THE
REVERSE APRIL 2011
review
AARP suit seeks to reconcile HECM statute and HUD policies
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TRR 04.11
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26
36
32
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the Essentials A Strategic Plan for Success 22 Leveraging business process improvement and advanced technology to position yourself for a better tomorrow.
Seth Hooper
Solidifying the Foundation 26 AARP suit seeks to reconcile HECM statute and HUD policies.
Brett G. Varner
The Tale of Regulators and Originators 32 An uncanny resemblance to Greek mythology.
Jim Cory
The Reverse Review’s Two-Year Anniversary 36 l
the The Report 7, 9 Ask the Underwriter
The Conversation
16
Ask the Appraiser
18
The Perspective 12
The Industry Roundup 20
The Advisor 14
The Resources 37
4 | TRR
10
Core
The Last Word 38
Meet the Team Publisher
Aman Makkar Your greatest strength is knowing your greatest weakness.
Letter from the Editor
Editor-in-Chief
Emily Vannucci “You’re trying too hard... try less.”
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e
Copy Editor
Kersten Wehde I can’t read a menu, text or wedding invitation without proofreading it. The Reverse Review made the short trip
the future.” This one statement really
attend the NRMLA West Show. It was
uncertain time for the industry right
up to Newport Beach mid-March to
great to see familiar faces and connect with readers and contributors, but our main goal in attending was
to hear NRMLA’s update on the
industry. We are at an unusual point right now, planning, predicting and anxiously awaiting rules to go into effect this month, and waiting for
other ongoing issues to stabilize. I
feel as if I’m sitting on the edge of my seat, waiting for news to break on an
together and persevere because there is a great deal of people out there
a positive way. It’s my hope that
the clarifications make our industry stronger and we can move forward with even greater momentum than before!
two-year anniversary this month.
do just that this month in our
The Reverse Review is celebrating its Make sure to turn to page 36 for a
Printer The Ovid Bell Press
review.
Advertising Information phone : 858.832.8320 e-mail : advertising@reversereview.com
look back at our successful year in
feature concerning the AARP and
As always, we have a great issue for
Foundation,” written by Brett Varner.
all of the hard work that went into
HUD lawsuit, “Solidifying the
At the end of the article he writes,
“Although the process of resolving this situation may create a period
you this month, so sit back and enjoy our April issue.
Until next time,
of instability or uncertainty for
the reverse mortgage industry, the
clarifications should help strengthen the foundation of the program for
Brett G. Varner “He who spends too much time looking over their shoulder, walks into walls.”
ability to change their lives in such
We at The Reverse Review are
the news that matters most. We
News Editor
that need our help and we have the
On a lighter note, amidst all the news,
straightforward facts and reporting
Tray-C Knight I don’t even know how to spell my own name. Sorry, Kersten.
now, we need to continue to work
almost daily basis.
committed to bringing you the
Creative Director
resonated with me. Although it is an
Editor-in-Chief { emily
vannucci
}
Subscriptions and Editorial Content phone : 858.217.5332 e-mail : information@reversereview.com website : reversereview.com © 2011 The Reverse Review, LLC. All rights reserved. The Reverse Review, LLC is a California limited liability company and is the publisher of The Reverse Review magazine. Reproductions or distribution of any materials obtained in the publication without written permission is expressly prohibited. The views, claims and opinions expressed in article and advertisement herein are not necessarily those of The Reverse Review, its employees, agents or directors. This publication and any references to products or services are provided “as is” without any expressed or implied warranty or term of any kind. While effort is made to ensure accuracy in the content of the information presented herein, The Reverse Review, LLC is not responsible for any errors, misprints, or misinformation. Any legal information contained herein is not to be construed as legal advice and is provided for entertainment or educational purposes only. Postmaster : Please send address changes to The Reverse Review, 16745 W. Bernardo Drive Suite 450 San Diego, CA 92127
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the Contributors l
Feature Article
Dave Bancroft
1
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Brett G. Varner
The Perspective, pg 12 Solidifying the Foundation, pg 26
1
The Conversation, pg 16
Dave Bancroft, former Executive Vice President and Board of Director member at Security One Lending, is an industry expert in the origination of reverse mortgages. Bancroft was the Founder and President of Omni Reverse Financing Inc, specializing in government lending. Omni Reverse was one of the largest originators of HECM Mortgages in the country and was acquired by Security One Lending in 2009. davebancroft@cox.net | 949.355.4653
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Michael Banner
2
2
The Last Word, pg 38
Founder of LoanWell America, Inc., Michael Banner is one of few reverse mortgage professionals accredited to teach continued education classes to CFPs, CPAs, attorneys and insurance agents. Banner has been interviewed by the Wall Street Journal, Tampa Bay Business Journal, and appeared on the Fox Business Network. michael.banner@loanwellamerica.com | 877.753.1705
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Brett G. Varner is the News Editor for reversereview.com. He has served the mortgage industry for 10 years in leadership capacities in sales, marketing and operations. His unique and knowledgeable perspective is focused on developing useful content and strategies in a forum of open and lively debate. brett.varner@ reversereview.com
6 | TRR
Jim Cory
3 3
The Tale of Regulators and Originators, pg 32
Jim Cory is Cofounder and CEO of Legacy Reverse Mortgage, a reverse mortgage originator in San Diego, CA. Cory began his reverse mortgage career 13 years ago and he serves on the Board of Directors for the National Reverse Mortgage Lenders Association. Cory has a Bachelor of Arts degree from the Pennsylvania State University and can be found on Twitter as @LegacyJim.
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Sue Haviland, CRMP 4
5
The Advisor, pg 14
Sue Haviland is Co-founder of ReverseMortgageSuccces.com. She has been in the mortgage industry more than 25 years. Unlike many others, Sue originates reverse mortgages each and every day and has earned her Certified Reverse Mortgage Professional designation. If you would like to profit from the largest niche to ever hit the mortgage industry, grab the free course and profit-producing tips at reversemortgagesuccess.com.
The Reverse Review April 2011
the Report
February 2011 Wells Fargo Bank of Bank, N.A. America, N.A.
Top Lenders Report
MetLife Bank, N.A. Endorsement 444
One Reverse American Mortgage LLC Advisors Endorsement Group 295 Endorsement 155
12345
Endorsement
CHARLOTTE
1662
Endorsement
777
Lender
GENERATION MORTGAGE COMPANY
Endorsements
Endorsements
140
EQUIPOINT FINANCIAL NETWORK IN
24
URBAN FINANCIAL GROUP
99
MORTGAGESHOP LLC
23
GUARDIAN FIRST FUNDING GROUP
92
NATIONWIDE EQUITIES CORPORATION
23
SECURITY ONE LENDING
91
MAS ASSOCIATES
22
GENWORTH FINANCIAL HM EQUITY
90
PRIMELENDING A PLAINSCAPITAL
22
PNC REVERSE MORTGAGE LLC
83
ROYAL UNITED MORTGAGE LLC
21
1ST AAA REVERSE MORTGAGE
70
SENIOR AMERICAN FUNDING INC
20
FINANCIAL FREEDOM ACQUISITION
66
TRIPOINT MORTGAGE GROUP INC
20
SENIOR MORTGAGE BANKERS INC
65
FULTON BANK NATIONAL ASSOCIATION
19
63
APPROVAL FIRST HOME LOANS INC
19
57
REVERSE MORTGAGE SOLUTIONS INC
18
GREAT OAK LENDING
55
SENIORS REVERSE MORTGAGE
16
NEW DAY FINANCIAL LLC
50
CHRISTENSEN FINANCIAL INC
16
43
TRINITY REVERSE MORTGAGE INC
FIRST NATIONAL BANK
36
UPSTATE CAPITAL INC
IREVERSE HOME LOANS LLC
35
UNITED SOUTHWEST MORTGAGE CORP
MONEY HOUSE INC
34
ALL FINANCIAL SERVICES INC CHERRY CREEK MORTGAGE CO INC
NET EQUITY FINANCIAL INC M AND T BANK
Lender
MIDCONTINENT FINANCIAL CENTER
16
16
15
AXIS FINANCIAL GROUP INC
15
34
ARAMCO MORTGAGE INC
14
29
ASPIRE FINANCIAL INC
14
28
ALLIED HOME MORTGAGE CAPITAL
14
STAY IN HOME MORTGAGE INC
25
AA MORTGAGE GROUP LLC
14
SUNTRUST MORTGAGE INC
TRR | 7
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the Contributors
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Seth Hooper
5
6
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A Strategic Plan for Success, pg 22
Seth Hooper has more than 10 years of experience working in the reverse mortgage market and previously held the position of Director of Operations at First American Loan Production Solutions and Director of Reverse Mortgage Solutions at CoreLogic. He is currently the chair of MISMO’s® reverse mortgage workgroup. He has a Bachelor of Arts in history from the University of Colorado.
Brian Sacks
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Brian Sacks is Co-founder of reversemortgagesuccces.com. He has been in the mortgage industry for over 25 years. Unlike many others, Brian originates reverse mortgages each and every day! If you would like to profit from the largest niche to ever hit the mortgage industry, grab the free course and profit-producing tips at reversemortgagesuccess.com.
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Bill Waltenbaugh
John K. Lunde
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John K. Lunde is President and Founder of Reverse Market Insight, Inc., a performance data analysis and consulting firm specializing in the reverse mortgage industry. RMI clients include eight of the top 10 reverse mortgage lenders plus investors, servicers and vendors to the industry. rminsight.net | 949.429.0452
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Ralph Rosynek
7
9
1011
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The Report, pg 7, 9
Ask the Underwriter, pg 10
Ralph Rosynek has been The Reverse Review “Ask the Underwriter” columnist for more than two years. Rosynek is the Vice-President for National Correspondent Production at Reverse Mortgage Solutions, Inc. RMS is a premier provider of reverse mortgage servicing, a Ginnie Mae Seller/Servicer and offers complete mortgage banking support and services to the reverse mortgage industry. He is currently seated as a member of the NRMLA Board, co-chair of the Professional Development Committee and holds HUD HECM Direct Endorsement credentials. rrosynek@rmsnav.com | 708.774.1092
The Advisor, pg 14
9
Ask the Appraiser, pg 18
Bill Waltenbaugh, SRA is a certified appraiser of 20 years. During these years, Bill witnessed and experienced firsthand the many changes that occurred in the appraisal industry, from the advent of licensing to the implementation of HVCC. Currently, Bill is the Chief Appraiser at AppraiserLoft, a nationwide Appraisal Management Company, and writes a weekly blog called “For What It’s Worth.”
