EW THE
REVI
VERSE R EV E RE
EV
W
ER
IE
SE
TH
RE
VE
W IE
INSIDE THIS ISSUE | A Call to Action: Making the Case to Financial Planners
Explaining the power of the HECM E
R
THE
REVERSE review JU NE 2015
PAUL FIORE SITS DOWN IN OUR HOT SEAT PG. 16
AVOIDING THE PITFALLS OF A DIRECT MAIL CAMPAIGN PG. 24
THE NEED FOR DIALOGUE BETWEEN SALES AND SERVICING PG. 26
WHY RECENT POLICY CHANGE WILL PROPEL THE PRODUCT PG. 38
The Reverse Review June 2015
BROWSE.
CUSTOMIZE. PRINT.
1.
BROWSE. American Advisors Group (AAG)
offers our partners a library of marketing materials that include recent updates on financial assessment and non-borrowing spouse.
Your Logo Here
2. 3.
PRINT. Plus with on-demand printing, you will
now have the flexibility of printing a handful, or a lot depending on your needs.
Learn how this cutting-edge tool can help grow your business. Partner with AAG today.
aagwholesale.com
2 | TRR
CUSTOMIZE. As an added partner perk, you will
be able to customize marketing materials and brand it with your company logo, phone number and URL.
Ask us about our new HIGHER LTVs FOR BORROWERS!
Slide into HomeSafe with the
Nation’s #1 Wholesale Lender Hit a grand slam for your borrower with HomeSafe, a powerful jumbo reverse mortgage, exclusively from Urban Financial of America, LLC (UFA). Urban is the nation’s #1 Wholesale Lender for four consecutive years. • Loan amounts up to $2.25 million • No initial disbursement limitation • Condos appraised at $500,000 or more do not require FHA approval • Fixed rate, lump-sum draw Our championship Business Development Team is on deck to serve you! Call 855-77-URBAN (855-778-7226) www.ufawholesale.com/Homesafe
®
*Since December 2011. Based on trailing 12 months’ endorsement volume. Source: Reverse Market Insight. UFA’s HomeSafe reverse mortgage is a proprietary product of Urban Financial of America, LLC, and is not affiliated with the Home Equity Conversion Mortgage (HECM) program. Currently available in AZ, CA, CO, CT, FL, HI, IL, NJ and TX. For business and professional use only. Not for consumer distribution. 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. ©2015 Urban Financial of America, LLC. All Rights Reserved. CALIFORNIA BUSINESS NAME: URBAN FINANCIAL GROUP OF AMERICA, LLC. NEBRASKA BUSINESS NAME: REVERSE IT! LLC UFA193 [Exp 03/2016] reversereview . com 8 TRR | 3
The Reverse Review June 2015
From the EDITOR RE
V IE
E R EVE W TH RS
E
RE
EW THE
REVI
A NOTE FROM JESSICA GUERIN
EV
W
ER
IE
SE
VERSE R EV E RE
Explaining the power of the HECM
TH
RE
VE
EW
RS
VI
E
INSIDE THIS ISSUE | A Call to Action: Making the Case to Financial Planners
E
R
THE
REVERSE review J U N E 2015
It’s no secret that more and more seniors are using the Internet. Whether they’re researching, seniors today are logging on, taking advantage of everything the World Wide Web has to offer.
PG. 16
PG. 24
PG. 26
PG. 38
EDITOR-IN-CHIEF
Traci Knight
hard to market their services online. WHY RECENT POLICY CHANGE WILL PROPEL THE PRODUCT
Erik Richard
CREATIVE DIRECTOR
professionals nationwide are working THE NEED FOR DIALOGUE BETWEEN SALES AND SERVICING
PUBLISHER
Jessica Guerin
Aware of this growing trend, reverse
AVOIDING THE PITFALLS OF A DIRECT MAIL CAMPAIGN
SENIOR PUBLISHER
Reza Jahangiri
shopping, emailing, Facebooking or
PAUL FIORE SITS DOWN IN OUR HOT SEAT
Meet the Team
COPY EDITOR
Through educational website content and multiplatform social media campaigns,
Kersten Deck MARKETING DIRECTOR
Alycia Greer
lenders are promoting the HECM, spreading the word to tech-savvy seniors JUNE 2015
COVER
More and more seniors are turning to the Internet to learn about reverse mortgages.
about how this financial tool can be used to create a solid
Printer The Ovid Bell Press
retirement plan. With a revamped product to promote, marketers now have a new message to spread, and the Internet is set to play a key role. Not only will it affect how people learn about the product, it may influence how they choose a lender and how they relate their reverse mortgage experience to their peers. All of these factors will go a long way toward shaping the future of the product, making it more important than ever that lenders learn how to effectively share their message online.
JESSICA GUERIN Connect with me about how you can participate. Reach me at jessica@reversereview.com
Advertising Information phone : 630.207.3882 email : jessica@reversereview.com Subscriptions email : information@reversereview.com Editorial Content email : jessica@reversereview.com © 2015 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
SIGN UP FOR THE NEWSLETTER AT REVERSEREVIEW.COM
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
GET THE LATEST ISSUE DELIVERED DIRECTLY TO YOUR INBOX
FIND US ON
FACEBOOK AND LINKEDIN
table of contents
TRR 6.15
19 | Originating
What’s a Boomer to Do? For those who liked to live large, few options are left when it comes to retirement.
IN THIS ISSUE... 23 MEGAN HAFENSTEIN Title Tip
PHILIP E. LIPP
21 | Underwriting
Underwriting Your Company, Part II Breaking down key areas of risk management RALPH ROSYNEK
24 | Marketing
One Mailing, Seven Lessons Learned
30 RICK BROWN Spotlight
Avoiding the pitfalls of a direct mail campaign E REVE W TH R EV
IE
RS
VE RE
EW THE
ER
W
EV
The need for dialogue between sales and servicing R
15 | Roundup
E
Headlining stories of the past month
MARTY BELL
IE
09 | Industry News
Compliance: Moving Beyond the the HECM Rules to Real Opportunity, Part II
REVI
A Call to Action: Making the Case to Financial Planners
Explaining
26 |the Servicing power of SE
Read about the association’s current initiatives.
VERSE R EV E RE
12 | NRMLA News
TH
The latest developments in companies across the reverse space
RE
EW
07 | Movers & Shakers
SE
VI
R BILLE SMITH
DEBRA TAYLOR
EVERSE review REVERSE MORTGAGE DAILY
A collection of recent facts and surveys affecting the reverse market
10 | Stats
16 | Hot Seat
April’s top lenders and HECM endorsement stats through March REVERSE MARKET INSIGHT
FEATURE
29 | HMBS
38 DONNA HARRINGTON Last Word
The Importance of Data
Paul Fiore
Executive vice president of retail lending at AAG
How more information will help investors better understand the value of the HECM GREGORY BELL
34 | Feature
Internet Marketing
For originators looking to connect with senior consumers, the Internet has become a powerful tool. JESSICA GUERIN
“Nowadays, prospective borrowers are going online to learn about the loan and find a lender, making it more important than ever for reverse professionals to market their services on the Web. In an effort to do so, lenders big and small are taking steps to elevate their online presence: fine-tuning their websites, posting educational resources and utilizing social media to spread the word.
YO DO U CAN IT!
There’s no such thing as a stupid idea. REACH OUT TO US ABOUT WRITING FOR TRR. INFO@REVERSEREVIEW.COM reversereview . com
8 TRR | 5
The Reverse Review June 2015
contributors JOHN K. LUNDE
MARTY BELL
PAUL FIORE
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
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 and four nonfiction books, and his writing has appeared in publications including Playboy and New York magazine. Bell wrote and produced the award-winning documentary film The Boys of Summer and produced 15 Broadway shows (including Ragtime, Fosse and Dirty Rotten Scoundrels) that won 27 Tony Awards.
As AAG’s executive VP of retail lending, Paul Fiore is responsible for the management and production of a 200-plus loan officer call center. Previously, Fiore served as chief learning officer for Senior Lending Network. He has spoken at various NRMLA and MBA meetings about the correct way to sell reverse mortgages over the phone.
