THE
REVERSE JUNE 2010
review
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2 | TRR
June 2010
Robert Wagner Paid Celebrity Spokesperson
Guardian First Funding Group, LLC, One Penn Plaza, Suite 1414, New York, NY 10119. Trade/servicemarks are the property of Guardian First Funding Group and/or its subsidiaries. Licensed by the Department of Corporations under the California Finance Lenders Law; Licensed by the California Department of Real Estate (Guardian First Funding Group, Inc.); Connecticut – Mortgage Correspondent Lender/Broker # 14560; Delaware, Office of the State Bank Commission, MB License NO.010889; State of Florida Office of Financial Regulation; Georgia Reg.#19764; Maryland, Mortgage Lender 11811; Massachusetts Mortgage Broker License NO. MB 3748 – acting in the capacity of a Mortgage Broker in MA; Michigan – Mortgage Broker #FL 0010711, 2nd Mortgage Registration SR 0010743; Registered Mortgage Broker, NYS Banking Department; New Jersey – State of NJ Department of Banking and Insurance Reference No. 0804609-C20; Licensed with the Pennsylvania Banking Department; and Licensed by Virginia State Corporation Commission License #MC-3327; Texas Mortgage Banker, registration # 84221. Some products may not be available in all states. All loans arranged through third parties. This is not a commitment to lend. Restrictions apply. All rights reserved. We arrange but do not make loans. Equal Housing Lender.
June 2010 TRR
|3
TRR06.10 “ T h i n k i n g F o r w a r d I n R e v e r s e .”
FEATURE
Local PR Can Extend National Efforts, But Do Your Homework!
To regain forward momentum with the press, all industry participants can play a role, from the largest lenders and servicers to individual originators. Justin Meise
“Positive press offers value beyond the brand awareness you get from advertising.”
14
Reverse Mortgages and Life Insurance
Some seniors may not be able to afford life insurance; Jonathan Neal explains how the solution may lie in reverse mortgages.
page 14
Jonathan Neal
12
How to Manage Distractions
We all know that distractions can
plague the workplace. Try the “Five S”
system to help overcome some common issues and enhance productivity. Sam Collins
20
Product Suitability the Choice is Not Yours Paul Fiore highlights the plenitude of options in the reverse mortgage
industry, and encourages lenders to give clients optimum knowledge regarding the HECM product. Paul Fiore
Note from the Editor
The Art of Byline Articles & PR
Ask the Underwriter
Industry Stats
(3Cs)+(2Cs) = 5Cs
March 2010
Directory
The Last Word 29
Fixed Rate is Popular, but is it the Best Choice?
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June 2010
6
5
30
24
8
THE
REVERSE review
W
The Art of Byline Articles & PR
16745 W. Bernardo Drive Suite 450 San Diego, CA 92127 Publisher Aman Makkar
When you pick up The Reverse Review each month or
download a copy from our website, you might think to
yourself, “I could write an article like this,” but soon come to the realization that you’re not a reporter and probably never will be. If you have thoughts like this, you’re not
alone. But, you don’t have to be a reporter in the reverse
mortgage industry to get an article published. The trick to
writing for us is knowing what your audience wants to read
Editor-in-Chief Erica English Copy Editor Kaitlin Dershaw Creative Director Traci Knight
and then understanding the subject matter. Once you’ve decided a byline article is a good PR strategy for your
company, the next step is identifying what your readers want to be educated in. This month, Justin Meise writes
our feature on local PR. He discusses how it offers value on many levels of awareness, from branding to working
with the press in a unique communication process. Positive exposure is a critical component of improving the overall image of our industry. Do you think you’re up for the
challenge? Though byline articles take time and effort, the
Layout & Design Wilferd Guenthoer National Accounts Manager David Peck Printer The Ovid Bell Press
rewards of becoming a thought leader in our industry can be immense.
Have a great month...summer is finally here!
Advertising Information phone : 858.832.8320 e-mail : advertising@reversereview.com Subscriptions and Editorial Content phone : 858.217.5332 e-mail : information@reversereview.com website : www.reversereview.com
Erica English Editor-In-Chief
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June 2010
© 2010 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
(3Cs)+(2Cs) = 5Cs
Compliance and Checklist join Character, Capital, and Capacity in the classic underwriter formula RALPH ROSYNEK As mortgage professionals and consumers, most of us are well
Consider the dilemma currently in mortgage origination, arising
Capital and Capacity.
add to the confusion. The Colorado Division of Real Estate
aware of the underwriting formula of the 3 Cs of Credit – Character,
More simply stated, the role of the Underwriter is to determine the Borrower(s) ability and willingness to repay, and the sufficiency of collateral presented to protect the interests of the Lender.
when individual legislation and regulatory mandates now publicly approved a new rule (4CCR 7253: 5-1-2 Mortgage Loan Originator Disclosures) effective June 14, 2010. Section 5-3(a) of the rule
requires that all mortgage loan originators create and implement a form that itemizes the disclosure of all third-party fees and costs:
Yes, this authority to approve has been traditionally supported
“a. Due to the 2010 changes to the HUD Good Faith Estimate
mandated state, federal and regulatory guidelines, and company
meets the requirements set forth in § 12-61-914(2)(b), C.R.S. As
by policy, procedure, investor guidelines, insurability standards, determined risk considerations.
But, what happens when state, federal and regulatory mandates
collide with the interests of the lender and consumer to effectively transact?
For months (and months), as an industry we have re-tooled our
systems, re-trained our personnel, re-educated the Borrower(s) and
re-designed our workflows to address the perceived inconsistencies and failures in the “old” RESPA protections afforded the consumer.
“More simply stated, the role of the Underwriter is to determine the Borrower(s) ability and willingness to repay, and the sufficiency of collateral presented to protect the interests of the Lender.” 6 | TRR
June 2010
Disclosure form, the Director has determined this form no longer a result, the Director requires that all mortgage loan originators create and implement a form that itemizes the disclosure of all
third-party fees and costs. The disclosure shall include mortgage loan originator and borrower signatures and dates in which the disclosure was completed and signed. A completed disclosure
form shall be completed according to the following timelines…..” To my knowledge, no actual final form or document was attached to evidence compliance with this requirement.