The Reverse Review April 2011
the Report
INDUSTRY SUMMARY Retail Endorsement Growth
-6.77
January Endorsements Retail and Wholesale Volumes
Wholesale Endorsement Growth
9.33
- Reverse Market Insight The first month of 2011 brought us back to a familiar theme from last
Total Endorsement Growth
-0.34%
year as broker/wholesale endorsements outpaced retail in a down month for the industry overall. We saw this pattern several times last year,
* Figures Above Reflect Change from Prior Month
Trailing Twelve Month Endorsements
particularly as the industry volume growth tapered off in September and October.
• Broker/wholesale endorsements for January came in at 2,413
units, up 9.3% from December but down 45.8% from a year ago
• Retail endorsements totaled 4,049 units, down 6.8% from last month but up 27.7% from last year
10,000
• Brokers contributed 37.3% of all units, up from 33.7% last
8,000
month but down from 58.4% a year ago
6,000 4,000
The divergence between channels is particularly striking this month
because retail was entirely responsible for the industry decline. It’s way
2,000
too early to attribute the weakness to BofA’s exit (we won’t see that effect
0 2 3 4 5 6 7 8 9 10 11 12 1 Retail
Wholesale *Numbers Represent Months
RETAIL
WHOLESALE
UNITS CHG%
UNITS CHG%
TOTAL UNITS CHG%
10
3,124
-1.48%
3,890 -12.58%
7,014 -7.96%
11
2,783 -10.92%
3,038 -21.9%
5,821 -17.01%
12
2,692
-3.27%
2,813 -7.41%
5,505 -5.43%
1
2,465
-8.43%
2,086 -25.84%
4,551 -17.33%
2
2,900 17.65%
2,404 15.24%
5,304 16.55%
3
3,358 15.79%
2,521
4.87%
5,879 10.84%
4
3,969
18.2%
2,672
5.99%
6,641 12.96%
5
3,405 -14.21%
2,558 -4.27%
5,963 -10.21%
6
2,976
-12.6%
2,307
-9.81%
5,283 -11.4%
7
4,004 34.54%
2,547
10.4%
8
4,343
8.47%
9
4,049
-6.77%
TOT
40,068
6,551
24.0%
2,207 -13.35%
6,550 -0.02%
9.33%
6,462 -1.34%
2,413
31,456
until at least March or even April endorsements), so we can probably expect some bounce-back from retail in February results if our client conversations are any indication. Indeed, BofA has had its two best endorsement months since February 2010.
What’s most interesting is that broker/wholesale business has grown very little from the lowest levels in 2010 for BofA, while retail has recovered
with the rest of industry. We’ve heard from several people in the industry that this directly related to the decision not to pursue certain types of
broker/wholesale business. There was a wide divergence among other top 10 lenders in January, as Genworth and Urban both saw strong recoveries from what now look like hiccups in December, while Financial Freedom (editor’s note: who has just recently exited the industry as well) had the most notable decline to a multiyear low. g
71,524
TRR | 9
The Reverse Review April 2011
ask the Underwriter your focus has just changed.
of my job!). I realize now, I took a much
with little or no warning. Isn’t it ironic:
of my situation by calling it something
your home and maintaining financial
think I ever said or admitted I was
Joblessness can happen at any time,
less dramatic approach to the reality
Your focus and priorities (remaining in
other than unemployment. Yes, I don’t
stability) have just aligned with the
unemployed.
customer base you serve!
Was it my age, arrogance or fear that led
Recent business decisions and industry
me to believe my situation was a short-
mortgage space and mortgage lending in
be employed?
of individuals, resulting in a significant
“Soon” slowly turned into weeks,
large sector of the reverse mortgage
I “looked,” but what was I looking
changes affecting both the reverse
general have impacted quite a number
term, temporary state and soon I would
forced employment movement of a
and might have lasted longer. Yes,
production workforce.
for and how was I looking? It wasn’t
About a year and a half ago, I too
that I realized I needed to do more to
until I took a good look in the mirror
experienced joblessness. Interestingly
accelerate “soon” into “now.”
enough, now that I have actively
Making Yourself a Complete Package Ralph Rosynek
rejoined the
So, my first word of
workforce, what
you are doing, take a
reverse mortgage
advice is to stop what
started as a moment
deep breath, and “look
of reflection ended as a personal
underwriting of that time frame in my
life. For those of you
just experiencing the joblessness effect,
I thought I would
share some “ability and willingness”
perspectives that resulted from
my underwriting
...take a deep breath, and “look into a mirror”– the resolution to your unemployment is in your plan and completely within your control.
experience of
You wake up one morning and catch the news, read an email or leave an afternoon staff meeting and suddenly, 10 | TRR
into a mirror”– the resolution to your
unemployment is in your plan and completely within your control.
When was the last time you visited with your resume? Many of us have been with our
employer for a number
of years and somewhere on a storage disc or in a folder at the bottom of
termination.
a drawer is the document that bespeaks
First and foremost, notice my denial of
the resume.
employer’s participation in the reverse
For most, keeping up your resume is
the exit and termination of my former
mortgage lending market (and the loss
our qualifications and achievements –
not a priority or a Top 10 chore. Your
resume is a key component of your plan
needed feedback as to your suitability,
In the second box list those qualities,
do some advance work on this document
available positions.
to a new job. Post your list by the phone
to seek employment. Take a moment and before you merely add the job you just
skills and knowledge matching to
lost and blitz it to your entire contacts list.
You will notice I haven’t mentioned
achievements, and most importantly your
working on your resume and networking.
Presentation styles change; references,
goal or vision statement need to be updated. Type “resume” into the Google search engine and spend
some time looking through the
various offerings and expertise that will
spruce up the presentation of your skills
and knowledge before you hit the streets. Write an effective and brief (but
descriptive) cover letter for your resume with a very positive ending – tell your reader or
recipient you are the candidate
they are looking for to enhance their
team.
Network your resume and search on
steroids. Since your last job search,
new opportunities to communicate your availability have opened up; you have more contacts;
and the market has grown despite
the formalization of a plan other than
Drawing a box and looking for a specific fit is a very limiting and perhaps
dangerous activity in the early stages of
job searching. Yes, you should know your basic needs, abilities, likes and dislikes, but be flexible and open-minded.
As opportunities arise, you may be
presented with a unique or unusual
interview opportunity; not exactly what you were just doing. Many employers
and job recruiters seek individuals who
have core knowledge and skills as a basic requirement and look to the interview
Lastly, you have reworked your resume,
network and contacts; don’t forget to rework yourself and your appearance.
draw two boxes to identify problems and
still effective, but technology is becoming a preferred method of communication.
Have you ever considered a headhunter? Utilizing the services of a recruiter
can expand your networking circle
considerably; increase your access to a wider range of potential
employers; and provide you with
quickly as possible, unless you would
rather get another unemployment check than a paycheck.
Now, go look in the mirror one more time. Is this the way you looked on the second to the last day of your last job? Would you hire the person in the mirror? If you are not positive about what you see, I know funds may be tight,
but take some time and update yourself. Very few employees
are hired solely on looks, but
there is a visual component to our
shoes (yes, shoes do say something)?
a new employee.
online job listings have replaced the old mail resume delivery. Phone calling is
this point!) and clean up the first box as
trainable” as very desirable attributes for
Drop the attitude, fear and disbelief.
days of newspaper want ads and snail
and gaining weight isn’t a good idea at
decision-making process. Do you need
ability to be creative, innovative and “re-
communication channels in a much more aggressive form. Social networking and
(or better yet the refrigerator – eating
process to discover a heavy overlay of
your employer’s exit. More importantly, employers are embracing electronic
attitudes and positive pluses you bring
How many times have you been told to resolutions? Seems stupid, but actually this is a very therapeutic activity when it comes to improving yourself. List all
of your job fears, negative thoughts, and shoulder chips that you are feeling or
experiencing in the first box. You know these are going to hamper your job search.
a new hairstyle, makeup, wardrobe or Be honest. Sometimes, a slight change
in appearance, a new suit or new shoes
adds just the right amount of “extra” to you and your resume to complete the package.
To those of you in the job market, I feel
your pain, have recently walked in your shoes and wish you speedy success in
finding a new job. I can tell you it does
happen, and the process, while unsettling
at times, is part of your ongoing character build. A personal note to Marc Helm at Reverse Mortgage Solutions, Inc., and to his partner Bob Yeary, whose
advice (“There are very few positions
available for ex-Presidents and CEOs”) was followed by the jointly offered
opportunity to work for RMS as the Vice President of National Correspondent Production: my sincerest thanks. g
TRR | 11
The Reverse Review April 2011
the Perspective injuries thrust him into an unexpected role wherein he helped guide the team to the playoffs. Then it all came crashing
anyone associated with the processing and
against the San Francisco Giants, Conrad
reverse mortgages.
Giants the winning run in the ninth inning.
A coordinated origination process is like a
Series, while Atlanta’s season came to an
the process is dependent upon the other
down. In a key divisional series game
made three crucial errors, the last giving the
underwriting of a loan. The “team” must
be able to rely on and trust one another in order to provide clients with the highest level of care and service, especially with
San Francisco went on to win the World
well-designed assembly line. Each step in
end.
steps. When one breaks down, the process
Everyone has been in situations where
on closings for revenue, everyone loses.
or someone else on their “team,” led to
individual mistake and pattern of poor
situations, instead of seeking solutions
incident is portrayed as a global failing.
fails, and since many in the process rely
crucial mistakes, either made by themselves
However, there is a difference between an
losing a loan or a client. Often in these
work. Solutions are rarely found when an
or correction of the issue,
The result is a team that
far easier to point a finger
confidence in one another.
loses cohesion, trust and
people seek blame. It is
than to take responsibility for a result, which then
leads to disputes between
team members rather than cooperation. In the heat of
In Adversity,
a Team’s Strength is Revealed Brett G. Varner
the moment, people forget that isolated mistakes are unavoidable. Handled
immediately, honestly and
appropriately, most clients are understanding and
appreciate the efforts to
resolve the issue. Working together to resolve these issues helps ensure that
such instances do not turn into repeated mistakes.
