Reverse mortgage counselors are seeing an increased level of volume in 2020 which may partially be attributed to the COVID-19 coronavirus pandemic, but the source of the additional volume varies between counselors based on location and borrower needs. This is according to a panel discussion between reverse mortgage counselors which took place at the National Reverse Mortgage Lenders Association (NRMLA) Virtual Annual Meeting & Expo in November.
Counselors are observing all manner of changes to the ways they’ve had to conduct business during the course of the pandemic, including the observation of more refinance business, slowing proprietary counseling certificate issuance, and what they think originators should keep in mind about preparing their borrowers for the counseling process.
Refis driving HECM certificates
Many counselors are observing trends that appear to be spinning out of the COVID-19 pandemic, largely including the generally-observed trend that shows that reverse mortgage volume appeared to spike in the middle of the year, after the early uncertainty of the pandemic appeared to wear off. This was an observation made by Melinda Opperman, president of Springboard Nonprofit with a d/b/a as credit.org in Riverside, Calif.
“We’re definitely seeing an increase and the increase pertains to the refinances versus first time reverse mortgage applicants,” she says. “Refis are up.”
Home Equity Conversion Mortgage (HECM) sessions also saw a spike before beginning to level off in the early fall, according to Mohan Lalwani, program manager at ReverseMortgageHelper.org and DebtHelper.org in West Palm Beach, Fla.
“Refis up and general is up also, I would say probably from August onwards,” he says. “Regular reverse mortgages are now about normal.”
However, based on what some counselors are seeing, proprietary reverse mortgage sessions have decreased, according to the panel. This was an observation first noted by Jennifer Cosentini, housing director at Cambridge Credit Counseling Corp. in Agawam, Mass.
“Our reverse mortgage business is up, also with refis. But just in general, it’s up,” she says. “Proprietary [counseling sessions] are down a tad.”
Both Lalwani and Opperman agreed with Cosentini’s assessment, with Lalwani saying that proprietaries were nearly “in-line” with traditional HECM sessions while Opperman noted that proprietaries are down in her business, as well.
The reverse mortgage industry noticed the surge in refinance transactions starting in the fall, with analysts and originators taking different perspectives on what additional refinance transactions could mean for the industry’s immediate future.
Effects of the rate index shift
The impending change from the London Interbank Offered Rate (LIBOR) index to the Constant Maturity Treasury (CMT) index is expected to reverberate through to the counseling side of the reverse mortgage business as well, because of the discussions related to borrower education that have to take place. The counselors themselves also have to be properly notified about how the index rate shift will impact the information they relate to borrowers.
On this front, counselors appear confident in the idea that they have been properly briefed on the impact that the rate shift will have on business, according to Lalwani who also works as a broker.
“As a broker myself, too, [my] basis on that, I’ve trained my counselors exactly to go over the estimates that are provided by the lending institutions,” he explains. “Basically, what’s on that paper is what we discuss.”
The impending shift of the rate index is also something that reverse mortgage originators should keep in mind when preparing a borrower for their counseling session, Lalwani adds.
“I just think that the borrower should [have things] explained a little bit more due to the changes from LIBOR to CMT, especially when it’s a monthly or annual CMT,” he says. “Because as a counselor, we will have to [specify for the borrower] ‘this is the monthly, this is the annual, these are the pros, the cons, you folks make the decision on what’s best for you.’”
Electronic counseling during the pandemic
Additionally, though some states have face-to-face counseling requirements, the logistical hurdles created by the COVID-19 pandemic have forced counselors to adapt to more remote counseling sessions either over the phone, or through new video conferencing platforms like Zoom or Apple’s FaceTime.
“If somebody wants a face-to-face, then we would offer them Zoom, Skype or FaceTime, whichever, we can offer all three different types of sessions,” Lalwani says. “And sometimes, it’s nice to have that. Because if it’s a couple, and one of the couple can’t hear as well, then the other one is sort of repeating us using [something like] sign language. So, from the body language, we would know that the person is understanding exactly what’s happened, and it makes a lot of difference.”
Many times, though, having counseling sessions over the phone is sufficient since it eliminates the need for a client to learn a new, unfamiliar technology, Opperman says.
“The vast majority [of clients] are terrific with the telephone,” she says. “They’re happy with their phones, they know how to turn the volume up on their phones, all of that. So, we’ve not had any pushback from clients with the lack of the ability or inability to do face-to-face during the pandemic.”
A lot of this is also dependent on the rules imposed by individual states. In California where Opperman works, face-to-face sessions are not permitted due to pandemic restrictions from the office of Gov. Gavin Newsom, but the office has additional barriers and notices ready for the time when those restrictions are lifted.