While I agree, the perception and reality of the new RESPA
guidelines have, in my opinion, (in some cases) reduced the
amount of detailed information the Borrower(s) can review. The
new guidelines have also created timing and information issues, which may create barriers for some Borrowers to transact.
Call it déjà vu (or a senior moment!) - did we not just recently do away with this form of disclosure practice?
Perhaps it is time to amend the time honored underwriting
formula. No longer are the 3Cs enough to lead to a successful
transaction approval. In some cases, failure to properly provide
information and the subsequent acknowledgement are impacting the Borrower(s) ability to transact on a timely basis.
Maybe the new formula should be (3Cs) + (2Cs) = 5Cs, where the 2
additional Cs equal Compliance and Checklist – if it doesn’t comply or
you missed the item on your checklist, the transaction is probably faulted. Compliance underwriting has become a highly specialized
component of the overall underwriting process. The key to
“No longer are the 3Cs enough to lead to a successful transaction approval. In some cases, failure to properly provide information and the subsequent acknowledgement are impacting the Borrower(s) ability to transact on a timely basis.”
successful approvals with limited risk of transaction failure or
Additionally, once you have determined the required disclosures
to implement and train a compliance procedure and checklist
available to assist you in building and maintaining your checklist.
repurchase risk to the originating company, is to take the time
methodology at the Company level prior to submission of the file for underwriting.
and compliance procedure, there are many checklist resources Make sure to speak with your investor representative for an
updated version of their compliance procedures and checklist.
Primary to this task is to know the what, when and why of
Too often, we put off for tomorrow what should be done today. In
to the Company origination activities. The best starting place for
the very beginning of the transaction.
origination compliance; the creation of a compliance checklist specific these tasks is a discussion with your legal/compliance counsel.
the case of compliance, it is critical to contemplate this action from
AppraiserLoft.com | 877.870.LOFT(5638)
June 2010 TRR
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INDUSTRY SUMMARY
March Endorsements Retail and Wholesale Volumes
Retail Endorsement Growth
-10.92%
REVERSE MARKET INSIGHT As we already saw in the March Retail Leaders report, the decline in
Wholesale Endorsement Growth
-21.9%
HECM applications has led to a dramatic drop in endorsements just as surely as gravity accelerated Newton’s apple. While we continue
to believe there is more pain to come on the endorsement side of the equation, we’re optimistic that applications will continue to pick up
Total Endorsement Growth
-17.01%
meaningfully once we see final April numbers later this month.
* Figures Above Reflect Change from Prior Month
TRAILING TWELVE MONTH ENDORSMENTS
In the meantime, let’s sift through the wreckage of March endorsements
from a business channel perspective to discern what we can, in advance of the market by market look in next week’s Industry Trends report. To the numbers!
• Both wholesale and direct endorsement volumes dropped by
double digit percentages in March, with brokers/wholesale down
12,000
21.9% vs a 10.9% decline for retail/direct. This continues the pattern
10,000
we saw last month as wholesale trended substantially weaker. With
just 255 more units in the month, the channels are the closest they’ve
8,000
been since November. It seems inevitable that retail will pass the
6,000
brokers, and fitting that the last time this occurred was last April. Anyone care to predict a repeat performance?
4,000 2,000
• The large lenders continue to dominate the industry, with 88.3% of
March volume. This is slightly off from last month’s figure of 92.4%,
0 3 4 5 6 7 8 9 10 11 12 1 2
but still above trend for the past 12 months.
*Numbers Represent Months
• March also highlighted a changing landscape across channels, with
RETAIL UNITS
CHG%
WHOLESALE UNITS
CHG%
TOTAL UNITS
CHG%
4
6,320 9.91
5,341 -3.07
11,661 3.56
5
4,077 -35.49
4,275 -19.96
8,352
-28.38
6
4,010 -1.64
4,623
8.14
8,633
3.36
7
4,436 10.62
5,392
16.63
9,828
13.84
8
3,681 -17.02
5,246
-2.71
8,927
-9.17
9
3,903 6.03
5,567
6.12
9,470
6.08
10
4,081 4.56
4,692
-15.72
8,773
-7.36
11
3,836 -6.0
3,901
-16.86
7,737
-11.81
12
3,954 3.08
4,326
10.89
8,280
7.02
1
3,171 -19.8
4,450
2.87
7,621
-7.96
2
3,124
3,890
-12.58
7,014
-7.96
3
2,783 -10.92
3,038 -21.9
5,821
-17.01
-1.48
o Metlife has more than doubled overall volume in the past 12 months, up 114% and remarkably proportionate in growing both retail and wholesale more than 100%.
o Wells Fargo has always been heavily weighted toward retail,
although in the past year the mix has been changing slightly, as
the wholesale side grew 66% in a slightly down period for retail endorsements (-11%).
o Generation and Genworth have both substantially grown their
wholesale business, each increasing more than 165% in the past 12 months, while retail grew slower in the case of Generation
and not at all for Genworth. As of March, JB Nutter is the only
TOT
8 | TRR
many lenders having clearly shifted volume in one direction or another.
top 10 lender with less retail volume in its business mix than June 2010
Generation and Genworth.
June 2010 TRR
|9
contributors
Ralph Rosynek
Ralph Rosynek is President and CEO of 1st Reverse as well as a HECM DE Underwriter. Mr. Rosynek has been involved in mortgage lending for over 30 years with the last 5+ years exclusively providing reverse mortgage lending solutions. To contact Mr. Rosynek or to learn more about 1st Reverse Financial Services, Please visit www.1streverse.com or call 877.574.1000.
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June 2010
Jonathan Neal
Jonathan Neal is the senior partner at CCGCapital Consulting Group, LLC, a sales and training consulting firm located in Atlanta Georgia. Through his 30 years of experience, John’s primary focus has been on post-retirement and estate planning. Jonathan is recognized nationally as an author and coach, managing and training financial/ insurance professions who work principally in the senior market place. Jonathan can be reach by phone at 678.906.2850 or email at jneal@ccgcap.com
John Lunde
Justin Meise
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 8 of the top 10 reverse mortgage lenders plus investors, servicers and vendors to the industry. Find out more at www.rminsight.net or call 949.429.0452.
