In 2003, she bought the advisers’ mortgage business, FSI Mortgage in Salt Lake City, UT, and she has not looked back. “Of course, the amounts go up and down; the rates go up and down. But the basics that make a reverse mortgage a reverse mortgage have never changed. That stays constant.” Misconceptions about the product also have endured, says Richins, managing member of FSI Mortgage. Despite the complex nature of reverse mortgages, she says, “borrowers are starting to get the hang of it.” Backstory The first reverse mortgage, originated in 1961, was the brainchild of a Maine banker who wanted to help a widow stay in her home after her husband’s death. Within a decade, lawmakers began to take an interest in the product, given its potential to help older homeowners tap into their home equity while remaining in their homes. But it was not until the 1980s that Congress began taking concrete steps to create the HECM. The first step was a 1983 proposal by former U.S. Sen. John Heinz, a Pennsylvania Republican, to have reverse mortgages insured by the Federal Housing Administration (FHA). A proposal to establish a HECM pilot program was later added as an amendment into a comprehensive housing bill that was signed into law in 1988 by President Ronald Reagan. Lenders quickly adopted the HECM, though they also continued to offer and experiment with proprietary reverse mortgages. Megen Lawler, owner of Novato, CA-based Bay Docs, got her start in 1991 as a marketing analyst for a proprietary reverse mortgage product. The company where she worked became a HECM servicing company and developed a way to process documents electronically. The U.S. Department of Housing and Urban Development (HUD) eventually told the company that as a servicer, it could not charge for document preparation, Lawler says. So, in 1994, her boss suggested she start her own documentation company. Lawler says she was initially apprehensive given the seemingly clerical nature of the work. But she grew more enthusiastic as she began to understand all of the nuances of running her own business. “I was excited to give it a shot,” she says. And Bay Docs was born. Regulatory Influences The evolution of the HECM has been closely tied to regulatory changes. In the first few years after Lawler founded Bay Docs in 1994, the program was fairly consistent. The chief milestone in the 1990s came in 1998 when the HECM program was made permanent, and Congress approved funding for counseling and other consumer education. More frequent changes started coming after the turn of the century, Lawler says. They included the ability to keep nonborrowing spouses on a home title and the introduction of HECM-to-HECM refinancing. Taking Account continued from page 17 Sabra Richins Megen Lawler “Of course, the amounts go up and down; the rates go up and down. But the basics that make a reverse mortgage a reverse mortgage have never changed.” —Sabra Richins, managing member of FSI Mortgage 18 REVERSE MORTGAGE / JANUARY-FEBRUARY 2024
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