ER EV
R SE
EVIE
RE E
R
this issue
E
INSIDE
TH
VE
E RS
Saving the HECM for Middle America
HE REVERSE REV IE W
W THE RE REVIE V
WT
TH
MARKETING TO THE CHILDREN OF POTENTIAL SENIOR BORROWERS PG. 27 ALICIA MUNNELL TALKS ABOUT THE HECM’S ROLE IN RETIREMENT PG. 35 + COLIN CUSHMAN SITS DOWN IN OUR HOT SEAT PG. 16
W
THE
REVERSE review
JUNE 2013
The
co$t of Compliance
U
U W
Reverse mortgage lenders grapple with mounting operational costs in a hyper-regulated world.
oo
The ReveRse Review June 2013
REVERSEVISION
is to automate their lending process. Do you know why?
919.834.0070 || www.reversevision.com || info@reversevision.com 2
| TRR
Making it happen. Making it happen. That’s Urban Financial Group. Sales and marketing support. Operational, industry, and secondary market expertise. Training services. In fact, all itindustry, really takes That’s Urban Financial Group. Salesand andunderwriting marketing support. Operational, and to make success happen inTraining Reverseand Mortgage lendingservices. is choosing theall right partner. secondary market expertise. underwriting In fact, it really takes to make success happen in Reverse Mortgage lending is choosing the right partner.
» Put the power of our wholesale lending division behind you. » Put the power of our wholesale lending division behind you. NMLS ID# 2285 For mortgage professional use only, not to distributed to the general public. Urban Financial Group Corporate Office: 8909 South Yale Avenue, Tulsa, OK 74137; Urban Financial Group, Inc. may do business under the name REVERSE IT!, which is a DBA, or division of Urban Financial Group, Inc. Copyright 2013 Urban Financial Group, Inc. All Rights Reserved. NMLS ID# 2285 For mortgage professional use only, not to distributed to the general public. Urban Financial Group Corporate Office: 8909 South Yale Avenue, Tulsa, OK 74137; Urban Financial Group, Inc. may do business under the name REVERSE IT!, which is a DBA, or division of Urban Financial Group, Inc. Copyright 2013 Urban Financial Group, Inc. All Rights Reserved.
888-777-3311 | www.reverseit.com 888-777-3311 | www.reverseit.com
REVERSEREVIEW.COM
TRR
|3
The ReveRse Review June 2013
From the Editor Meet the Team and originating mortgages for seniors who
Senior Publisher REZA JAHANGIRI
Publisher ERIK RICHARD
Editor-in-Chief JESSICA GUERIN
Creative Director TRACI KNIGHT
Copy Editor KERSTEN WEHDE
A NOTE FROM JESSICA GUERIN
While reverse mortgage
Marketing Director ALYCIA COLACION
fact that today’s generation of working Printer The Ovid Bell Press
professionals work diligently to connect with Fidelity Investments reported that 28 percent
Advertising Information phone : 630.207.3882 email : jessica@reversereview.com Subscriptions email : information@reversereview.com
Hill as the FHA lobbies Congress for the
Editorial Content email : jessica@reversereview.com
{ Jessica Guerin }
the pavement in Washington to aid in the
4
| TRR
ED
Feedback is very important to us here at The Reverse Review. Send us your thoughts on past articles or something that is on your mind and we will publish it in this section. information@reversereview.com
SIGN UP FOR THE NEWSLETTER AT REVERSEREVIEW.COM.
T AY EC ST ONN C
Feedback
Want to talk to Jessica? Reach her at jessica@reversereview.com.
© 2013 Reverse Publishing, LLC. All rights reserved. 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, Reverse Publishing, 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, 3800 West Chapman Ave., Orange, CA 92868
GET THE LATEST ISSUE DELIVERED DIRECTLY TO YOUR INBOX!
Table of Contents
TRR 6.13
27 | Marketing Marketing to “Kids” potential borrowers tiMothy M. DwyeR
IN THIS ISSUE... 18 MARK BROWNING Originating
29 | Appraising The Gap
chaRles gRess
31 | Servicing The Unnatural Stress of a Natural Disaster
08 | Movers & Shakers
15 | Roundup
The latest developments in companies across the reverse space
A collection of recent facts and
09 | Industry Update
16 | Hot Seat
Ryan laRose & syDney goDBeheRe
Colin Cushman
Headlining stories of the past month
The challenging work of repair administration
ReveRse MoRtgage Daily
President and CEO of Generation Mortgage Company
11 | Top Lenders Report
21 | Originating
24 LAURIE DENKER MACNAUGHTON Originating
33 | HMBS D.C. Is Where the Action Is The FHA vies for legislative DaRRen stuMBeRgeR
Working Together reverse lenders
Collaborating with other
ReveRse MaRket insight
TRR Talks to Alicia Munnell
place
12 | NRMLA News
35 | Spotlight The director of the Center for Retirement Research at Boston College reveals why she thinks the HECM will one day be
eD FRankel
22 | Originating
32 JOHN BUTTON Tech
The Gray Champion
MaRty Bell
JiM coRy
42 | Last Word Adjusting to Business Without the Fixed-Rate John sMalDone
FEATURE
38 | THE COST OF COMPLIANCE
@
Want the online version? reversereview.com/magazine
oo
“When it comes to compliance concerns, reverse mortgage companies are no different than other In this heightened regulatory environment, reverse lenders big and small are feeling the effects as they struggle to adjust to a new way of
JUNE 2013
COVER Lenders grapple with compliance expenses.
PG. 27 PG. 35 PG. 16
Saving for Middle America
INSIDE this issue
THE
REVERSE review
The
co$t of Compliance
Reverse mortgage lenders grapple with mounting operational costs in a hyper-regulated world
U
WU
U
U W
Jessica gueRin & JiM Milano
oo
REVERSEREVIEW.COM
TRR
|5
The ReveRse Review June 2013
Contributors
John K. Lunde
Marty Bell
J OHN K . L UND E
MARTY BE LL
C OL I N C U S HMAN
11 | Top Lenders Report John K. Lunde is president and founder of Reverse Market Insight, Inc., a performance data analysis and consulting
12 | NRMLA News Marty Bell is NRMLA’s senior vice president of communications and marketing. This is Bell’s professional Act III after careers in books, journalism and the Broadway theater. Bell is the author of two novels
16 | Hot Seat Colin Cushman is the president and CEO of Generation Mortgage Company and a member of the NRMLA board of directors. Prior to GMC, Cushman served as the FHA’s director of portfolio analysis and was responsible for developing valuation models to support product development, premium pricing, risk management and operations. He also led the design of the HECM Standard and Saver products.
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
his writing has appeared in publications including Playboy and New York magazine. Bell wrote and produced the awardThe Boys of Summer and produced 15 Broadway shows (including Ragtime, Fosse and Dirty Rotten Scoundrels) that won 27 Tony Awards.
