreciated, according to Jennifer Cosentini, housing director at Cambridge Credit Counseling Corp.

“I think the reverse mortgage industry responded fast and effectively to help seniors tap into their equity and feel confident about their decision to get a reverse mortgage during this crisis,” Cosentini says.

Funding sources for counseling firms strained by pandemic

Since the financial crisis that led to the Great Recession in the late 2000s and early 2010s, funds appropriated from the United States Congress for housing counseling have been declining. This means that some counseling organizations, including GreenPath, exhausted their funding more quickly in light of a surge in housing counseling volume driven by the strain of the pandemic, Conley says.

“Some generous companies have stepped up and aided capacity building by putting grant money out there to help support the cause,” Conley says. “Wait times were impacted at many agencies. Many lenders and servicers had significant wait times as their phone lines were flooded with relief requests. However, this was (and is) not the case at GreenPath.”

At significant effort and expense, GreenPath has been able to provide its services remotely and seamlessly, benefitting from a previous transition to remote work from a “significant portion” of the organization’s employees in 2019.

At MMI, the workforce was already dispersed, and had previously become accustomed to providing many of its services including reverse mortgage counseling over the phone, Boies says.

“As a result, MMI had no reduction or interruption in providing HECM counseling,” Boies explains. “Some other housing counseling agencies were not as well prepared and they did have to pause or reduce services as they grappled with the logistics of remote work. As of now, most of our industry partners are reporting success with remote work. Funding for sessions has not been impacted at MMI, as consumers pay the majority of the fee for HECM counseling directly.”

Similarly, Cambridge reports no major disruptions in either funding for counseling services or wait times as a result of the pandemic, Cosentini says.

“We have seen new funding sources come out to help housing counseling agencies overcome the impact of COVID-19,” Cosentini says. “There was minimal wait in [terms of] receiving the funds.”

Preparing for the end of temporary relief

Other divisions within the counseling companies also reported a rise in incoming inquiries from consumers, due to new questions that the pandemic created about their mortgages and debts, Conley explained. Those peaks observed earlier in the pandemic have started to decrease because of government assistance in the form of the CARES Act, foreclosure and eviction moratoriums and temporary credit payment deferments.

This, however, could be a lull before another large influx as some of those previous protections handed down by the government begin to lapse, Conley says.

“We recognize that this assistance could be the calm before the storm,” she says. “As consumers move out of these respite periods, they will undoubtedly need more assistance for financial recovery. GreenPath can help consumers as forbearances and moratoriums end and deferred payments need to be addressed.”

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  • “Reverse mortgage clients appear to be better-prepared for their counseling sessions regarding their understanding of the reverse mortgage product category, a potential sign that the industry itself is doing an effective job of responding to the financial need that the COVID-19 coronavirus pandemic has created. ”

    Let us look at some numbers. Through the first eight months of this fiscal year total HECM endorsements are 25,415 compared to the 21,202 total HECMs last fiscal year. That is an increase of 4,213 or 19.9%.

    Through the first eight months of this fiscal year total HECM Refis are 4,176 compared to the 1,039 for the same period last fiscal year. That is an increase of 3,137 HECM endorsements or 301.9%. For that same period H4Ps increase by 142 HECM endorsements or 9.7%. and Traditional HECMs increased by 934 HECM endorsements or 22.17%.

    But let us look at the composition of the increase in total HECMs of 4,213. HECM Refis increased by 3,137 HECM endorsements in that period and compose 74.5%. H4Ps increased by 142 HECMs and compose just 3.4% of the total increase, while Traditional HECMs increased by 934 HECMs and compose 22.1% of the total increase.

    Even though Refis total just 16.4% of the total HECMs so far this fiscal year, their volume was so low last fiscal year that they are the heart of the increase in this fiscal year. The eight month total this fiscal year of 4,176 exceeds the HECM Refi volume for all of last fiscal year by 2,488. The total HECM Refi endorsements for last fiscal year were just 1,688.

    So while the HECM Refi is a significant part of the HECM volume for this fiscal year, its total impact is the largest composition of the total increase we are seeing this fiscal year. Perhaps in part it is HECM Refis that have HECM counselors talking about HECM borrowers being better prepared. After all who knows more about HECMs, prospects or existing HECM borrowers?

    Apparently this renewed emphasis on HECM Refis has some in the industry very bothered. While they admit that HECM Refis are significant portion of total HECM endorsements this fiscal year, they do not want to discuss the impact HECM Refis are having on the overall growth in HECM endorsements. Why? The volume of HECM refis will most likely drop next fiscal year since interest rates will not drop much much further. That could spell another period of stagnation in the growth of HECM endorsements in fiscal 2021, a prospect few want to acknowledge right now.

    Why is the following strange? “Since the financial crisis that led to the Great Recession in the late 2000s and early 2010s, funds appropriated from the United States Congress for housing counseling have been declining.”

    HECM Case Number Assignments have been dropping from an all time high of 169,617 for fiscal year 2009 to just 49,939 for the 12 twelve month period ended June 30, 2019 and rising to 58,690 for the 12 twelve months ended May 31, 2020. So in less than a decade, demand for HECM counseling as seen in Case Number Assignments has dropped 70.6%. It seems only logical that taxpayer funding for counseling for HECMs would also be dropping. Yet that is not to say that other areas in housing counseling may be in great need of more funds due to increased activities.

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