I read with interest the Nov-Dec special issue of NRMLA’s Reverse Mortgage Magazine. The issue was devoted to opinions and comments by some distinguished colleagues. Many have held leadership positons in the National Reverse Mortgage Lenders Association. While I appreciate the comments as accurate as they are, they simply fail to paint a complete picture of the abiding challenges facing this industry.
The magazine content reflected a never-ending cascade of program superlatives, plusses, and positives without addressing the deleterious minuses, and negative focal points which continue to adversely affect the viability and sustainability of the program.
If the intent was to create a rah-rah piece to inspire those reverse mortgage industry souls who are discouraged, maybe the mission has been accomplished. However, to appreciate the quagmire we find ourselves in requires that the industry look at some failures as well. Researchers Karl Weick and Kathleen Sutcliff, in their prolific research on HROs (high-reliability organizations) proffer that it is important to look at failure to see where an organization is going. If we were to substitute “industry” for “organization” the same arguments discussed therein remain germane.
Dissecting successes and failures are equally important endeavors. Examining both sides of the issue becomes vastly more instructive, than focusing on, for example what has gone right. When a singular success-focus is taken, it creates a very powerful confirmatory bias that not only prevents one from seeing those surprising and shocking “black-swan events”, but it also insidiously lulls one into a false belief that everything is OK.
If we led our lives with the ethos presented in the aforementioned edition, what follows is a rather comical depiction: When crossing the street, we would look one way instead of both ways; when running a business we would look at income and ignore expenses, or vice versa.
Peter Bell, in his monthly commentary suggests all is well and states, “I think we arrived in a good place”. To support this thinking he provides support for the above claim as follows. “Market dynamics, growing investor interest, re-engineered HECM options, more robust counseling and a low interest rate environment leaves us poised for growth….” While I can agree with the spirit of the comment, I find it wanting and incomplete because it leaves the impression that everything is fine with the program. The point is that everything is not fine. A real opportunity for program refinement is thus being ignored.
Similarly, what remained unstated makes the latest edition reek of disingenuousness.
It (the comments) suggests that eligible seniors can continue to enjoy their homes as they transmute equity into cash. However, the dirty little secret remains that many seniors, as far as access to the HECM program is concerned, are being locked out of their own homes.
Current dire economic conditions have made the HECM program a loan of first-resort. Sadly for many, it has become a loan of no-resort. The HECM program are the new "liar loans", as seniors in desperate need for funds discover that governmental policy will no longer provide them access to the program. An industry that once catered to those borrowers living in condos and co-ops, now must deal with utterly frustrated people who feel cheated and lied to, as access for many due to draconian governmental policy is for all practical purposes- DENIED.
Good to hear your voice again, Dennis. I wonder what ever happened to that great PR firm that NRMLA hired? Thank you.
Posted by: Bob Irving, CSA | December 31, 2010 at 12:07 PM