Colin Cushman
Mark Browning
Ed Frankel
Jim Cory
Laurie Denker MacNaughton
Timothy M. Dwyer
MA R K BR OWNIN G
E D F RAN KE L
JI M C ORY
18 | The Upcoming HECM
21 | Working Together to Help Seniors Age in Place Ed Frankel has been in the reverse mortgage business since 2003, when he began with Charter Funding in California. He currently works with Security One Lending near Portland, Oregon. In his previous work in the insurance and annuity business, Frankel founded United Economic Services Inc., a marketing company now owned by Metropolitan Life. Frankel is an active member of
22 | The Gray Champion Jim Cory is co-founder and CEO of Legacy Reverse Mortgage, a reverse mortgage originator in San Diego, California. Cory began his reverse mortgage career 13 years ago and he serves on the board of directors for the National Reverse Mortgage Lenders Association. He has a bachelor of arts degree from the Pennsylvania State University.
Realities of Middle America Mark Browning is the founder in Rochester, New York, that has been exclusively devoted to managing housing wealth and reverse mortgages for the past 15 years. Browning has a background in lending administration, mortgage securitization and structured becoming an entrepreneur, Browning was the president and CEO of the U.S. mortgage banking platform of a multinational bank. mbrowning@homechex.com
L A UR I E DE N K E R M A C NA UG HT ON 24 | The Picture – Yesterday, Today and Tomorrow Laurie Denker MacNaughton is a reverse mortgage specialist at Middleburg Bank. She studied in Europe, graduated with honors from Villanova University and attended graduate school at George Washington University. She is a freelance writer and a frequent speaker at elder law, events. lmacnaughton@middleburgbank.com
Charles Gress
6
| TRR
jcory@legacyreversemortgage.com
800.991.4613 Twitter:@LegacyJim
degrees from NYU and the New York Institute of Finance.
TI MOTH Y M. D W Y E R
C HAR L E S GRESS
27 | Marketing to “Kids” Timothy M. Dwyer is the founder and CEO of Entitle Direct Group, Inc., the parent company of EnTitle Insurance
29 | The Gap Charles Gress is a senior review appraiser at Toledo-based Martin + Wood Appraisal Group LTD. With 17 years of experience in the appraisal industry, Gress is involved in the attraction, education and retention of appraisers, having trained more than 30. Gress was the keynote moderator for the Collateral Risk network in 2011.
insurance underwriter to sell directly to consumers. Prior to founding the company in 2006, Dwyer worked in the insurance industry for more than two decades. Entitle Direct Group is headquartered in Stamford, Connecticut. ortdwyer@entitledirect.com 203.724.1150 entitledirect.com
Contributors
Ryan LaRose
Sydney Godbehere
RYA N L A R OS E
SY D N E Y GOD BEHERE
JOH N B U TTO N
31 | The Unnatural Stress of a Natural Disaster Ryan LaRose is president and COO of Celink, an independent reverse mortgage subservicer. LaRose has more than 12 years of servicing experience and has worked exclusively in reverse mortgage servicing since 2005. In addition, he is an active member of the NRMLA servicing and technology committees. celink.com 517.321.5491
31 | The Unnatural Stress of a Natural Disaster Sydney Godbehere manages repair administration, loss draft and line-of-credit processing for Celink. She has worked at Celink for more than seven years and is passionate about providing the highest-caliber service to clients and borrowers. She credits her team and Celink’s mission, vision and values with inspiring her work every day.
32 | A New Era of Interconnections John Button is the president of ReverseVision. He has more than 16 years of experience in developing and managing mortgage technology products and businesses. Button has led companies to sustained growth and introduced numerous origination, servicing and analysis products in the mortgage and bank risk management areas. He has held multiple senior-level management roles in technology businesses and has taken part in company creation, executive consulting, mergers/acquisitions and product development in his 30-year-plus career in technology development.
John Button
Darren Stumberger
Jessica Guerin
DA R R EN S T UM BE R GE R
JE S S I CA GU E R I N
JI M MI LAN O
33 | D.C. Is Where the Action Is Darren Stumberger, managing director at Knight Capital Group, heads Agency MBS trading and is responsible for HMBS/HREMIC trading, distribution and risk management. Prior to Knight, Stumberger held mortgage trading
38 | The Cost of Compliance Jessica Guerin is the editor-inchief of The Reverse Review. She has worked on the editorial teams of Chicago Home & Garden, Chicago magazine and Time Out Chicago. Prior to joining the magazine, Guerin managed the marketing efforts
38 | The Cost of Compliance Jim Milano is a partner with
Sachs, Morgan Stanley, Merrill Lynch, Standard & Poor’s and KBC Group NV. dstumberger@knight.com
in the Chicago Board of Trade. She has a master’s degree in magazine publishing from Northwestern University and a B.S. in journalism from Boston University.
Kider. Milano’s practice focuses on regulatory compliance for particularly with respect to reverse mortgage issues. Milano is nationally recognized as one of the leading lawyers in the area of reverse mortgage law, and is a frequent speaker on topics of interest to industry members at various trade association conferences and webinars.
Jim Milano
J OHN S M A L DO N E
John Smaldone
Be a part of the conversation.
Write for us! We are looking for new contributors. Share your thoughtful commentary with our readership today.
Email jessica@ reversereview.com to learn more.
42 | Adjusting to Business Without the Fixed-Rate John Smaldone is the executive vice president of Hanover Financial Services, a consulting the reverse mortgage industry. Smaldone is the founder of Taylor, Bean and Whitaker and is the former senior vice president of TransLand Financial Services’ reverse mortgage divisions. With more than 43 years of mortgage banking experience and 12 years in the reverse space, Smaldone intends to remain in the reverse mortgage industry, taking on long-term consulting assignments.
page 20
comments we loved “It is easy to make the HECM failsafe by excluding too many
equitable and inclusive while
-Mark Browning REVERSEREVIEW.COM
TRR
|7
The ReveRse Review June 2013
Movers & Shakers READ ABOUT THE LATEST DEVELOPMENTS in companies across the reverse space.
H AV E A C O M PA N Y U P D AT E Y O U WOULD LIK E T O S E E P U B L I S H E D?
Landmark Network Launches First Valuation Management App AMC Landmark Network launched the and iPad. Named “Landmark Network” and available through the Apple App store, the app gives users the ability to access and manage their appraisal orders on the go. After logging in to view their pipeline of active and completed appraisal orders, users can submit inquiries, request updates or provide order information to Landmark’s support staff. “We are very excited about the release of our mobile application and this version is only the beginning,” Landmark CEO Erik Richard said. “We are already working hard on additional features and updates, including developing a version for the Android platform, which we hope to release in the very near future.”
ReverseVision, Inc. Opens West Coast Support Center, Hires Fresco Ellis Reverse mortgage technology provider ReverseVision, Inc. has expanded its support center to the West Coast and hired industry veteran Fresco Ellis as its customer support specialist. Based in San Diego, California, Ellis has more than 10 years of industry experience and has worked for both One Reverse and Generation Mortgage. “Our customer service has helped build our company into the industry’s service and technology leader,” said President John Button. “This clients, especially those with operations on the West Coast.”
Texas Mortgage Bankers Association to Host 12th Annual Reverse Mortgage Day The Texas Mortgage Bankers Association will be hosting its 12th annual Reverse 8
| TRR
EMAIL IT TO JESSICA@REVERSEREVIEW.COM.