10 | Stats g
John K. Lunde
Marty Bell
Paul Fiore PHILIP E. LIPP
Philip E. Lipp
Ralph Rosynek
Megan Hafenstein
Debra Taylor
Gregory Bell 6 | TRR
MEGAN HAFENSTEIN
Ralph Rosynek is the senior vice president of Money House U.S., responsible for sales and operations activities of the company’s HECM and forward mortgage national wholesale and correspondent business channels. Rosynek is a seasoned HECM DE underwriter and has written for The Reverse Review since the magazine’s launch as its underwriting expert. He has held many leadership roles in the reverse mortgage industry for the past 15 years. rrosynek@moneyhouseus.com
Megan Hafenstein is the VP of business development at PRC, a national reverse mortgage title and settlement company. Hafenstein manages accounts in 22 states from the company’s headquarters and works closely with operations to ensure that clients’ files are closed accurately. Prior to joining PRC six years ago, Hafenstein worked in the California Legislature after receiving her B.A. in political science from Cal Poly, San Luis Obispo.
21 | Underwriting Your Company, Part II g
BILL SMITH
DEBRA TAYLOR
Bill Smith works for Reverse Mortgage West in Irvine, California. He began his reverse career with Financial Freedom in 2002 and has since originated more than 600 loans. While at Financial Freedom, he pioneered efforts on seminar selling, fiduciary support and assisting conservators with HECMs for their clients. Smith has lectured on HECMs across the country and has been a speaker for NRMLA, FPA and the National Guardianship Association. bill@reversemortgagewest.com
Debra Taylor is compliance manager for Celink, where she oversees state licensing, management of internal quality controls and compliance with servicing regulations. Taylor has worked in the financial industry for more than 30 years, specializing in compliance, customer service, and project and operations management. She brings a new perspective to Celink Compliance through experienced face-to-face interaction with clients.
Philip E. Lipp is the president of Allwest Mortgage and a founding director of the California Association of Mortgage Brokers. Lipp has worked in the mortgage business with his wife, Ilene, for 29 years, helping lowincome, first-time homebuyers, supporting initiatives to prevent predatory lending and assisting homeowners in foreclosure. Lipp has a B.A. from Antioch College and an MBA from Pepperdine University. He has a general contractor license and a real estate broker license.
16 | Hot Seat g
RALPH ROSYNEK
19 | What’s a Boomer to Do? g
24 | One Mailing, Seven Lessons Learned g
Bill Smith
12 | NRMLA News g
26 | Compliance: Moving Beyond the Rules to Real Opportunity, Part II g
23 | Solar Energy Systems and Title g
GREGORY BELL
29 | The Importance of Data g
Gregory Bell is an investment analyst for debt securities. He previously spent five years at RBS Securities LLC, formerly Greenwich Capital Markets Inc., where he was responsible for trading and structuring various agency mortgage and assetbacked securities. Most notably, he developed the firm’s HMBS and HREMIC trading business.
contributors RICK BROWN
30 | A Call to Action: Making the Case to Financial Planners g Rick Brown
Donna Harrington
Rick Brown works for Frontier Mortgage in Chesterfield, Missouri. Previously, he served as director of the reverse department for Midwest Mortgage Capital for 10 years. Brown has closed hundreds of HECMs during his career and can proudly say he has met every one of his customers at their kitchen tables. Brown is passionate about educating seniors and their trusted advisors about HECMs. He frequently holds presentations for financial and real estate professionals, church and senior groups, and anyone else who will listen to him.
DONNA HARRINGTON
38 | A New Beginning g
Donna Harrington has been in the banking and financial industry for more than 12 years. In the past eight years, her emphasis has been helping senior homeowners with home equity solutions in their retirement. Harrington works for Yadkin Mortgage Company servicing Virginia and Eastern North Carolina. She belongs to several senior groups and volunteers with the Food Bank, USO and the Hampton Roads Rotary club.
movers & shakers READ ABOUT THE LATEST DEVELOPMENTS IN COMPANIES ACROSS THE REVERSE SPACE.
HAVE A COMPANY UPDATE YOU WOULD LIKE TO SEE PUBLISHED? Urban Financial Hires Ron Bartley to Manage Midwest Area Retail; Company’s Indianapolis Call Center Celebrates Record Growth Urban Financial of America has hired Ron Bartley as Midwest area manager for its retail sales division. Previously, Bartley was an area sales manager for AAG and central region team leader for Liberty Home Equity Solutions. Also, UFA’s Indianapolis Call Center is celebrating record growth upons its one-year anniversary. Since its inception in April 2014, the location has tripled its headcount. “With this impressive growth over a single year, we are extremely excited to increase production in Indianapolis, in conjunction with our call centers in Tulsa, San Diego, Philly and New York,” says Tony Arnold, VP of call center sales.
RMS and S1L Announces Rebranding Initiative and New TV Ad Reverse Mortgage Solutions and its retail brand, Security 1 Lending,
email it to jessica@reversereview.com
a division of Walter Investment Management Corp., have launched rebranding and repositioning initiatives, and a new TV spot. “In addition to the redesigned logos and tagline, the comprehensive multimedia introduction kicks off with the unveiling of our exciting new, integrated, solutionsdriven Internet site; updated sales materials; direct marketing; and a number of other components. It also marks the debut of a fresh TV spot showcasing our updated brand positioning,” says Sharon Robbins, SVP and CMO.
Reverse Mortgage Funding Hires Alexis Lopez Carril as Regional Account Manager Reverse Mortgage Funding has hired Alexis Lopez Carril as regional account manager in the Southern Florida area, a position that supports RMF’s thirdparty origination sales channel. Carril will report to National Sales Leader Mark O’Neil. With more than 15 years of experience in sales and lending,
Carril worked previously as a wholesale sales and operations consultant for Lending Direct and as a wholesale account executive for HighTechLending. “Alexis’ experience, professionalism and commitment to delivering the highest levels of customer service make her a perfect addition to our rapidly growing team of reverse mortgage professionals,” O’Neil says.
FirstBank Acquires Northwest Georgia Bank FirstBank has acquired Northwest Georgia Bank, a leading community bank that has served North Georgia and Chattanooga for more than 100 years. With approximately $270 million in assets, Northwest Georgia Bank has four branches in Chattanooga and two in North Georgia. The acquisition will increase FirstBank’s assets to $2.8 billion and elevate its market share to seventh in the Chattanooga area.
reversereview . com
8 TRR | 7
The Reverse Review June 2015
1.
NRMLA 2015 HUNTINGTON BEACH, CA
-
2.
3. 4.
SEE AND BE SEEN... 1. Attendees enjoyed the view during a networking lunch on the lawn of the Hyatt Regency.
5.
NRMLA RECAP
2. Springwater Capital’s Cory Williams
6.
N
RMLA’s Western Regional Meeting took place last month in Huntington Beach, where 230 attendees flocked to an ocean-side resort to discuss the HECM market and mingle with their colleagues. Sessions during the two-and-a-halfday conference addressed the impact of Financial Assessment, marketing the new reverse mortgage and the HECM’s role in retirement planning.
8 | TRR
3. Urban Financial’s Sherry Apanay, Anneta Pope, Jonathan Scarpati and Sydney Muir 4. RMS’ Shirley Langley with Aramco’s Mehran Aram 5. Citywide Home Loans’ Bonnie and John Wallace 6. Security One Lending’s Dan Shackelford with Liberty Home Equity’s Adrien Prieto and Tim Frederick
7.
7. Premier Home Equity’s Bart Johnson and HighTechLending’s Kimberly BIxler
9.
8. Premier Home Equity’s Tony Garcia and HighTechLending’s Joan Imelio
8.
10.
9. Premier Home Equity’s David Darling 10. Tom Evans (Urban Financial), Steve Resch (Urban Financial), David Stroop (MIS), John Loveless (Proficio Mortgage) and Josh Moran (Live Well Financial)
industry news
June Edition AN UPDATE OF THIS PAST MONTH’S BREAKING NEWS
The industry’s headlining stories at your fingertips UP-TO-THE-MINUTE NEWS? Visit reversemortgagedaily.com
NEWS DIRECT TO YOU: WANT EVEN MORE
HEADLINING NEWS HUD RESCINDS RECENT 1. RULE ON REVERSE MORTGAGE NONBORROWING SPOUSES HUD has rescinded a previous mortgagee letter that would have given reverse mortgage lenders the option to delay foreclosure of non-borrowing spouses by assigning the loan to HUD. In Mortgagee Letter 2015-12, the agency revoked the guidelines laid out in ML 2015-03 that detailed the Mortgagee Optional Election (MOE) Assignment of HECMs assigned prior to August 4, 2014. Effective immediately, lenders will have a new option to extend foreclosure proceedings for up to 60 days in certain cases. Lenders may immediately elect to begin using this extension. “The request for an extension is not conditioned on the continued pursuit of foreclosure or the marketing of the property,” HUD stated. “The mortgagee’s request for an extension is effective when made and FHA will not be providing any specific approval for this extension.” To elect an extension, HUD directs mortgagees must prepare a detailed Extension Request on their company’s letterhead and obtain an authorized loan servicing manager’s signature.