Justin Meise is a principal with River Communications, a White Plains, NY PR firm specializing in financial services for over 20 years. Justin worked with NRMLA to launch the consumer education program starting in 2000 and has provided PR services to Financial Freedom for over nine years. Justin welcomes comments or questions at jmeise@riverinc.com or through LinkedIn.
Sam Collins
Paul Fiore
Shannon Hicks
Sam Collins is the President of Sam Collins Reverse Marketing, LLC and Founder of REMALO, the Reverse Mortgage Association for Loan Officers. REMALO is a web based National sales, marketing, training, and full service center, created exclusively for Reverse Mortgage Loan Officers, Correspondents, Branch Managers, key executives, and brokers. www.remalo.org or 877.262.7656
Paul Fiore joined AAG to head the retail platform in California. Mr. Fiore was most recently the Chief Learning Officer at Senior Lending Network, where he developed SLN University. Paul has been a speaker at NRMLA and MBA meetings. He joined SLN as VP of Internal Production, helping to build their reverse mortgage sales center to the 4th largest reverse mortgage retail provider.
Shannon is a reverse mortgage originator and VP of Product Development at Reverse Fortunes, Inc. His past experience includes serving as a planned giving and fundraising manager for a non-profit, and as a financial services professional. He currently teaches reverse mortgage classes for both financial professionals and borrowers across Northern California. Shannon is also host of Reverse Fortunes Weekly, the nation’s first podcast for reverse mortgage originators. For more information call 1.866.592.2096.
June 2010 TRR
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Reverse Mortgages and Life Insurance Seniors that may not be able to afford life insurance find a solution: reverse mortgages JONATHAN NEAL When it comes to the use of a reverse mortgage as a funding source for financial/insurance planning, I get a lot of questions about
long-term care and taxes, but a surprising few about life insurance.
financial/insurance planners. All three resulted in the placement of life insurance funded by reverse mortgages.
This is understandable being that the long-term care issue is such
The first case involved a 70-year-old widow who has two sons, both
to understand is that there is a significant need and desire for life
income to meet her needs and she didn’t have any significant assets
low hanging fruit, but what most insurance and RM advisors fail insurance in the 62 and older marketplace.
Combine that with the fact that there are a lot more — and I
mean a lot more — life insurance salespeople than there are LTCi
salespeople. What you might find interesting is how large the senior, or in our case the 62-year-old and older, life insurance market is.
What makes this so exciting is that opportunity to sell life insurance in the senior marketplace would be so much bigger if more life
insurance agents were aware of and made their prospects aware of
the here-to-for unrealized source of funding that can be tapped via a reverse mortgage.
What we have here is a triple-win situation, made up of those
seniors who would like to buy life insurance but don’t think they
of whom live in different states. She has more than enough annual
other than her home, which was paid for and had a market value of a little over $200,000. She wanted to leave her sons the house, but realized that neither would ever live there, and the house would end up being sold, after which they would get approximately
$100,000 each. She also had a great desire to leave her alma mater
something, but didn’t see how she would ever be able to afford to
do so. We were able to use a reverse mortgage to provide her with a guaranteed lifetime income that will provide her, after tax, a life
insurance policy with a death benefit of $303,756. Of which we listed three primary beneficiaries who are entitled to $101,253 tax-free
income each. Her sons will end up with at least as much as they
would have from selling the house and her beloved college will get a nice gift.
can afford to, life agents that would like to provide a product to
The second case dealt with a 68-year-old man who has three
both the life agents and seniors with the key to solving the
dollar bond account. This represents his total estate with the
those seniors, and reverse mortgage advisors who can provide
funding problem. All that is required to reap the rewards of this
unprecedented opportunity is the time to let every life insurance
salesperson you come in touch with know that you have the ability to unlock the funds they and their prospects want and need. The
only question is whether or not you are going to be one of the RM advisors who will take advantage of this opportunity.
Just how you go about this is up to you, but allow me to give you
three different situations in which I was involved with two different
12 | TRR
June 2010
daughters, each of which expects to inherit one-third of his millionexception of his house, which was valued at $275,000. The option
here was that he also has a special needs grandson that he wanted
to make sure was taken care of. Two of the daughters, who are aunts to the special needs child, were not really open to the idea that they would lose part or possibly all of what they saw as their rightful inheritance. What we were able to do was introduce the idea of using a reverse mortgage to fund a life insurance policy, which
would be put into a trust for the grandchild. We made sure that a
reverse mortgage will provide him with lifetime distributions that
will produce the annual premium required to put a $249,006 life
In the end, we were able to use the funds freed up by a reverse
The third case in which we used a reverse mortgage to pay for a life
Of course, these three examples required a lot more planning
72 and she had just turned 71. Their estate is worth approximately
Nonetheless, the bottom line is that there is a huge market out there
insurance policy in place for the grandchild.
insurance policy had to do with a retired couple. At the time, he was $3,600,000, from which they don’t take income as they live
comfortably on distributions from their retirement accounts and
social security. Combined, these provide them with annual income that far exceeds their needs.
What they wanted to do was leave money for their church without
reducing the amount they intended to leave their children. This case
mortgage to put a $364,948 second-to-die in place.
and analysis than I have time or Erica has room for in one article. comprised of people who own homes, are over 62 years old, and want/need life insurance. In turn, those in the reverse mortgage field have an unlimited number of common prospects with life
insurance salespeople, and those of whom are willing to take the
time required to build some bridges will most likely benefit greatly from their efforts.
required some advanced estate planning, during which we reached the conclusion that by using a reverse mortgage, they will be able
to leave their church a significant gift, which will not only provide
them with a tax write-off, but also reduce their overall assets when totaling up the size of the estate. Being that we are in a time of
uncertainty as to what future estate taxes will be, they found the RM/life-insurance solution very attractive.