I have always believed that teams live and die together. If they are not working together to constantly improve, then they are doomed to fail.
I have always believed that teams live and die
Brooks Conrad, a bench player for the Atlanta Braves, was thrown into prominence late last season when several key 12 | TRR
together. If they are not working together to
Following that unbelievable game, Conrad stood at his
locker and acknowledged, “I felt like I let everyone down.” He also stated
that you have to stand up and take responsibility
rather than seek blame. In response, a group of veteran players on the team surrounded him
and reminded him how
important he had been to
their season. The result of the day was unfortunate,
but it should not be allowed to take away from the fact
that his efforts helped fuel their run to the playoffs.
constantly improve, then they are doomed
The Braves look forward to the coming
extend beyond one’s own company to
another, primarily because they addressed
to fail. In mortgage originations, teams
season with confidence and faith in one
include service providers, wholesalers, and
adversity as a team. Can you say the same about your team? g
TRR | 13
The Reverse Review April 2011
the Advisor as they come in. If you have
being in need of your services? With
please email the advisor at advisor@
a very long wait between the time
your question in an upcoming issue.
program and the time they actually
any marketing-related questions,
the senior population there is often
reversereview.com and we will address
someone inquires to learn about the
This inquiry was a particularly
interesting one and we chose it to be
promised by the lead company?
members use?
What information has the lead
I do want to thank the person who
they get an approximate property
sparked some spirited debate in our
is their motivation for obtaining a
What follows is our response:
shopping and you are the next call
value? The borrower’s age? What
offices at Reverse Mortgage Success.
reverse mortgage? Or are they just
Generation Sue Haviland, CRMP and Brian Sacks
Many who buy leads are often
recommend to you. WHY?
looking for a deal “right now” and many
In our experience, what may be a good
Unlike those who are looking for a
horrible one tomorrow. But the answer
they need to investigate and have some
14 | TRR
disappointed, mainly because they are
of these leads will take time to develop.
lead source today may turn out to be a
forward mortgage, many seniors feel
is actually much deeper than that. Here
time to make a decision.
when it comes to lead generation:
So what can you do instead of or in addition to buying leads? Since this is all about how to generate new business, let’s explore some ways of getting prospects to chase you!
is a point you always need to remember It’s all about who is chasing whom. To be more direct, it’s all about getting clients to chase you!!!
There are several issues to consider when you purchase leads. Keep this list handy if you are buying leads as any part of your business. How many others has that lead been
This past month, The Reverse Review received a question via the Ask the Advisor channel and we are happy to address these questions
on their list?
lead companies, but unfortunately we don’t have one in particular we can
on Lead
provider obtained and how? Did
submitted that question because it
There are some good as well as bad
Perspective
What has this person been told or
the topic of this month’s article. Are
there any reputable lead sources that
A New
consider a loan application.
Start networking with other
professionals who could recommend your services. Really get to know
their business and how you can help
each other. Sue did a video interview
sold to?
with one of her financial planning
How was that lead obtained? What
and promoted it via a call with his
that person identify themselves as
time and positions her as the reverse
I mean by that question is, how did
partners and he put it on his website clients. This cost her nothing but her mortgage expert in her local market.
?
Need assistance from the Advisor?
Send your question to advisor@reversereview.com and it may be addressed in the next issue.
Begin a direct mail campaign
Use some free PR techniques and
Speak to professional groups like
consistent.
and TV stations (Brian was recently
church or other religious leaders.
aimed at your target audience. Be
Create a website that offers
information and a special report, which is the sales message you
would be using when they call,
offered as a special report. (We love
this strategy and it works.) Use your
site as a mechanism to communicate with your prospects and promote your
other activities (see # 4 and #5).
contact your local newspapers, radio interviewed on Maryland Public
Television) to give them an update on the HECM program and the
new Saver option, as well as some
attorneys, accountants, and even (This is another strategy we love
and have even developed an entire campaign to support.)
pros and cons. Or offer them a few
We recommend that you pick no more
Every day there are news stories
monitor the success of each before
myths and facts about the program. about how boomers and seniors are
experiencing challenges and haven’t saved enough for retirement. Use that hook to contact the media
and let them know that a reverse mortgage could be a solution.
than three activities to implement and
moving on to another. We could go on and on here but the point is that you
need to start thinking and implementing ways to get prospects chasing you.
Once you do, you may never choose to purchase leads again. g
TRR | 15
The Reverse Review April 2011
the Conversation in San Diego. On several occasions
coveted relationships. Back-end pricing
Beach, he would just vanish from
once Snooki got punched. Innovative
partying late into the night in Pacific the group without a
spiked like TV ratings for Jersey Shore lenders implemented
peep and head home.
new offerings to attract
Concerned at first, I was
business, such as axing
quickly informed by
professionals that this informal exit is called the “Irish Goodbye.”
Although the diagnosis was in, it still bothers me when something
important goes away
into the night without a sound. This decline
highlights another turn
in this roller-coaster ride our industry has been
on for some time now. If you have been
following the markets lately, you have seen
The Irish Goodbye Dave Bancroft
Is anybody else astonished by the ridiculously swift decline in back-end pricing?
some interesting
behavior. First, we have watched lenders try to
grow by luring brokers into their ranks with
fearful predictions of the future. Talk of “broker begone” is scary but truth be told, it isn’t
the servicing fee and
Then, almost as fast as it came, the back-end has vanished into a mere image of itself. We have seen pricing rebates drop in some cases by two-thirds and now rumblings of lender-broker pairings are hot again.
happening. I can’t
deny its allure; I was
altogether. The broker bonanza was in full swing.
Then, almost as fast as it came, the back-end has vanished into a mere
image of itself. We have
seen pricing rebates drop in some cases by two-
thirds and now rumblings of lender-broker pairings are hot again. Right now interest rates are on the
rise and origination fees
are a necessity. The lowest fixed-interest loan is on
the curb and no straight
answers are coming from the window as to why
the loss of appetite. Some are saying that a couple of buyers are sidelined, AWOL, reducing
competition and price,
while others point to the BofA exit as a cause. We
even punch-drunk enough to write an
will never get a straight answer, like
family.” But as soon as that went to
millions of fish went belly-up in that
article on it and encourage the “instant print, the investor appetite for HECM
mortgage-backed securities skyrocketed
I can’t believe how far it has fallen since
and wholesale departments declared
has been. This type of behavior reminds
halted with brokers while account
November and how quiet the response
war on each other. Lender conversations
me of my old roommate Jordan
executives stormed CFOs’ offices and
16 | TRR
ridding the origination
demanded price-matching to save
why those birds fell from the sky, or why Redondo Beach harbor. Regardless, the health of this industry is catching cold
and too many have quietly disregarded the shrinking rebates. We can never
accept revenue reduction without the
proper exit interview. I believe many just experienced their first “Irish Goodbye.”g
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TRR | 17
The Reverse Review April 2011
ask the Appraiser which is addressed in this months column.
not good indicators of current market
If you have any appraisal-related
different focus.
questions, please email the appraiser at
information@reversereview.com and we
will address your question in an upcoming
Bill Waltenbaugh
over time, appraisers will
We have a home we own outright that has a protested tax appraisal decreased to $227,000, although similar homes on the block are appraised for $240,000-plus. For planning purposes, can we expect an appraisal for a reverse mortgage coming up with a similar figure?
In appraisal terms, this date
values noted in their reports.
are too many unknowns to confidently rely on this information for planning
purposes. That said, it wouldn’t surprise me if an appraisal for your reverse
mortgage produced a similar result. Now that I got my political answer out of the way, let me get to the specifics. There are two reasons why this
information shouldn’t be relied upon for planning purposes.
We simply don’t have enough
market trends or any differences
18 | TRR
Because markets tend to change assign a specific date to the
information about time frames,
The Reverse Review is excited to debut its new column: Ask the Appraiser. We recently received a question for our knowledgeable appraiser
can be dated and are developed with a
issue.
In general terms, the answer is no. There
The Difference Is in the Details
value for lending purposes because they
between the subject and the other
appraised properties on the block. Although assessed values are often market-based, they’re
is known as the effective date
and it refers to the point in
time the appraiser developed
their analysis and conclusions. In this case, the date of the tax
appraisal and the effective dates of the other appraisals on the block are not provided. As such, even if the values are accurate and the other properties are similar, any change in market conditions would not be accounted for. In addition to effective dates and market conditions, other concerns such as
curb appeal, site size, square footage and design need to be considered
when valuing a property. To do this,
an appraiser will compare the subject’s features and amenities to other
properties in the area that sold recently. When a difference is noted, a market
adjustment is made to the sales price
of the comparable property to account
for the variation. The adjusted value of these properties assists the appraiser
in estimating the market value of the
subject property. Even if the other homes on the block were recently appraised, they may differ from the subject with
respect to condition, utility and appeal.
Without accounting for these differences, the values of the other properties are
not reflective of the subject. In addition,
only market-tested and confirmed closed sales should be used for this process.
?
Have a question for the Appraiser? Email questions to information@reversereview.com and look for your answer in an upcoming issue.
Applying this same procedure to the appraised value of other properties in the area is not an acceptable appraisal practice.
aa
concerns to be equitable, it’s not reasonable to rely on this valuation for planning purposes.
So why did I say I wouldn’t be surprised if the mortgage
appraisal was similar to the values noted above? Well, if the
Even if the other homes on the block were recently appraised, they may differ from the subject with respect to condition, utility and appeal. Without accounting for these differences, the values of the other properties are not reflective of the subject. The term “value” can have many meanings in real estate.
That’s why appraisers specifically define the type of value
being appraised within their reports. In the example noted
above, the value of $227,000 is the product of a tax assessment. Although many assessed values are market-based, they are
only completed periodically or when a property transfers or is improved. Different effective dates create the same concerns noted above.
Finally, since this value is being used to estimate tax liability,
effective dates of these appraisals are recent and the other
homes on the block are similar to the subject, it would stand
to reason the mortgage appraisal would have a similar value.