// May 3, 2015
2. FORBES: REVERSE MORTGAGE RULES PROVIDE RETIREMENT SECURITY Reverse mortgages are one way eligible homeowners can leverage their home equity to provide revenue in retirement, and while they aren’t right for everyone, recent changes have made the financial
product more appealing, writes Jamie Hopkins on forbes.com. “In April 2015, new rules have been implemented to help prevent previous miscues often associated with reverse mortgages,” he writes, adding that a reverse mortgage can be properly utilized to “significantly improve retirement income security.” Hopkins continues, writing that a reverse mortgage “is no longer just for the cash poor and house rich,” and that they can instead “used strategically as one part of a retirement income plan designed to build a buffer against sequence of returns risk early in retirement, help defer Social Security benefits or reduce cash outflow from traditional mortgage payments.”
// May 18, 2015
3. CHASE TO BUY $45 BILLION IN LOAN SERVICING FROM OCWEN JP Morgan Chase & Co. will purchase an estimated $45 billion worth of mortgage servicing rights (MSRs) from Ocwen Financial Corporation’s subsidiary, Ocwen Loan Servicing LLC. Ocwen announced its intention to sell this portfolio of 266,000 Fannie Mae loans in early March as part of the company’s ongoing strategy to sell off agency MSRs. “Buying this prime servicing book will improve the quality of our servicing portfolio and will help drive a stronger and less volatile mortgage business,” said Chase Mortgage Banking CEO Kevin Watters in a written statement. “We expect this portfolio, in addition to lower delinquency rates overall, will help improve the value of our business.”
// May 14, 2015
4. FEDERAL AGENCIES ISSUE FINAL RULE ON AMC
Six federal agencies have adopted a final rule to implement minimum requirements for state registration and supervision of appraisal management companies (AMCs), which provide services to lenders, underwriters or other principals in the secondary mortgage markets. Under the final rule, states may elect to register and supervise AMCs. These participating states must apply certain minimum requirements in the registration and supervision of the companies. In states that have not established such a structure after 36 months from the effective date of the final rule, any non-federally regulated AMC will be barred from providing appraisal management services for federally related transactions.
// May 4, 2015
5. HELOC ORIGINATIONS UP 32% OVER LAST YEAR, DESPITE QUARTERLY DIP The number of loan originations— including HELOCs—increased in the first quarter of 2015 compared with the same period last year, despite quarterover-quarter drops, according to the latest RealtyTrac housing and property data. The 238,359 HELOCs originated in the first quarter of 2015 represented 15.4 percent of all loan originations. While HELOC originations were down 17 percent from the previous quarter, they still increased 32 percent from a year ago, the Residential Loan Origination Report indicates. “A dip in interest rates early in the year combined with lowered mortgage insurance premiums for FHA loans breathed some life back into the refinancing market in the first quarter,” said Daren Blomquist, vice president at RealtyTrac.
// May 17, 2015
REQUIREMENTS reversereview . com
8 TRR | 9
The Reverse Review June 2015
stats May 2015
Top Lenders Report
12345 American Advisors Group
One Reverse Mortgage
Endorsement
Endorsement
1,078
439
RMS/S1L
UFA
Endorsement
Endorsement
423
338
Liberty Home Equity
Endorsement
307
Lender Endorsements RREVERSE MORTGAGE FUNDING LLC
259
Lender Endorsements
LIVE WELL FINANCIAL INC
161
CIRCLE MORTGAGE CORPORATION
PROFICIO MORTGAGE VENTURES LLC
106
FIRSTAR BANK NA
9
HOME POINT FINANCIAL CORPORATION
90
FRANKLIN FIRST FINANCIAL LTD
9
72
LAND-HOME FINANCIAL SERVICES
9
NET EQUITY FINANCIAL INC
65
PACIFIC RESIDENTIAL MORTGAGE LLC
9
UNITED NORTHERN MORTGAGE BANKERS LTD 60
NORTH AMERICAN SAVINGS BANK
9
PLAZA HOME MORTGAGE INC
53
SUCCESS MORTGAGE PARTNERS INC
8
45
SECURITYNATIONAL MORTGAGE COMPANY
8
FIRSTBANK 44
LENOX FINANCIAL MORTGAGE CORPO
8
M & T BANK
35
FULTON BANK
8
32
BANK OF MAUMEE
8
31
CONTOUR MORTGAGE CORPORATION
7
31
BROKER SOLUTIONS INC
7
NATIONWIDE EQUITIES CORPORATION
30
MEADOWBROOK FINANCIAL MORTGAGE
7
SUN WEST MORTGAGE CO INC
29
HOMESTEAD FUNDING CORP
7
26
ODYSSEY FUNDING LLC
7
OPEN MORTGAGE LLC
HIGH TECH LENDING INC
CHERRY CREEK MORTGAGE CO INC GMFS LLC
THE FEDERAL SAVINGS BANK
MCM HOLDINGS INC
ADVISORS MORTGAGE GROUP LLC
25
SUN AMERICAN MORTGAGE CO
22
UNITED SOUTHWEST MORTGAGE CORP
22
TOWNEBANK 16 THE MONEY STORE
16
MORTGAGESHOP LLC
15
AMERICAN PACIFIC MORTGAGE
10
Brought to you by:
15
HOMEOWNERS MORTGAGE ENTERPRISE
14
GEORGETOWN MORTGAGE
12
AMERICA FIRST FEDERAL CREDIT UNION
12
YADKIN VALLEY BANK AND TRUST
12
UNIVERSAL LENDING CORPORATION
11
VAN DYK MORTGAGE CORPORATION
10
10 | TRR
AMERICAN NATIONWIDE MORTGAGE COMPANY 10
%%%%% LOOKING FOR MORE STATISTICS? Go to rmsinsight.net for all of the industry’s latest stats and rankings.
stats HECM Endorsement Stats Through April 2015 INDUSTRY SUMMARY
MO. 4
2,362
Retail Endorsement Growth
5
2,651 12.24%
6
2,413
-8.98%
7
2,319
-3.9%
8
1,944 -16.17%
1,306 -26.3%
3,250 -20.56%
9
2,248 15.64%
1,514 15.93%
3,762 15.75%
10
2,773 23.35%
2,078 37.25%
4,851 28.95%
11
2,500
-9.84%
1,907 -8.23%
4,407
12
2,867 14.68%
1
2,874
2
2,557 -11.03%
3
2,772
TRAILING TWELVE MONTH ENDORSEMENTS 5,000
3,000
Wholesale Endorsement Growth
-13.76%
2,000 1,000
Total Endorsement Growth
-1.74%
Wholesale *Numbers Represent Months
01
TOT
UNITS CHG%
0.17%
0.24% 8.41%
UNITS CHG%
1,806 -19.95%
4,168
1.99%
4,493
7.8%
1,747 -5.16%
4,160
-7.41%
1.43%
4,091
-1.66%
1,842 1,772
-9.15%
4,940 12.09%
8.7%
2,073
-9.67%
2,062 -0.53%
4,936
-0.08%
4.7%
4,716
-4.46%
1,862 -13.76%
4,634
-1.74%
2,159
30,280
22,128
52,388
60% 50%
FIXED RATE PERCENTAGE
40% 30% 20%
3/1/15
2/1/15
1/1/15
12/1/14
11/1/14
7/1/14 7/1/14
10/1/14
6/1/14 6/1/14
9/1/14
5/1/14 5/1/14
8/1/14
4/1/14 4/1/14
2/1/14
1/1/14
12/1/13
9/1/13
8/1/13
3/1/14
02
3/1/14
ARM
{ FIGURE }
7/1/13
6/1/13
5/1/13
10% 3/1/13
HECM ENDORSEMENT TRENDS
* Figures Above Reflect Change from Prior Month
TOTAL
70%
{ FIGURE }
4/1/13
Retail
10/1/13
4 5 6 7 8 9 10 11 12 1 2 3
11/1/13
0
WHOLESALE
UNITS CHG%
8.41%
4,000
RETAIL
FIXED
$1,200.0 $1,000.0
$400.0 $200.0
3/1/15
2/1/15
1/1/15
12/1/14
11/1/14
10/1/14
9/1/14
8/1/14
2/1/14
1/1/14
12/1/13
11/1/13
10/1/13
9/1/13
8/1/13
7/1/13
6/1/13
5/1/13
$0 4/1/13
IN THE MILLIONS
$600.0
3/1/13
HECM ENDORSEMENT
INITIAL PRINCIPAL LIMITS
$800.0
reversereview . com
8 TRR | 11
The Reverse Review June 2015
nrmla news Western Regional Report: Industry Eagerly Faces the Future
NRMLA Welcomes New Public Relations Director When NRMLA decided to create an in-house public relations department, CEO and President Peter Bell’s dream was to find someone with association experience, financial services experience and Capitol Hill experience.