Mortgage Day at the Driskill Hotel in Austin, Texas, on September 10. The event, which will include members of the nation’s leading reverse mortgage lenders, and title companies, will unite industry professionals from around the country to discuss the business of reverse mortgage lending. “With the lending landscape changing almost daily, those attending this conference will receive the most up-to-date information on everything from FHA reform to secondary market updates,” said Scott Norman of Sente Mortgage.
Open Mortgage Sets Up Reverse Mortgage Headquarters in Atlanta Area Texas-based reverse mortgage lender Open Mortgage established a new headquarters in Douglasville, Georgia, near Atlanta. “The Atlanta area is a great banking hub to locate our infrastructure team for the underwriting, shipping and funding functions of our business,” Open CEO Joe Morris said. “The momentum of our team growth assures our valued senior clients the excellent customer service that they deserve in order to achieve their lives, their golden years.”
Generation Mortgage Company Releases Trial Version of nu62 App Generation Mortgage Company has released the trial version of its nu62 iPad app to its approved partners. The nu62 app is a cutting-edge tool that allows a partner to graphically demonstrate the options available through the use of a HECM, making it easy to compare multiple product options in a more engaging and interactive way.
Liberty Sponsors Texas Tech Study on HECMs and Retirement Planning Liberty Home Equity Solutions is sponsoring a new research study from Texas Tech University researchers John Salter, Shaun Pfeiffer and Harold Evensky on how utilizing a HECM loan may contribute to the preservation of a retirement portfolio. The study will focus on the “safemax” withdrawal rate when using a “standby reverse mortgage portfolio protection strategy.” Liberty said its support of the project is part of the lender’s on issues that impact senior clients and how a HECM loan may enhance a retiree’s
One Reverse Mortgage Welcomes Amanda Clinton as Project Manager Amanda Clinton has joined the One Reverse Mortgage business development team as a project manager. Clinton will be working on expanding One Reverse’s retail business and developing a wholesale channel. She has more than eight years of mortgage banking experience and worked previously as the operations manager at Net Equity Financial, Inc. Clinton also founded the Baltimore Chapter of the National Aging in Place Council.
Metro-West’s Greg Stephens Wins Valuation Visionary Award Greg Stephens, SVP of appraisal operations and compliance at Metro-West Appraisal Company, has won the 2013 Valuation Visionary Award. Stephens is a recognized subject-matter expert in appraisal regulations and standards, and has provided qualifying and continuing education seminars around the country. Metro-West is the largest independent appraisers located in 30 states.
Industry Update
June Edition
Brought to you by:
AN UPDATE OF THIS PAST MONTH’S BREAKING NEWS
NEWS DIRECT TO YOU: WANT EVEN MORE UP-TO-THE-MINUTE NEWS? Visit reversemortgagedaily.com.
headlining news 1.NRMLA PROPOSES REVERSE
MORTGAGE FINANCIAL ASSESSMENT GUIDANCE TO HUD
The National Reverse Mortgage Lenders
4.HUD TO SELL 20,000
DISTRESSED LOANS TO DRIVE FHA RECOVERY
was a critical piece of legislation for homeowners in Texas,” Scott Norman of
HUD said it will sell 20,000 distressed
of reverse mortgage lending and the recovery, the sale of the distressed loans // May 17, 2013
3.MEMBERS OF CONGRESS determine if HECM borrowers are at risk
in developing the recommendations was
PRESS FHA ON NEED FOR REVERSE MORTGAGE CHANGE
FHA’s reverse mortgage program while at least two congressmen expressed their
// May 3, 2013
5.CFPB TAKES TO YOUTUBE TO
EXPLAIN NEW MORTGAGE RULES
The CFPB has released video presentations explaining new mortgage
shorter presentations of six different
and willingness to pay ongoing property charges are considered in the proposal, capacity test looks at income and capacity charges, while the willingness test looks at whether borrowers have demonstrated they are willing to keep those payments // May 14, 2013
of Congress that the FHA’s proposed
it is providing service in the market,”
2.TEXAS HOUSE VOTES IN FAVOR OF HECM FOR PURCHASE LOAN
legal and compliance staff,” the CFPB // May 15, 2013
mortgage advocates and other vested
// May 16, 2013 REVERSEREVIEW.COM
TRR
|9
The ReveRse Review June 2013
Put Your Career on Track
t $POUJOVJOH &EVDBUJPO GPS '1"T BOE 3& "HFOUT t $SFEJU 6OJPO 1BSUOFS 1SPHSBN
t 2VBMJUZ #SBOEFE .BSLFUJOH .BUFSJBMT t 5PQ $PNQFOTBUJPO 1MBO
“At Security One Lending our Success is Measured by your Success.�
10
| TRR
4FDVSJUZ 0OF -FOEJOH ] $BNJOP %FM 3JP /PSUI 4VJUF ] 4BO %JFHP $" /.-4 *% 4 -
Report April 2013
Top Lenders Report
YEAR-TO-DATE EnDORSEMEnT VOLUME
12345 Security One Lending
Liberty Home Equity
One Reverse Mortgage
Urban Financial Group
American Advisors Group
Endorsement
Endorsement
Endorsement
Endorsement
Endorsement
754
Lender
621
517
Endorsements
486
Lender
Endorsements
Reverse Market Insight - Logo October 9, 2009
PANTONE COLORS
Brought to you by:
REVERSE MARKET INSIGHT
444
3005C
Process Blk C
%%%%% LOOKING FOR MORE STATISTICS? GO TO RMINSIGHT.NET FOR ALL OF THE INDUSTRY’S LATEST STATS AND RANKINGS. REVERSEREVIEW.COM
TRR
| 11
The ReveRse Review June 2013
NRMLA News
On the Docket Talk With the Officials Following the release of the President’s members took advantage of the opportunity to hear directly from HUD Deputy Assistant Secretary Charles Coulter and his staff during a webinar addressing concerns that the MMI Fund would require a $943 million draw on the Treasury. “HUD does stand behind [the HECM] program and it’s obvious, looking at the demographics, that there is going to be
Karin Hill, HUD’s director of Single Family Program Development and the person who manages the HECM program day to day, reported that the changes being considered would address more recent knowledge of life expectancy coupled with a decrease in the average age of borrowers, as well as tax and insurance defaults. considering:
during the webinar. “But the product as it exists today cannot stand on its own economically, and so changes need to be made.”
assessment of borrowers in the origination process to determine
The April 12 phone conference was organized at Coulter’s request to NRMLA President and CEO Peter Bell, as he anticipated a negative press response to the issue. “What shows up—not explicitly but in communications—is that HECM does create a disproportionate negative effect on the insurance fund,” Coulter said.
forward
The need for a positive subsidy (which is government terminology for a gap occurrence) is a result of loans issued prior to 2009 at the time home values
NRMLA MEMBERS MUST DISCLOSE ALL AVAILABLE PRODUCTS 12
crashed. HUD staff is focused on avoiding additional gaps going forward.