The difference in value between the tax appraisal and the other appraisals on the block are less than 6 percent. Values this
close tend to lend some credibility to one another. However,
obtaining an appraisal from a qualified local appraiser is the only way to tell. g
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an extra effort to be fair and consistent is made. In areas where taxes are based according to value, homeowners can appeal
the assessed values if they believe they are wrong. However, for obvious reasons, appeals only occur if the owner feels the value is too high. I haven’t come across a homeowner
yet who wanted to appeal their assessed value for being too
low. In short, given the purpose of the assessed value and the
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TRR
| 19
The Reverse Review April 2011
the Industry
Roundup
industryround up edition
a roundup of this past month’s breaking news:
Who moved where; why a company closed its doors; WHO is new to the industry?
Find it here m ov er s k sh a k e rs
U p- k- C o m e r s
Sarah Hulbert: Joined 1st Reverse Mortgage
Reverse Mortgage Solutions, Inc.:
Manager. In her new role, she will be
mortgage originations by launching new
April
David Stevens: FHA commissioner
announced his resignation from the agency
effective March 31. Following a tumultuous period at the agency, Stevens later
USA as Retail Business Development
Announced major expansions into reverse
announced that he has accepted a position
responsible for overseeing growth and
correspondent and retail channels. To
Association.
development of their retail reverse mortgage business.
support the correspondent channel, RMS hired Ralph Rosynek as Vice President,
as president of the Mortgage Bankers
AARP: Raising claims that HUD
National Correspondent Production
inappropriately redefined “non-recourse” in
President, Correspondent Operations.
variance in the definition of “homeowner”
the Underwriter” columnist. On the retail
filed a lawsuit that stirred up a frenzy of
President, National Sales Executive, Reverse
a poorly structured segment on the T&I
President, Regional Sales Executive in Texas.
A subsequent follow-up left much to be
Bob Emerling: Joined American Advisors
National Senior Home Equity: After securing
Fox to ensure future reports have access to
He will be responsible for overseeing quality
million, Bart Johnson and Tony Garcia have
Security One Lending, Inc.: Hired former
Bank of America executive Ron Fletcher as Senior Vice President of national
performance. His primary role will be to expand the company’s retail sales force.
They also announced the hiring of recording artist Pat Boone as a national celebrity spokesperson.
Group as Director of Risk and Compliance. control and compliance for the company.
Doug Douglas: Was named Chief Financial
Officer of NewDay Financial. Douglas will be responsible for strategic planning, cash management, accounting and financial analysis.
Manager; and Ellie Johnson as Vice
Mortgagee Letter 08-38 and questioning the
Rosynek is also The Reverse Review’s “Ask
in HECM statues and HUD policy, AARP
side, RMS added Gary Bauch as Senior Vice
anger and frustration; and Fox News aired
Mortgage Division; and Audra Pickens, Vice
delinquency issue with reverse mortgages.
capital investment commitments of $5
teamed up to form this new entity with
desired, but NRMLA continues to work with accurate information.
NAMB & NAIHP: Independent actions that were
the goal of consolidating market share by
later consolidated, the two organizations
their businesses.
permanent injunctions against the Loan
providing new options for brokers to grow
W hat H a p p e n e d ? Financial Freedom: Announced plans to
close all reverse mortgage origination
channels. In a letter to business partners,
CEO Michelle Minier cited the regulatory
filed lawsuits seeking temporary and
Originator Compensation Rule. The move follows calls by many industry groups,
including NRMLA, to delay implementation of the rule to provide additional time for compliance guidance.
Wells Fargo: Stopped offering reverse
environment and the often used phrase
mortgages through their wholesale channel.
describe the closure.
retail producer had made little effort to
“focus on the bank’s core businesses” to
The move was not surprising as the leading sustain meaningful wholesale reverse mortgage production.
20 | TRR
the
E
Essentials
The Essentials | i’sen sh l | - your monthly source of in-depth information, industry updates, highly opinionated views and at-your-fingertips news. J i m C o ry Seth Hooper B r e t t G. V a r n e r
It takes a lot to create an attention-grabbing, informative article and The Reverse Review is very fortunate to have worked hand in hand with industry leaders over the past couple of years. We are always searching for new writers and industry-related articles. If you are interested in contributing your views and have what it takes to intrigue our readers, we would love to hear from you! Email emily@reversereview.com to start the conversation.
TRR | 21
The Reverse Review April 2011
the Essentials
A Strategic Plan for Success Leveraging business process improvement and advanced technology to position yourself for a better tomorrow. Seth Hooper
et’s face it: Nobody is immune to the impact of the current housing crisis. While reverse mortgages offer older Americans a way to tap home equity during retirement, the collapse of the mortgage market in 2008 has led to major changes that impact consumer choices, according to a new report from the AARP Public Policy Institute. ¶ “For homeowners who are ’house-rich, but cash-poor,’ reverse mortgages can be a lifeline that enables older people to remain independent while meeting basic needs,” said the report.
22 | TRR
“However, declining home values and the
When the market crashed, what did forward
to reach out to the larger players involved
have had a major impact on all aspects of
think proactively about the future? No. They
on the spot to see what they are seeing and
resulting collapse of the mortgage markets reverse mortgages.”
The release of additional products like
lenders do? Did they innovate? No. Did they went into what can best be characterized as survival mode. They chose to do nothing
the HECM Saver may bring additional
leading to more scrutiny from Congress and regulatory agencies charged with protecting consumers. In recent years, Congress has passed two consumer protection laws in
response to unsuitable financial products
being sold along with a reverse mortgage. One concern highlighted in the report is the fact that reverse mortgage borrowers are
getting younger in recent years. “The trend toward borrowing at earlier ages raises
concerns about the long-term impact of
reverse mortgages on financial security.” With more borrowers taking out lump
The release of additional products like the HECM Saver may bring additional choices to consumers, but it has also made reverse mortgages more complicated...
reverse mortgages for long-term financial
and ride it out. That strategy was far from
reverse mortgage options and improved
innovation is rewarded. Now is the time to
security. Providing safe and affordable
counseling and disclosures will be crucial in establishing the consumer confidence needed for expansion of this important financial option.” said the report.
Despite the challenges, that doesn’t mean
that all has to be gloom and doom by any stretch of the imagination. Success in the reverse world is yours for the taking if
you know how to excel. What do I mean?
There’s a common statement that talks about the futility of doing the same thing twice
and expecting a different outcome. My hope in penning this article is that the reverse
mortgage lending professional does not get caught up in this trap. You need to start by
looking at what has happened in the world of forward lending.
John Lunde, President of Reverse Mortgage Insight, He said, “Last year volume declined 35
percent while the number of companies
originating reverse mortgages declined 35
percent, and BofA recently exited the reverse market. The other side of the story is the
introduction of the HECM Saver program— it is a significant piece of the future of
reverse lending, but it requires a great deal
of changes for reverse originators to tap into its enormous potential.”
Peter Engelken, Business Division President of Genworth Financial Home Equity Access, Inc., pointed out, “This is a dynamic time
for the reverse mortgage industry. For the first time in a few years, interest rates are
sums at closing, the report says that “more research is needed on the consequences of
doing to weather this storm.
described the reverse market as turbulent.
choices to consumers, but it has also made reverse mortgages more complicated,
in reverse mortgages today and put them
successful. On the other side of the coin,
innovate. For example, when the Mortgage Disclosure Information Act hit in 2009,
many forward lenders opted to implement electronic upfront disclosures as a way to
comply. That’s fine, but many did not take
this opportunity to look holistically at their technology and all of their point-of-sale
procedures. As a result, when changes were
mandated on the Good Faith Estimate (GFE) and tolerance levels were enforced between the GFE and the final HUD last year, many
rising and there are new regulations on the horizon that will impact how lenders and
loan originators do business. While interest rates remain well below historical levels,
since October 2010, bond prices have been falling and interest rates have been rising, with investors selling bonds and buying stocks. This has resulted in significant
market volatility and rapid rate increases
over the last 60 days. Concurrently, lenders and loan originators are preparing for the
implementation of changes in compensation structures under Regulation Z that take effect April 1.
lenders had to go back to the drawing
Communication and education are critical
revamped their entire point-of-sale initially
and business partners understand the
board. Innovative forward lenders that had a much easier time.
Surely we have some ideas on how you can improve your reverse mortgage operation and position yourself for success, but
instead of tooting our own horn, we decided
during this period to ensure consumers
external factors driving product, pricing and policy decisions,” he continued. “We will
be conducting a series of webinars for our
business partners focusing on the secondary
market, product changes and implications of Regulation Z.” >>
TRR | 23
Jeff Birdsell, 19-year industry veteran and VP of Product Management Reverse Mortgage Services at Mortgage Cadence, added, “To put everything into perspective, we’re in the first non-growth phase that the reverse market has encountered. One of
the reasons for this is the amount of money that people can get for their homes in this current market. Low appraisals generate
less cash for the borrower to use to cover the first mortgage. One of the biggest
challenges, though, continues to be the lack of understanding of this product in the
marketplace. We have come a long way in the last 10 to 15 years, but the majority of
our senior population, and their advisors, still need to be educated on how reverse mortgages really work.”
We pressed further to get a true snapshot of market conditions today. Are things improving? Are they still gloomy?
(
untapped need and market for reverse. The
associated with the current reverse
Saver program.
was critical to ask our reverse mortgage
next big thing will certainly be the HECM
(
E n g e l k e n Since its
introduction in October 2010, the HECM Saver product, which features lower
upfront fees but lower loan limits, has grown significantly. The HECM Saver
represents almost 20 percent of our retail volume. We are very excited about the
introduction of the HECM Saver product in
benefits of reverse mortgages as part of
a broader financial planning strategy for seniors in all income segments.
Things are not all bad. Many of the 80
million baby boomers have reached 62, the minimum eligible age for HUD reverse
exponentially, with more than 6,500 seniors
percent increase from 2010. HECM Saver
government entitlement programs including
expectancy continues to rise at a time when
will be a big part of the volume growth.
Social Security and Medicare are already
(
to get worse in the years ahead as more
market conditions such as lower home
values and higher interest rates. However,
the consumer need for the product remains strong, especially during these challenging
economic times. The changes implemented by HUD in 2010 in terms of product
and consumer safeguards will serve as
foundations for sustainable, long-term
growth. We are very excited about the longterm growth potential of the industry.
(
B i r d s e l l Whether the current
market is up or down relative to the
past, there continues to be a tremendous
24 | TRR
of the negative trends into positives. The overriding answer that we got was that
it is critical to automate in order to thrive nowadays.
