The employment of a senior’s home equity in an effort to produce better retirement outcomes by either paying for expenses or increasing a retiree’s quality of life is a cornerstone of the messaging employed by the reverse mortgage industry. Increasingly, alternative equity tapping products are finding a place in the conversation, as several companies have introduced instruments which are not based on debt as another way for a homeowner to access the equity they’ve built up in their homes.
The National Reverse Mortgage Lenders Association (NRMLA) is the industry’s foremost trade association, with product experts and leaders from across the reverse mortgage industry contributing to its educational and advocacy efforts, in addition to maintaining the association’s code of ethics. As a longstanding trade association, NRMLA sees the potential to apply its home equity tapping expertise to product categories beyond reverse mortgages, according to NRMLA President Steve Irwin during his session of RMD’s HEQ event earlier this month.
A place for products beyond the namesake
When asked about whether or not the trade association sees a place for itself in working with the increasingly populated alternative home equity tapping space, the possibility is absolutely present, according to Irwin.
“Yes, is the short answer,” Irwin shared. “Absolutely. We know and have engaged with many of the executive management from a variety of these different companies [who offer] the alternative methods for accessing equity. We are in talks with different equity release offerers around the globe right at the moment.”
These talks include companies offering equity release products in Canada, Australia and New Zealand, in addition to Irwin sharing that he has seen “innovative” work being done on the Korean peninsula as well as a Japanese delegation that has created a product similar to reverse mortgages.
“So that being said, there is an opportunity [in the alternative equity space] and there is a role,” Irwin said of NRMLA. “There is an opportunity for some of these firms to leverage some of our subject matter expertise and relationships, and some of our outside counsel’s deep thinking into these areas.”
One of the elements of the conversation related to alternative equity release products is that unlike reverse mortgages, many of them are not specifically designed to be used by seniors in or near retirement, but this doesn’t present a problem for the association, Irwin says.
“A lot of these products, while they can be used to bolster retirement security aren’t specifically designed for the elder population, but that’s okay,” he shares. “I just think there is an opportunity for us to continue to collaborate and work closely. We are going to be developing some international council around this, and we would be willing and able to engage at the national level as well.”
NRMLA’s code of ethics must be part of the conversation
If alternative equity tapping companies do choose to avail themselves of NRMLA’s expertise, however, that will also mean conforming to the rules that the association sees as paramount to serving the interests of borrowers and/or customers, Irwin says. No issues are foreseen on this front, but it has to be a component of the discussion.
“We do take very, very seriously our association’s code of ethics and professional responsibility,” Irwin says. “Not that there would be any issue there, but that is something that would have to continue to be a part of any of our members’ profiles, [there needs to] be an adherence to that.”
NRMLA has always subscribed to the idea that consumer protections must remain at the front of the reverse mortgage industry’s activities not to be burdensome, but to make sure that reverse mortgage customers have necessary safeguards in place, Irwin says.
“We don’t think that overly burdensome regulation is necessarily effective nor efficient,” Irwin explains. “But at the same time, we are very concerned about consumer safeguards, and we want to ensure the products our members and partners offer are safe and consumer-friendly. That is also part of the conversation.”
At the end of the day, proceeding forward with alternative equity tapping products, if the opportunities present themselves, is a natural evolution of NRMLA’s subject matter expertise and relationships, Irwin said.
“It would be narrow-minded and not as forward-thinking as we need to be if we didn’t recognize the development and rising use of alternative methods of accessing equity, and supporting retirement financing that way,” Irwin says. “So yes, of course there’s an opportunity, and we’d welcome it. We look forward to continuing those conversations.”