| TRR
Implementing “something like a set-aside or escrow” to protect borrowers who start to fall behind on tax and insurance payments Limiting draws in some fashion at origination to make sure borrowers have access to cash for longer periods of time In addition, HUD is exploring potential solutions to the predicament of the non-borrowing spouse who loses a
The Board of Directors unanimously approved Ethics Advisory Opinion 2013-01: Ethical Product Offerings, which requires all lender members to “offer and describe the full range of products and programs generally available in the marketplace that may provide
husband or wife and is obligated to pay off the loan or vacate the home. Among the options under consideration are requiring all borrowers who are a couple to both be over 62 or, in the event one is younger, determining the principal limit factor based on the youngest individual’s age. As previously reported by NRMLA, HUD feels it needs legislative authority from Congress to make the necessary changes in a timely manner. “We want to be clear about what we are grappling with,” Coulter said in summation. “With congressional authority we can issue Mortgagee Letters that reiterate these ideas. That is what we would like to do. But without congressional authority, the only thing we can do is look at collapsing the ARM Standard into the loans, or look at principal limit factors. Whatever we do must be effective by
In support of HUD’s preferred course of action, NRMLA staff has been engaging with senators and representatives from both parties who serve on the committees that would offer the desired legislation and urging them to provide HUD with the authority it needs.
such consumers.” The advisory opinion is meant to protect consumers from being steered into products that are not necessarily the client’s circumstances. Members are instructed to have their legal counsels review the advisory opinion to determine what, if
any, changes need to be implemented as far as disclosing product offerings goes. If a lender does not offer a product that is otherwise available in the marketplace, then it must provide information to the consumer on that product to remain in compliance.
A group of reverse mortgage company trainers is working with NRMLA to improve the content and delivery of the ethics Reverse Mortgage Professional (CRMP) designation must participate in prior to sitting for the exam. Trainers Jud Lyman and Chuck Cox of Liberty Home Equity Solutions, Dan Hultquist of Generation Mortgage Company, Craig Barnes of Security One Lending, Lorraine Geraci of Urban Financial Group, and Ken Kanady of Wendover Consulting Services are developing a session focused on a wide spectrum of ethics issues, including advertising, lead generation, appraisals, counseling, product appropriateness, borrower competency and post-closing/servicing. NRMLA’s legal counsel, Jim Brodsky of Weiner Brodsky Kider, offers instruction on NRMLA’s Code of Ethics and Professional Responsibility and its applicability to the everyday workplace. The group is hoping to facilitate expanded participation in the CRMP program by presenting the new workshop at NRMLA conferences and at various locations across the country throughout the year.
The State and Local Issues Committee continues to work on CA AB 553. The Servicing Committee has been addressing HUD’s recently published FAQs
The Risk and Compliance Committee is working its Florida’s Mortgage Lender and Broker Act and the FTC online advertising rules. The HUD Issues Committee has been working on on originator issues with HERMIT. The HMBS Issuer Committee is gathering data Purchase events.
NEW MEMBERS
NEW CRMPS
- Acrobat Financial Group, LLC
- Daniel Matthews, Direct
Scottsdale, Arizona
Finance Corporation Norwell,
- Alpha Mortgage, LLC
Massachusetts
Mandeville, Louisiana
- Joe McParland, Direct
- Diamond Funding Corp
Finance Corporation Norwell,
Milford, Massachusetts
Massachusetts
- Bank of England-Cleveland,
To learn more about the CRMP designation, visit nrmlaonline.org or contact Darryl Hicks at dhicks@dworbell.com.
Ohio branch Westlake, Ohio
Home Loans, CHL Mortgage Provo, Utah
Corporation Columbus, Ohio
2 0 12
BEST
- Bonnie Wallace, Citywide
- Residential Finance
2 0 11
VOTED THE
BROUGHT TO YOU BY MARTY BELL: REVERSE MORTGAGE LENDERS ASSOCIATION
NEWS FROM NRMLA
NRMLA Ethics Course Revisited
IN COMMITTEES
NRMLA News
TITLE COMPANY
toll-free: 800.542.4113 www.PRClosings.com
Does your title company leave you to fix their mistakes?
PRC GETS THE JOB DONE RIGHT. REVERSEREVIEW.COM
TRR
| 13
The ReveRse Review June 2013
-PPL 5PVDI
(P
"QQSBJTBM NBOBHFNFOU XIFO BOE XIFSF ZPV OFFE JU
/PX BWBJMBCMF GPS J1IPOF BOE J1BE PO UIF "QQMF "QQ 4UPSF 14
| TRR
7PUFE JO PWFSBMM SBOLJOH BOE JO UIF 3FBM &TUBUF $BUFHPSZ
'PMMPX VT !-BOENBSL".$ ª -BOENBSL /FUXPSL *OD "MM SJHIUT SFTFSWFE
Roundup Here is a look at the latest
NEWS AND STATS
AFFECTING THE MARKET.
{
THIS MONTH
retirement facts, home price stats, senior trends and HECM market developments in The Reverse Review’s monthly Roundup.
HECM TRENDS
R E T I R E M E N T S TAT S
Endorsement numbers reach their second-highest level in the past year.
A Fidelity Investments study shows that baby boomers are woefully unprepared for retirement, revealing that:
HECM endorsements from March to April declined loan total was still the
there were some interesting stats to note from April’s
More than 50 percent of Americans have saved less than
The top two regions, Southeast/Caribbean both increased, each turning in their highest performance of the past 12 months.
THE SENIOR AGENDA
A new survey sheds light on the top states for retirement.
-U.S. News & World Report
Rocky Mountain and New England also increased, with the former also setting a 12-month high and the latter just missing. Midwest declined the most, dropping 17.1 percent from March, but the region is up the most year-to-date at 20.9 percent.
NUMBER CRUNCH
Most of America is optimistic about the future of home prices.
51%
home price in their local areas
28 percent have set aside less
M A R K E T U P D AT E
considered most accommodating for retirees: SD
Tennessee Louisiana South Dakota Kentucky Mississippi
TN ms la
O R I G I N AT O R O P I N I O N S
Hammerhouse’s Originator Opinion Survey reveals that regulatory uncertainty is a chief concern.
ky
A quarterly report by New View Advisors reveals the top players in the HMBS program. No RMS 63 pools with approximately $905 million No Urban Financial Group 64 pools with approximately $682 No Live Well Financial 19 pools with approximately
No Generation Mortgage Company 29 pools with approximately $244 million
REVERSEREVIEW.COM
TRR
| 15
The ReveRse Review June 2013
THE H OT SEAT
things you need to know or may have been wondering JUNE 2013
the hot seat From his favorite vacation and his first job to his thoughts about the future of the reverse mortgage market, we get the personal and professional facts from Colin Cushman, president and CEO of Generation Mortgage Company, in our monthly edition of The Hot Seat.
16
| TRR
Colin GENERATION MORTGAGE COMPANY PRESIDENT AND CEO
PERSONAL >
You can’t always be an extrovert.
>
Ten years from now I will be trying to parent two teenage boys.
>
Something nobody knows about me is that I can speak, read and write Thai.
>
My favorite vacation was backpacking around the world with my wife for 11 months.
>
If I were a professional athlete I would be a
>
The craziest thing I’ve ever done was the world’s highest bungee jump from a bridge in South Africa.
>
My favorite website is economist.com.
>
Every morning I get woken up by my 3-year-old son.
>
I can’t go without
>
When I was a kid I practiced boxing for months with my dad to execute a plan to beat up the town bully. working on an assembly line, adding coupon inserts into
>
newspapers. >
My favorite time of the day is breakfast with my boys.