(
L u n d e The reverse marketplace
through the use workflow automation and
publications and research discussing the
the same time as last year. We’ll see a 20
opportunities to be limited by external
the space, and at the same time, turn some
we are seeing more and more financial
turning 62 each day. On top of this, life
we expect reverse mortgage growth
of the positive elements running through
can benefit greatly from scalable
greater media attention and as a result,
volumes are up 27 percent compared to
E n g e l k e n In the short run,
originators how lenders can get the most out
2010. It has helped reverse mortgages gain
mortgages. This demographic is expanding
L u n d e In the last four months
mortgage market, we thought that it
dangerously overextended. It is only going baby boomers retire and tap into these programs.
The aging population currently holds billions of dollars’ worth of equity in
technology that creates great efficiencies
the utilization of imaging. These solutions can quickly reduce the cost of originating
reverse mortgages. Another potential area
where technology matters is when it comes to providing more consumer-facing tools.
(
E n g e l k e n Technology can play
a critical role in streamlining the decision process for consumers and in driving
process efficiencies for lenders and loan originators. Lenders can use technology to better illustrate the true benefits of
reverse mortgages for consumers based
on their own personal financial situations
and as part of a comprehensive retirement
strategy. Today, most consumer-facing tools focus on illustrating the funds available
for borrowers under a reverse mortgage.
(
B i r d s e l l The best thing that
their homes. These individuals are faced
technology can do for reverse mortgages
strong desire to stay in their homes longer.
the overall process. Technology allows
economic stimulus package, which was
point, there still needs to be a great
home values for a reverse mortgage from
awareness. Technology can help us there,
with mounting medical bills and have a
is bring a greater level of efficiency to
Adding fuel to this momentum, the federal
for scalability. To go back to an earlier
passed earlier this year, increased eligible
deal of education to bring about greater
$417,000 to $625,500, opening up more
too.
reverse mortgages.
(
properties and equity that would qualify for
As we examine both the pros and cons
E n g e l k e n There may
be opportunities in the future to use
software tools to illustrate the benefits
of incorporating a reverse mortgage to
Sure, technology can be a huge helper, but
of an overall retirement plan. Technology
most bang for the buck? A fully integrated
preserve and grow consumer wealth as part is also critical to driving efficiencies by automating manual processes that may help reduce paperwork and ultimately support shorter turnaround times.
what type of technology will get you the technology platform can deliver true
efficiency, which is vital to profitability for
The elements of a fully integrated technology platform include and provide specific benefits when applied correctly.
today's reverse lenders.
first: Workflow automation consists
second: The inundation of paper
third: With the current tempo of
of business procedures automation or
documents resulting in thousands of
business, reverse lenders must be able
“workflows,� during which documents,
folders, lost and misplaced documents,
to institute policy and process changes
information and/or tasks are passed from
cluttered offices, off-site storage, poor
quickly to gain and maintain a competitive
one participant to another in a way that is
data security and compliance issues
advantage. A Business Rules Engine allows
governed by rules or procedures. This will
can break the rhythm of even the most
the continual molding of technology to
eliminate or significantly streamline manual or
efficient enterprise. A fully integrated
provide dynamic data flow to best leverage
disparate processes.
electronic document management solution
internal strategies and real-world benefits
enables lenders to capture, store and
in the form of time and cost savings, along
Workflow automation improves efficiency.
manage documents for everyday business
with increased scalability and profitability.
The automation of many business
operations more efficiently; helping to
processes results in the elimination of
accelerate the lending process by applying
The solution should include a number
many unnecessary steps, which reduces
exception-based processing.
of out-of-the-box events and actions to
the overall cost per loan exponentially.
fully accomplish your goals; however, you
It also offers better process control.
Electronic document management and
also should have the added ability to take
You get improved management of
imaging systems provide advanced capture
control, extend the system and configure
business processes achieved through
and Optical Character Recognition (OCR)
your own policies and processes. Along
the standardization of working methods
technology to enhance data accuracy and
the same lines, intelligent forms creation
and the availability of audit trails, which
loan quality while increasing operational
enables lenders to dynamically create initial
significantly improves compliance.
efficiencies and decreasing costs. Lenders
disclosures and closing packages and
have the ability to capture any document
deliver them securely to the borrower or
A byproduct of this approach is improved
from any data source, view and annotate
settlement agent. The central idea is that
customer service. It’s important to
the document, and then print, fax, email or
accurate and quick document preparation
remember that consistency in the
package for delivery. Documents are stored
and delivery through a comprehensive
processes leads to greater predictability
securely and all activities in the imaging
platform accelerates the lending process
in customer response levels. In the end,
system are audited. Lenders can control
and ultimately increases customer
a total technology solution will give you
access to specific documents and specify
satisfaction while maintaining compliance
flexibility. Software control over processes
who can view them and what actions can
and reducing costs.
enables ease of configuration that is in
be performed on them.
line with changing business needs and constantly changing rules and regulations. A focus on business processes leads to streamlining and simplification, thereby reducing errors.
When housing prices stabilize (and even,
Reverse lenders have to use technology to
those new baby boomers enter the market,
process in order to take advantage of a very
dare I say, begin to increase) and all of
reverse lenders have to be ready for them.
craft a better, more efficient, more compliant
planning for this and put these solutions in place. g
fluid market. There is no better time to start
TRR | 25
AARP suit seeks to reconcile HECM statute and HUD policies.
On March 8, 2011, AARP filed a lawsuit against the U.S. Department of Housing and Urban Development (HUD). The lawsuit, filed on behalf of
three surviving spouses of HECM borrowers, alleges that HUD inaccurately and illegally interpreted the definition of “non-recourse” and “homeowner” in establishing
HECM policies. AARP suggests that the result of the lawsuit could have national implications because it will determine if non-borrowing spouses can avoid foreclosure and
have the right to stay in homes that are underwater. This is something, they state, that borrowers had paid insurance premiums to avoid.
AARP conducted a study
on the FHA-insured HECM program in 2006 and
released their report,
“Reverse Mortgages: Niche Product
or Mainstream Solution,” in
December 2007. In the report, AARP first
publically raised
their concerns
about how HUD
was applying
these definitions
in implementing
their policies. It
appears that in creating
their recommendations,
AARP was giving HUD a
mortgages by Section 255 of the Housing and Community Development of 1987, signed by President Ronald Reagan on February 5, 1988. The
subject of the debate that has resulted in the AARP lawsuit
involves these definitions that are drawn from two subsequent regulations that laid out the framework of the Home Equity
Conversion Mortgages (HECMs) to be insured by the FHA. The
first is the statute within United States Code that defines HUD’s authorization to create an insurance program, U.S.C. Title 12,
Chapter 13, Subchapter II, Section 1715z-20. In this case, AARP
has focused specifically on Subjection (j), which serves to protect a homeowner from displacement, and creates the definition of “homeowner” in the dispute.
The second regulation in the debate is the HUD Handbook
The resulting lawsuit
could then be seen as the culmination of AARP’s frustration that HUD’s
policies continued to run
afoul of their interpretation of the statute. In order to
protect their constituency, and seek to have the
appropriate application of
the language clarified, they
may have felt that litigation would provide the clearest possible remedy.
is narrowed down to a single subsection, Chapter 1, Section 3,
language, it may be hard to
relates to FHA insurable HECM loans, is established.
practices related to “non-
recourse” and “homeowner” may have effectively created administrative law that
overstepped the authority
given to them in the statute. The allegations claim that
the statute is unambiguous
and clear in establishing the
definition of these terms, and that HUD abandoned long-
standing rules in establishing arbitrary changes to the
policies and practices that
run contrary to the statute.
HUD Handbook, “non-
HECM is stated to mean:
“the HECM borrower (or
his or her estate) will never owe more than the loan
balance or the value of the
property, whichever is less; and no assets other than
the home must be used to
repay the debt.” AARP, along with industry participants,
have long believed that this protection to homeowners
is an unconditional benefit
afforded to borrowers when they execute the HECM. It
is essentially the basis of the
FHA mortgage insurance for which borrowers have paid
significant premiums for this In light of hundreds
Subsection C, wherein the definition of “non-recourse,” as it
that HUD’s policies and
recourse” as it relates to
4235.1 released in August 1989 and revised through Handbook
4235.1 REV-1 in September 1994. Again, the subject of contention
sentences. AARP suggests
goal of encouraging them discrepancies. was granted the authority to create
the specific language in two
In Section 1-3(C) of the
to correct the problematic
UD
is essentially a debate over
“friendly warning” about these policies with the
an FHA insurance program for reverse
program and the industry,
protection.
of pages of regulatory
There is debate as to when
imagine, but this case, with
provision as only applying
major implications for the
HUD began interpreting this to when the estate sells the
“non-recourse” as it relates to HECM is stated to mean: “the HECM borrower (or his or her estate) will never owe more than the l
In light of hundreds of pages of regulatory language, it may be hard to imagine, but this case, with major implications for the program and the industry, is essentially a debate over the specific language in two sentences.
home, not when they desire to retain it,
when the home is sold for less than the
processing of a HECM loan. This scenario
outstanding balance regardless of home
made it clear issuing ML 08-38 did not
is either below the age of 62 and cannot
which then requires repayment of the full value. HUD has indicated that they believe this has always been their interpretation of the statute, but the practice began to come to light sometime in 2006 or 2007. The
AARP report published in December 2007
indicated that HUD had never announced that its non-recourse practice varied from the policy in the HECM Handbook. It
called on HUD in “Recommendation 5”
(page 111) to “clarify that the HECM nonrecourse limit means that borrowers or
their estates will never owe more than the value of the home.”
balance of the reverse mortgage. HUD amount to a change in policy; only a
clarification wherein the heirs were not
unduly afforded the ability to purchase
the property as a method to avoid paying
the full balance of the HECM. A reason for this definition, some have suggested, is
that in a “non-arm’s length” transaction, heirs or estates may actually seek to
artificially reduce the value of a home
for the sole purpose of taking advantage of the non-recourse provision, or at least
receive the unfair dual benefit of retaining the home and paying the lesser balance of
typically occurs in cases where a spouse
qualify for the HECM, or one borrower is younger and qualifying based upon their age would provide insufficient funds to
accomplish their borrowing needs. Persons in these cases, in addition to the QCDs (if applicable), were also typically required to sign disclosures acknowledging their
position as a non-borrower, even resulting in a “Non-Borrowing Resident” form that had to be signed by any non-borrowing
person residing in the home, whether they were a spouse or not.
the HECM.
