3 minute read
When non-NRMLA members visit the association’s website (nrmlaonline.org), they find 17 documents comprising 67 pages and a complaint form listed under the Code of Ethics and Responsibility tab. The fact that the authoritative body and de facto voice of our industry has devoted so much time and space to this subject is impressive, and that information may be helpful to those of us who interface daily with homeowners in need of financial assistance.
That said, much of the content is laden with legalese and complex jargon that may be off-putting to potential clients seeking reassurance about our practices and actions. During a recent read-through of that site, I found myself wondering how we could make the message about our standards of conduct easier for our clients to understand. When it comes to ethics, the message is simple: Do what is best for our client, for ourselves and for the industry. These are complementary objectives that each of us should embrace and strive to accomplish.
As I was contemplating what to write for this article, two client scenarios came across my desk that got me thinking about ethics in the reverse mortgage industry.
There was nothing inherently unethical about the first scenario, but I nonetheless contemplated it more than usual. When I ran the numbers on the adjustable-loan program that was being proposed, the margin was set so that the LO received an extra $20,000 while the client was getting $10,000 less in their principal limit amount. To the LO’s credit, all of the costs were being credited back to the borrower. That amounted to nearly $18,000 in closing costs all together. The total payout to the LO was more than $30,000.
My concern about this arrangement boiled down to the fact that the borrowers received $10,000 less than the maximum amount available to them. I wondered, “Was there enough money at a margin .125 percent lower by which the borrower would have gotten the maximum proceeds?” No doubt, with that adjustment made to benefit the client, the LO could afford to have credited closing costs to the borrower and still would have received a very sizable commission check. In my opinion, clients should get the maximum amount available to them.
The second scenario involves a topic that appears in NRMLA’s ethics documents: “Be in good communication with your borrowers.” In most cases, the homeowners who come to us for reverse mortgage loans have an intense need for immediate cash flow either to retire an existing mortgage payment and/or access additional monthly cash. I have found that they are very concerned and absolutely want to ensure that they are making the best possible decision regarding the disposition of the roof over their heads. If we, as mortgage specialists, do not adequately keep in touch with these homeowners throughout the loan process, we fail to provide appropriate, professional care to our clients and, ultimately, we malign the industry as a whole. When my borrowers leave messages for me, I make certain to call them back and provide satisfactory responses to their questions.
After all, for the 23 years that I have been in the mortgage industry, both conventional and reverse, I have taken stock of my performance on behalf of my clients by the simple act of looking myself in the mirror every morning. Am I OK with the person I see? Have I been fair and ethical in my own mind and by industry standards? As long as I am OK with the face looking back at me, I know I am on the right path.
