The Reverse Review May 2016 by The Reverse Review

EW THE EVI ER VE

VERSE R EV E RE

HECMs and retirement planning

W IE

INSIDE THIS ISSUE | Retirement Expert Wade Pfau

THE

REVERSE review MAY 2016

HOT S EAT

ORIG INAT ING

OR IGINATING

TECH

PG. 15

PG. 17

PG. 19

PG. 21

We get personal with Michael Hild

Correcting the Misinformation

From CPA to H4P Advocate

Boomers and Technology

The Reverse Review May 2016

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CONNECTING THE REVERSE MORTGAGE INDUSTRY SINCE 2007.

Reverse Loans | One Platform | All Connected www.reversevision.com 2 | TRR

LEVERAGE THE LEADERSHIP OF THE NATION’S #1 WHOLESALE REVERSE MORTGAGE LENDER*

Committed Partners Industry Experts Premier Products You and your clients deserve the best, and at Finance of America Reverse LLC (FAR), you’ll receive the best selection of products - including FAR’s HomeSafeSM jumbo loan - along with competitive pricing and the support you need to be successful.

Join the leader who is taking the industry forward and setting new standards. (855) 778-7226 • www.farwholesale.com

*Since December 2011. Based on trailing 12 months’ endorsement volume. Source: Reverse Market Insight. For business and professional use only. Not for consumer distribution.

FAR’s HomeSafe reverse mortgage is a proprietary product of Finance of America Reverse LLC, and is not affiliated with the Home Equity Conversion Mortgage (HECM) program. Currently available in AZ, CA, CO, CT, FL, HI, IL, NJ, OR, PA, SC and TX. NMLS #2285 (www.nmlsconsumeraccess.org); Corporate Office: 8909 South Yale Avenue, Tulsa, OK 74137. Not all products and options are available in all states. Terms subject to change without notice. ©2016 Finance of America Reverse LLC. All Rights Reserved. FAR271 [Exp 1/2017] reversereview . com 8 TRR | 3

The Reverse Review May 2016

From the editor RE

V IE

E REVE W TH RS

EW THE

EVI ER

A NOTE FROM JESSICA GUERIN

VERSE R EV E RE

HECMs and retirement planning

INSIDE THIS ISSUE | Retirement Expert Wade Pfau

THE

REVERSE review MAY 2 0 1 6

HOT SEAT

O RIGINATING

PG. 15

PG. 17

PG. 19

We get personal with Michael Hild

Correcting the Misinformation

Those who have dedicated their careers to helping senior borrowers have believed all along in the value of this product. They have rejected widespread criticism of reverse mortgages and worked hard to educate the misinformed. Their everyday interactions with the seniors they serve remind them just how important reverse mortgages are. Now, with feedback from the 1,700 borrowers who partook in this in-depth study, we have compelling evidence highlighting the program’s value.

From CPA to H4P Advocate

MAY 2016

COVER A new study offers insight into the borrower’s experience.

Eighty-six percent of reverse mortgage borrowers are satisfied with their loan, and the majority felt that taking the loan improved the quality of their lives. This critical fact—a key finding in a comprehensive study about reverse mortgages recently released by Ohio State University researchers—is the driving force behind the work we do.

TE CH

Boomers and Technology PG. 21

In this month’s feature story, we outline the survey results that are part of The Ohio State’s ongoing “Aging in Place” study. The results not only tell us more about the people who consider taking HECM loans, but also shed light on their experiences during the loan process. Armed with this feedback, we can continue to improve the way we connect with and serve prospective borrowers so they too can benefit from this important product.

JESSICA GUERIN Connect with me about how you can participate. Reach me at jessica@reversereview.com

GET THE LATEST ISSUE DELIVERED DIRECTLY TO YOUR INBOX

Feedback Feedback is very important to us here at The Reverse Review. Send us your thoughts on this issue or comment online for a chance to see your perspective in print.

4 | TRR

FIND US ON FACEBOOK AND LINKEDIN

Meet the Team SENIOR PUBLISHER

Reza Jahangiri PUBLISHER

Erik Richard EDITOR-IN-CHIEF

Jessica Guerin

CREATIVE DIRECTOR

Traci Knight

COPY EDITOR

Kersten Deck MARKETING DIRECTOR

Alycia Greer

Printer The Ovid Bell Press Advertising Information phone : 630.207.3882 email : jessica@reversereview.com Subscriptions email : information@reversereview.com Editorial Content email : jessica@reversereview.com © 2016 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 Review 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

table of contents

TRR 5.16

08 / STATS

21 / TECH

REVERSE MARKET INSIGHT

How to connect with baby boomers through online services and software

March top lenders and HECM endorsement stats through February (plus new charts with refinance percentages)

17 24

Using Technology to Speak the Language

WENDY PEEL

10 / NRMLA NEWS

Read about the association’s current initiatives. NRMLA STAFF

13 / ROUNDUP

A collection of recent facts and surveys affecting the reverse market

15 / HOT SEAT

22 / SERVICING

A Recipe for Successful Repair Administration, Part II Things to know when working toward a satisfactory property repair SYDNEY GODBEHERE

24 / SPOTLIGHT

Retirement Expert Wade Pfau

Chairman and CEO of Live Well Financial

Why he thinks reverse mortgages will be the next hot topic in retirement planning

17 / ORIGINATING

30 / LAST WORD

Let’s make it our mission to spread the word among our professional partners.

What it means to be an older American in today’s world

Michael Hild

Correct the Misinformation

So Many Shades of Gray

ANNETA A. POPE

HARLAN ACCOLA

19 / ORIGINATING

From a CPA to a HECM LO

How one financial professional’s experience led to a mission to teach others about the powers of the H4P TED LANGE

FEATURE

YOU CAN DO IT!

26 / FEATURE Asked and Answered A new survey of HECM counselees sheds light on the borrower’s experience. JESSICA GUERIN

REACH OUT TO US ABOUT WRITING FOR TRR. INFO@REVERSEREVIEW.COM

“Conducted by researchers at The Ohio State University, the survey polled seniors who participated in HECM counseling, asking questions about their motivations, experiences and financial status to learn more about how reverse mortgages can impact borrowers. reversereview . com

8 TRR | 5

The Reverse Review May 2016

To be the very best lender that you can be, means partnering with the leader in reverse mortgage technology solutions. With the industry's only true one-stop shop, you'll have the most reliable software and dedicated people constantly by your side supporting and building you up every step of the way.

contributors JOHN K. LUNDE

MICHAEL HILD

John K. Lunde is president and founder of Reverse Market Insight, Inc., a performance data analysis and consulting firm specializing in the reverse mortgage industry. RMI clients include eight of the top 10 reverse mortgage lenders, plus investors, servicers and vendors to the industry. 949.429.0452 rminsight.net

Michael Hild is the chairman and CEO of Live Well Financial. He is also a managing member of Anderson’s Neck Oyster Company, a managing member of Church Hill Ventures and Chairman of the City of Richmond BPOL Task Force.