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June 2010 TRR
| 13
14 | TRR
June 2010
His predictable reaction (to industry veterans) could be described as
However, working with the press is a unique communications
that I would work with such a disreputable industry and pitch
interacting with reporters. Media relations require specific skills
abject horror tinged with paternal disappointment. He was stunned products that “scam” vulnerable seniors, and he was consequently dismissive.
Sometime later, while discussing his retirement options – and, of course, forgetting that I was working with the reverse mortgage
industry – my father told me that if he needed to, he could always
take out a reverse mortgage! You see – he told me – he’d just read an
process, from the creation of messaging to outreach tactics to
and a significant time commitment. Also, unlike other forms of
marketing communications such as advertising or direct marketing, there is little control over the final product, which is ultimately
at the editor’s mercy. Reporters and editors publish based on an
interview or press release without providing the finished product for any form of approval to their sources.
article about reverse mortgages in The Wall Street Journal…
Positive exposure in the press is obviously a critical component
Yes, that’s a true story, and one I often tell when asked about the
of improving the overall image of the industry. And, of course,
role of public relations in reaching seniors because it underscores the power of press coverage to influence opinion and behavior. Unfortunately, negative stories arguably have an even more
palpable effect. In consecutive years, negative press cast a pall over the industry, starting with the media barrage in 2008, following the
December 2007 Senate Committee Hearing on Aging, and proceeded
of consumer and influencer education and an important aspect
participants who raise positive awareness improve their visibility and credibility, which assists with business development. Positive press offers value beyond the brand awareness you get from advertising. It reinforces your credibility and expertise to clients because they perceive sources as “vetted” through an objective media outlet.
by last year’s scathing reviews by Consumer Reports.
Fortunately, NRMLA will be implementing a new comprehensive
Despite some terrific gains in educating consumers and the media,
program will undoubtedly focus on national, top tier press,
negative bursts such as these keep the industry head to the wind. To regain forward momentum with the press, all industry participants can play a role, from the largest lenders and servicers to individual originators. The effort needs to include top tier media as well as grassroots efforts. Everyone needs to be an ambassador for the industry, particularly in relation to press.
public affairs program in the near future. While much of this
industry participants can extend the reach of this global program by supporting it with local efforts. No doubt, the program will provide guidance on the message and tactics that industry participants can employ to support the effort. So let’s take a look at some current
messaging challenges and start thinking about the kinds of tactics to use locally.
June 2010 TRR
| 15
Develop a Fresh, Effective Message & Value Proposition
borrowers reported that they were satisfied with their
The basic message on reverse mortgages hasn’t needed to evolve
satisfied with the counselors that they were required to see; and
much over the last decade and even if it does, the focus on consumer benefits and safeguards will remain. NRMLA’s new public affairs
effort should yield a freshened message on reverse mortgages that
will need to provide a strategy and content for addressing the most common criticisms and stigmas, including:
experiences with lenders, and 95 percent reported that they were •
Gather testimonials and endorsements that confirm you follow the NRMLA code of ethics.
High Cost Cost remains a tough issue. The recent New York Times piece on
the elimination of origination fees and other cost reductions, while
Scams The industry has done a solid job of shaking much of the “scam” stigma by reinforcing and continually improving consumer
safeguards. However, additional financial data will be crucial to
solidify the reverse mortgage’s place as a mainstream product that
should be considered alongside other staples of retirement planning
such as 401k plans, IRAs and company pensions. Also, it’s likely that
the industry will continue to see lawsuits erroneously claiming fraud or other abuses in the future. To combat the impact, the industry
needs to tell a proactive story that incorporates new satisfaction data and responds more aggressively to the inaccurate allegations. Local ideas to strengthen your message on this issue include: •
Know your facts about lawsuits, allegations, and the outcome
•
Arm yourself with existing data, e.g. AARP study revealed
of any litigation, especially in your market;
generally positive, still dinged reverse mortgages for their high cost. To address this, it’s critical to bring to life a stronger value
proposition. Among other things, this will require new data and
more creative solutions for illustrating the cost-to-value relationship, particularly in relation to other options available to seniors. Tips to use locally on this issue include: •
•
“
Don’t hide from a fee discussion; always be prepared to disclose and explain the different fees, especially as they are required by HUD;
MIP is a major driver of upfront costs; explain the value of this
HUD requirement back to the borrower as outlined by NRMLA: •
The MIP guarantees that if the company managing your
account – commonly called the loan “servicer” – goes out
of business, the government will step in and make sure you have continued access to your loan funds. Furthermore, the
To regain forward momentum with the press, all industry participants can play a role, from the largest lenders and servicers to individual originators. The effort needs to include top tier media as well as grassroots efforts.
16 | TRR
June 2010
MIP guarantees that you will never owe more than the value of your home when the HECM must be repaid.
Discuss reverse mortgages in the proper text of the options to seniors
and seniors’ desire to remain in their homes; use real borrower stories to illustrate.
The RESPA Challenge
The Shame of the “Need-to Product” Scenario Home ownership – particularly having a home paid off – is of course deeply meaningful to many seniors. Consequently, mortgage debt is often viewed as embarrassing, especially to the depression era seniors. In addition, many seniors have a strong desire to leave
the home as a legacy to their heirs. Changing attitudes will require continuing to showcase borrowers who made a choice to include a
reverse mortgage in their retirement planning after reviewing all the
options. Until a secondary market returns making proprietary jumbos viable, the industry will need to focus on the home as a retirement asset and change the nature of the discussion around retirement options. Local tips here might include: •
Emphasize ownership and control, and dignity is arguably
•
Arm yourself with survey data illustrating that boomer kids
•
retained with a reverse mortgage;
would prefer their parents use their home to enhance the quality of life; and
Prepare real borrower stories from your market that illustrate seniors’ choice to use a reverse mortgage and their decision making process.
Disreputable Brokers
•
Be fluent in the many consumer safeguards that protect seniors;
Stricter RESPA rules, lower principal limits, a more complex FM1009 and other changes pose a serious challenge to our industry. Lenders will take on additional responsibilities and need to be meticulous while working with brokers. Brokers will lose all or most of the YSP and any mistake made in the GFE could cut into their origination fee as well.