Just three weeks into the implementation of Financial Assessment, there seemed to be a reinvigoration of energy and renewed urgency for creative approaches to marketing and sales within the reverse mortgage industry. The 250 industry participants who gathered at the beautiful beachfront Hyatt Regency Resort & Spa in Huntington Beach, California, in mid-May for NRMLA’s Western Regional Meeting heard an emphasis on leaving the past of the product behind, embracing the advantages (particularly additional security) provided by the current product and the need for thoroughly educating the new, younger consumer base about the versatility of HECMs as a retirement funding asset. In a session on changes in marketing approaches due to recent product alterations, Mary Smith of Liberty Home Equity Solutions, Teague McGrath of AAG and Sharon Robbins of RMS all confirmed that their companies are indeed reaching retirement plan-focused clients who are more savvy, more skilled digitally and more open to the idea of debt than targeted borrowers in the past. Cost is less of an issue to these potential borrowers since they are not desperate for cash. On the other hand, they are in no hurry to make a decision, so the loan process can take lender patience. In a candid evaluation of the current state of HECM counseling, John Olmstead of HUD’s Office of Housing 12 | TRR
Counseling reported that better-qualified people are now being counseled and that the number of endorsements is getting closer to the number of counseling certificates issued. Olmstead recommended that loan originators do a financial pre-screening of clients prior to counseling. “In some instances, you may find that what the client really needs is credit or debt counseling rather than HECM counseling,” Olmstead said. The conference climaxed with a lively interactive session, “Sales Techniques and Strategy: What’s New?” conducted by Kimberly Smith and Tabatha Addison of AAG. The session concluded that the issue is not what’s new so much as what’s been lost: the ability of empathetic loan originators to listen patiently to their clients’ needs instead of assaulting them with an avalanche of facts and highlights about the reverse mortgage.
Members can download the presentation slides and audio recordings from the Western Regional Meeting by logging on to nrmlaonline.org.
When Jenny Werwa walked into NRMLA’s conference room, equipped with a resume that includes PR experience at the National Association of Realtors, the American Immigrant Lawyers Association and the office of California Congresswoman Jackie Speier, Bell had found a match. “I never expected we would not find the whole package,” he says. Werwa will be leading the effort to execute “Help More People,” the 2015 public relations plan approved by the Board of Directors, which includes commissioning of new and needed research, aggressive press outreach and the creation of a National Reverse Mortgage Education Week.
Save the Date: Annual Meeting Bookmark your calendars now for THE LARGEST annual gathering of reverse mortgage professionals, the 2015 Annual Meeting & Expo. This year’s conference is taking place November 16-18 at The Palace Hotel in San Francisco. Look for registration announcements in the coming weeks.
No More MOE In case you missed it, NRMLA distributed a member alert in May announcing FHA’s decision to rescind Mortgagee Letter 2015-03 and eliminate the Mortgagee Optional Election (MOE) Assignment option.
The text of Mortgagee Letter 201512 can be found at: portal.hud.gov/ hudportal/documents/huddoc?id=1512ml.pdf
The text of FHA Info #15-33 can be found at: portal.hud.gov/hudportal/ documents/huddoc?id=SFH_FHA_ INFO_15-33.pdf
On Behalf of the Industry: Members Supporting Public Relations Plan
In order to commission research to provide evidence of the success of reverse mortgages and also to grow our staff to fulfill members’ requests
TELLING OUR STORY
BROUGHT TO YOU BY MARTY BELL: NATIONAL REVERSE MORTGAGE LENDERS ASSOCIATION
Recent program changes will help make reverse mortgages a safer option to leverage home equity and significantly improve retirement income security, according to Jamie Hopkins, Associate Director of the American College’s New York Life Center for Retirement Income, whose article appeared on forbes.com, which averages more than 4 million visitors per month. The article, titled “New Reverse Mortgage Rules Open Door to a More Secure Retirement,” nicely illustrates the message that NRMLA and the industry has promoted for the past two years: that reverse mortgages should be considered when developing a wealth management strategy, rather than used as an option of last resort. Hopkins writes that, “There are a variety of strategic uses for reverse mortgages that might prove to be more beneficial to the homeowner, especially when it comes to retirement income planning.” A standby line of credit can help retirees “avoid taking substantial withdrawals from an investment portfolio in the early years, thus allowing it to continue to grow,” or they can use a reverse mortgage and defer claiming Social Security benefits or an employer-sponsored pension plan. Yet another course is that “some retirees are now taking a reverse mortgage to pay off their traditional mortgage, and at the same time creating a line of credit or generating additional income,” says Hopkins, who also serves as an associate professor of taxation at the American College and co-creator of the Retirement Income Certified Professional (RICP) designation.
for new activities, NRMLA needed to reach outside its annual budget and solicit additional support from members’ companies. Thus far, more than 29 companies have signed pledges of financial support for these new efforts. NRMLA wants to thank the following companies for stepping up to the plate for the benefit of the entire industry: American Advisors Group, Access Mortgage, Agency for Consumer Equity Mortgage Inc., Bank of New York, BayDocs, Celink, Circle Mortgage Corp., 1st Financial Reverse Mortgages, Franklin Funding, Greenleaf Financial LLC, Harbor Mortgage Solutions Inc.,
NEWS FROM NRMLA
nrmla news
HighTechLending Inc., HomeChex, JB Nutter, Liberty Home Equity Solutions, Live Well Financial, Longbridge Financial, McGowin-King Mortgage LLC, Nationstar Mortgage, One Reverse Mortgage, Open Mortgage, Premier Reverse Closings, Retirement Life Funding LLC, Reverse Mortgage Advisors LLC, Reverse Mortgage Funding, Reverse Mortgage Solutions, ReverseVision, Senior Funding Associates, Southern Trust Mortgage, and Urban Financial of America. Companies interested in supporting this effort should contact Marty Bell at mbell@dworbell.com.
reversereview . com
8 TRR | 13
The Reverse Review June 2015
The value of A STRONG ALLY:
INNOVATION.
Industry leaders aren’t always the biggest...they’re the fastest. Reverse mortgages require highly specialized servicing and adaptability to rapidly changing regulations. Celink reduces our clients servicing costs and risk through continued innovation.
For more information, please contact Katie Kirkham, Director of Client Relations at (844) 228-2101. 14 | TRR
celink.com | (844) 228-2101
roundup
THIS MONTH A LOOK AT THE NEWS AND STATS AFFECTING THE MARKET HECM market developments in The Reverse Review’s monthly Roundup.
{
{
GET UP-TO-DATE retirement facts, home price stats, senior trends and
and a gradual uptick in household formations. We expect 2016 to be even better, due to a significant amount of pent-up demand and an economy that will be entering a period of reasonable strength and consistency,” says NAHB Chief Economist David Crowe.
W ORD O N T HE ST R E E T
NAHB PREDICTS AN UPTICK IN THE HOUSING MARKET.
The National Association of Home Builders says it expects to see positive growth in the housing market in the coming year. The association estimates single-family housing will see a 9 percent gain in 2015 and predicts a 39 percent gain in 2016. “This should be a good year for housing, buoyed by sustained job growth, rising consumer confidence that is back to pre-recession levels
THE F AC T S OF AG ING Study finds inhome care to be cheaper than alternatives.
Although long-term care costs are rising, a Genworth Financial study found that in-home care services are still cheaper than paying for care in an assisted living facility.
$20 * The median
hourly rate for home health aide services
$3,600
* The monthly median rate at an assisted living facility
$220 * The median
MONEY M AT T ER S
GALLUP REVEALS THAT MANY INVESTORS TAP INTO THEIR 401(k)s EARLY.
A recent poll indicated that, while many workers set aside at least some funds for retirement, a notable portion end up tapping into their set-aside.
1 in 5 tap into their 401(k) plans.
9%
16%
9% have withdrawn from their 401(k) early.
16% have taken a loan from their 401(k) accounts.
S E N I O R C ON C E RN S CPAs SAY CLIENTS ARE WORRIED ABOUT RUNNING OUT OF MONEY.