8 | Stats g

John K. Lunde

Michael Hild

15 | Hot Seat g

Harlan Accola

Ted Lange

Wendy Peel

Sydney Godbehere

TED LANGE

WENDY PEEL

Ted Lange is a CFP and a veteran insurance and securities executive with nearly 40 years of experience. Lange founded and led two successful companies: Equity Planning, Inc., with more than 50 financial planners; and Equity Banking Services, Inc., with more 100 financial planners located in Midwest community banks. He is a graduate of Purdue University’s Insurance Institute and the College of Financial Planning in Denver, Colorado.

Wendy Peel is the VP of sales and marketing for ReverseVision, where she is tasked with communicating the company’s corporate goals and value proposition to the market. A highly seasoned technology sales and marketing executive, Peel is well-versed in promoting B2B technology-driven enterprise solutions. Peel graduated from the University of West Florida with a B.A. in communications/ advertising.

19 | From a CPA to a HECM LO g

21 | Using Technology to Speak the Language g

HARLAN ACCOLA

17 | Correct the Misinformation g

Harlan Accola, CRMP, is the branch manager and national reverse mortgage director for Fairway Independent Mortgage Corporation. Accola has been in the mortgage industry for more than 20 years and is a registered financial consultant and a Certified Senior Advisor. Based in Marshfield, Wisconsin, Accola specializes in educating loan officers, financial advisors, Realtors, attorneys and other professionals on HECMs. harlana@fairwaymc.com NMLS #277693

SYDNEY GODBEHERE

22 | A Recipe for Successful Repair Administration, Part II g

Sydney Godbehere is the vice president of loan operations for Celink. She has worked at Celink for 10 years and is passionate about providing the highestcaliber service to clients and borrowers. She credits her team and Celink’s mission, vision and values with inspiring her work every day.

ANNETA A. POPE Anneta A. Pope

BE A PART OF THE CONVERSATION.

30 | So Many Shades of Gray g

Anneta A. Pope is the vice president of business development at Finance of America Reverse. Prior to entering the industry six years ago, she was director of correspondent banking for a global money remittance firm. She has a diverse background and extensive experience in working with large companies and banking institutions, and spent a substantial portion of her career as a search consultant within the International Technology Sector in Silicon Valley.

Share your ideas with your colleagues and be a part of the solution. Reach out to us at info@reversereview.com.

reversereview . com

8 TRR | 7

The Reverse Review May 2016

stats March 2016

Top Lenders Report

12345 American Advisors Group

RMS/S1L

Endorsements

351

Endorsements

999

Liberty Home Equity

One Reverse Mortgage

Finance of America Reverse

Endorsements

338

322

286

Lender Endorsements

REVERSE MORTGAGE FUNDING LLC

227

GMFS LLC

SYNERGY ONE LENDING INC

166

MANN MORTGAGE LLC

NATIONWIDE EQUITIES CORPORATION

118

HOMEOWNERS MORTGAGE ENTERPRISE

114

VIP MORTGAGE INC

WHOLESALE CAPITAL CORP

MORTGAGE BROKERS SERVICES

PEOPLES HOME EQUITY INC

LIVE WELL FINANCIAL INC

HIGH TECH LENDING INC

270

HOME POINT FINANCIAL CORPORATION OPEN MORTGAGE LLC FIRSTBANK

TOWNEBANK 10

ADVISORS MORTGAGE GROUP LLC

LOANLEADERS OF AMERICA INC

REVERSE MORTGAGESCOM INC

FIRSTAR BANK

UNITED NORTHERN MORTGAGE BANKERS LTD 40

FIRST PRIORITY FINANCIAL INC

THE FEDERAL SAVINGS BANK

ACADEMY MORTGAGE CORPORATION

AKT AMERICAN CAPITAL INC

FAIRWAY INDEPENDENT MORTGAGE CORP

AMERICAN NATIONWIDE MORTGAGE COMPANY 7

RESOLUTE BANK

EVOLVE BANK & TRUST

PROFICIO MORTGAGE VENTURES LLC

NEW AMERICAN MORTGAGE LLC

SENIOR MORTGAGE BANKERS INC

VAN DYK MORTGAGE CORPORATION

SUN WEST MORTGAGE CO INC

PLAZA HOME MORTGAGE INC

MCM HOLDINGS INC

AMERICAN PACIFIC MORTGAGE

LONGBRIDGE FINANCIAL LLC

CHERRY CREEK MORTGAGE CO INC

BANC OF CALIFORNIA M & T BANK

FRANKLIN FIRST FINANCIAL LTD PEOPLES BANK

UNITED SOUTHWEST MORTGAGE CORP

MONEY HOUSE INC

SUCCESS MORTGAGE PARTNERS INC

SUN AMERICAN MORTGAGE

PACIFIC RESIDENTIAL MORTGAGE LLC

8 | TRR

Brought to you by:

%%%%% LOOKING FOR MORE STATISTICS? Go to rmsinsight.net for all of the industry’s latest stats and rankings.

stats HECM Endorsement Stats Through February 2016 01

REFI

10% 5%

1/1/16

12/1/15

11/1/15

10/1/15

9/1/15

8/1/15

7/1/15

6/1/15

5/1/15

4/1/15

3/1/15

2/1/15

{ FIGURE }

PURCHASE

20% 15%

SHARE OF HECM ENDORSEMENTS

HECM ENDORSEMENT TRENDS BY PURPOSE

{ FIGURE }

PURCHASE

$1,200

REFI STANDARD

$800 $600 $400 $200

TRAILING TWELVE MONTH ENDORSEMENTS 6,000

2,772

8.41%

Retail Endorsement Growth

2,597

-6.31%

1,895

2,477

Total Endorsement Growth

2 3 4 5 6 7 8 9 10 11 12 1 Retail

Wholesale *Numbers Represent Months

17.69%

* Figures Above Reflect Change from Prior Month

RETAIL UNITS CHG%

1/1/16

12/1/15

14.32%

11/1/15

MO.