•
Associate yourself with other reputable, respected businesses in
But there is also good news around the corner...
This is perhaps the most frustrating and difficult issue to address for the industry. Despite an increase in consumer safeguards,
HUD requirements and additional regulations to protect seniors,
key influencers continue to harp on isolated bad behavior, which
ultimately paints the entire industry with a negative brush. Again, the industry needs to aggressively educate the press on NRMLA’s
Code of Ethics and Advisory Opinions and efforts to censure or ban violators. Local tips could include:
•
Be fluent in NRMLA Ethics Advisories; and your market.
Once the new NRMLA public affairs program is developed, all
industry participants should plan to infuse the new messaging in their own local efforts for consumer and media education efforts.
ReverseVision Inc.
3310 Pollock Place • Raleigh, NC 27607 www.reversevision.com (919) 834 0070 • info@reversevision.com
June 2010 TRR
| 17
Overview of Working with the Media Whether or not you are part of a large firm that has a professional PR team, it’s helpful to have a basic understanding of media relations and it’s crucial if you plan on engaging local press. For starters, have a healthy but not paralyzing fear of the
press. Media relations require specific skills, a significant time
commitment, and the ROI can be difficult to track. The upside,
of course, is that effective use of the media can improve seniors’
opinions about reverse mortgages and contribute to your business growth to boot. Understand that newspapers are in business too
planning, real estate, or local business activity. Some publication categories include: •
Local Daily Papers
•
Community Senior Papers
• • •
Community Business Papers Weekly Community Papers
Community News Websites
Often, it can be difficult to evaluate the reach of a media outlet. Of course, we have tricks for determining which publications are worth reaching:
– the business of delivering information. By helping to make the
Review Their Advertising – By reviewing their advertising you can
can generate positive coverage. Such coverage offers several benefits
For example, if many of the ads target seniors, you are probably on
reporter or editor’s job of gathering useful information easier, you to your business and the industry as a whole: •
Call the Advertising Department – Another well-practiced PR trick
your business. If seniors hear or read about you and perceive
department at the publication to ask questions and request a media
media outlet lends credibility to the reverse mortgages and
over the long term.
Cost Efficiency: The best part about media or public relations:
it’s free (if you’re doing it yourself of course)! However, because news coverage is not paid for, there is no guarantee that a
•
the right track.
Credibility: The de facto third-party endorsement of a non-paid
you to be a reputable resource, you and the industry benefit •
make an initial assessment of the audience the publication reaches.
is to view the advertising media kit online or contact the advertising kit. Since publications sell and price advertising based on whom they reach, they are the keepers of important information for you. The
media kit will provide detailed information about the publication’s distribution, upcoming editorial, and audience.
reporter will use the information you provide or use it in the
Develop a Media List – Once you have identified your target media,
Change Attitudes: By touching broad audiences through as
editors. This will be the list to which you distribute press releases
way you desire.
many different channels as possible – press is just one of those – the industry can reinforce its positive message and begin to change attitudes and build awareness.
you will want to develop a media contact list of local reporters and and other materials to generate coverage.
The list should consist of editors or reporters who:
Identifying Your Target Media
•
Write about personal finance, retirement, real estate or senior
The first step to begin media outreach is to identify your target
•
Edit an appropriate section of the publication, e.g., any editorial
media. There are likely anywhere from a handful to over a
dozen print publications that are potential targets for the kinds of information you will provide. What you are looking for are
editorials that cover senior issues, personal finance, retirement
18 | TRR
June 2010
•
issues; OR
section that reports on the achievements of local business people; OR
You have contacted to confirm they wish to receive information from you.
With very small publications, the editorial staff may be limited to an editor and a few freelance writers. If contact details are not listed in
the media kit or on the masthead (listing of employees, editorial staff, advertising information usually found in the first few pages), you
will want to contact the publication and ask for the best method of delivering press releases.
The RESPA Opportunity
Reaching Out – Outreach is, for all practical purposes, essentially a cold call. Approached properly, you will provide something of value to the reporter. If you have done your homework and can connect the right reporter with the right information, the process should be smooth.
The goal is to build a relationship with the reporter so that you are
seen as an expert and valuable source. By becoming a trusted source,
your comments and content will likely find its way into many articles over time. Some additional tips for outreach include: •
• • • •
Stay focused on what is of value to the reporter, not valuable to you;
Be cognizant of their news cycle – don’t expect to reach reporters at deadline time;
Be conscientious about returning calls, following through, and providing promised content;
Learn reporters’ preferred method of interaction, which might even include LinkedIn or Facebook; and
Be patient – it takes time to build relationships, and it can take weeks or even months to see press coverage.
The Press Kit – As you begin reaching out to the media, you will
likely be asked for more information on reverse mortgages, your company, or the industry as a whole. Be prepared by organizing
a press kit, either on your website or in a format that can be easily shared. A good press kit will include: •
Fact sheet on your business;
•
Fact sheet on NRMLA;
• • •
ReverseVision's international team of software engineers, attorneys and mortgage specialists turn these challenges into opportunities. They build the tools that give their customers a competitive advantage. This is why over 6000 reverse mortgage specialists in over 600 companies rely on ReverseVision every day.
Fact sheet on reverse mortgages; Sample sales literature on products and services; and Your bio.
Working with the press locally can be a valuable enhancement to the industry’s continuing efforts to improve perceptions about reverse mortgages – but poor preparation, ill-chosen phrases, or a lack of
respect for the media can create disastrous results. Take your time to
Can you afford not to use ReverseVision?
study the local media, prepare, educate yourself on best practices for media relations and, of course, stay in synch with NRMLA’s efforts.
NRMLA’s national program will provide excellent guidance on how to address key issues locally and be effective with your local media.
ReverseVision Inc.
