Fairway's Jensen Says HECM Reform Must Tackle Borrower Myths

As policymakers and lenders debate changes to the Home Equity Conversion Mortgage program, Fairway's Christine Jensen says the product's biggest obstacle is not its rules but how borrowers perceive it.

Jensen pointed first to the 2% upfront mortgage insurance premium, one of the most visible costs of a HECM. Borrowers often balk at the figure, she said, without understanding what it pays for. The premium supports the federal insurance backing the program, which protects borrowers and lenders if a loan balance outgrows a home's value. Jensen's view is that any conversation about reform should start with explaining that trade-off clearly, rather than treating the charge as a simple fee to be trimmed.

She also addressed second appraisals, which can be required when a first valuation draws questions. For older homeowners counting on a specific amount of available equity, the extra step can mean added time, added cost and uncertainty about how much they can ultimately access. Jensen suggested that streamlining the process, or at least making it more predictable, would help borrowers plan with greater confidence.

Beyond the mechanics, much of Jensen's focus was on retirement planning. She described the HECM as a tool that can be built into a broader financial strategy, not a last resort. Used thoughtfully, home equity can help cover monthly expenses, create a standby line of credit or ease pressure on investment portfolios during down markets. That framing runs against a stubborn perception that reverse mortgages are only for people in financial trouble.

Misconceptions remain widespread, according to Jensen. Many prospective borrowers still believe the lender takes ownership of the home, or that heirs will be left with a debt larger than the property is worth. In practice, the borrower keeps title and remains responsible for taxes, insurance and upkeep, and the program's non-recourse feature limits what heirs can owe. Jensen argues that these facts rarely reach the people who need them, often because of outdated impressions or poor early experiences with the product.

For loan officers and financial advisers, the takeaway is education. Jensen indicated that lenders who take time to walk clients through costs, obligations and realistic use cases are better placed to restore trust in the product. With a large share of American wealth sitting in home equity among older households, she sees the HECM becoming more relevant, provided the industry can correct the record on what it actually does.