Wholesale Endorsement Growth

2,000

10/1/15

INDUSTRY SUMMARY

20.28%

4,000

9/1/15

8/1/15

7/1/15

6/1/15

5/1/15

4/1/15

3/1/15

$0 2/1/15

DOLLARS IN MILLIONS

HECM ENDORSEMENT INITIAL PRINCIPAL LIMITS

$1,000

WHOLESALE UNITS CHG%

TOTAL UNITS CHG%

1,862 -13.76%

4,634

-1.74%

1.77%

4,492

-3.06%

-4.62%

1,793 -5.38%

4,270

-4.94%

2,971 19.94%

2,324 29.62%

5,295

24.0%

2,694

-9.32%

0.3%

5,025

-5.1%

2,929

8.72%

2,820 20.98%

5,749 14.41%

2,331

2,589 -11.61%

2,080 -26.24%

4,669 -18.79%

2,427

-6.26%

1,901 -8.61%

4,328

-7.3%

2,467

1.65%

1,553 -18.31%

4,020

-7.12%

2,524

2.31%

1,705

9.79%

4,229

5.2%

2,199 -12.88%

1,690 -0.88%

3,889

-8.04%

2,645 20.28%

1,932 14.32%

4,577 17.69%

TOT

31,291

23,886

55,177

reversereview . com

8 TRR | 9

The Reverse Review May 2016

nrmla news BROUGHT TO YOU BY NRMLA STAFF

IN THE PRESS: 2 “Cash-strapped Boomer? You Can Retire Using Home Equity,” written by retirement planning expert Jamie Hopkins of The American College (and recent presenter at NRMLA East), is a CNBC article that discusses four strategies that use home equity to help retirees age in place, among them reverse mortgages. 2 “Strategies for Securing Your Retirement,” a video segment by Morningstar’s Christine Benz, features an interview with noted financial planner Harold Evensky, in which he discusses how to maximize savings, build sustainable retirement income, plan for longevity and utilize a HECM Line of Credit to improve portfolio survivability. 2 “Wade Pfau: Retirees Should Consider Reverse Mortgages,” published by thinkadvisor.com, summarizes remarks made by retirement expert Wade Pfau of The American College, during a webinar for the Financial Planning Association. “I think it’s really important for advisors who may have done their due diligence about reverse mortgages 10 or 15 years ago to look at what all has changed starting in 2012 and to do their due diligence over,” said Pfau. 2 “New Math on Reverse Mortgages,” written by nationally syndicated retirement expert Robert Powell for The Wall Street Journal, is a well-researched story highlighting new interest from the financial planning community in the benefits of reverse mortgages.

S E NIOR HOME EQU I TY HI TS $ 5 . 8 3 T R ILLI ON

An estimated $140.2 billion increase in the aggregate value of homes owned by seniors drove their share of home equity to $5.83 trillion and fueled the NRMLA/ RiskSpan Reverse Mortgage Market Index (RMMI) to an all-time high of 203.20 in 10 | TRR

HE FIGURED IT OUT

A tribute to Ed Szymanoski

By Peter Bell, NRMLA president & CEO

EDWARD SZYMANOSKI, A S S O C I AT E D E P U T Y A S S I S TA N T S E C R E TA R Y F O R E C O N O M I C A F FA I R S

In the Housing and Community Development Act of 1987, Congress approved the creation of a new financial product “to meet the special needs of homeowners by reducing the effect of the economic hardship caused by increasing the costs of meeting health, housing and subsistence needs at a time of reduced income, through insurance of home equity conversion mortgages to permit the conversion of a portion of accumulated home equity into liquid assets.” It took seven years for senior advocate Ken Scholen to push this notion through Congress. But HUD was now given nine months to publish proposed regulations for what would become the new Home Equity Conversion Mortgage. Among the requirements were that the insurance component of the program be net neutral on an annual basis, which meant there would be no cost to the government. This would necessitate analyzing the actuarial risks, or looking into the crystal ball to project how the country’s economy and this program would perform over time, as much as 30 years out. There was no previous model to base this on. Someone had to figure the whole thing out. Enter Ed Szymanoski, Jr., a Hartford, Connecticut, native and Brown University graduate with degrees in applied mathematics and economics who had come to Washington from HUD’s regional office in his hometown a year earlier. Along with Judy May and a team of economists and lawyers, Szymanoski created a simulation model based on three innovative ideas: ONE // The first two-part mortgage premium structure that included both an upfront and annual premiums to sustain the fund TWO // A totally original notion called “principal limit factor” based on a borrower’s age and interest rates to determine how much a borrower could receive THREE // Customized payment plan options to best fulfill the specific needs of the borrowers Over the next 29 years, there were extensive alterations to improve the HECM program for both consumers and government, many of them conceived or executed by Szymanoski. But when he died on April 9, 2016, following a brave battle with cancer, these three original concepts that helped nearly one million American families improve their lives in retirement remained in place. I do not think it is an exaggeration to say that without Ed Szymanoski’s unique mathematical foresight, there would be no HECM program. All of us in the reverse mortgage industry, as well as elder Americans and citizens all around the world, were extremely fortunate to have Ed Szymanoski on our team. He made our lives better.

Q42015, compared to 198.53 in Q3 2015. On a year-over-year basis, the RMMI—a quarterly measure that analyzes trends in home values, home equity and mortgage debt held by homeowners 62 and older— increased 8.1 percent in 2015, compared with increases of 7.8 percent in 2014 and 17.5 percent in 2013.

NRMLA distributed a press release reporting the data, which got picked up by numerous media outlets, including bankrate.com’s nationally syndicated Senior Living blog, written by Dr. Don Taylor. You can get more information on the RMMI by visiting nrmlaonline.org.

nrmla news O N T H E D O C K E T:

so we are taking the opportunity to cover these issues in the revised Guide.”

HUD Announces Updates to FA Guide and HECM Policy Handbook

RELIEF GIVEN TO DEFAULTED BORROWERS HUD has provided servicers with new options to cure loans in technical default for non-payment of property taxes and homeowners insurance in lieu of calling them due and payable or proceeding with foreclosure. Mortgagee Letter 2016-07 took effect immediately and:

Addressing NRMLA’s Eastern Regional Meeting in New York, April 9-10, HUD officials announced pending revisions to the Financial Assessment & Property Charge Guide and a new section being added to the Single Family Housing Policy Handbook 4000.1 devoted exclusively to reverse mortgages.

• Allows servicers to create repayment plans for defaulted T&I loans where foreclosure had been initiated, or for loans at, or approaching, 98 percent of the maximum claim amount • Allows servicers to delay submitting a Due and Payable request to HUD for tax and/ or insurance default amounts of less than $2,000.

Alpha Mortgage Corporation Wilmington, North Carolina (Lender)

• Provides servicers with the option to use their own funds to cure a T&I default, as long as the servicer does not add said amount to the loan balance, submit a claim to FHA seeking a reimbursement, or assign the loan to HUD for a period of three years.

