At many sporting events when the home team victory is relatively secure, the public address system plays Steam's "Na Na Hey Hey Kiss Him Goodbye."
We might be reaching the goodbye point with the reverse mortgage loan as we know it. Yet, another large originator of the product, this time it is Generation Mortgage, has decided it no longer wants to be in this business (although Generation does plan to remain a servicer).
This is not to say the reverse mortgage product is not a good one. In fact, its intent is noble — allowing senior citizens to age in their own properties. But it has been patched so many times (albeit for the right reasons) that it might be easier to redesign the program from scratch.
A new reverse mortgage will probably not look much different than the current Home Equity Conversion Mortgage; but a revamp is an opportunity to successfully bring private capital to this product. Conforming and private versions of a reverse mortgage have been tried; none have gained traction.
The reverse mortgage market, which has never grown past niche status, might actually gain the meaningful market share its supporters said it deserves if there were options to the Federal Housing Administration-insured HECM. It is clear the American taxpayer would benefit.
The Consumer Financial Protection Bureau can establish generic rules about reverse mortgage lending (including a counseling requirement) but after that turn product specifics over to the private market.
There can even be a specific private non-borrowing spouse product that takes into account those additional risks without having the FHA Insurance fund bear the consequences if there were to be a problem.
Wiping the slate clean and recreating the reverse mortgage might be the only way to give this product the prominence it deserves.