HUD essentially interpreted “homeowner”
recommendation until Mortgagee Letter
The second component of AARP’s
and “borrower.” Accordingly, any of the
The stated goal was to issue “clarification
defining “homeowner” in the U.S. Code.
HUD did not respond to the AARP
2008-38 was issued in December 2008. regarding borrower’s recourse for
repayment of HECM loan debt and
termination of a HECM mortgage.” The letter stated that program participants
had mistakenly inferred that the language in the handbook included situations
when the estate desired to retain the
home. It then states that the intended
meaning of the provision is “simply that if the borrower (or estate) does not pay
the balance when due, the mortgagee’s
lawsuit focused on this sentence
Subsection (j), titled, ”Safeguard to
prevent displacement of homeowner,”
states that in order to insure a HECM, it must defer repayment of the loan until
“the homeowner’s death, the sale of the specified in regulations of the Secretary.
applies to “arm’s length” transactions
practice allowed for loans to be insured in cases where a spouse was not a party to the transaction.
homeowner.”
HUD to return the application of “non-
the protections of this provision even if
sold, the non-recourse provision only
and were a party to a transaction. This
The goal of the recommendation in
‘homeowner’ includes the spouse of a
for any deficiency resulting from the
Therefore, in cases where the home is
when they remained on title to the home
For purposes of this subsection, the term
At issue is whether the non-borrowing
foreclosure.”
three terms would only include the spouse
home, or the occurrence of other events
remedy is limited to foreclosure and the borrower will not be personally liable
to be interchangeable with “mortgagor”
spouse of a HECM borrower is afforded they are not a signatory to the HECM loan. HUD has long insured transactions where a borrower’s spouse was either excluded
from title and the HECM loan, or removed via a Quit Claim Deed (QCD) in the
AARP’s 2007 report was to encourage recourse” to be unconditional, where a homeowner can never owe more
than a home is worth without further
interpretation. The result being, no matter how the HECM loan was resolved, the
amount paid to the lender would be the lesser of the HECM loan balance or the
appraised value (or sales price approved by the lender and HUD).
oan balance or the value of the property, whichever is less; and no assets other than the home must be used to repay the debt.”
TRR | 29
1 Plaintiff 1:
3
2 Plaintiff 2:
Plaintiff 3:
Delores J. Moore from Covington, Indiana. Age 79.
Leila Joseph from Brooklyn, New York. Age 77.
Robert Bennett from Annapolis, Maryland. Age 69.
She married Mr. Moore late in life and was never added to the deed to the home or the HECM mortgage.
She was removed from the deed to the property when her husband, suffering from dementia at the time, entered into the reverse mortgage.
He had jointly owned the home with his wife since 1981. Unbeknownst to him, he was removed from the deed when the HECM was executed. His wife, who was seriously ill at the time, died the following month.
She is defending against a foreclosure action in Fountain County, Indiana Circuit Court.
the
F
Mrs. Joseph is defending a foreclosure action in the Supreme Court of Kings County, New York.
actsthe details of the plaintiff’s involved in the lawsuit
Mr. Bennett faces a foreclosure action in Circuit Court in Anne Arundel County, Maryland.
AARP’s lawsuit involves three plaintiffs
AARP has stated that they believe the
release of ML 08-38. He noted that the
HECM borrowers. In all three cases, the
contract between borrowers and lenders
length” requirements in the definition
that were non-borrowing spouses to
borrowing spouse has passed away and
the plaintiffs are subsequently defending foreclosure actions under the “due and
payable” provisions of the HECM. One
plaintiff claims he was removed from title without his knowledge when the HECM
clarification amounts to a breach of and a breach of insurance contract
between HUD and borrowers, the second
of which negates a primary reason for the
insurance premiums that are paid through the loan.
was executed. By revising the definition
Additionally, should the court affirm
plaintiffs will have suffered substantial
interpreted the definition of “homeowner”
of “non-recourse,” the suit alleges that the hardship if they are forced to pay the full balance of the reverse mortgage in order to retain their home. The lawsuit also
claims that the “Safeguard to Prevent
Displacement of Homeowner” section of the U.S. Code precludes a spouse from
being displaced via foreclosure, even if they were not named on the mortgage.
The lawsuit attests that HUD has never recognized this important provision.
The lawsuit seeks to gain an injunction
the claim that HUD inappropriately in the statute, it could lead to a
determination that non-borrowing spouses had their property rights
improperly terminated through QCDs
that were executed in the processing of
HECM loans. Ultimately, the QCDs that the plaintiffs executed could be deemed void, thereby reaffirming their rights to
included a Statement of Policy from HUD. In August of that year, NRMLA took a position to protect the unconditional
definition of “non-recourse.” NRMLA counsel James Brodsky noted that NRMLA began a period of heavy
engagement with regulators to restore the original definition. NRMLA suggested that the potential for limited abuses
could be mitigated in valuation process
requirements, and it was an unfair practice to treat heirs differently than others when it came to applying the non-recourse provisions.
properties.
and NRMLA continued to advocate
the validity of the HECM liens against the
its position of narrowing the definition for restoring the original. NRMLA
believes that this can be simply resolved At the NRMLA West conference in mid-
plaintiffs.
NRMLA’s position on the claims in the
March, President Peter Bell discussed
lawsuit, as well as their actions, as the
situation unfolded since even before the
30 | TRR
2006 counseling training session that
In issuing ML 08-38, HUD reaffirmed
definition of the terms according to the statute, and also seeks damages for the
of “non-recourse” first appeared in a
the properties and bringing into question
against ML 08-38, restoring the original language and establishing the legal
first mention of including the “non-arm’s
by replacing ML 08-38 to make “nonrecourse” unconditional, but include
appropriate safeguards to ensure a fair and reasonable process of property valuation in “non-arm’s length” transactions.
This lawsuit has pointed at cracks in the foundation of the HECM program, but it may very well lead to a process of strengthening the program and how it helps seniors finance their retirement.
In regard to the definition of
application of these rules, their initial
Even with the potential direct impacts
problematic issue that essentially is the
which future cases are able to base their
industry is the resulting media coverage
“homeowner,” Bell indicates a more
result of “poor drafting language” in the statute that didn’t accurately reflect the legislators’ intent. NRMLA has taken
the position that it is reasonable to infer that the meaning of “homeowner,”
“mortgagor” and “borrower” can be
considered interchangeable. Accordingly, NRMLA supports HUD’s interpretation that their definition reflects the true
intentions of the statute, thereby making the non-borrowing spouse allowable in insurance contract.
The problem, Bell points out, is that due to
objective could be to create precedence on claims. Even though
AARP had made their opinions known in
2007, it has come to the point of litigation due to perceived lack of
clarity in the statutory language. When it
comes to interpreting legislative intent, it
usually can only be
resolved by either legal or legislative action.
the nature of a statutory definition versus
In the first likely action
issue that most likely cannot be resolved
may issue injunctions
an administrative interpretation, this is an through negotiation and will need to be
adjudicated by the court. Should the claim prevail, Bell suggests that a potential
outcome would be for HUD to amend rules no longer allowing for a spouse to be excluded from title in a HECM
transaction. He acknowledges that this
creates potential for lost volume and some
borrowers with greater need being limited
by this application, but this is unavoidable if the term “homeowner” is determined to be as broadly applied as the lawsuit portends.
NRMLA has offered to be a broker in this lawsuit, helping HUD and AARP reach a consensus on addressing the issues.
NRMLA believes that the best course of
action would be for the organizations to focus on legislative efforts that seek to amend and clarify the statutory
language, rather than leaving it up to the courts.
in the case, the court ceasing foreclosure
proceedings against
the plaintiffs until the case is litigated. Due
to potential precedent created by the case, HUD could then
consider imposing a
broader moratorium on similar actions
pending resolution of the lawsuit.
could have national implications,
in addition to clearly changing the
and the potential negative impact on the reputation
of the product among the public. Each step in the
litigation process will be covered in varying light by the media. Media
outlets will likely turn to legal and financial
analysts, who may or
may not fully understand the HECM program and the lawsuit, to discuss
the merits of the issues
at hand. Detractors, such as the Consumer Union, may use this lawsuit as
a way to substantiate the dangers of the program they have previously
portrayed. The litigation may seek to clarify
the law, but industry
participants could be
portrayed as complicit in HUD’s actions.
This lawsuit has
pointed at cracks in
the foundation of the
The ramifications could fundamentally
HECM program, but it may very well
to the first major lawsuit against the
program and how it helps seniors finance
change the HECM program. This amounts HECM program. If the lawsuit prevails
and becomes a precedent for additional lawsuits, lenders and HUD could be
forced to pay damages to borrowers and
estates that were negatively impacted
by HUD’s interpretation. Additionally, they could be required to amend the existing HECM loans to comply
with the clarified rules. Depending
Since AARP believes that this case
of the litigation, a major concern for the
on perceived risks to the HECM
insurance fund, HUD could also
consider additional limitations to the
program.
lead to a process of strengthening the
their retirement. Although the process of resolving this situation may create a period of instability or uncertainty
for the reverse mortgage industry, the
clarifications should help strengthen the
foundation of the program for the future. A period of pain for the industry may
be necessary to avoid problems as the
program matures. At the end of the day, it
is better to have an industry that continues to grow on a solid foundation of clear
rules rather than on a shaky foundation of poor regulation and supervision. g
TRR | 31
The Reverse Review April 2011
the Essentials
The Tale of Regulators and Originators An uncanny resemblance to Greek mythology. Jim Cory
32 | TRR
I
n Greek mythology, Hera is known as the wife and sister of Zeus, the goddess of women and marriage. HERA, in the world of reverse mortgages, however, was written into law on July 30, 2008, as the passing of the Housing and Economic Recovery Act. The summer of 2008 was a turbulent time for mortgages, home values and the global economy overall, with the world on the cusp of a major economic correction.
HERA was the beginning of a tremendous
importantly, the overall maximum lending
many of us remembered from his days
business, with a great deal of it pertaining
more than $50,000. We were in love!
the housing ring, this time as Attorney
amount of regulation in the mortgage
to the Federal Housing Administration,
limit for HECMs had been increased by
and more specifically the HECM reverse
But HERA is also known as a jealous and
with the HERA regulations and ending, for
MDIA and the SAFE Act. The MDIA and the
mortgage product. Each change, beginning now, with the Federal Reserve Board’s rule on compensation set for April 1, 2011, has forced mortgage originators to adapt.