NRMLA welcomes its newest members:

Commenting on the revised FA Guide, Phil Caulfield, a policy analyst within the Office of Single Family Housing and one of the chief architects behind Financial Assessment, said, “This is going to happen by mortgagee letter very soon. Much of the content is going to be the same as the current Guide, but we have gained a fair amount of experience with Financial Assessment. We have received feedback from the industry about what you don’t fully understand and what needs to be clarified,

NEW MEMBERS

Best Capital Funding dba Lending360

Woodland Hills, California (Lender)

EverBank

Boston, Massachusetts (Associate)

SUSAN PERRY Capital Funding // Laguna Niguel, California

CHRISTINE UVA Reverse Mortgage Funding LLC // Melville, New York

ROB WYATT Reverse Mortgage Advisors // Lady Lake, Florida

KEN WIELAND United Capital Lending // Knoxville, Tennessee

TRA F F I C TO REVERS EM O RT GAGE.O RG

30,685

74,821

(compared with 27,609 for February 13-March 13)

(compared with 67,985 for February 13-March 13)

UNIQUE USERS

PA G E V I E W S

Land Home Financial Services Concord, California (Lender)

Reverse Lending Experts, a dba of Pacific Capital Mortgage Orange, California (Lender)

(March 13-April 13)

Tempe, Arizona (Lender)

CESAR FLORES Reverse Mortgage Funding LLC // Melville, New York

Geneva Financial, LLC

FERNANDE MARIE BENCZE Alliance Reverse Mortgage // Santa Rosa, California

NE W C R M Ps

NRMLA congratulates the following people for achieving the status of Certified Reverse Mortgage Professional:

Silex Financial Group, Inc.

Hawthorne, New Jersey (Lender member) reversereview . com

8 TRR | 11

The Reverse Review May 2016

2016 We HUNTIN

stern Re

gional M

GTON B

EACH, C

A | MAY

eeting 10-11

Com new Ch e meet our ief Hunting Appraiser in ton Bea ch

landmarknetwork.com

Meet our team too! John Dingeman, MNAA Chief Appraiser (888) 272-1214 ext.719 jdingeman@landmarknetwork.com Gloria Betancourt SVP of National Sales (888) 272-1214 ext.302 gbetancourt@landmarknetwork.com

12 | TRR

Lou Machos SVP of National Sales (888) 272-1214 ext.308 lmachos@landmarknetwork.com

roundup

THIS MONTH A LOOK AT THE NEWS AND STATS AFFECTING THE MARKET GET UP-TO-DATE retirement facts, home price stats, senior trends and HECM market developments in The Reverse Reviewâ&#x20AC;&#x2122;s monthly Roundup.

{

MON E Y MA TT ERS

NEW SURVEY REAFFIRMS HOW LITTLE MONEY OLDER AMERICANS HAVE SAVED. A recent survey of Americans age 55 and older reveals that:

30%

26%

54%

have no retirement savings

have less than $50,000 saved

fall short of the savings amount considered necessary for a successful retirement

RETIREMENT READINESS SURVEY RESULTS AGE

MEDIAN INCOME

SAVINGS BENCHMARK

% ON TRACK

% BEHIND

$34,605.00

Started a retirement fund

48%

52%

$54,243.00

$16,272.90

33%

67%

$66,693.00

$100,039.50

20%

80%

$70,832.00

$212,496.00

22%

78%

$60,580.00

$260,494.00

26%

74%

NUMB E R C RUN CH

36 PERCENT

of boomers plan to rely on Social Security as their primary source of income -Transamerica Center for Retirement Studies

Demographics 48 million Americans were age 65 and older in 2015, 18 percent more than in 2010. The number of older Americans will increase to

74 million by 2030 98 million by 2060

reversereview . com

8 TRR | 13

The Reverse Review May 2016

trust. You are their face of

Trust is fostered every time your reverse mortgage holders interact with you. Which is why reverse mortgage servicing is so crucial…and why Celink is your constant ally throughout the life of the mortgage. 14 | TRR

celink.com | (844) 228-2101

MICHAEL HILD

Chairman / CEO

M Y PA R E N T S TA U G H T M E HOW TO WORK HARD.

From his first job and his favorite vacation to the craziest thing he’s ever done, we get the scoop from Michael Hild, chairman and CEO of Live Well Financial, in this month’s edition of The Hot Seat.

My favorite vacation was to Yosemite National Park. I proposed to my wife at Cathedral Peak after a long hike to the top. It was perfect.

The craziest thing I’ve ever done was start an oyster farm. My wife and I raise oysters using an off-grid solar nursery on the York River. The name of the farm is Anderson’s Neck Oyster Company.

If I had three wishes they would be to have one more day with my mom (she passed away from ovarian cancer much too young); to go fishing with my grandfather one more time; and to be able to take a year off and travel the world.

If I could meet anyone, past or present, it would be Teddy Roosevelt. Given my passion for the outdoors and conservation, he is someone I admire.

When I was younger I wanted to be a football player. I played at Cornell University, but didn’t make it to the pros.

When I was a kid I took a monthlong backpacking trip through Germany. I was at Checkpoint Charlie when it was removed and I chipped away a part of the Berlin Wall that I still have.

My favorite book is Ernest Hemingway’s The Old Man and the Sea. You have to love the joy of the struggle even if it

appears it might all be for naught in the end. It’s the little challenges in life that test your mettle and ultimately define your character. My first job was detassling corn in the Indiana cornfields when I was 13 years old at the fine rate of $3.80 an hour.

If I could trade places with someone for a day, I would choose the Dalai Lama. Being a Westerner, seeing the world through Eastern eyes would be fascinating.

For success I have sacrificed material items. My wife and I have put our money into businesses and the causes we are passionate about instead. I think that is much more rewarding than cars, houses and other material things.

If I could time travel, I would have a drink and a conversation with Ernest Hemingway. I think we would have similar interests and a lot to talk about.

The future of reverse mortgages is dependent on Ginnie Mae making some badly needed changes to the HMBS

structure. As it stands, the security has way too many drawbacks and it discourages companies from wanting to continue to securitize after the honeymoon period is over and their portfolios age. >

Before I entered the reverse mortgage industry I was a young 20-something with a promising career at Capital One. I gave that up to establish Live Well, which was a crazy idea at the time.

Industry growth is dependent upon HUD’s factor table for principal limits. An enormous number of people want a reverse mortgage but do not qualify because they are short proceeds to pay off their existing first mortgage.

The ideal characteristics of leaders in the industry are integrity and passion. You have to want to help people to be a true leader in this industry. You also need a passion to want to make the industry and the customer experience as good as it can be.

WHAT MICHAEL THINKS

The most important thing seniors should understand about reverse mortgages is that it’s a loan that comes with distinct pros and cons. Learn the facts and don’t listen to the folks who perpetuate half-truths and misperceptions. reversereview . com

8 TRR | 15

FULL-SCALE OPERATION

The Reverse Review May 2016

WE OFFER SAME DAY SCENARIO AND OPERATIONS CALL BACK SUPPORT NOW ENLISTING!

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Call Harlan Accola today:

715-389-8800

★ Fairway is here to stay with over 11 billion in volume in 2015

NMLS #277693

Copyright©2016. Fairway Independent Mortgage Corporation. NMLS #2289. All rights reserved. Distribution to general public is prohibited. This is not considered an advertisement as deﬁned by 12 CFR 226.2(a)(2). All rights reserved.

16 | TRR

ORIGINATING

CONNECT

Correct the Misinformation By Harlan Accola

Let’s make it our mission to spread the word among our professional partners.