79% of CPAs say running out of money is among their clients’ top concerns. Exasperating this fear are concerns about: health care costs, market fluctuations, lifestyle expenses, unexpected costs, the possibility of being a financial burden on loved ones and the desire to leave an inheritance.
daily rate for nursing care in a semiprivate room
$250
* The median daily rate for nursing care in a private room
NUMBER CRUNCH
$42,797 The average savings of a 50-yearold
reversereview . com
8 TRR | 15
The Reverse Review June 2015
THE
REVERSE review
THE
J UNE 2015
The best purchase I’ve ever made was our new home. It truly feels like a place where we can raise our children until they are grown.
Paul From his favorite movie and his most memorable moment to his thoughts EXECUTIVE VP OF RETAIL LENDING American Advisors Group 16 | TRR
about the reverse mortgage market, we get the facts from Paul Fiore, senior vice president of retail lending at American Advisors Group (AAG).
personal >
Ten years from now I turn 50 and
>
my oldest daughter heads to college.
was not to take anything for granted.
Yikes! >
You never know what challenges life will bring you.
If I were a professional athlete, I
would be a baseball player. Baseball
>
was my first love. >
were having our third daughter. >
I took it into Manhattan without telling
My favorite movie is Rocky. It’s
>
fact
If I were a professional athlete, I would be a baseball player. Baseball was my first love.
If I could trade places with
someone for a day, I would choose
odds and Sylvester Stallone, an Italian,
Derek Jeter.
is the star! I’m a sucker for a good
>
fun s
before the financial collapse.
about an underdog overcoming the
underdog story.
The worst purchase I’ve ever made was our house in New York right
him. >
The most memorable moment in
my life was when we found out we
My first car was my dad’s 1984
Toyota Supra, which was stolen when
The best lesson I’ve ever learned
>
For success I have sacrificed living close to family.
I never miss an episode of Better Call Saul. Great show.
>
Every morning I drive my daughter
to school while she jams to Katy Perry, Ariana Grande and Taylor Swift. Sadly,
professionAl >
reverse mortgage industry is
I know every song. >
changing perception and getting everyone to think outside the box in
I can’t go without Starbucks, every
order to grow the industry.
single morning. >
>
When I was a kid, I was extremely
>
a lot brighter than many people believe
I’ll never forget 9/11. It will stay with
great for the long-term success of our
My first job was working in the
industry. >
HECM. People forgot how to sell the
value of the reverse mortgage and the
My parents taught me how to work
use of the line of credit.
hard and appreciate everything you life, go get it and don’t wait for it to come to you. >
My favorite time of the day is
weekend mornings with my family. >
I’ve never jumped out of an airplane and I never will.
The greatest setback for our
industry was the full-draw, fixed-rate
Yes, the recipe is top secret.
have in life. If you want something in
I can’t go wit hvoeurty Star bucks, eing. single mor n
it to be. Financial Assessment will be
kitchen of a Kentucky Fried Chicken.
>
The future of reverse mortgages is
shy and introverted.
me forever. >
The biggest challenge in the
>
Industry growth is dependent upon new marketing strategies, product
stability and product acceptance from a broader base of seniors. We have to show the long-term value of what a reverse mortgage provides to a large population of seniors.
I would encourage a family member to consider a reverse mortgage because… I already have. My parents took a reverse mortgage three years ago to support their retirement years and they could not be happier. reversereview . com
8 TRR | 17
The Reverse Review June 2015
18 | TRR
ORIGINATING
RR
CHANGE
RR
RR
What’s a Boomer to Do? By Philip E. Lipp
ACCORDING TO PHILIP
Downsizing is often mentioned as a possibility. But that creates a tricky problem with all the stuff that’s been accumulated. Downsizing is supposed to help free up cash by unloading the big family home and moving into a
It’s time to grow up and face the music. Like the Rolling Stones said, “You can’t always get what you want, but if you try sometimes, you get what you need.” If you turn over a new leaf, maybe you will be lucky enough to qualify for a reverse mortgage and be able to stay in the home you love. You know, the one with all that stuff in it. n
IT’S TIME TO GROW UP AND FACE THE MUSIC. Like the Rolling Stones said, “You can’t always get what you want, but if you try sometimes, you get what you need.” reversereview . com
8 TRR | 19
SPOTLIGHT
Unless one has a guaranteed pension plan from an entity that will not go bankrupt, most boomers will have to live on meager savings and Social
So what’s a boomer to do? Well, there’s the possibility of selling all the “stuff” and moving to a less expensive city. While that might be an interesting change-of-pace idea, many folks would prefer to stay close to friends and family rather than starting all over again someplace new.
Get serious about paying down your mortgage and building up some equity. Start saving money and invest in your IRA again. Invest in some low-cost index funds. Start being smart about your finances and realistic about the cost of your future. Stop hoping that you will get an inheritance from your folks; it may never happen.
HMBS
It turns out that if you’re lucky, life might last a long time, and it’s expensive—even with the kids out of the house and on their own. The amount of money required to maintain ourselves comfortably for 20 to 30 years in retirement is staggering.
Security. And God forbid something goes really wrong and in-home care is needed. Such expenses could be impossible to manage and, currently, Medicare doesn’t cover it.
SERVICING
I marveled at all the bright, shiny objects they bought, mostly on credit, and wondered how in the world they were going to pay for it all. Well, now I am old enough to qualify for Medicare and I’ve got some latent wisdom as well. They couldn’t afford it then and they can’t afford it now.
MARKETING
I remember when I was in my 20s and 30s, I was always envious of my friends buying the latest gizmos, cars and vacations. My friends just felt like they had to have it and they had to have it now.
The answer is going to be lousy-tasting medicine, but the only way to make it is to live below your means. This means stop using credit cards, even if you get double miles. Stop buying stuff, cut back on eating out—cut, cut and cut!
TITLE TIP
For those who liked to live large, few options are left when it comes to retirement.
So what’s a boomer to do?
UNDERWRITING
When I speak to my friends about what they plan to do, I get these blank stares. I guess when you have debt piled up and little in savings, what’s your choice? Some people ask me how that reverse mortgage thing works, and whether it could work for them. But what I find is that all too often, they have been using the equity in their homes for all sorts of things: swimming pools, credit card bills, college tuition.
ORIGINATING
house or apartment built for two. That might help, but if you are a boomer with a penchant for living large and buying stuff, the additional money from the home sale could go quickly, and then what?
WE KNOCK OUT THE
The Reverse Review June 2015
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 20 | TRR
UNDERWRITING
ASSESS
Underwriting Your Company, Part II By Ralph Rosynek
Breaking down key areas of risk management ORIGINATING UNDERWRITING
In the first part of this series, I outlined steps readers could take to assess their company for risk. So, how did your first risk underwrite meeting go? For many, the session was filled with discussions that created an agenda for the next meeting, yet probably ran overtime and did not complete all of the desired tasks of the agenda. Regardless, your meeting was a success! Gathering a team of committed members to participate in the risk preparedness process is key to a thorough review. A committee of one assigned to all tasks is not a realistic approach to meeting the challenges of risk and compliance management.
TITLE TIP
NOTE: Most regulatory and agency reviews seek an organizational chart of compliance and risk management personnel and, in some cases, job descriptions and resumes associated with each of their responsibilities.
LOOK SOMEWHAT LIKE THIS? Licensing Human resources Origination
Loan operations
Marketing/advertising
Investor-related concerns
Technology Customer/servicing Legal/compliance
Company management
Accounting Vendor management
In the next part of this series, we will examine subcategories and internal controls in more detail. n reversereview . com
8 TRR | 21
SPOTLIGHT
DID YOUR LARGE-TICKET LIST
For example, under the advertising/marketing category, your policies and procedures indicate there are specific state, federal and agency advertising requirements; disclaimer requirements; licensing notations; logo use and inclusion; prohibited statements and terms; and documented claims and prohibited offers. Each of these items is a subcategory that will impact the development of internal controls and result in measurement and testing of risk mitigation. Begin to identify the subcategories of each of these large-ticket items in your meeting and continue until all have been broken down.
HMBS
More than likely, your initial meeting resulted in quite a number of questions and ideas for follow-up. In the meeting, it was suggested that your team review the CFPB’s “large-ticket items,” or the most essential compliance issues that must be tackled. Having team members divide ownership of these large-ticket items will allow for a more focused development and review of risk and compliance issues, allowing the team as a whole to examine steps toward mitigation.
The second item on the agenda, which will more than likely spill over into a subsequent meeting or two, should be the creation of subcategories for each of the larger items. These subcategories are where the detail and assessment begin to take place. Don’t forget to take those ideas and questions that arose in the initial meeting and place them within a large-ticket item subcategory.