To see what regulatory hurdles lie ahead for
vengeful goddess; she brought with her the SAFE Act, with most parts implemented in 2009 and 2010 respectively, were far away, little noticed, and of no concern to the general mortgage originator in 2008.
the mortgage originator, one must review
***
ACT 2 Marriage
the past. And while reviewing the recent
history of regulation, it helps to remember the words of Alexis de Tocqueville,
who once remarked, “Events can
move from the impossible to the inevitable without ever stopping at the probably.” Thus begins our love story between
regulators and originators, opening in the summer of 2008…
(Author’s note: I am not an attorney and many of the rules and dates have been abbreviated
or perhaps even paraphrased incorrectly, both to keep the reader’s attention with brevity of explanation, and because of my general ignorance. Enjoy.)
***
i
ACT 1 The First
Date (2008)
HERA was signed into law on July 30, 2008,
and was composed of several acts, all meant to bolster the flagging housing market, find
a solution for Fannie Mae and Freddie Mac, and protect consumers and homeowners.
As a reverse mortgage originator, the piece I
i
and the First fight (2009)
lending limit in an obscure county, and more
Mac agreed to the Home Valuation Code
of Conduct, or HVCC. In short, it said that an originator could no longer order an
appraisal directly from an appraiser. This
seemed like a good way to create appraiser independence, but carried with it a host
of issues, most notably an increase in cost for the consumer. Thunderclouds indeed, but not affecting FHA and the reverse mortgages they insured just yet…
Improvement Act, or MDIA, was finally
acronym on an
innocuous date.
The ARRA changed the HECM national
mortgage limit from
$417,000 to $625,500, an increase of 50 percent.
This was a great moment for the legions of reverse mortgage originators,
as it ushered in a wave of new and refinance
business. Originators contacted applicants
that formerly could not be helped, as well as
of HERA, the Mortgage Disclosure
implemented. Soon after implementation, the
acronym MDIA began to
be pronounced “Medea,”
most assuredly after Medea, the wife of Jason and the Argonauts. The tales of
Medea are known to be
confusing and disparate, much like the similarly
pronounced act, however most tales have Medea murdering someone
over some disclosure of information.
those that refused the
Here we have our second
mortgages. The reverse
regulatory intentions but
smaller HECM reverse
mortgage business was booming.
the industry was doing
querying the FHA limit website for the
Cuomo’s office, Fannie Mae and Freddie
law on February 17, 2009, a meaningless
for an increase of FHA HECM limits to
November 2008. There would be no more
investigation into their practices by Mr.
One year to the day after the passing
Act of 2009, or ARRA, was signed into
However, while the
$417,000 on a nationwide basis beginning
General of New York. In order to cease an
The American Recovery and Reinvestment
remember most was the FHA Modernization Act. This act, among other things, allowed
as HUD Secretary, had stepped back into
reverse mortgage side of well, thunderclouds were gathering ahead for the
overall mortgage industry. Now Governor
Andrew Cuomo, the same Andrew Cuomo
act passing with the best of a number of unintended
consequences that would eventually affect the
consumer. Many would
agree that some parts were good, such as requiring redisclosure when the
deal changes by a certain
threshold; and others were not so good, like mandatory wait times of several days >> TRR
| 33
and rules about acceptance of documents
this was a rule saying a bank or lender (and
Reform and Anti-Predatory Lending Act,
delivery. The love affair was not over, but
can table fund) doesn’t have to disclose the
such as another round of the loan originator
through mail, fax, email and courier
the cracks were spreading in the foundation of the relationship.
September 30, 2009, was probably the
busiest day in reverse mortgage history.
After moving the HECM insurance fund
in with the FHA fund, and due to horrific home value losses, it was determined by
HUD that the previously subsidy negative (federal-speak for profitable) HECM
program now was subsidy positive (federalspeak for broke). Approximately 10 days
earlier, it was made clear that HUD intended to cut principal limits for new, unlogged applications as of October 1, 2009, by 10
percent across the board. This was a change
that had to happen to preserve the program,
even if you’re not the lender, provided you origination charge. Second, the document was created with
revisions (sorry,
Governor Cuomo),
rejoice! Nice
originators finish
last. This new GFE at the time was
seen as a potential
watershed moment for mortgage
originators, however after a few months it just became one
more regulation to follow.
and loan modification
As with every previous counseling change, the industry groaned as the counseling system, which as usual was not broken, was fixed yet again.
with no accompanying decrease in rate
part of HERA in 2008 (remember her?), had
originators saw the deleterious effects of
this policy change, as new reverse mortgage applications fell by as much as 40 percent (many have postulated that falling home prices made up quite a bit of this drop in
volume, however it is difficult to argue that the drop in principal limits didn’t cause much of this downturn).
***
ACT 3 The i
Honeymoon is Definitely Over (2010)
brunt of the work for the SAFE Act, though
a multiyear, staggered implementation. The
its rate, features and costs. The new GFE,
while welcomed by some, had two obvious fatal flaws. First, calculation of origination
charge is often impossible to read correctly,
even by an experienced originator. Added to
34 | TRR
regarding the creation of the Bureau of
Consumer Financial Protection and the
lack of “too big to fail” legislation. However, many are no doubt wondering how
anything in this bill
could possibly fail if
authored by Senator Christopher Dodd and Congressman Barney Frank.
at the time of this article’s publishing,
Mortgage Licensing System. While this
system has great utility for consumers and
even some positive features for originators, it caused a massive increase in licensing
fees for everyone in our industry, except
or proposed and pending implementation, including changes to Regulation Z to be
briefly addressed below, FTC Rulemaking regarding mortgage advertising, and numerous state-specific regulations.
bank employees. Many would agree that the
FHA mortgages saw some new specific
good thing overall, but again costs increased
released FHA Mortgagee Letter regarding
SAFE Act and creation of the NMLS was a and again the banks were able to avoid a
significant part of the cost and regulation.
into law on July 21, 2010. Returning to
the consumer the exact details of their loan,
debated, especially
database, known as the Nationwide
originators to be licensed through a national
via RESPA, making sweeping changes to
official form was created, intending to show
Frank is still hotly
Also in 2010, additional rules were passed
The Dodd-Frank Wall Street Reform and
the Good Faith Estimate, or GFE. Now an
regulations. Dodd-
SAFE Act called for all non-bank mortgage
This act begins with significant changes
taking hold on January 1, 2010, with HUD,
mortgages, HVCC
Shady originators
2010 also saw the
or fees. Later, in the first quarter of 2010,
compensation reform, rules on high cost
no signature line!
but it was a major blow to consumers who
saw the lending proceeds severely decrease
which contains future regulatory hurdles
Consumer Protection Act was signed
the Greek mythology analogy, if HERA were Hera, then surely this would be
Zeus, the mightiest of Olympians. As the
regulations in 2010 as well, as a previously condominium financing was implemented after several delays. On February 1,
the “spot condo” approval process was
eliminated, replaced with the requirement
that any condominium must have the entire project approved in order to be eligible for FHA financing. Condominium financing,
already struggling, was dealt a vicious blow.
implementation of most aspects of “Zeus”
Fourteen days later FHA implemented its
this article, it is still largely unknown how
required brokers and lenders to order
will not occur until after the publishing of it will affect the regulatory environment. One pertinent piece of it is the Mortgage
own form of the HVCC, which basically
appraisals through appraisal management companies. This was another regulation
with the best intentions but some
of their FHA licenses, supposedly a way
What we do know for sure comes from H.L.
as appraisal prices increased and the quality
The rule renames the brokers Third-Party
an easy solution to every human problem –
unintended consequences for the consumer, of appraisals began to differ.
On September 11, FHA implemented
the new HECM Counseling protocols,
designed to help borrowers and improve the counseling. As with every previous
counseling change, the industry groaned as the counseling system, which as usual was not broken, was fixed yet again.
Faced with another budget shortfall and
to increase oversight of FHA originators.
Originators, or TPOs, and puts them under
the supervision of the lenders. The accepted
Due to this rule, some banks are dropping
however it seems odd that oversight was
loan originators to work more on a salary
to monitor all of the licensed brokers,
increased by no longer overseeing. Many in the broker community thought this could be the end of the broker, only to find this
rule, like the GFE a year before, was just one more hurdle that was cleared fairly quickly. All of this history takes us to the next
4, 2010. I First, the HECM Saver was
Compensation Final Rule by the Federal
introduced with lower fees and a lower
principal limit to drive safer growth and
offset losses. II Second, the principal limits were reduced for all borrowers but with heavier effects on the older seniors.
III Third, the monthly FHA Mortgage
Insurance Premium was increased from 0.5 percent to 1.25 percent. And in a complete surprise to the industry, FHA lowered the HECM factor floor from 5.5 percent to 5.0 percent, meaning that at the current low
rates, customers would feel less MIP impact
and could actually benefit from the principal limit changes. Very Promethean indeed, although disturbing to the gods of the
neat, plausible, and wrong.”
reasoning is that FHA was too thinly staffed
subsidy request, FHA made four additional
reverse mortgage changes effective October
Mencken, who once said, “There is always
regulatory hurdle, the Loan Originator
wholesale programs and restructuring their basis. Every lender has a different idea on
how to compensate brokers and their loan officers. Lenders are approaching brokers and individual mortgage originators to
join them as branches in their regular retail operations. And some brokers are joining
with lenders, while others are staying put to see how the dust settles.
Reserve Board. As of publication, this rule
Amid all this chaos, and looking back to
Fool’s Day, 2011, the perfect date for such a
many cannot help but see the possibility
is fittingly set to be implemented on April
confusing rule. Many believe that this rule is the biggest game-changer yet; the rule
that will turn the entire mortgage originator world upside down. It is meant to be an easy, simple way to prevent mortgage
originators from pushing products that
aren’t in the best interest of the consumer.
all of the previous game-changing events, that this rule, like the others, could just be
much ado about nothing. This author looks forward to reading this paragraph after the rule’s implementation and laughing, either
at the madness of the current environment, or himself.