3310 Pollock Place • Raleigh, NC 27607 www.reversevision.com (919) 834 0070 • info@reversevision.com
June 2010 TRR
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How to Manage Distractions
Distractions can be avoided and productivity can be increased with the “Five S” system SAM COLLINS My son just finished his first year of college and just before he left I
offered him this advice, “Your success in college and life will depend on your ability to manage your distractions.” Actually, I think this advice spills over into our adult lives and our business on a daily basis. For me, I know I am constantly managing my distractions.
Sometimes distractions will pop-up that you cannot characterize.
You set about doing a task, but for some reason, it just doesn’t get
1. 2. 3.
4. 5.
Sort- the first step in organizing.
Set the order- organize, identify and arrange everything in your workplace.
Shine - regular cleaning and maintenance-this adds to your order. Standardize- simplify and make it easy to maintain.
Sustain-maintain what has been accomplished, once 1-4 is completed.
done. Have you ever gotten to the end of the day and asked yourself,
These five basics are critical in creating an effective and productive
happens to me more often than I would like to admit.
to your day. These five basics are also the most often overlooked
“What did I get accomplished?” If so, don’t feel alone because this
With all of the changes occurring in our business, I knew I needed to become more efficient and more productive in my business. I
stepped back and started evaluating what really was happening
during my day. To my chagrin, I found I was not doing a very good job managing my distractions and my time.
I wanted to put into place a plan to find out how to really make myself more efficient and hopefully add more organization and productivity to my day. I discovered there are many tools out there to help. I Need a System One such system used is referred to as the Five-S system. This
system can easily be implemented and the cost is free. The usefulness of the system is dependent upon the effort you put into making it
work for you in your daily workplace, whether it is in your office or your home. Here are the five basics for your system:
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workplace, which can add an immeasurable amount of productivity when most of us seek to improve our productivity, however once
you understand it, the relevance of the Five S system is obvious, as are the immediate benefits you will receive.
The 5 basics can be employed in an office environment, a home
office, or a simple home kitchen. The point is that if a work area is properly set up and maintained, productivity is increased
tremendously. This means that more can be done with less stress and less waste; there is less chance for distractions to get you off task. Sort First you must sort the items in the work area and determine the
usefulness and importance of each item for the tasks that are done in that space. This means that you must be willing to part with
items that are not useful or simply clutter the space. There must be a definite place for everything that is to be retained. If it doesn’t work, throw it out!
Next, Set the Order
preventing clutter from returning, maintaining your organization
Secondly, set the area in order by identifying the things that will be
this is my downfall. My workplace is like my garage. I have to
in that area and organizing them and arranging them in a manner
that will facilitate efficient and productive workflow. For example,
consider a set of kitchen knives that are stored in a countertop block; each knife has a definite slot in the block and it is obvious when a knife is missing. Follow this principle of setting the area in order.
and continuously striving to improve the workflow. I must admit constantly stay on top of it to keep it organized.
Here are some tips to help manage your distractions and keep better track of your time:
You want to know at a glance that everything is in its place. Use
#1 Take Advantage of Time Management Tools
should have its own definite slot. Once you know what goes in the
Using time management tools gives you the ability to organize
they can be most useful. Keeping with our knives, it wouldn’t make
as Yahoo, Gmail, or Outlook allow you to schedule events and set
labels and file folders to sort everything and every piece of paper area, you want to arrange things so that they are located where
sense to store them in a linen closet or far from where you do most
of your cutting; you want them near the cutting board to minimize travel distance. This same principle holds true for your files and paperwork.
I use two organizers, one on my desk for my current files and tasks, and I use the other rolling hanging file folder holder for tasks that come up on a weekly basis. I also have my computer, phone and printer within a swivel of my chair,all positioned for maximum
your time and plan ahead. For example, most email programs such reminders. These tools are free and available for your immediate use. #2 Email Tips Did you know that on average we spend 2 hours a day reading and
responding to emails? So getting control of the Inbox is an important time management tip! I try to limit checking emails to twice a day,once in the AM, the other in the PM.
comfort.
#3 Determine How Much Time You Are Really Wasting
Shine and Polish the Area
Often, a first indication that time management skills could be useful
Once you have the basic organization down, you want to shine the
much. The best way to begin is to keep a time log of your daily
area. This means regular cleaning and checking that everything is in place—remember the knife block? Are all the knives in their proper
slots? I actually feel better about myself when the workplace is clean and polished.
Standardize the Workplace Area Standardizing the area is important, along with locating similar objects within the workplace. For the 5 Basic S traits to be most effective,
items used for a single task should be together to maximize what can
be done in a single area with a minimum number of steps for each. Try
to you is that you are busy, yet feel that you have not accomplished
activities. Keep a log of your time for one solid week, using the tools offered in #1. Knowing how you spend your time is an important time management skill to develop.
#4 Create Time Management Goals for Yourself We all only have 24 hours a day, so time management is not about creating more time, but using the time we have more effectively by changing our behavior, not just time. With goal setting, it is important to have a long-term vision.
to keep things grouped together as much as possible or at least gather
#5 Plan Your Projects and Marketing Efforts
will help you eliminate waste and maintain order.
A project is generally one particular piece of work with a fixed time
This is an ongoing process; you should continuously ask yourself if you
success.
all of your tools and “ingredients” together before starting a task. This
could improve your workflow. This step is a major tough one for me. Sustain (Maintain) the Work Area
The final step is the hardest to do: sustain the work area. This means
frame. Planning your project increases the chance of your marketing
#6 Create Your Own Time Management Action Plan Busy people have many demands on their time. Being effective is all about prioritizing your time ruthlessly and meaning it!
June 2010 TRR
| 21
#7 Organizing to Save Time Are you wasting time looking for that phone number on a post-it note, or a file on your computer? This could be costing you time and money. Get an automated system you can use on demand. I also use a spiral notebook, instead of looking for loose pieces of paper and a CRM system for all my contacts. #8 Plan Your Day as if it Has to Count Research suggests that every hour spent planning saves 3-4 hours in actual execution and gives you better quality output. Amazing time saved is time not lost!
#9 Be More Productive During Your Prime Time Knowing the best time for you to be most productive is key.
However, don’t forget your prime time may be different than your senior clients, so you may need an adjustment to your time output to coincide with your senior prospects.
