Every industry and business has opportunities to continue to get better. The reverse mortgage industry is unique in that it is constantly evolving and changing and yet we still have some basic opportunities to address problems within the industry.
One of the first changes that would be incredibly helpful for both the industry and consumers is better financial literacy and access to simple financial literacy for consumers. I don't meant calculators to explore what a reverse mortgage can do for you. I means basics like how can I compare this to traditional financing or having a house fully paid off. How the reverse mortgage behaves and what my options with it are. It often feels like the only education available to consumers is tucked away in academic articles and difficult to find and digest. It would be great to see consumers have a better understanding of who the reverse mortgage works best for, how it works and when it's appropriate.
Changes in the financial services industry would also be very helpful here. Specifically, compliance departments in the financial services industry in institutions like the banks, agencies, wirehouses and other broker dealers would go a long way to demystifying reverse mortgages. Today compliance departments seem to play two roles: protect the institution and protect the consumer. It often feels as if protecting the institution comes before protecting the consumer and this is often the case with the reverse mortgage. Compliance departments and the financial advisors, planners and agents that work for these institutions need to continue to adopt fiduciary standards (that means acting in the best interest of clients) regardless of whether there is profit to be made for the financial institution. A large reason why reverse mortgage are misunderstood is because the industry that should be helping to educate on them would rather choose, for the most part, to ignore them
Some other helpful changes that are good for consumers would be pricing transparency. It's not always easy to understand how pricing influences a reverse mortgage and there are a lot of factors that come into play. I'm not sure what the best solution is to provide additional transparency on a moving target but it would be better for the industry as well as potential borrowers if there was a more clear understanding on how and why the pricing shakes out the way it does.
One big gripe about the industry today that continues to be a thorn in the side of reverse mortgage professionals and their consumers (although mostly they don't notice) is the technology. There is little reason for reverse mortgages and the FHA to have technology as dated as it is. It creates unnecessary friction between underwriters, loan officers and consumers. It slows down the process, leads to mistakes and higher costs and is sorely lacking in keeping up with the rest of the mortgage industry. Technology today should not be as big of a challenge as it is in the reverse mortgage industry.
The last and perhaps greatest change I'd love to see in the reverse mortgage industry is continued innovation. FHA would also love nothing more than to see more innovation, new players and new products expand in the reverse mortgage world. Much like the financial services industry continues to grow and shift and innovate in products like annuities, long term care and life insurance, there is a need for the reverse mortgage to innovate and better address changing retiree needs. The industry and consumers could benefit tremendously by greater innovation.