Now that most risky mortgage products
***
ACT 5 The Future
(I swore I wouldn’t write the word
“subprime.” oops…) are no longer offered
and basically eliminated entirely, many have remarked that this is like trying to close the
i
(4/2/2011 and Beyond)
What will the future hold for the love
barn door after the cows have already left.
between the mortgage regulator and
As 2010 came to a close, brokers and smaller
The basis of the rule, and please remember
heavy pendulum of regulations swing back
the Implementation of Final Rule FR 5356-F-
for fixed-rate loans (of course more risky
these questions, however a few things are
loan originators and brokers cannot be
will be there to cheer the victories, quietly
rate, aside from the size of the loan.
for our customers. And like almost every
Additionally, compensation cannot be paid
new regulations will increase the cost of
secondary market.
lenders were given one final parting shot, 02, know as FHA Reform…
***
ACT 4 YOU DID
i
WHAT??? – No, Seriously, What Did You Do? (1/1/2011 – 3/31/2011)
Most of the FHA reform was implemented January 1, 2011. One rule that came with it was that it took away the FHA “mini-
Eagle,” meaning that brokers were stripped
reverse mortgage originator? Will the
that your author is no attorney, is that
and loosen things up? No one can answer
adjustable rate mortgages aren’t included),
for certain: Reverse mortgage originators
compensated based on loan terms, including
lament the defeats, and do our best to care regulation since our beloved HERA, the
to a broker if the borrower is compensating
mortgage financing for our dear customers.
this publication, no one really knows for
Cheers to the survivors of this torrid affair! g
the broker as well. The fact is, at time of
sure what this exactly means, except that
rate sheets, originator compensation plans and even business plans are already being altered.
TRR
| 35
REVERSE
REVERSE
review
review
T
R
R year in review
How Medicaid’s Estate Recovery Can Help You Make New Friends Jonathan Neal
JONATHAN NEAL
Those of us in the Reverse Mortgage Industry are here because we truly care for Seniors and want to see them enjoy their golden years. As such, this is also true for those who seek to provide seniors with Long-Term Care Insurance. As the saying goes, “two minds are better than one”, so why not put our heads together in order to offer Seniors products that benefit them in the long run. This month, Jonathan Neal focuses on the idea of Reverse Mortgage and Long-Term Care Insurance professionals coming together in order to provide Seniors with sound knowledge and advice on another use for their Reverse Mortgage funds which they may not have considered in the past.
June 2010
How 18 Medicaid’s Estate THE Recovery Can Help You Make New Friends page
REVERSE -April
review
To Be, Or Not To Be: FHA Loan Correspondents Face a Looming Question Weiner Brodsky Sidman Kider, PC
Fed Kamensky /
April, HUD reformed some of the FHA regulations, and developed the “Final Rule”. This change THEIntakes effect on May 20, 2010, and brings new regulations that FHA loan correspondents must
18 Joel schiffman To Be, or Not to Be: FHA Loan Correspondents Face areview Looming Question
REVERSE page
understand and abide by, which can quickly become overwhelming. In an effort to help originators and lenders see the light in these changes, Joel Schiffman and Fed Kamensky, of the law firm of Weiner Brodsky Sidman Kider, P.C. explain the upcoming shift.
J U LY / A U G U S T 2 0 1 0
-may
SURVIVING
In The Reverse Mortgage Industry Todd Walters
Local PR Can Extend National Efforts, But Do Your Homework! Justin Meise
Justin meise
Local PR Can 16 Extend National Efforts, but Do Your Homework! page
year anniversary
The media is a major source of information, especially in the promotion of products. Even reverse mortgages are dependent upon good coverage. Because any and all mediums are subject to positive and negative information, all mortgage industry participants need to play a role in positive reinforcement through the media. Beginning with grassroots efforts, Justin Meise suggests some ways in which everyone can help develop positive media coverage for the reverse mortgage industry.
-june
THE
REVERSE
Reverse Mortgages: Sue Haviland an Originator’s Tale review Simple and easy marketing strategies can improve your credibility in the reverse mortgage field
NOVEMBER 2010
HUD
-September
!
36 | TRR
DECEMBER 2010 / JANUARY 2011
% $
Fed Kamensky / THE Joel schiffman
REVERSE -november
The HECM Saver and Salvation FEBRUARY 2011
review
review
THE SAFE ACT: WILL IT SERVE ITS PURPOSE? The industry anxiously awaits the changes that come with the passage of the SAFE Act. John Smaldone
Fed Kamensky and Joel Schiffman
it save the industry?
Q
REVERSE -October Embracing Change
A parable on ML 2010-34 and NRMLA ethics advisory 2010-01
can
ETHICS ADVISORY
jason levy
THE
THE HECM SAVER AND SALVATION
2010-01
I would like to extend a big THANK YOU to all of our readers, authors and advertisers of the magazine. You are the ones that make our jobs here exciting, fascinating, mind-boggling (at times) and ever-changing. We pour everything we have into each issue of The Reverse Review magazine in hopes that it will be well received among the community of our readers and hopefully we’ve lived up to that goal. This year has flown by and has been nothing but fun! Happy anniversary, The Reverse Review – here’s to another great year to come.
EMBRACING CHANGE:
How brokers can successfully market the HECM Saver in their businesses Jason Levy
REVERSE MORTGAGES: sue haviland AN ORIGINATOR’S TALE
from the editor
review
review
THE
thank you
REVERSE -july/august OCTOBER 2010
REVERSE SEPTEMBER 2010
Todd walters
THE Surviving in the Reverse Mortgage Industry
10 WAYS to become the
“GO -TO” PE R S ON
The Industry’s
2011 RESOLUTIONS
+
new look year
john smaldone
The Safe Act: Will It Serve Its Purpose? THE
REVERSE
-December/januaryreview MARCH 2011
INTERVIEW
HMBS
BRETT G. VARNER
as “Holy Grail”of fixed-income securities REFORMS: consequences for
A CONVERSATION WITH NEW VIEW ADVISORS’ JOE KELLY.
ORIGINATORS
3
SECRETS
ATARE E. AGBAMU
THE THREAT OF THEFT
for REFERRALS
customers
QC basics
C H AN G I N G : WHAT LENDERS
MUSTdo
Atare E. Agbamu
HMBS as “Holy Grail” of Fixed-Income Securities
-February
TALK
Craig Corn Challenges the Industry to Seize Opportunities
2011?
brett G. varner
danger in
Craig Corn Challenges the Industry to Seize Opportunity
-march
l
the Resources Information at your fingertips. A listing of advertisers and contributors featured in this issue.
l
l
l
AppraiserLoft
Mortgage Cadence
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Celink
National Tax Search
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appraiserloft.com 877.229.7799
mortgagecadence.com 888.462.2336
celink.com 517.321.9002
nationaltaxsearch.com 888.627.5494
iReverse Home Loans
reversemortgagesuccess.com 410.557.0294
reversevision.com 919.834.0070
Reverse Market Insight
RMS
ireverse.com/employment 800.486.8786
reversemarketinsight.com 949.429.0452
rmsnav.com 888.918.1110
Legacy Reverse Mortgage
Reverse Mortgage Crowds
Tradition Title
legacyreversemortgage.com 888.678.0818
reversemortgagecrowds.com 800.604.6535
traditionta.com 631.328.4410
Number
the
Anniversary
The Reverse Review is celebrating its two-year anniversary this month – here is to many more successful years to come!
12,020
Number of pages The Reverse Review has printed in the two years that it has been in publication. TRR
| 37
The Reverse Review April 2011
the Last
Word the seniors, the actual people this great
teach all of them about reverse mortgages
majority of our industry think we need to
– CROSS-SELL!!!
product can help in so many ways. The get the word to the seniors; I happen to disagree (strongly).
This industry has become so scared of
The mortgage industry, reverse or
that it’s a bad thing, but it’s not. The truth
conforming, has never been and never
will be the “eyes and ears” of the senior generation. And when you add into the
equation what Wall Street has done to the mortgage industry’s reputation the last
few years, thinking that we can suddenly
become the delivery vehicle, is arrogance at best. Recession, principal reductions, low
appraisals and increased MIPs aside, it’s just
not happening. We are not the messengers to carry the true strength of this great product to the masses.
Then who are the “eyes and ears” of the
senior generation? An even better question
may be: When any product is introduced to the financial community, how has it gotten to the masses? Hmmm.
The “Eyes & Ears” of the Senior Generation Michael Banner
How about the 1.1 million insurance
agents that includes long-term care agents,
Medicare supplement agents and hundreds of thousands of financial advisors? How
about more than 1 million attorneys? How
about the 55,000 certified financial planners
is, used correctly, a reverse mortgage can
help millions of seniors afford home health care services and long-term care insurance premiums that otherwise would never be available. How about a line of credit for
seniors that are experiencing record low rates of returns on their CDs, savings or annuities? Why should their quality of
life suffer in their retirement years? Guess what: Seniors don’t discuss these matters with their “mortgage guy”; they discuss
them with their “trusted financial advisor.” We are not the delivery vehicle; the groups
mentioned above are and always have been. We need to become their eyes and ears!
Why hasn’t our industry befriended the
real estate industry? The majority of the 1.2 million licensed Realtors in this nation are
not even aware that the purchase mortgage exists. In my opinion, the purchase reverse
mortgage is a sleeping giant juts waiting to be introduced to the masses...via the real estate industry.
Building a large and successful referral base
clients have taken in their investment
mainstream financial community that the
that are dealing with the losses their senior portfolios in recent years? Or how about the several million home care providers that
deal with seniors every day and have to hear but we simply can’t afford it.”?
38 | TRR
cross-selling that it has convinced itself
or how about those 630,000 registered reps
them say, “We know we need the home care
The future of the reverse mortgage industry depends on education. How many times have we heard that? But just whom do we need to educate? Obviously we need to educate
then they may – are you ready?
Why is so much of our industry so afraid of reaching out to these other segments of the mainstream financial world? Every time I
ask this question I get the same answer. If we
is just not easy. But if we don’t convince the
reverse mortgage deserves to be considered a mainstream product then I truly fear we may be the bottom rung of the financial
ladder for many years to come. And we don’t deserve that, this great industry
doesn’t deserve it and most importantly the millions of seniors we could be reaching
absolutely don’t deserve it! Let’s stop being
afraid of something bad happening and start doing lots of good. g
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