Taking the time to connect with other professionals will help correct the misinformation in the marketplace. We have a duty as reverse professionals to spread the word about how a HECM can be used to ensure a successful retirement. If we communicate clearly and with sincerity, we can make a substantial difference in the lives of millions of seniors. n reversereview . com

8 TRR | 17

SPOTLIGHT

I recently spoke with an agent who owned a property and casualty practice and an insurance firm for 40 years and had hundreds of clients. In his career, he only spoke to one person about a reverse mortgage and he quietly admitted to me he told them not to do it. But he was willing to meet with me. After an hour, he had a completely different take on the program. In one short meeting, he became convinced of the power of reverses and was encouraged to spread the word among his many clients.

SERVICING

“

The facts are on our side. The research proves how sensible it is to take a reverse mortgage early, regardless of your financial situation, to lay the groundwork for a better and safer retirement. We must become teachers. We must supplement the scholarship and press with stories of how we have helped people in various ways—making the most of their Social Security benefits by delaying their withdrawal, avoiding the sale of stocks in a down market, saving a life

Every week, let’s make it a point to have an appointment with an attorney, financial advisor or another professional in the aging-in-place community. If 500 reverse professionals saw one referral partner each week, we could collectively connect with 26,000 professionals. If each referral partner worked with 50 clients, we could potentially touch the lives of 1.3 million clients in one year.

TECH

When placed in this situation, it is easy to blame the advisor. Avoid this trap! The problem is not the advisor—it’s me, it’s you, it’s the industry. Yes, the advisor should have done their research, but every loan officer out there must take it upon themselves to spread the good news about reverse mortgages and correct misinformation in the marketplace. We know many advisors still think of reverse mortgages as a loan of last resort. We must give them the information that changes that!

insurance policy that was going to lapse or reducing the tax burden for IRA distributions.

ORIGINATING

In our profession we are often tasked with overcoming the uninformed opinions of our clients’ advisors—the Realtors, attorneys, CPAs and trusted family friends they have enlisted for help. Too often, these advisors harbor misconceptions about reverse mortgages that lead them to discourage the client from pursuing the loan.

WE KNOCK OUT THE

The Reverse Review May 2016

COMPETITION

Experience | Excellence | Commitment | Pride

PRC has been FIRST IN REVERSE 15 years running. We are proud to be the ﬁrst national title and Settlement Company to specialize in reverse mortgages. Our dedicated team of professionals oﬀers the experience and knowledge to smoothly close reverse transactions—correctly. Having closed more than 150,000 reverse mortgage loans, PRC understands the importance of comprehending all HUD and lender guidelines.

TOLL FREE: (800) 542-4113 | www.PRClosings.com 18 | TRR

ORIGINATING

From a CPA to a HECM LO By Ted Lange

This experience inspired me to pursue a career that unites my financial planning background with

reverse mortgage loans. As an originator with a CFP designation, I work hand-inhand with CFPs, insurance agents and CPAs, helping them explore how a reverse mortgage can fit into their clients’ retirement plan. Admittedly, being a CFP myself does make it easier to meet and build relationships with other financial professionals. I have joined various groups to support my mission to network with financial professionals, including my local Financial Planning Association chapter and an estate planning group. Much to my surprise, I am the only reverse mortgage person in both groups. These groups comprise professionals from nearly

Many of my fellow LOs say that trying to work with CFPs is difficult, and it can be if you are selling rather than educating. But most CFPs believe in and encourage collaboration with individuals from other financial disciplines, realizing that no one can be an expert in all fields. That said, the first thing they assess when deciding whether or not to collaborate with you is, “Are you competent and objective?” If you can show that you are honest and earnest from the start, that will go a long way to developing such partnerships. We all want to do the right thing for our clients, and nothing can replace the team approach when looking for the right solution. n reversereview . com

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SPOTLIGHT

The non-recourse aspect of the loan helped solidify my interest. Even if the home’s value didn’t increase in 25 years, the $185,000 down

payment was burnt up by accrued interest, and I lived there until they carried me out feet first, I would benefit. I would have lived in a great upscale neighborhood for about $2,100 a month, which includes the down payment spread over 25 years, property taxes, insurance, utilities and HOA fees. Also, the $290,000 I was able to save by not paying for the house upfront in cash could potentially double in 25 years. These facts convinced me to move forward with the loan, and six years later, I’m still here and loving it. When a nearly identical home a block away sold for $979,000, I was elated.

I can’t emphasize enough the importance of being involved with such groups, especially since reverse mortgages are now positioned to become a significant retirement planning tool. Your fellow professionals need to know how a HECM can help their clients. If you attend meetings, you can be the one to educate them about how it works.

SERVICING

I decided to buy the house and pay cash. But before I made the move, I remembered a flyer I received from my bank about a product called a Reverse Mortgage for Purchase. I decided to call them for more information, and learned that if I put down $185,000, I would have no mortgage payments for as long as I lived in the house, provided that I paid property taxes, homeowners insurance and HOA dues. As a numbers guy, I felt this product was too good to pass up.

“As an originator with a CFP designation, I work hand-in-hand with CFPs, insurance agents and CPAs, helping them explore how a reverse mortgage can fit into their clients’ retirement plan.”

all financial disciplines— CFPs, CPAs, bankers, trust attorneys and estate planning attorneys. They focus on sharing knowledge through member presentations and case studies, and the information I have gleaned through these meetings has been invaluable.

TECH

Prompted by family health concerns, I sold my interest in the firm and moved to Southern California. In 2009, after a few years in Carlsbad, I was ready to purchase a home. At the time, property values there were at an alltime low. I found a singlestory home in an upscale neighborhood that was listed at $475,000—40 percent of its previous value. It was just what I had been looking for.

How one financial professional’s experience led to a mission to teach others about the powers of the H4P

ORIGINATING

Like many of my colleagues in the reverse business, I worked in an entirely different profession before I moved into the world of HECMs. Ten years ago, I had a successful financial planning practice in Omaha, Nebraska, and like many of my fellow advisors, I did not hold the reverse mortgage industry in high regard.

The Reverse Review May 2016

20 | TRR

ADVANCE

TECH

Using Technology to Speak the Language By Wendy Peel

Want the online version? reversereview.com/magazine

needs. And they are the vast majority How to connect with of the market potential. So how can we baby boomers through use technology to best serve these most sought-after of borrowers? online services and 8 Show boomers the money… software

Give financial planners—or even borrowers themselves—access to tools that let them interact with their money. Software that models how best to leverage a HECM does double duty by educating your borrower while doing the selling for you.

Say “please” and “thank you.”

Good manners matter to the boomer generation. Handwritten notes, personalized greetings and a proper attention to detail demonstrate that you are grateful for your client’s business, not entitled to it. Once you’ve built that relationship, don’t lose sight of it. Managing a referral network becomes complex as your business grows. A robust contact management solution is critical for forging relationships with borrowers as well as important decision makers, like CPAs, Realtors and financial planners, to name a few. Use technology to help you mind your manners.