Get the insider tools top producers don’t want you to know about. Reverse Fortunes is your Secret Weapon for Boosting Sales! Just Some of the Tools You’ll Get Are: RmCRM RmCRM combines a powerful online CRM with the best practices of the reverse mortgage industry.
#10 Manage Your Phone Calls Effectively Is your telephone a tool or a tyrant? The phone can eat up a lot of
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your productivity, either because you spend too long on the phone
or the phone is a constant interruption. I have a timer on my desk. I set an alarm to go off, based on the time allocated for that caller or
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prospect.
Implementation – Get Started Now! Managing distractions and making best of your time has a very low cost attached. Yes, you can do all of the above for little or no money. Keep in mind, that once time is gone, it’s gone forever.
INDIVIDuAl OR TEAM SOluTIONS Powerful tools for individual originators and added management features for Office/Branch Managers. TRy IT TODAy AND SAVE!
Now all of these ideas and tools are great, however, they are
up PLUSly t E s E FRE your month . 10% off ip fees forever sh member /2010! 0 3 / 4 y b sign urpcode RF3REVIEW
exactly that: just ideas. For those ideas to work, it is up to you to implement them. Why not start today? Start keeping track of all
those distractions. Managing distractions can help you stay on task, reduce stress, improve productivity, and ultimately your bottom line profits.
E nte
Good Luck!
The Ultimate Resource for Ordinary people. Extraordinary results. Reverse Mortgage Originators
22 | TRR
www. June 2010
ReverseFortunes .com
Ordinary people. Extraordinary results.
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Call Today (866)472-3982 June 2010 TRR
DIRECT MARKETING
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or Visit us online at: 23 www.AllproDirectMarketing.com
Product Suitability: The Choice Is Not Yours
The plenitude of options in the reverse mortgage industry encourages lenders to educate clients PAUL FIORE After months of little to no change in our products, the reverse
major migration to the fixed HECM product; with HECM volume
you turn, you can see various product changes, which include
market. Despite the attractiveness of the reduced fees, is the fixed
mortgage market has suddenly exploded with change! Everywhere either reduced fees or, in some instances, no fees. All lenders, big
and small, are making adjustments and fighting to get business in their doors. Press coverage of these changes has led borrowers to
down, companies are looking for the best path to survive in this
HECM always the best option for our clients? Has the adjustable product lost its place in our industry? Let’s take a look.
seek out the best deal they can get, often focused on cost. It’s easy to
When I started in the reverse mortgage industry, the fixed product
outside influences; it has been the most common objection we have
forward industry, it took time for me to understand the benefits and
understand why a borrower would be focused on cost, aside from faced for years when selling reverse mortgages. The increase in
competitive situations on our sales floor has literally doubled over
the past 60 days. Everyone is talking about the fixed HECM and the increased benefit it provides for the borrowers; it has truly become the product of the moment. Without question, there has been a
wasn’t an option for clients. As someone who came from the
advantages of how a senior could utilize a reverse mortgage and
truly change their life. As time went by, I learned that by providing seniors with money that they needed today and money for the
future via a credit line, we were able to dramatically improve their quality of life and give them the ability to stay in their home for as long as they chose. The fact that there was no fixed option became a non factor in the sale of a reverse mortgage. Sure, there were
“When I started in the reverse mortgage industry, the fixed product wasn’t an option for clients. As someone who came from the forward industry, it took time for me to understand the benefits and advantages of how a senior could utilize a reverse mortgage and truly change their life.” 24 | TRR
June 2010
people that wanted the security of a fixed rate, but when explained properly, the benefits of the adjustable far outweighed their
concerns. The focus of our sale was always about how to properly distribute and utilize the proceeds of the reverse mortgage. If the loan didn’t make sense, we didn’t sell the product. It was pretty straightforward.
When the fixed product became an option, it provided yet another powerful tool for those clients that wanted the comfort of a fixed rate. In my eyes, it was meant for very specific clients: those that were paying off significant debt. If a client owned their property
free and clear, we still sold the adjustable product on a consistent basis unless the client was making a major purchase and needed
the funds immediately. We taught our sales team to make sure they did a true financial snapshot with the client, to understand what
the client wanted to accomplish, to determine if a reverse mortgage could help them accomplish their goals, and to ultimately help
them decide whether a fixed or an adjustable was the right choice,
if any. Product suitability was a big part of what we believed in and really helped seniors in making the proper choice for their financial future.
I vividly recall a day in my old office when a colleague of mine met
“The art of the reverse mortgage sale is in the details. Learning about what makes your borrower tick and what they hope to accomplish with a reverse mortgage provides the opportunity to present the proper product choices to them. This will ultimately help them decide which product makes the most sense.�
with a client who was signing initial disclosures to take a reverse mortgage. The client had chosen a fixed loan and had owned her property free and clear. She was receiving a large sum of money upfront and my colleague rightfully asked what her plans were
with the proceeds. Our client, in her late 80s, did not know what
she planned on doing with all the money. She needed a small sum of money to do some upgrades to her home but for the most part,
she needed money in reserve because she had depleted her savings
accounts. As it turns out, her son was the person pushing for all the funds upfront and he could never articulate why they needed the money. This was an obvious red flag and led to a serious
discussion with our client and proper guidance to help her decide what to do in her situation. To make a long story short, she closed with an adjustable HECM and took $25,000 upfront to take care of her immediate needs. The rest of the proceeds were put in a
line of credit for her to utilize when she needed. My point in this
example is that, as reverse mortgage originators, it is our job to try to learn what the borrower’s situation is and most importantly,
help determine which product makes the most sense, regardless of outside influences.
June 2010 TRR
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What do I need to know today?
Today we provide a tremendous benefit to our clients by having reduced fees or no fees on fixed loans. It is great that a client has
access to more money than before, due to these changes, but there
are still many scenarios where an adjustable makes more sense than a fixed loan. With LIBOR margins improving, borrowers are able to
receive similar proceeds to a fixed loan, and for those that don’t need
all of the money upfront, this is a huge benefit. These loans need to be
offered to clients just as often as we offer fixed loans. The facts haven’t changed, if you have a borrower with a free and clear property, an adjustable HECM still may be the best choice for them, even if the fees are higher than a fixed loan. We cannot lose sight of this.