>
I’ve never failed to deliver on a promise.
>
The best lesson I’ve ever learned was from my dad, who taught me to be humble, hungry and curious at the same time.
PROFESSIONAL >
THE CRAZIEST THING I’VE EVER DONE WAS THE WORLD’S HIGHEST BUNGEE JUMP FROM A BRIDGE IN SOUTH AFRICA.
The biggest challenge in the reverse mortgage industry is moving beyond the public perception that a reverse mortgage is only for seniors in desperate circumstances to one where the product is seen as a smart retirement planning tool.
>
The future of reverse mortgages is of seniors say they want to age in place, and about half are considering using their home equity to help fund retirement. At this point, there are 24 million households with residents age 62 or older, and half of those hold more than 50 percent of their net worth in home equity. In short, the market is enormous, and the future is ours.
>
The most fascinating thing about the reverse mortgage industry is the wide range of options we have to help seniors age in place.
my favorite time of the day is breakfast with my boys. REVERSEREVIEW.COM
TRR
| 17
The ReveRse Review June 2013
ORIGINATING
THINK
M A RK BRO W N ING
Alicia Munnell
Director of the Center for Retirement Research at Boston College
“Reverse mortgages, which allow homeowners to tap their home equity, are instruments that many Americans are going decent retirement.” Market Watch - August 7, 2012
$176,900 // According to the National Association of Realtors (NAR), this
the national level. The median value among these communities is approximately $139,000. This means that proceeds from Standard and
middle, this means that half the homes
a representative proxy for the middle
Atlanta, Minneapolis, Phoenix, Dallas
$110,000 //
Geographic concentrations of risk and the impact of home price appreciation assumptions High principal use by consumers (coupled with other risks)
like Lincoln, Charleston, Cedar Rapids, option, generates approximately low interest rates, this is the highest
The reasons for the projected losses stem mainly from the housing bubble and fall into three general categories:
Higher-than-expected tax, insurance and property charge delinquencies The FHA has responded to this
14 Years // approximate life expectancy of the
The preferred method is to write new
for property charge payments, and limit the ability of the homeowner to The HECM reverse mortgage program Of the 153 metropolitan statistical areas that contained data in NAR’s fourth-quarter 2012 report, two-thirds reported median 18
| TRR
ORIGINATING As all of this is going on, it is essential
largest assets of many in the middle class, is an essential element of the
oRiginating
*
MaRketing
plainly reveal, a HECM on a home America can not always be expected
appRaising
of all HECMs were originated in California, Florida and parts of New Utilization
initial year has been increasing for Magnifying the impact, the years 2006 to 2009 were among the largest
tech
HECM can greatly prolong a senior’s capacity to comfortably stay at home
seRvicing
homeowners and families from Middle America from accessing a tool that
Aging in place is the overwhelming states were also among the worst hMBs
the HECM is to help solve the crisis facing the middle class, its design and
2010, both states lost their entire
$252,000 // According to the FHA’s
were originated in these two states at
HECM originations when the Standard version of the
spotlight
Geographic Distribution of the HECM
In 2012, HECM originations in these Tax and Insurance Delinquencies The difference can be partly explained
percent for California and 8 percent
has emerged with rising homeowner
in the history of the HECM program, Company in the heartland, the HECM
As recently as 2006, nearly 50 percent REVERSEREVIEW.COM
TRR
| 19
The ReveRse Review June 2013
ORIGINATING Reinforce the marginalization of the HECM as a “loan of last resort,� which carries adverse implications for user diversity
that the period from origination to tax
Incent high levels of existing indebtedness entering into a HECM property charge escrows and high limited availability of homeowner’s
attention, geography and home
Concentrations of risk are managed at the macro policy level, not the loan third of married females entering into a HECM loan will be widowed within 10 years (16 percent for males)
is a portion of borrowers whose
detected at origination with a more
Advantage high-cost coastal markets with a higher amount of proceeds and a lower tax-to-house price ratio Disadvantage broad geographies with modest median home values with a lower amount of proceeds and a higher tax-to-house price ratio Skew toward the more expensive Standard product versus the consumer-friendly Saver product Skew against consumers with short (lower risk) holding time expectations
The Law of Unintended Consequences
It is easy to make the HECM failsafe
Social scientists and economists have
This is the recognition that the actions of people and especially governments with respect to providing boomers rationale for taking restrained and
Reverse mortgages represent a real
This strongly indicates that the critical
the HECM program involving three adverse selection at origination
intention of staying in the home for a
doing all of this at the same time will
Merging of Issues
critical importance of getting it right Here are some of the risks:
separate and distinct challenges have concentrations of HECM originations in bad markets are combined with
20
| TRR
transactional mortgage banking will
Raise barriers and impediments that cause the HECM to be less appealing as a planning tool (i.e., a component of a comprehensive
it is the middle American people that x
ORIGINATING accommodate limited mobility as they
and implement new programs and initiatives that provide services for the the private sector has implemented initiatives to assist this demographic, giving rise to a new designation in
oRiginating
*
As reverse mortgage professionals, MaRketing
to connect with members of the in assisting seniors with the
appRaising
comes down to it, HECM originators and contractors with the CAPS designation both aim to help seniors
seRvicing tech
ED F RAN K E L million American seniors, and this
hMBs
M
ore and more people
of baby boomers expected to enter
in the newspapers and on the
to pay for home renovations and
spotlight
People are living longer than they did 100 years ago, when the average longer doesn’t necessarily mean
common goal to assist seniors looking some form of remodeling to make their many American seniors who wish to
are open to establishing a referral x
REVERSEREVIEW.COM
TRR
| 21
The ReveRse Review June 2013
ORIGINATING
JIM CO RY
T cycles, and right now we’re coming to
working with a new generation of
For some time I have been enamored with the idea of generational cycles,
recent and detailed foray into the The Fourth Turning accepted worldwide as the premier
ascend to new heights and begin a new will be dramatic change, and second, we
The basic premise of The Fourth Turning is that generations, which each last
the fray and we witnessed a shift from the old, simple secondary market of to a new world of big lenders, bigger banks and even bigger investment before and made money like never
Champion,� the elder statesman who
were bringing in the harvest developed
generational archetypes appearing in
President Ronald Reagan, perhaps the certain way and tackles the world with a different view that correlates to its accepted as being born in 1943 or 1944, Like any cycle, there are marked view of generations or not, there can After two initial phases of growth the creation of the National Reverse
22
| TRR
ORIGINATING rallies the world to break the crisis and lead the world into a new spring
hadn’t hit the reverse mortgage
retirees and seniors, there can be no better analogy than that of the Gray became one of the largest and most
oRiginating
the world deals with its crisis, we
*
prior crisis, this Gray Champion, at least in America, was none other than
MaRketing
mortgage participant after another will take the reins and provide
appRaising
seemingly have the inclination or not only exiting banks and lenders,
Into this rides the Gray Champion, seRvicing
x
tech hMBs
Tweeting about your boss spotlight
Wearing leather pants Becoming a leader in your industry THE
REVERSE review
Reach our network of more than 8,200 reverse mortgage professionals.
