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Reverse Mortgage Originators Wake Up to a Post-October 2 World

As the deadline for major reverse mortgage changes came and went Monday, originators across the country exhaled — sometimes for the first time in a month.

“Last week was finals week of your senior year in college, or right before your finals when you’re working on your master’s or something,” reverse mortgage specialist Laurie MacNaughton told RMD. 

MacNaughton, who works for Atlantic Coast Mortgage, said she worked until as late as 2 a.m. on Thursday as she worked with borrowers looking to lock in higher principal limit factors before the October 2 change. 

She spent September working 30 days straight, calling anyone who’d ever expressed interest in a reverse mortgage in the past to alert them of the impending change. Like many folks, some of her clients had inquired about Home Equity Conversion Mortgages but had other things get in the way — people had health problems, for instance, or were unable to coordinate meetings with trusted family members.

“There’s no sense of urgency when you think something’s always going to be there,” MacNaughton said.

Meanwhile, at Peoples Home Equity in Alcoa, Tenn., branch manager Loren Riddick found himself frustrated at his team’s inability to advertise the impending rule changes in local newspapers, fearful of running afoul of regulations that prevent reverse mortgage advertisements from implying a sense of urgency.

“Even though it’s urgent, even though it’s a last-chance-for-romance kind of thing, yeah, I can’t say anything,” Riddick told RMD.

Still, Riddick emphasized that he remains upbeat about the future of the program going forward, though he expressed doubts about the viability of HECMs for needs-based borrowers in the near future.

“Do you look at the glass half full, or do you look at the glass half empty?” Riddick asked. “And that’s probably the best way to sum it up.”

Beth Paterson, executive vice president at Reverse Mortgages SIDAC in St. Paul, Minn., told RMD that her team helped secure case numbers for all of the potential borrowers who wanted to access the old principal limit factors, but others naturally were left behind.

“Less funds will be available for some who had inquired perviously and decided to wait, which means they likely won’t qualify if or when they do decide to proceed,” Paterson said via e-mail.

The same thing happened at 1st Nations Reverse in Owings Mills, Md., where executive vice president Josh Stein said some potential borrowers fell short and couldn’t get counseling appointments in time.

“The time and effort required for people to call numerous agencies to get an appointment was too much for some people,” Shein said. “In light of the very short timeframe we all had to work with, we did the best job we possibly could, but certainly more time would have allowed us to help more customers.”

Shein and the team at 1st Nations Reverse will continue to work with borrowers who missed the deadline to see if they can qualify under the new PLFs, he said.

“It was extremely busy over the last few weeks trying to help as many consumers as possible within the short window we had,” Shein said.

There were some positive stories to come out of the process: MacNaughton said she told her clients to call counseling firms twice an hour to inquire about any last-minute openings; one would-be borrower didn’t start the process until Thursday, but still managed to get a same-day appointment after a cancellation.

“I can’t even begin to tell you how heroic I see them,” MacNaughton said of the nation’s HECM counselors. “My unending gratitude goes out to you.”

And in the end, like Riddick, Paterson had a positive outlook for the future.

“After being in the industry for so long and seeing so many changes, I’m just remaining positive and focusing on the program as it is for borrowers, and continuing sharing the benefits,” she said.

Written by Alex Spanko