Embrace social media.

Recent polls show that as many as 90 percent of baby boomers use one or more social media sites, with Facebook being the most common by far. While social media offers a powerful avenue for connecting with prospects and clients, many lenders have legitimate concerns about their ability to monitor loan officers’ activity on social media for compliance violations. Thank goodness there are technology companies that specialize in monitoring social media to help lenders protect themselves. Do your homework and select a monitoring service that keeps you compliant. Regulatory changes over the last few years have left the reverse mortgage industry poised for real growth. Coverage in industry media and popular press are swinging our way. By necessity we’ve been refocused on the broad center of the opportunity rather than the edge cases. Now is the time to take a hard look at mortgage technology and rethink how you are using it. You may be overlooking an opportunity to change the way you sell and build a more robust referral network. In the end, improving these two important factors could help you close more loans. n reversereview . com

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SPOTLIGHT

With HUD’s Financial Assessment in place, loans for the needs-based borrower are now a small portion of originations rather than the norm. As a result, it is in our industry’s best interest to focus on reverse-mortgage candidates who are somewhat funded or even well-funded for retirement. These potential borrowers have been here all along—it’s just that our industry did not focus on their

… and encourage them to play with it.

SERVICING

That means not just understanding how HECMs fit into holistic financial planning, but sharing that knowledge through a hands-on experience complete with graphs, calculations and simulations. It means making the latest technologies our standard sales practices. Perhaps most of all, it means recognizing what motivates each borrower to consider a reverse mortgage.

Boomers have a lot in common with their millennial counterparts when it comes to waiting: They don’t like it. Don’t leave the deal languishing after you’ve cleared the major hurdles of educating a borrower and getting an affirmative decision. Get it done fast using the latest technologies, such as eSign. Despite their reputation as technophobes, baby boomers are not the strangers to technology they’re made out to be. Studies show they make purchases online and are quick to adopt processes that allow them to complete tasks quicker.

TECH

Baby boomers, born from 1946 to 1964 and now between 51 and 69 years of age, have begun retiring in earnest. Millions who don’t yet qualify for a HECM will become eligible over the next 11 years. To forge relationships with these borrowers of tomorrow, we need to start speaking their language today.

Use tools, charts and graphs to show borrowers how they could actually improve their portfolio performance, retirement budget or estate value using a reverse mortgage. Whether you’re modeling scenarios for a savvy and wellfunded senior or overcoming an anxious borrower’s objections, using graphs to clearly demonstrate the value of a HECM will improve your credibility and help lead to a closed deal.

Don’t dillydally.

ORIGINATING

What words come to mind when you think about mortgage technology? I would hazard a guess that “compliance,” “necessary evil” and “boring” might top the list. Rarely is mortgage technology associated with words like “fun,” “flashy,” “innovative” or “fast,” but these are exactly the associations I would challenge all of us to cultivate as we work together to grow the reverse mortgage industry.

The Reverse Review May 2016

SERVICING

LEARN

A Recipe for Successful Repair Administration, Part II By Sydney Godbehere

Things to know when working toward a satisfactory property repair

In Part I, I likened the process for great repair administration to following a proven recipe for success. In Part II, we’ll address questions surrounding what happens when issues arise that are outside of the servicer’s control. As a servicer, we would love if all repairs were completed prior to the deadline. Unfortunately, there are borrowers who are unable to complete repairs in a timely manner. In these cases, when the deadline is reached and all possible extensions are exhausted, the servicer is required to place the loan into default. Does it matter how many or how few repairs remain? In compliance with ML 2015-10, a servicer must refer a loan to be called due and payable within 30 days from the loan “becoming eligible”

22 | TRR

WHY might a borrower not complete repairs in a timely manner? We hear a wide array of reasons why A BORROWER IS unwilling or unable to complete the repairs. Here are a few: ONE

A borrower cannot locate a contractor willing to complete the work without an upfront deposit. We encourage borrowers to talk with family members, friends or neighbors to see if they know someone who can complete the repairs. Often, simple repairs like scraping and painting can be completed without the assistance of a licensed contractor requiring a deposit. TWO

The borrower has been temporarily out of the home due to illness. In these instances, we attempt to locate an authorized alternate contact or Power of Attorney for the borrower, who may be able to assist with the completion of the repairs, so the borrower can focus on the restoration of their health. THREE

(which means the Repair Rider due date, plus any HUD-approved time extensions that have expired), regardless of the extent of the repairs needed or the funds withheld in the Repair Set-Aside. Borrowers still claim they are caught

unaware despite the letters and phone calls from their servicer. The home they have been living in is required by HUD guidelines to move toward foreclosure proceedings and they can no longer wait to complete the repairs.

The borrower does not think the repairs are necessary. In these instances, the servicer reviews the repairs with management to determine if any fall under one of the three categories HUD has provided guidance for in the Waiver Process of a Repair Set-Aside. How do you recognize a repair that can be waived? Could the repairs be waived with a lead-based paint waiver? Are the repairs unnecessary? Do we have a licensed contractor stating the repairs are not needed or cannot be completed? If it is determined the required repairs fall into one of these categories, the owner of the loan may be able to waive certain repair requirements, which also requires them to document their reasoning (for audit trail purposes).

SERVICING Can a borrower prevent their loan from moving to foreclosure once it has been called due and payable? The same scenario applies for any loans that have been called due and payable. For example, a borrower can provide proof of financing to obtain a new loan or provide proof the house is listed for sale in order to request an extension during the due and payable process. The cure for delinquency on a loan deemed due and payable because of incomplete repairs is actually completing the repairs. A HUDcertified inspector must then confirm the repairs have been completed to FHA standards and document this within their inspection report.

ORIGINATING TECH

When will the loan be referred to foreclosure? Each servicer has a timeframe, proprietary procedures and processes for when a loan will need to be referred to an attorney in order to meet the deadline. The deadline associated with HUD guidelines is the date on which the first legal action in the foreclosure must be completed (which is 180 days from the date the loan was

â&#x20AC;&#x153;Making sure the

called due and payable, guidelines with regard to borrower has a plus any HUD-approved defaulted loans. One way clear understanding time extensions). One the industry can help is when walking away specific point difficult for through consumer and from closing helps eliminate the negative borrowers to understand industry education. The product and industry is that even if the loan is more originators, loan consequences that referred to an attorney officers, underwriters and ensue when borrowers to begin the foreclosure counselors understand claim they were not fully process, it does not the repair administration informed.â&#x20AC;? mean the property has process (and the been foreclosed on. The consequences of not borrower still has time to complete the completing the required repairs), the repairs prior to the property going to better. Err on the side of caution; it sale. is better to give borrowers too much information than not enough! Borrowers How can you help the borrower? must understand that completing repairs Completing the repairs is just as is a requirement, not an option. important as keeping taxes and insurance currentâ&#x20AC;&#x201D;and borrowers have Making sure the borrower has a clear a very short window after the Repair understanding when walking away from Rider due date before the loan must closing helps eliminate the negative be called due and payable (per ML product and industry consequences 2015-10). Previously, a servicer would that ensue when borrowers claim they have the leniency to allow more time were not fully informed. Serving up a if the borrower was progressing with great repair administration experience the repairs. Whether the taxes are not is great for the borrower and great for paid or the repairs are not complete, building positive product and industry the loan must follow the same HUD perception. n

SERVICING SPOTLIGHT

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The Reverse Review May 2016

SPOTLIGHT IN THIS MONTH’S EDITION

WADE PFAU TALKS ABOUT THE IMPORTANCE OF HECMs

Retirement Expert Wade Pfau Why he thinks reverse mortgages will be the next hot topic in retirement planning

may 2016

WANT TO SEE MORE ARTICLES LIKE THIS?

