The Highest Good

HECM sales present opportunities to respond with virtue

“Summum Bonum”

“Summum Bonum”. The highest good was a phrase Rome’s famed orator Cicero was inclined to recite before his audiences. The greatest good or the sum of all that benefits your fellow man/woman. It’s a phase every HECM (reverse mortgage) professional should keep in mind when approaching every potential borrower.

The highest good is also embodied as the Stoic definition of virtue. The stoic tradition held that virtue is composed of wisdom, courage, temperance, and justice.

Applying these principles lets see how each could fit into our interactions as a reverse mortgage professional.


  • Am I overwhelming the homeowner with information?
  • Are they looking for a quick fix?
  • What is their communication style and am I using it?


  • Am I willing to be direct about their current financial situation?
  • Am I willing to make less money do to the right thing?
  • Am I willing to discuss any property issues?


  • Are ethics at the forefront of how we interact in this loan transaction?
  • Am I showing sensitivity to their needs, hopes, and previous disappointments?
  • Am I willing to slow down my pace in the interest of them holding firm to the information being presented?


  • If they were my grandparents how would I proceed?
  • Did someone else try to deceive or rip them off?
  • Do my words and actions reflect the value of honesty?

Loan Payout Manipulation

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NRMLA Issues Ethics Advisory on Planned Prepayment HECM Loans

reverse mortgage newsIt’s not often discussed or quite frankly on the radar of most reverse mortgage professionals, structuring HECM loans for higher initial payouts followed by an immediate pay-down.

It’s a tricky strategy that is unfortunately employed by a few reverse mortgage lenders or brokers, strategic prepayments following a large initial loan payout at closing. In its most egregious form, it works like this: Broker A is working with the Smiths who have a very low mortgage payoff or mandatory obligations. Approaching the loan closing date said broker encourages the Smiths to take a lump sum distribution up to the 60% first-year distribution limit keeping their upfront FHA insurance premium at one-half of a percent telling them they can repay the excess withdrawals in the first month to avoid the interest charges. Consequently, the broker benefits with a higher UPB or Unpaid Principal Balance which may increase his loan pricing or commission while the borrower is convinced they are unaffected. Isn’t this a win-win scenario?

If there’s one thing history has taught us it is that ethical guidelines are born from questionable business practices…

Download a transcript of this episode here.

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Worth fighting for: Friday’s Food for Thought

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We may feel we are on the ropes, but there are some things worth fighting for as reverse mortgage professionals.

Our rights as originators:

  • Fairness in regulation (NMLS renewal)
  • To be included in regulatory discussion
  • To be treated as a professional not a predator by lawmakers

Our responsibilities:

  • To be ethical in all we do
  • To continually improve our knowledge & skill set
  • Participate in industry support, discussions and trade groups
  • To preach the gospel of the reverse mortgage