The art of the reverse mortgage sale is in the details. Learning about what makes your borrower tick and what they hope to accomplish with a reverse mortgage provides the opportunity to present the proper product choices to them. This will ultimately help them
decide which product makes the most sense. Profitability is a huge
factor in whether a company can sustain itself or not; fixed loans are more attractive in this sense. One can argue, however, that many loans are left on the table by loan originators that don’t properly
present all options to a client. This also affects profitability. I have
personally seen clients that have chosen us instead of a competitor solely because they didn’t have a huge need for a large upfront
sum of money—they were never presented an option besides the
fixed loan. Yes, there was no origination fee or service fee, but the borrower didn’t want all the money and became nervous. By just
giving them the option of an adjustable mortgage, we were able to alleviate their fears of getting too much money upfront and could
still accomplish their goals of having access to money and knowing that they had security for their future.
The more options we provide to our seniors, the more loans we will
write, and the better off we will all be as an industry. HECM volume is down, yet more and more seniors turn 62 every day—something doesn’t add up. The opportunity in the reverse mortgage space
is vast; seniors need help and financial stability at a time during
which they are concerned for their pensions and social security. We give ourselves the best opportunity for capturing this market by
doing what is right for them and presenting all the options that they have with a reverse mortgage. We have a great product with many
options to help many people, so let’s make sure we help as many as we can. Fixed or adjustable? Present the options thoroughly and let
the borrower choose based on what makes the most sense for them. The choice is theirs.
26 | TRR
June 2010
Bob Yeary • 281-404-7818
June 2010 TRR
| 27
28 | TRR
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st
everse
FINANCIAL SERVICES, LLC
A
SUBSIDIARY OF WILMINGTON SAVINGS FUND SOCIETY, FSB
A Subsidiary of Wilmington Savings Fund Society, FSB
www.1streverse.com 877.574.1000
www.AttorneyTrustReview.com 631.669.4370
www.ireverse.com/employment 800.486.8786
www.aagreverse.com 800.850.1356
www.allproprinting.com 866.472.3982
Capital Consulting Group www.ccgcap.com 770.242.8029
www.celink.com 517.321.9002
nrmlaonline.org
www.appraiserloft.com 877.229.7799
www.guardianfirst.com/jobs 800.682.1577 option 3
www.remalo.org 877.262.7656
www.reversefortunes.com 866.592.2096
www.reversevision.com 919.834.0070
www.reverserateleads.com 877.262.7656
www.reversevision.com 919.834.0070
www.riverinc.com 914.686.5599
www.S1L.com 619.794.0674
www.service1inc.com 412.200.2550
www.texasmba.org /reverse_mortgage 512.423.4545
June 2010 TRR
| 29
Fixed rate is popular, but is it the best choice? The benefits of personalizing the choice between fixed or adjustable HECMs SHANNON HICKS A few weeks ago, I had the privilege to speak to over one hundred
you (or the customer’s heirs) if they really didn’t need a lump sum
fee fixed rate HECM. My goal was to take a second look at how and
customer is receiving public benefits (Medic Aide or SSI) and the lump
originators and reverse mortgage professionals about the new no
why we make certain product recommendations to our customers.
distribution? Absolutely. What if the loan officer did not ask if the sum causes them to lose their benefits? Not a pretty situation.
While loan volume has been increasing in recent months, the market
Then consider the amortization. Even with a modest and predictable
it up to last October’s 10% Principal Limit Factor cut and falling
least. What if that same customer with an adjustable rate loan kept
is considerably down from last year. The reasons abound, but chalk home values. We are scratching for every dollar we can find just to
pay the existing mortgage balance. Enter the new “profit-sharing” of lenders eliminating service fees, loan origination and, in some cases, paying the FHA MIP insurance for the fixed rate HECM.
fixed rate, the growth of the loan balance is impressive to say the
most of their funds off the balance sheet in the line of credit? Even
with higher interest rates (a possibility) they would be miles ahead
in equity preservation and—even better—have access to more cash in the growing Line of Credit.
At first glance this is good news; a great opportunity to overcome
Next comes the question of YSP. Let me be clear, I am not against YSP. It
would not qualify just a few short months ago. Business should see
what if your loans are examined later and it is found that the vast majority
the “too-expensive” objection of many while helping those who some uptick in volume. Consumers love the word “free”.
But are we giving our customers the full picture when it comes to
is necessary for many institutions to operate at a modest profit. However,
are Fixed Rate HECMs with generous YSP payouts to you? We would want to document why the loan was recommended or chosen by the customer.
which HECM program they choose: Fixed or Adjustable? I mean, is
Reverse mortgage professionals need to fully appreciate the effects
costs if they have a low mortgage payoff or don’t have an immediate
and to ultimately understand which product better meets the needs
it really worth it for the customer to save $10,000 or more in upfront
need or plans for the cash proceeds? The old saying “walking over a dollar to pick up a dime” comes to mind.
It comes down to the question of suitability and, quite frankly, liability. No one likes the word liability in any industry, however we are being held to ever increasing standards of conduct and suitability. Could
selling a fixed rate loan with lower upfront costs come back to haunt
30 | TRR
June 2010
of negative amortization, leverage, managing equity consumption, of our customer in the long term. Consider documenting why a
customer is choosing a particular loan and the circumstances. Keep it on file. Also, a suitability worksheet may be a great way to train and standardize your staff’s approach to product choice.
At some point the elimination of fixed rate fees will pass, but it
is a great opportunity for us to examine (fees or not) our process,
suitability, and commitment to our customers to provide the best information and education about product choice.
It’s hunting season... Join our team today!
Security 1 Lending is on the hunt for
Reverse Mortgage brokers interested in becoming lenders and established loan
officers looking to receive live transfers.
For more information on how you can be a part of the Security 1 Team, visit our web site at S1L.com
June 2010 TRR
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