The ‘Rules of the Game’ presentation returns to address the misconceptions of inverted professionals

‘Rules of the Game’, a popular interactive session from past annual meetings of the National Association of Reverse Mortgage Lenders (NRMLA), returned in 2024 to the San Diego event that took place in late September.

Presented by reverse mortgage educators Dan Hultquist and Jim McMinn, the pair wanted to reiterate how guidelines can often be misunderstood in the reverse mortgage industry. They all tried to “make a splash on long-held ideas that will open your eyes to a better presentation of the reverse mortgage.”

The problem with definitive statements

The first topic the pair addressed was the trap some reverse mortgage lending professionals might fall into by making “definitive statements.” These may conflict with the program rules or other more nuanced realities of the Home Equity Conversion Mortgage (HECM) program.

“When you start using words like ‘always,’ ‘guarantee,’ or ‘never,’ those are definitive words that can be problematic if there is an exception to the rule,” Hultquist said. “And as we know, it’s a bit complicated. There are exceptions to the rule, and that’s where lawsuits happen.”

For example, Hultquist began a statement asking, “Is it true that borrowers can always…” before immediately interjecting.

“No, don’t use the word ‘always,’” he said. “There is no guarantee. We have no idea.”

Using “wobble words” to convey the reality of a particular rule or regulation helps emphasize the point a professional may be trying to make while avoiding definitive statements that could be problematic, McMinn noted.

The audience mentioned some of their favorite examples: ‘usually’, ‘usually’, ‘sometimes’ and ‘typical’ were offered. While a given rule may work in one direction most of the time, industry professionals should steer clear of the definitive statement that a rule or guideline will always work in the same way, as that is where problems can arise.

Accuracy of presentations so you stay in your lane

In keeping with the sports theme, the pair then described the need to “be precise with our steps,” or in other words, accurate in presentations on the specifics of the product.

“If you’re going to pass that ball, make sure you know the guidelines,” Hultquist said. “Communicate them and make sure everyone knows what routes they are going to take.”

One example he provided is a statement that a borrower will never have to make a payment while they have a reverse mortgage. Although payments on the loan balance are not required by borrowers, there are other payments associated with keeping a reverse mortgage in good standing. These include property taxes, homeowners insurance, and – if applicable – homeowners association (HOA) fees.

“There has to be a caveat to that,” Hultquist said. “The caveat is not without qualifying language regarding borrowers’ obligations.”

This is to ensure that a reverse mortgage professional remains closely connected to their own field. They should not wander into areas where they may be knowledgeable but may not be qualified to provide specific advice.

“Don’t go out of bounds,” Hultquist said. “’Staying on your own path’ is another way we talk about it. Do not overstep the boundaries by providing tax, legal or investment advice. These are just some general ground rules, like you don’t want to communicate with appraisers or consultancies or your unlicensed activities if you don’t have a license, things like that. You want to stay within the boundaries.”

McMinn added that professionals’ specific expertise in reverse mortgages may not be limited, but presenting insights on other topics is simply not advisable.

“We know a lot about this program,” he said. “We all live with it every day and we want to advise our customers and make sure they know what they are doing. But we want to stay within our borders, so let the legal people do the legalese. We let accountants and the tax authorities do their thing, and then we can all come together.”

Learning the scripts

The pair also recommended learning the “playbooks” for a particular strategy, especially when it comes to the intersection between reverse mortgages and other disciplines.

“There are a lot of playbooks out there,” Hultquist said. “It could be financial planning playbooks, maybe working with lawyers or real estate professionals. And maintenance: know the maintenance. I am passionate about compliance and service, and we have industry people who are fantastic to reach, but who know the maintenance book.”

Hultquist also said that purchasing strategies have their own dynamics, and that a good understanding of a particular topic you may want to use makes it much easier to execute them successfully.

“Learn the playbooks so we know what to do,” Hultquist said. “If you don’t know that playbook, you probably shouldn’t make that play.”