CONTACT US TODAY to join this group of industry leaders! info@reversereview.com ~ 630.207.3882 REVERSEREVIEW.COM
TRR
| 23
The ReveRse Review June 2013
ORIGINATING
L AU RI E DE NK E R M A C N AU G H T O N
I
n the soft, gray tones of the photograph, my grandmother’s dark eyes are serene and her long, silken
What might seem an improbable pairing
According to Laurie
“It goes without saying that most Americans are going to need to
toward the camera, her chin ever so slightly
Ages Past I am far down the line in a large family, and my grandparents were old by the time
conversations, insomnia, food hoarding, inability to navigate my parents’ home,
live on their own, and the decision was when in my bedroom they saw the thin, grandparents to have their own rooms, so Yet today I hardly know anyone who isn’t
24
| TRR
matter how diligently a couple might have saved, putting aside enough money to last to the end of life simply was not possible for boomers’ spending (and saving) habits and the disproportional impact of job cuts borne by those in their 50s and 60s, and the likelihood of tomorrow’s retirees going into retirement
ORIGINATING The Ghost of Care Costs Future
We Ain’t Getting There From Here
in The New England Journal of Medicine are going to need to access every
These professionals are seeing what we originators are seeing: seniors with too or seniors who have done the hard
last to the end of life simply was not make money go farther, and attorneys
60s, and the likelihood of tomorrow’s retirees going into retirement with
Changes, Rumors of Changes and Rumors of Reports Recommending Changes
seRvicing
I only hope changes yet to come will
worse, these new retirees had fewer children, meaning the potential pool of
appRaising
seniors, and as long as seniors want to most homeowners were paying their
MaRketing
Growing Awareness of the Hidden Bucket
*
oRiginating
And the cost of care for these older
boomers’ spending (and saving) habits
x
tech hMBs spotlight
A nationwide title and settlement company servicing the reverse mortgage industry.
A BEttEr choicE! Our dedicated team of professionals has the experience and knowledge to smoothly close reverse transactions. Through years of experience, FNC has gained valuable knowledge by building strong relationships with reverse best treatment, and that is why FNC is where reverse mortgages take center stage.
240-864-4844
fnctitle.com REVERSEREVIEW.COM
TRR
| 25
The ReveRse Review June 2013
STAR BORN ComeA share theIS stage and learn how you can be a reverse mortgage star
Visit our booth at NRMLA West. Reverse mortgages were designed to be a valuable financial tool for seniors, allowing them to age-in-place. The nu62SM app makes it easy to explain how a reverse mortgage, tailored to their specific needs, can be used as a financial planning tool. This app will open up the reverse mortgage market to a whole new audience, as the benefits can be quickly and easily demonstrated on the spot. For more information contact: -BVSB 5SPZ t 8IPMFTBMF %JWJTJPO $PPSEJOBUPS t 5PMM 'SFF t MBVSB USPZ!HFOFSBUJPONPSUHBHF DPN
Proud member of: Š 2013 Generation Mortgage Company, 3565 Piedmont Road NE, 3 Piedmont Center, Suite 300, Atlanta, GA 30305 — 866-733-6090. NMLS | TRRFor our state(s) legalese, visit: www.generationmortgage.com/statelegalese. 26#1319.
PROMOTE
MARKETING to “Kids� TIM O T H Y M . D W Y ER
and targeted television advertisement placements that we all know work well to reach the baby boomer to the children of baby boomers means
Your success is trackable.
*
MaRketing
is clearly the lead horse for marketing Increasingly, the children of baby boomers are searching for and
oRiginating
Online marketing also affords a higher degree of tracking with less effort than
new marketing copy and targeting
types of digital marketing that easily
Here are a few key things to keep in mind when marketing online:
tracking mechanisms provide the ability to instantly become a statistical,
Interested parties are easily targeted.
tuned.
tech
to reverse mortgage professionals, marketing reverse mortgage services
Again, Google AdWords is a good
seRvicing
the largest demographic in the United States, retiring baby
appRaising
T
increasingly via mobile and tablet
The reason for the marketing is not
hMBs
some people still read papers and between the ages of 31 and 49 years
spotlight
often directly or indirectly involved
AdWords is a great place to start, as
who are actively looking for reverse
impressions are especially important to the baby boomer generation, and
potential borrowers certainly possesses While baby boomers may be one of the differences in terms of messaging,
they will go online to research reverse mortgages after they see that television that when they search for information
mortgages there are different,
when marketing digitally to kids,
x
REVERSEREVIEW.COM
TRR
| 27
The ReveRse Review June 2013
55()15
"#,#(!
5
0 ,- 5 ),.! ! 5 .1),%95 ." 5( .#)([-5 -. -.7!,)1#(!5 , 0 ,- 5'),.! ! 5),#!#( .),
+PJO 3FWFSTF .PSUHBHF /FUXPSL %JSFDU MFOEFS XF PXO PVS PXO DBQJUBM *O IPVTF VOEFSXSJUJOH DMPTF MPBOT GBTU 4FBTPOFE NBOBHFNFOU EFDBEFT PG FYQFSJFODF "HHSFTTJWF DPNQFOTBUJPO QBDLBHF 3PCVTU NBSLFUJOH UPPMT BOE MFBET QSPWJEFE *G ZPV BSF BSF TFFLJOH UP JODSFBTF ZPVS UBMFOU BOE QSPEVDUJWJUZ XJUI B GBTU HSPXJOH EJSFDU MFOEFS XJUIPVU UIF CVSFBVDSBDZ PG B MBSHF CBOL UIFO XF TIPVME UBML
5P MFBSO NPSF PO IPX ZPV DBO KPJO WJTJU VT BU BQQMZ SFWFSTFBOESFMBY DPN PS DBMM UPEBZ 28
| TRR
VALUE
APPRAISING
The Gap CH AR L E S G RE S S
loans overseen by Fannie, Freddie,
oRiginating MaRketing
F
market still trying to recover from a massive drop in home prices and, in seRvicing
Now, this is nothing new to a seasoned appraiser, as I am always being told I am too high, too low, or both by different parties involved in a
appRaising
*
homes, a noticeable gap has arisen
saying for years that we appraisers tech
and most borrowers are accepting the One challenge for appraisers in
hMBs
more appraisal orders are coming
they will most likely not be able to sales have given rise to one of the most
and appraisers everywhere are having spotlight
As we face the challenges of Uniform Standards of Professional First, let’s acknowledge that most and contract price,” meaning that the borrower owns a property and hires a and somewhere somebody is calling
according to charles // with a market still trying to recover from a massive drop in home prices and, in many cases, an oversupply of “used” homes, a noticeable gap has arisen between the market value of existing homes and the appraised value of new structures. you see, in a down real estate market, new construction is increasingly considered a premium and most borrowers are accepting the fact that if they want to build
contracts for sales and properties in
contract as a comp, he is still able to
x
REVERSEREVIEW.COM
TRR
| 29
The ReveRse Review June 2013
30
| TRR
SERVICING
LEARN
RYAN L A RO S E AN D S Y DNE Y G OD B E HE R E
oRiginating
made on the property for damages (commonly referred to interests and serve as the liaison between the lender, the
MaRketing
administration department learned the hard way when
appRaising seRvicing
* the goal of helping get borrowers back into their homes, all
standards of safety and operation change in the years
tech
W
hen borrowers obtain a reverse mortgage to
it was clear that making everyone happy might not happen
hMBs
HUD compliance with these repairs comes as a relief, administration provides critical assistance to borrowers in a spotlight
Repair administration is a critical aspect of the reverse mortgage, an appraisal provides the lender and borrower
professionals oversee the process of the borrower bringing a professionals in the repair administration department walk
Repair administration professionals work with clients and rocky roads smooth, while always remembering that the primary goal is to get borrowers back to their lives as soon as x
and HUD’s interests in the property while respecting and
Ryan LaRose is the president and COO of Celink, a reverse mortgage subservicer. Sydney Godbehere manages repair administration, loss draft and line-of-credit processing for Celink.