SERVICING
These resources are just that: resources. Third-party individuals and “primers” are a great assist for your committee members, but they do not change the fact that most regulatory bodies want to see that management owns the policy and procedure process and is in control of the daily monitoring and adjusting that’s often required.
Internal controls result from interpreting and defining risk from your policies and procedures. By testing the effectiveness of your compliance activity, you can analyze your management efforts to protect the consumer, the investors, the community, the industry, and the safety and soundness of your company.
MARKETING
Your meeting was unsuccessful if the ownership and allocation of tasks resulted in the sole engagement of a third-party compliance and risk management vendor, the purchase of policies and procedures manuals; or the purchase of Web-based software designed to keep you protected and send or produce a report.
The Reverse Review June 2015
Get on Board... It’s going to be a fun ride!
RFS
Retirement Funding Solutions
F u n d i n g A m e r i c a’s R e t i r e m e n t
tm
www.rfslends.com
877-721-3847
#nofilter #integrity #loyalty #diligence #compassion NMLS #1025894 22 | TRR
TITLE TIP
RR
INFORM
RR
RR
Solar Energy Systems and Title By Megan Hafenstein
As more homeowners install solar panels, loan specialists are sure to encounter confusion when it comes to title concerns.
There is no one-size-fits-all approach to these situations, and forms and practices have not been standardized or uniformly accepted—but don’t worry. Consult with your settlement officer if you have any questions on how solar energy systems may affect title on a property. n
MARKETING
Although the law specifies that the recorded notice does not by itself constitute a title defect, lien or encumbrance, it may nevertheless disclose facts of concern to title insurers, including
leases, possession and issues attending the installation of personal property on real property. Escrow holders may be asked to facilitate the transfer of interests in installed equipment. Lenders grapple with assuring the seniority of their lien, understanding appraisal issues and defining the extent of their encumbrance.
TITLE TIP
Sometimes, leases of equipment are disclosed by other recorded documents. Financing statements may disclose the presence of equipment encumbered by a security interest. When a qualifying company enters a contract for the sale or use of solar-generated energy, or the lease of a solar energy generation system for use on a residence, California law requires that a document called a Notice of an Independent Solar Energy Producer Contract be recorded.
UNDERWRITING
There’s plenty of free sunshine and, by all reports, the solar energy business is booming. More and more people are installing equipment for the generation of solar energy on their homes and other buildings. Although some owners purchase the equipment outright, many others enter into leases or other arrangements. These arrangements can affect title.
ORIGINATING
8
SERVICING HMBS SPOTLIGHT
QuickCert has a new location in Fajardo, Puerto Rico! With our trained HECM counseling staff, we're here to bring local lenders the quick turn-times they need.
888-383-8885 quickcert.org
ops@quickcert.org reversereview . com
8 TRR | 23
The Reverse Review June 2015
MARKETING
LEARN
One Mailing, Seven Lessons Learned By Bill Smith
Avoiding the pitfalls of a direct mail campaign On Friday, April 17, 2015, I sent 1,914 letters to HECM borrowers’ mailboxes in San Diego County. My letter offered to “determine whether more funds are available” from refinancing an existing reverse mortgage. My phone began ringing and over the next few weeks I received 59 responses. I will generate a few HECM applications from this effort. But, what is more important is what I learned about a successful mail campaign, about how the residential real estate market in my area has affected equity for HECM borrowers and their ability to refinance, and what the conversations with these borrowers revealed about their reverse mortgage experiences. I began as a loan officer with Financial Freedom in 2002. I left in 2006 and joined a local reverse mortgage brokerage firm. I have successfully completed more than 600 reverse mortgage applications. This winter, I was sorting through computer files when I stumbled upon an Excel spreadsheet provided to me in 2006 by a title company rep. The spreadsheet contained the names, addresses and
loan dates for more than 1,900 HECM borrowers in San Diego County whose loans were insured between 2003 and 2005. I thought I had stumbled onto a loan originator’s gold mine. I generated a letter and contracted with a direct mail firm. Admittedly, 59 responses out of 1,900 letters is not a significant sample. Still, I’ve reached what advertisers say is a direct mail “home run:” a 3 percent response rate. Regardless, the conversations I had with many of the callers were so similar, they led me to make some valid observations.
REVERSE REVIEW READERS HELP THOUSANDS OF SENIORS FIND FINANCIAL SECURITY. LET’S TALK ABOUT HOW WE CAN HELP THOUSANDS MORE. 24 | TRR
Financial results aside, the effort was rewarding and beneficial. Our industry is full of dedicated professionals who are sincerely committed to the people we serve. Every opportunity to serve our constituents is a gift. Learning from our efforts will bring surprises. Knowledge will enable us to do better next time. Our industry can benefit from committed ambassadors motivated to support the welfare of the protected class we serve. If nothing more, my letter provided an opportunity to do just that.
Get involved. info@reversereview.com YOUR MONTHLY PUBLICATION FOR REVERSE MORTGAGE NEWS
MARKETING
Here are the lessons I learned: LESSON 1
+
LESSON 4
The letter’s format is critical. Older Americans do read their mail. Careful attention to format and style will increase readership. A window envelope was shunned in favor of the recipient’s address printed on the piece. As much superfluous information as possible was eliminated. Law and regulation was adhered to but the letter was not weighed down by distracting compliance information that screams “form letter” and turns off recipients. I kept my letter to one page and it included my headshot.
LESSON 7
Listen, keep your promise and be an ambassador for our industry. Nearly every caller had issues to discuss in addition to an interest in receiving additional funds. All were truly grateful to have an industry professional to talk to. In a couple of cases, solutions to lingering problems or concerns were developed. Many said they would keep the letter for future contact. Two referred me to friends who were considering reverse mortgage solutions.
reversereview . com
8 TRR | 25
SPOTLIGHT
+
HMBS
Reverse mortgage borrowers are left in the cold after their loan closes. Nearly every caller welcomed the opportunity to talk with a reverse mortgage professional as a result of the letter. In some cases they were even more strident, complaining about the lack of resources and support to address their questions and concerns, and many condemned the quality of service from their servicer. Also interesting is that nearly all of the callers expressed resentment that they are being charged a monthly service fee (common practice when these loans were originated) and that all they get in return is a monthly one-page statement. Clearly, cost/benefit is a concern.
LESSON 6
SERVICING
A letter with a plan is better than a letter with a promise. My letter suggested the possibility of more cash or income from refinancing, but it did not promise this result. Instead, I laid out a detailed plan describing how I would help the borrower find out what could work for them. I would need their age and the current loan information only available from the most recent statement from their reverse mortgage lender to go further. Then I offered to work through a title company to determine the accurate value of their home. I would evaluate all of this and report back what additional funds might be available. With the homeowner supplying necessary information and me then researching and calculating the outcome, my letter suggested a collaboration. I believe that people like a plan as opposed to the hollow promises unsolicited mail pieces often offer.
+
MARKETING
LESSON 2
The housing market has left reverse mortgage borrowers with little remaining equity—a critical condition overlooked. The HECM loans on my list were generated at the peak of the housing bubble in 2003 through 2005. Those who refinanced from 2010 through 2012 took advantage of higher HECM lending limits, which resulted in favorable refi outcomes in spite of the still unrecovered home values that fell sharply beginning in 2008. Even though home values in San Diego County are rebounding today, the vast majority of respondents to my letter lacked sufficient equity now to make refinancing viable. Many are currently underwater. I only learned this as a result of the caseby-case data gathering and analysis I performed for each caller. Knowing what I’ve learned, I realize now that greater critical analysis may have contributed to a more successful outcome.
TITLE TIP
+
LESSON 3
List refinement is essential. I was so elated to find the specific list of HECM borrowers from a decade ago that my enthusiasm got the best of me. My previous experience with lists purchased from various list vendors, including title company farm lists, led me to believe that my list was the “holy grail,” and that my results would stand out when compared with purchased lists where demographics were the sole criteria. What I learned when reviewing current principal balance figures from callers’ HECM statements was that in the majority of cases, the existing equity was non-existent or too small to allow refinancing. In retrospect, it would have been productive to scrub my list with additional criteria, such as current loan-to-value data for each property. There is no telling how many names on my list would have been removed.
UNDERWRITING
Audience behavior is more important than demographics. Prior to the mailing, I did not attempt to research which borrowers had already refinanced their reverse mortgage in the 10 years that had elapsed since the original loan. I found that the vast majority of respondents had indeed refinanced at least once and a few had refinanced twice. I concluded from these results that unbeknownst to me, my audience was already informed about refinancing to get more cash. The lesson learned here is that the message will resonate best with an audience that has an established appetite for what you are offering. This may seem obvious, but how many times have loan officers purchased lists based on demographics as opposed to behaviors and been disappointed in the results?