See them at reversereview.com.

By Jessica Guerin

PROFESSOR OF RETIREMENT INCOME AT THE AMERICAN COLLEGE, Wade Pfau works to

educate financial planners on retirement income strategy. Lately, his focus has shifted from Social Security withdrawal strategies to reverse mortgages. “It’s important because it is such a big asset. The average American does not have a large 401(k) balance or a large pool of investment assets,” says Pfau, who has a Ph.D. in economics from Princeton University. “For most Americans, Social Security benefits and home equity are going to be the two biggest assets on their balance sheet.”

A frequent Forbes contributor, Pfau has written numerous articles explaining how HECMs can be strategically used in retirement planning. He says that although reverse mortgages have fought a long battle against negative public perception, things do appear to be turning around. “I think some of the negative media coverage in the past has been related 24 | TRR

to the fact that some people were using reverse mortgages as a last resort, and ultimately their plan was not sustainable,” he says. “Recent changes were designed to better match the program with the research we’ve seen over the last couple of years, which is how to incorporate it into a responsible retirement income plan.” Pfau says the conversation about reverse mortgages has picked up in the past four years with an increasing number of articles (in the Journal of Financial Planning, for example) exploring their use. This, paired with government changes designed to position the product as a financial planning tool, has helped push some financial professionals to revisit the product. Still, Pfau admits that there is a long way to go toward widespread acceptance. He says that some advisors wrote them off years ago and may not recognize the need to reassess the product. “Advisors may have done their due diligence about them in the past and decided that this was something that

had high fees and only worked in cases where clients were running out of money,” he says. “Any self-respecting advisor is trying to make sure that their clients are not going to be in a situation where they’re desperate and have to use a last resort, so they didn’t really think it was something that clients would ever need.” Another problem, Pfau says, lies within the segregation of the financial services industry. “Within financial services, there are different types of business models. Some people are only able to sell and manage investments, so for them everything is an investment solution. Some people only work with insurance, so for them everything has an insurance position. Neither one of those has a way to incorporate a reverse mortgage into their business models.” Still, Pfau says he thinks reverse mortgages will continue to gain steam among the financial planning world. “I already see in motion the increasingly positive press coverage that reverse mortgages have been receiving,” he says. “As that process continues, it’s going to

SPOTLIGHT “I already see in motion the increasingly positive press coverage that reverse mortgages have been receiving. As that process continues, it’s going to slowly change the public perception. It will be a slow process, but it’s in motion now and it will continue to build in that direction.”

slowly change the public perception. It will be a slow process, but it’s in motion now and it will continue to build in that direction.”

“Over the past few years, Social Security was the hot topic in retirement. People were providing the education to clients and running free lunch seminars where they would explain how to claim Social Security benefits and so forth, and I think that topic has sort of run out of steam at this point,” he says. “I really think reverse mortgages are going to be the next hot topic, replacing Social Security claiming as the big topic over the next few years.”n

Wade Pfau is a professor of retirement income at The American College in Bryn Mawr, Pennsylvania. He also serves as a principal and director for McLean Asset Management, where he helps build retirement income solutions for clients. Pfau publishes research on a wide variety of retirement topics and has also contributed to the curriculum of the Retirement Income Certified Professional (RICP) and the Retirement Management Analyst (RMA) designation programs for financial advisors. He is a CFA charterholder and holds a doctorate in economics from Princeton University.

SERVICING

Check out Pfau’s blog: retirementresearcher.com

TECH

“I think it would help reverse mortgage professionals to understand more about the retirement income planning problem… to understand retirement risk and how a reverse mortgage can fit into that to help manage the return of risk or the risk created by large spending shocks like

Pfau, who is planning to release a book this summer on reverse mortgages and their role in retirement planning, says he expects the topic to become increasingly popular in the advisor community.

ABOUT WADE PFAU

ORIGINATING

To help advance the cause, Pfau says HECM professionals can learn how to better connect with financial advisors and gain a better understanding of retirement income planning, which he says is distinctly different from traditional financial planning.

long-term care expenses.”

SPOTLIGHT

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The Reverse Review May 2016

26 | TRR

It’s often said that to better serve your customers, you need to learn more about them. Luckily, a new survey of HECM counselees offers a great deal of insight into the profile of those who consider reverse mortgage loans. Conducted by researchers at The Ohio State University, the survey polled seniors who participated in HECM counseling, asking questions about their motivations, experiences and financial status to learn more about how reverse mortgages can impact borrowers. The survey is part of a larger study of reverse mortgage borrowers titled “Aging in Place: Analyzing the Use of Reverse Mortgages to Preserve Independent Living.” Led by seven Ohio State researchers in partnership with ClearPoint Credit Counseling Solutions, and funded by grants from HUD and the MacArthur Foundation, the study seeks to gain a better understanding of the connection between reverse mortgages and the financial security, well-being and independence of older adults. “We knew the baby boomer generation was retiring in droves and we also knew that a lot of them had mortgage debt,” says Ohio State professor Stephanie Moulton, who is spearheading the study. “You’ve got this double-edged sword, where equity is the primary asset, but a lot of seniors are using that asset in retirement. We wanted to better understand how the reverse mortgage fit into that puzzle of trying to make ends meet in retirement. Do they help reduce some of the burden for seniors, and under what conditions does that occur?” As part of its effort to achieve this goal, the team launched a survey of potential borrowers, ultimately collecting responses from 1,761 seniors who received HECM counseling from ClearPoint from January 2014 through July 2015. The data revealed that the average counselee was 70 years old and about one-third were single women. The average annual income was $31,000, or $2,600 per month, and 46 percent of respondents claimed to have no assets at the time of counseling aside from their home. The results gathered information from three sets of counselees: those who opted not to take a reverse mortgage, those who took a reverse mortgage and retained the loan, and those who moved forward with the loan and then terminated.

6 KEY FINDINGS: ONE Borrowers are generally satisfied with their reverse mortgage. TWO Supplementing income and paying off mortgage debt are the top intended uses for reverse mortgage funds. THREE Most borrowers are current on property taxes and rated the condition of their home as “good” or “very good.” FOUR Borrowers have average financial literacy, are risk-averse with regard to finances, and most have a written will.