administration professionals will appear to glide across this
REVERSEREVIEW.COM
TRR
| 31
The ReveRse Review June 2013
ADVANCE
TECH
ACCORDING TO JOHN “The impact of being interconnected is equally powerful for lenders. Loan applications will stream into your loan origination platforms without the need to have someone key in data or manually set up errors that arise from data entry mistakes.”
JOH N B U T T O N
W
of reverse mortgage lending is on the verge of getting
as the loan moves from one company
The impact of being interconnected wind of change coming from software of loan and data exchange gateways need to have someone key in data or only will these standards make it easier to have as frictionless of a process as
means that the loan data easily and seamlessly slides between each stakeholder in the process with no need
loan to an investor on the secondary
chance for errors, and they will have to
streamline the reverse mortgage now, has been that each party in the
What’s more, as the lender is processing x
32
| TRR
SECONDARY MARKET
HMBS
Want to see more stories like this? Visit reversereview.com.
D ARRE N S T U M B ER G ER
oRiginating MaRketing
million, slightly higher than March’s total appRaising
I
seRvicing
bid, with originators hedging their pipelines tech
*
hMBs
*
spotlight
ACCORDING TO DARREN
“As much as I’d like to say all the activity is on the secondary side, happenings in D.C. dominate the news and none of it is good. The industry is working around the clock to try to get the suspension bill passed to allow the FHA the authority to implement much-needed risk measures. But even if this does pass, the industry has its work cut out for it to ensure the long-term viability of the program with folks on the Hill.”
x
REVERSEREVIEW.COM
TRR
| 33
The ReveRse Review June 2013
AAG Wholesale.
REDEFINING how business is done.
AAG Provides: Superior Customer Service Customized Reverse Mortgage Training Expert Marketing Support Competitive Pricing Processing and Underwriting Support Access to the Reverse Mortgage Industry’s BEST Leads 34
| TRR
Re-define how business is done with AAG Wholesale. For more information and to learn how we put you and your business first, contact Kimberly Smith, Senior Vice President of Wholesale Lending at:
866-964-1109 KSmith@aagreverse.com AAGwholesale.com
the DiRectoR oF the centeR FoR RetiReMent ReseaRch at Boston college talks ReveRse MoRtgages.
SPOTLIGHT ARTICLE
TRR Talks to Alicia Munnell BY JESSICA GUERIN
w oRiginating
IN MONTH’STEHIS DITION,
ALic tALksiA MunnEL L hEcMABout thE ’ s r o L rEtir EMEnE in t.
MaRketing appRaising
JG you’ve been outspoken in your support of the reverse mortgage product. why do you think it can be an important tool for seniors looking
people approaching retirement, their
*
spotlight
of Economic Advisers, where she
to accurately summarize the views of many in the reverse industry. in particular, you criticized the media for running salacious headlines and failing to pick up on the details of the report. Do you think that those negative media headlines impacted
hMBs
is going to provide less relative to
JG you wrote an article in response to the cFpB’s Reverse Mortgage Report last year that refuted some
Boston College to teach at the Carroll School of Management and lead the
AM a lot of this new agency, I’m delighted proponent of the HECM program,
assets they have, whatever potential
reverse mortgages will one day be a
spoke with TRR reverse mortgages and her hopes for
answer the concerns expressed in the
REVERSEREVIEW.COM
TRR
tech
AM I consider the reverse mortgage in the context of everything else that career as an economist for the Federal Reserve Bank of Boston, where she spent 20 years before moving on to serve as assistant secretary of the
seRvicing
A
s the director of the Center for Retirement Research at Boston College, Alicia
| 35
The ReveRse Review June 2013
SPOTLIGHT ARTICLE action that forces them to leave it to
CENTER
for
reTireMenT reseArch at BOSTON COLLEGE
The CenTer for reTiremenT researCh aT BosTon College was esTaBlished in 1998 Through a granT from The soCial seCuriTy adminisTraTion. reCognized By The New York Times as “The naTion’s leading CenTer on reTiremenT sTudies,” The nonprofiT insTiTuTion foCuses iTs efforTs on soCial seCuriTy, sTaTe and loCal pensions, healTh and long-Term Care, older workers and reTiremenT finanCing. aCCording To iTs mission sTaTemenT, The CenTer aims To reaCh Beyond eConomiCs To sTudy “The Behavioral faCTors ThaT drive individuals’ deCisions so we Can CrafT soluTions ThaT work in praCTiCe, noT jusT in Theory.” To aChieve This goal, The CenTer sponsors mulTiple researCh projeCTs ThaT explore TopiCs relaTed To The eConomiCs of reTiremenT, and iT puBlishes These findings online for The puBliC.
L EAR N M ORE AB O UT T HE C EN TER FO R R ETIR EME NT R ES EARCH C R R .B U.EDU
36
| TRR
JG as a result of that report and of the recent audit of the Mutual Mortgage insurance Fund, the cFpB has promised to make changes to the program. are there any changes you would like to see made in order to make the product safer for
JG the product has had a low penetration rate thus far, just about 3 percent of the potential borrower market. what do you think the
AM
AM
I think the evolving trends are
who are retired today retired when and they’re expensive, and I think age was 65, and a lot of them have and then saying 20 or 30 years from
sold to the right people and people
the economics of need are going to increase the demand for reverse
informed and tied sales need to be
JG Do you expect this product to be much more commonplace in the AM
I do think it will become more
JG why do you think the product AM sort of taking away the wealth of
know where the tipping point is, people doing it that it becomes the
date shows that it’s not something that people want to do if they don’t have to
so it’s very, very important that, as the they are sold to the right people and
SPOTLIGHT ARTICLE AM do it and I think that it will become,
I think that it needs to shift this
and then once they get some money,
JG i understand that you’re a board member and investor in longbridge Financial. what
this misdealing and there needs to be
AM
CFPB report, this notion that people
some ways, we need to wipe the slate clean and establish standards that
of the great advantage to getting this
oRiginating
very big on people deferring claiming
whole life not getting rich and I don’t
and it’s the only time I’ve ever done MaRketing
I’m convinced that Longbridge is
JG what are your hopes for the appRaising
x
AM
seRvicing
JG what do you think is the reverse mortgage industry’s greatest
they get a reverse mortgage on their
tech
EXPERIENCE THE DIFFERENCE!
hMBs
MIS can handle your title, settlement and valuation needs.