+
LESSON 5
ORIGINATING
+
+
The Reverse Review June 2015
SERVICING
RR
CHANGE
RR
RR
Compliance: Moving Beyond the Rules to Real Opportunity, Part II By Debra Taylor
Financial Assessment will impact originators and servicers, and each team views the new rules from their unique perspectives. Originators have been reassessing how to complete the loan package and approve borrowers, while servicers are approaching things from their long-term servicing perspective. Servicers are charged with addressing questions like: When the setaside funds run out, and the borrower doesn’t make a tax payment, what options are available to assist the borrower? Do we have the information needed from the point of origination to help us through all phases of the loan’s servicing?
The need for dialogue between sales and servicing Our industry has been well-appraised of the policy changes surrounding Financial Assessment and nonborrowing spouses. There are many aspects to each new rule and they affect both originators and servicers alike. Origination and servicing teams are aggressively working to meet fast-approaching deadlines to complete personnel training in order to understand system upgrades that will accommodate new data fields, establish procedures for tracking or assessing a borrower’s ability to pay taxes and insurance, and determine policies for working with the non-borrowing spouses. Both groups are scrambling and many have questions about the regulatory impact of these new guidelines. What expectations can we set for each other—and for the borrower?
View our digital version...
Originators collect data and information from the borrower in order to underwrite and approve the loan. If sales doesn’t understand why servicing may need a piece of information later in the process, how can they be expected to explain to the borrower the need to obtain the information? A borrower may be likely to push back when asked to provide information if the loan officer is unable to explain why it may be needed years from now (or upon the borrower’s death). Borrowers are becoming increasingly savvy and have likely been through the mortgage process a few times. They know what to expect and the type of information that is normally asked. This product is different and has different requirements. Product education at every level is key to industry success. As an industry, we meet and discuss general changes in regulations. This makes time and space for originators to discuss with servicers their frustrations in understanding the borrower’s “Why?” We can and should help each other.
Reverse Review articles (present and past) are available on our website. Access a wealth of content about the business of HECMs online. www.reversereview.com 26 | TRR
SERVICING
If our industry were to employ a similar process, origination would feel free to call servicing experts and speak with a very knowledgeable individual to answer questions about the hows and whys of loan servicing. Clients would not only feel they were well serviced from both the origination and servicing sides, they would believe their money and property were in knowledgeable hands and safe care.
2015 is shaping up to be another challenging and changing year in the world of reverse mortgages. Some of the biggest impacts to our processes will be realized this year. Taking a short break to discuss the changes with each other will not only make new processes smoother to implement, it could help make every borrower’s experience more satisfying and memorable. n
Read more online. This is the second piece of a two-part series by Celink Compliance Manager Debra Taylor. To read Part I, see the May issue of TRR at reversereview.com.
MARKETING
Our dedicated team of professionals has the experience
SPOTLIGHT
and knowledge to smoothly close reverse transactions. Through years of experience, FNC has gained valuable knowledge by building strong relationships with reverse mortgage lenders and brokers, as well as the borrowers we service. We firmly believe that our clients deserve the best treatment, and that is why FNC is where reverse mortgages take center stage.
240-864-4844
fnctitle.com reversereview . com
8 TRR | 27
HMBS
A nationwide title and settlement company servicing the reverse mortgage industry.
SERVICING
A BETTER CHOICE!
TITLE TIP
The reality is that sales and service departments are so busy handling this fast-changing product that there doesn’t seem to be time to look to the other side to collaborate. I’ve been guilty of reviewing new regulations or an upcoming proposal and thinking, “This is an origination function and it doesn’t pertain to me,” and I move right along. I’ve come to understand that, had I taken the time to review the change from both
Each of us is trying our best to provide excellent service to our borrowers and their experience will be enhanced when sales and service work together before implementation of a new compliance regulation or process. We need to ask each other how our new processes will impact each other and how it translates to the borrower. If we work as allies, non-compliance will be rare and our borrowers will be well-served.
UNDERWRITING
perspectives, and the possible impacts later in the life of the loan, I may have been enlightened and better able to service our borrowers and ensure that regulatory obligations were met.
ORIGINATING
I once worked for a large financial institution that had very specialized departments. The company never expected all personnel to know all processes. If a client had a question about trusts, investments or a mortgage, the client’s representative would call the department that specialized in that area. An associate from this specialized department would then walk the client and representative through the “how” of the process. The client (and representative) would leave the meeting feeling they had been provided excellent care and specialized information. If excellent service and information is provided, clients rarely get upset when the process stops and calls are made to an expert in that area.
The Reverse Review June 2015
WORK WITH THE INDUSTRY’S ONLY PORTFOLIO LENDER
AND DISCOVER THE RMF DIFFERENCE. Partner with Reverse Mortgage Funding LLC (RMF), and be confident that you’ll get highly competitive pricing—and that your borrowers will receive industry-leading service and support throughout the life of the loan. From origination through servicing, our experienced and knowledgeable team maintains a consistently high level of service and attention to detail. Your customers—and your reputation—deserve nothing less.
To learn more, visit partners.reversefunding.com or call 877.820.5314 (option 5) © 2015 Reverse Mortgage Funding LLC, 1455 Broad St., 2nd Floor, Bloomfield, NJ 07003. NMLS ID # 1019941. Not for consumer use. L158-Exp042016 RMF14259-0415
28 | TRR
HMBS
RR
EXAMINE
RR
RR
The Importance of Data By Gregory Bell
HMBS SPOTLIGHT
8 TRR | 29
SERVICING
reversereview . com
MARKETING
I am frequently challenged by colleagues to explain the subdued growth of the reverse mortgage market in light of overwhelming demographics. This is a question that I often revisit. I believe the answer involves the many constraints that have limited the growth of this industry, and I hope to see them relaxed and even removed as the dissemination of more data leads to greater transparency. n
TITLE TIP
“I feel that we as an industry have a moral imperative, an obligation to American seniors, to address the coming retirement crisis, and one way to do so is to provide a better product. We need a stable financial solution, sculpted by data, that serves our customers, thinks long term and is transparent to all.”
As an investor, data analysis has enabled me and other market participants to quantify risk and improve the framework of our investment decisions. Like other fixed-income securities, the value of HMBS securities is derived from future cash flows, which are subject to the uncertainty of prepayment risk. The “story” speaks directly to this uncertainty. It is thanks in large part to a better understanding of risk that market participation has undergone a dramatic
However, the investment community needs more comprehensive data. More participants will entice further bank support, which is critical to addressing the liquidity and financing needs of issuers and servicers, specifically as it relates to financing origination pipelines, future principal, interest shortfalls and MCA buyouts. Increased demand will drive tighter spreads and put downward pressure on the current coupon, which I believe will also reduce the predatory stigma associated with the product.
UNDERWRITING
How many of us believe we are in a data-driven field? In my prior role as a primary market maker, dealer and trader of HMBS, my job function, when stripped down to its most basic level, was to make sense of data—your data: bits of data points from loans, borrowers, servicers, originators and brokers. I did so in an effort to see beyond the numbers and the loans themselves to understand the underlying story they were telling. It is this “story” that resides in the data that ultimately sells your product and determines its worth.
expansion since the inception of the HMBS program. A key catalyst to this has been the dissemination of loan-level origination and performance data via Intex remittance reporting, which provides a single source of consolidated industry data. Despite suppressed volumes, the market has enjoyed improved liquidity.
ORIGINATING
How more information will help investors better understand the value of the HECM
For this very reason, I implore all of you to store every piece of data you can and make it available to others, specifically the investment community. We as an industry can and will figure out what to do with it later. The practice of data-driven discovery is common in most industries and has been taking place in the mortgage industry for quite some time. Greater clarity in the present starts with data; before we can predict the future, we need to clearly observe the present. The benefits of this will be shared by all. In fact, I feel that we as an industry have a moral imperative, an obligation to American seniors, to address the coming retirement crisis, and one way to do so is to provide a better product. We need a stable financial solution, sculpted by data, that serves our customers, thinks long term and is transparent to all.
The Reverse Review June 2015
SPOTLIGHT
A Call to Action: Making the Case to Financial Planners IS TH
M O NT
H’
S
w
RR
ITION
WE OFFER TIPS FOR OUTLINING THE POWER OF THE HECM.
ED
IN
B Y R I C K B R O WN
06 / 2015
WANT TO SEE MORE ARTICLES LIKE THIS?
See them at reversereview.com.
