The Reverse Mortgage Domino Theory

Back during the Vietnam conflict, many politicians subscribed to what was called "The Domino Theory,” which was, essentially, the notion that should Vietnam fall to Communist rule, so would the rest of Asia. It never happened. There’s concern in the mortgage industry of another kind of “Domino Theory” ... one that would require banks, both large and small, perhaps banks without the necessary means, to hire an individual to handle all reverse mortgage counseling duties face-to-face. That’s what’s apparently happening in Massachusetts, so, it’s not entirely implausible that it could happen across the rest of the nation. Beginning Aug. 1, low-income lenders will be required to make face-to-face appointments with clients, reportedly in an effort to better serve those seeking reverse mortgages. While the industry has been fighting this particular regulatory shift for a few years, change is looming. “There are homebound seniors, transportation issues, language issues and a host of restrictions,” said George Downey, founder of Harbor Mortgage Solutions in Braintree, Mass. “The bottom line is it effectively will shut down reverse mortgage lending as we have known it in Massachusetts.” “Lenders may be overreacting. Since the mandate is targeted at vulnerable segments of the reverse mortgage market in Massachusetts, the wisest course for lenders and the industry is to welcome and embrace it,” said Atare E. Agbamu of Think Reverse LLC. "‘Either or’ thinking is not helpful here. What is good for reverse mortgage consumers can be good for lenders and the industry.” Could Massachusetts be the start of something new and frustrating for the reverse mortgage industry? While it seems a bit premature to automatically assume that one state’s mandate will eventually lead to national adoption, there are legitimate concerns. Only time will tell when it comes to this new bit of legislation.