Valuations
Mortgage Information Services expertly handles title insurance, loan settlement services and valuations nationwide under one roof! MIS offers a unique, streamlined approach to compliment our hands-on customer service.
spotlight
Title
*
Settlement
mtginfo.com 800.877.7557 ext 1222 REVERSEREVIEW.COM
TRR
| 37
The ReveRse Review June 2013
The
co$t of Compliance
U
WU
Reverse mortgage lenders grapple with mounting operational costs in a hyper-regulated world.
oo
38
| TRR
$ince
its inception in July 2011, the CFPB has set out on a mission are nothing short of ‘backdoor’ price controls on mainstream, forward progress to date in achieving this mission might be debatable, what
reverse lenders big and small are
An Unsustainable Path
managed to avoid many of the
After months and months of that will drastically impact the forward
enacted by the agency, they have seen spend time and money grappling with
In March, the CFPB acknowledged these concerns in a blog post that promised to investigate the
the post conceded, adding that the
HECM market sometime in the next
will consider these costs and weigh
Examining the Expense The Reverse Review, the agency declined to
points and fees threshold, which cannot be crossed if one is to make a
While many agree that the cost
When it comes to compliance concerns, reverse mortgage companies are no REVERSEREVIEW.COM
TRR
| 39
The ReveRse Review
U
U W
June 2013
oo
“In the world of cost accounting, compliance is a fixed cost, as opposed to a variable cost. If a company hired 10 new loan officers, the loan officers’ compensation would be an expense, however, some, if not all, of the loan officers would produce profitable loans that the company could sell. A compliance officer, on the other hand, is not going to make loans.” According to Jim
costs,” says Mark Browning, CEO of
the other hand, is not going to make
Too Small to Comply
“Survive and You Will Thrive” Milano agrees that small lenders have
While larger reverse mortgage lenders While Browning admits that some of
created a very expensive operating the cost of operation is two to three
expenses, smaller lenders with fewer hardest, giving credence to the concept that some companies may be too small
sells something, no one gets paid, not properly investing in compliance
Reverse Mortgage, says that while
have not already started to do so, in
the threat that they will grow beyond what a small lender can feasibly
view compliance as an investment and
Milano says that companies that can alter their mindset and start viewing compliance costs as a necessary
Browning says nearly a third of his time is spent addressing compliance problem comes down to the fact that related work will grow so large that, at some point, the company won’t be able to afford to hire an attorney
no longer originating mortgages, I no longer have the time to do the things that I need to do to make my
reverse companies have in swallowing
technology, marketing and advertising, Cory says that if this becomes the case,
be an expense, however, some, if not
40
| TRR
A lot of people aren’t going to be able
x
FIVE STEPS TOWARD COMPLIANCE
By Jim Milano
WHEN THE CFPB FOCUSES ON NEW REVERSE MORTGAGE RULES AND SUCH RULES COME INTO EFFECT, THE REVERSE MORTGAGE INDUSTRY WILL HAVE A NEW ROUND OF REGULATORY BURDENS AND IMPLEMENTATION CHALLENGES TO DEAL WITH. HERE ARE
FIVE STEPS THAT COMPANIES CAN TAKE TO ASSURE AN EFFECTIVE COMPLIANCE MANAGEMENT SYSTEM:
1
ADOPT A COMPLIANCE CULTURE FROM THE TOP TO THE BOTTOM. A company’s board of directors and executive management team must not only be aware of compliance issues, but also must direct the compliance function, which leads us to the next steps…
CREATE REGULATORY POLICIES AND PROCEDURES BASED ON CURRENT LAW AND REGULATIONS. There is no substitute
2
(and no excuse) for not knowing the basic black letter of the law. A recitation of the laws applicable to a company’s operations (whether it merely originates, or also makes, funds, sells and services loans) should be contained in its policy statement documents. Many companies’ policies and procedures are contained in an online format so that company employees can easily access such materials and even participate in online training that can be tracked and tested.
No.3 Integrate written policies. A company must have written policies in place—not merely canned policy documents that sit on a shelf, but policies that are integrated into company operations and procedures. These policies must cover all regulatory and legal aspects that apply to and impact a company’s mortgage operations and its support functions, and should be reviewed and approved by the board of directors.
TRAIN YOUR STAFF.
A company should train all of its staff on compliance requirements, especially its sales staff. Many companies utilize vendors, such as LOS systems, doc routine and acceptable in the mortgage business. However, while a mortgage company can outsource certain tasks that assist in the compliance function, the responsibility to remain compliant cannot be outsourced.
4
number five Develop a strong quality control (QC) and internal audit function. The internal audit function should report directly to the board of directors and should not be subject to supervision or oversight by the sales or operations functions of the company. The QC function should review loans, while the internal audit function should review the company’s overall operations and compliance with laws and regulations. Of course, these two functions should work together and coordinate their efforts. When the internal audit function detects problems, it should report those problems to the board, which should review the concerns and perhaps give the applicable department an opportunity to respond. If the department questions the rule being reviewed, compliance or legal counsel should re-review the rule in question to assure the company’s policies and procedures are up to date. Then, if warranted, the board should direct that corrective action be taken.
all of this might sound like a great deal of work. nonetheless, once these steps are institutionalized, they will become a routine part of a company’s overall operations and provide both a foundation and a feedback loop for a robust compliance program. Finally, after hearing the above overview, one director at a recent board meeting turned to me with a question: “Are we in the mortgage
business or the compliance business?” he asked. the answer, for the next few years at least, is “Both.” REVERSEREVIEW.COM
TRR
| 41
The ReveRse Review June 2013
LAST WORD
DISCUSS
Want to comment on this article? Comment online at reversereview.com.
Adjusting to Business Without the Fixed-Rate J OH N S M AL D O N E
S the Home Keeper, its version of the reverse mortgage, which
x
Rates on loans were controlled by HUD, not by the broker 42
| TRR
Your direct path to growth in the
Reverse Mortgage market.
Wholesale Lending Correspondent Lending Aggregation Partnering
RMPath.com WE OFFER EXCEPTIONAL SERVICE AND MARKET - LEADING PRICING
Powerful, Secure, Scalable Loan Origination System utilizing the RM COMPASS Technology Platform
Largest Issuer of HMBS in 2012 Rated 'Strong' by Standard and Poors State-of-the-art CRM/LOS Applications REO Management and Leasing Services Forward/Specialty Mortgage Servicing
RMSNAV.com
RMS FAMILY OF COMPANIES REVERSEREVIEW.COM
TRR
| 43
Active Innovation. Proven Results. Real Experts. Innovating the mortgage process since the dawn of on-line, Mortgage Cadence delivers proven solutions in the form of double-digit ROI thoughout the mortgage cycle. Our team of mortgage lending and technology experts is the quicken the tempo of your mortgage operation.
Orchestrator
Symphony
Prelude
The industry’s leading Enterprise Lending Solution.
Cloud-based. Comprehensive. The industry’s leading end-to-end lending solution.
Easy. Intuitive. The industry’s newest origination portal.
Finale
Opus
Medley
The industry’s answer to paper-
Complete. Integrated. The industry’s best collection of lending-related services.
Data-driven. Compliant. The industry’s leading document prep and delivery solution.
Looking for a new solution? Look at Mortgage Cadence. 888.462.2336 mortgagecadence.com