Moulton says the inclusion of former HECM borrowers is particularly interesting. “This is a new group that hasn’t been looked at much before—the people who have terminated their reverse mortgages and are still alive. One hundred of them participated in the survey,” says Moulton, adding that respondents were polled an average of four and a half years after they received counseling. “We found it interesting that people who had terminated their reverse mortgage and were still alive were by and large reporting that they were satisfied with that decision and said it improved the quality of their life.” According to Moulton, another interesting revelation was the fact that one of the main reasons borrowers were seeking the loan was to pay off an existing mortgage. “I don’t think that’s talked about as much,” she says. “Even though they are taking a lot of money out up front, it’s not necessarily being used to go to Tahiti; it’s being used to pay off a mortgage. We were seeing that in the credit data, and the survey confirmed that that is a big motivation for a lot of folks.”

FIVE Borrowers who terminated their reverse mortgages most often did so by selling their homes.

Moulton says the data has helped HUD shape recent policy changes. “We started five years ago, before Financial Assessment and the limits on initial withdraw, so we were able to provide research that informed HUD on some of the characteristics of individuals in the reverse mortgage program.”

SIX Reasons for not taking out a reverse mortgage are varied.

The team is continuing to collect and assess data as part of the larger Aging in Place study, aiming to determine how reverse mortgage borrowers fare over time. “We are using credit and loan data to see how borrowers are faring with the loan, comparing them to consumers who didn’t get a reverse. We’re also looking at consumers who are extracting equity through other means, and analyzing how their credit profiles changed compared with the profiles of reverse mortgage borrowers,” adds Moulton, who says she hopes to release early results by the end of the year. n reversereview . com

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The Reverse Review May 2016

The results below depict responses from the 1,761 HECM counselees who participated in the survey.

To borrow or not to borrow?

Active borrowers report high satisfaction levels.

Very disSatisfied

Very Satisfied

satisfaction meter

68%

Obtained a HECM

5 4.2

Obtained a HECM then terminated

27%

of borrowers were “SATISFIED” or “VERY SATISFIED”

Opted not to move forward

My motivation

Top Five Reasons for Considering a Reverse Mortgage:

A failed solution

11% of borrowers experienced default at some point 28 | TRR

Itâ&#x20AC;&#x2122;s over between us.

Thanks, but no thanks.

Those who terminated their reverse mortgage:

45% Sold their home

27% Refinanced to another reverse

19%

Those who opted not to pursue the loan listed three main reasons:

Repaid or refinanced with a nonHECM

1. T hey wanted to own their home completely, free of any mortgages

Foreclosed

2. T hey decided that the amount of money from the loan was too small 3. T hey found another way to meet their financial needs

I heard it through the grapevineâ&#x20AC;Ś or I saw it on TV. Counselees learned about reverse mortgages from:

TV ad

47%

Friend, family, community

Bank/mortgage company

18%

10%

Financial advisor

Customer experience

Money matters of borrowers said that the money lasted about as long as they anticipated.

Newspaper/ magazine

Internet ad

86 PERCENT

said their loan officer provided enough information to inform their decision

5 PERCENT

said they felt pressured by their loan officer

Influential Factors Counselees were influenced by:

23%

22%

20%

14%

Significant other/ spouse

Loan officer

HECM counselor

Children

Financial advisor reversereview . com

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The Reverse Review May 2016

LAST WORD

REFLECT

So Many Shades of Gray By Anneta A. Pope

What it means to be an older American in today’s world Reverse mortgages are characterized by some as a product and by others as a service. Whatever your position, there is one important question all of us must ask: How well do we really know our client? Let’s begin with a term that refers to the study of people of a certain age: gerontology. This is defined by Merriam-Webster as “the scientific study of old age and the process of becoming old.” The word “gerontology”—and its relative, “geriatric”— is derived from the Greek word geros, which means “old man,” able bodied, upstanding and strong. Interesting how only a portion of this meaning is associated with the modern definition of “geriatric” and the stereotypes attached to it. But it’s not just the terminology that’s an issue; underlying attitudes about aging need to be addressed. Culturally, we can’t seem to achieve a synthesis of the positive aspects (wisdom, life experience, worldliness, spiritual growth) and negative aspects (physical decline, the greater possibility of illness) of aging. Longevity carries with it many benefits, but as a director for AARP once noted, “Everyone wants to live longer, but no one wants to be old.”

“As professionals who cater to an older demographic, it’s important that we rid ourselves of ageist prejudices and acknowledge how aging Americans live in today’s world.”

For many, conventional mortgages elicit positive images of the American Dream realized—the start of a family, dreams for the future, a new home for gatherings with family and friends. Reverse mortgages, on the other hand, are often viewed as a solution— and a solution implies a problem.

But I believe reverse mortgages are more than that. I think they represent another dimension of the American dream—one that depicts a comfortable and fulfilling retirement. Older Americans today are vibrant, young at heart and full of life. For them, a reverse mortgage is the start of a new chapter. As professionals who cater to an older demographic, it’s important that we recognize this and rid ourselves of ageist prejudices. We must understand how aging Americans live in today’s world. For one, they are increasingly tech-savvy. A Pew Study reports that 59 percent of people over age 65 use technology regularly. Nearly 60 percent are active online, and approximately 71 percent of seniors between 65 and 75 log on daily. After all, the 30 | TRR

very technology we are using was developed by baby boomers Steve Wozniak and Bill Gates. Another reality for this demographic is divorce. Divorce rates in the U.S. are declining for couples in their 30s and 40s, but they have jumped for couples in their 50s and 60s. Researchers attribute this to several factors including human longevity and vitality, women’s increased financial independence, and new drugs and therapies that allow for healthy, continued sexual activity and intimacy. The rise of what has been coined “gray divorce” has led to a boom in online dating sites for older adults, increased participation in physical activities, sports and travel programs for singles. But for our purposes it’s important to note that divorce later in life can lead to the splitting of assets and creation of debt. As earning years come to an end and the comfort of a joint retirement fund is abolished, some divorced seniors can experience angst over what their financial picture will look like in retirement. Older Americans today face challenges and participate in activities that were unknown to previous generations. By developing a greater understanding of what of their experiences, and greater empathy for the struggles they face, reverse mortgage professionals will be better equipped to serve their borrowers. Remember that our borrowers are the same hope-filled people who once signed for a conventional mortgage as they began their journey through adulthood. They do not want to be defined by their age, but by their accomplishments, contributions and character. They still have dreams and goals as they navigate life ahead, and it’s our job to help make sure they are realized. n

with us. 877-721-3847

#nofilter #integrity #loyalty #diligence #compassion www.rfslends.com

NMLS #1025894

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The Reverse Review May 2016

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CALL TODAY to find out how easy it is to get started! 32 | TRR

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