L
ately, I have become weary of hearing financial planner types say that reverse mortgages are terrible scams or interesting curiosities that may occasionally help the destitute (or worse, merely opportunities for them to sell more of their products).
While reverse mortgages are far more valuable and versatile than these simplistic characterizations, I have not yet seen HECM fans make much of an effort to promote all of the ways that this loan can help seniors. Therefore, I’ve assembled a few arguments to make the case for a much greater use of HECMs in financial planning. Reverse Mortgages as Part of a Portfolio
I used to think that having a reverse mortgage was, among other cool things, something seniors did to help protect their portfolios. That was until a financial planner friend, Eric (name changed to protect the guilty from his superiors—see sidebar on pg. 32), who gave me a different slant that I had never even heard from anyone in the reverse industry. Eric’s theory is that all assets can be divided into one of three buckets: NUMBER ONE Income/assets that will be taxed now, such as W-2 income, unsheltered investment accounts, savings accounts, certificates of deposit accounts, etc. NUMBER TWO Income/assets that will be taxed at some later date, such as traditional IRAs and 401(k)s NUMBER THREE Income/assets that will never be taxed, such as Roth IRA accounts, tax-free municipal bonds, cash value life insurance and [drum roll]… reverse mortgages! 30 | TRR
In our effort to get the financial planning community on board, it will be helpful to point out the benefits this loan provides the advisors themselves, including: 3 Opportunities to expand their product offering with a tool that can provide a unique solution to clients’ problems 3 Longer retention of their clients’ financial assets for them to manage 3 Enhancement to their reputations as knowledgeable, concerned, ethical and responsible advisors
SPOTLIGHT
A ray of hope? Compare my friend Eric’s approach with the attitudes of three financial planners from his same company:
one may have to repay some benefits if other income is too high
benefits is no longer required, regardless of the amount of outside income (66-67 these days, depending on birth year)
4At 70, when full benefits are available
Some articles suggest waiting until 70, when the monthly payment reaches the maximum, while others say you’re better off taking it earlier and investing it. Whatever choice is selected, the point is that we have an option for that. They are as follows:
age 62, begin taking reverse mortgage payments immediately in an amount equal to the difference between the age 62 Social Security benefit and the age 70 benefit. Of course, there are numerous variations to the above based on an individual’s unique circumstances, and a trusted financial advisor would help select a plan that works best for a borrower’s particular situation. Our job as reverse professionals is to make sure we communicate these options to those advisors and provide them with the information they need to support their clients. The Loss of a Spouse The loss of a spouse is overwhelming in many ways, often including financially. Even in the best scenario, in which both spouses receive their own Social Security checks, the surviving spouse will usually only receive
Asset Protection I bet that, if we asked 100 random seniors, their adult children and their advisors, “Could a reverse mortgage improve a senior’s legacy?” 98 of them would say something like, “Are you kidding? Of course not!” This would be followed up with something about how the bank would own the house or that there would be no equity left. What few seem to realize is that for seniors securing reverse mortgages, there is always a financial benefit or they shouldn’t do it. The chart on the next page outlines many of these benefits (some discussed elsewhere herein), and I challenge other reverse mortgage professionals to add to this list. 8
reversereview . com
8 TRR | 31
SPOTLIGHT
4At the age when the repayment of
4For those commencing benefits at
HMBS
4At 62, when first eligible, even though
66-67, do the same as above at age 62, but reduce reverse mortgage payments at age 66-67 so that the total cash infusion from both sources equals the age 70 benefit.
Couples might believe that if the spouse with the highest income passes first, the surviving partner could get a reverse mortgage. With Financial Assessment in play, that may no longer be true, so it is especially critical that financial planners know that taking a HECM before tragedy strikes is often best. Let’s tell them.
SERVICING
I’ve read numerous articles recommending the three most talked-about ages to begin taking Social Security benefits:
4For those beginning benefits at age
one check, the larger of those amounts. When the deceased also had a pension that was supporting the household, the effect can be especially devastating. (See the sidebar on pg. 33.)
MARKETING
Optimizing Social Security
begin drawing from the reverse mortgage an amount equal to the (estimated) age 70 benefit. At age 70, begin taking Social Security benefits and discontinue reverse mortgage payments.
TITLE TIP
Furthermore, Eric told me that his goal for all of his retired clients is to have their monthly incomes remain sufficiently high, but their taxes low. A reverse mortgage is a versatile tool that can help achieve this goal.
4 For those waiting until age 70, at 62,
UNDERWRITING
Did you catch what I just did? I have put reverse mortgage in the portfolio and not off by itself somewhere. And even better, it’s in the coolest part of the portfolio—the “never taxed” part. How about that?
MY SECOND MEETING was with an individual who also seemed to love what I had to say, but was adamant that when I left, I take with me all of the charts and materials I had brought—you know, “get rid of the evidence.” I’ve never heard from him again either!
ORIGINATING
MY FIRST MEETING was with two fellow BNI members who loved what I had to say and liked me so much they wanted to hire me (because of my “instant credibility”). A week later, I made a follow-up call and they told me their management had informed them they should never talk to a reverse mortgage salesperson again—and they haven’t.
The Reverse Review June 2015
SPOTLIGHT The Elimination of a Forward Mortgage A substantial number of retired seniors still have a traditional, forward mortgage against their home. Reverse mortgages provide an attractive solution to this unexpected problem. When a forward mortgage is replaced by a reverse mortgage, the elimination of required monthly mortgage payment frees up a significant amount of money. At least one study suggests that, despite negative amortization, such a move can be financially beneficial to seniors. Financial planners need to know and explore this. Selling and Buying a House While the number of real estate professionals who are aware of the H4P product is small, the number of financial planners who are informed of this loan is likely even smaller. And that’s too bad,
because there are many ways that such a transaction can be a significant financial benefit to seniors. For instance, if selling and moving is necessary or desired, reverse mortgages may be the only type of loan many seniors could qualify for (which most will, even in light of the new Financial Assessment challenge). Without this option, many seniors could not even think about selling and moving unless they were to use all the sales proceeds from the house sold and those proceeds were sufficient to get them into something better than their current “illsuited quarters.” Furthermore, downsizing or even “upsizing” using a reverse mortgage as a purchase loan has its own unique financial benefits. Finally, here is one financial consideration I’ll bet very few have thought of: If Ralph and Agnes are living in the house they bought
43 years ago, which Ralph has maintained, expanded and upgraded with skill and TLC, but only until the last five or six years, when his health has prevented him from doing so, this couple is now residing in a depreciating asset. It is not far-fetched to think that, if they sell the current home now before it gets much worse and buy something more suitable requiring little or no maintenance, after a few years they would own more net equity than if they stayed put. In other words, selling and buying could actually be a solid financial investment. Spread the word about this exciting possibility! The Versatile Line of Credit With recent limits on the fixed-rate HECM discouraging many borrowers from selecting this option, its “competitor,” the adjustablerate HECM, is the predominant choice these days. (It always has been with my customers.) This is great because the line of
The Many Benefits of a Reverse Mortgage ACTION
POTENTIAL BENEFITS
4Use as a financial planning tool
$ Working with a financial professional, tap/repay a HECM line of credit when necessary to dramatically increase “cash flow probability” for as long as needed
4 Take an appropriate monthly payment
$ Supplement Social Security benefits if taken before age 70 $ Replace loss of household income upon the death of one spouse
4 Replace a forward mortgage with a reverse mortgage
$ Increase bank account balance month after month, year after year $ Increase net worth over time if invested wisely $ Stop foreclosure due to non-payment and avert possible loss of home and net equity
4 Leave available funds in a line of credit as long as possible
$ Have an ever-growing, pre-approved cash source always readily available $ Easily change to a monthly payment if desired
4 Utilize a HECM to purchase a home
$ May be the only way many seniors could purchase a home $ Could get seniors into home of their dreams without the cash-flow-killing forward mortgage payments (or possibly unwise depletion of portfolio funds) $ Could increase likelihood of in-home care, avoiding a move into a senior-care facility $ Could improve senior’s net equity position and therefore their legacy
4 Use a portion of proceeds to
$ Avoid the single greatest cause of financial catastrophe for senior: medical bills $ May allow a senior to “age in place”
4 Provide an advance inheritance to someone; use a portion of the proceeds for “estate-equalizing” life insurance policy*
$ See the benefits of legacy while still alive, achieving this rewarding goal without tapping into other retirement accounts - Helping someone start a business after losing a job - Paying someone’s college or private school tuition - Allowing heirs to benefit from legacy when they most need it
4 Use as Medicaid “buffer”
$ Funds in line of credit are readily available when needed, but are never income when tapped, and not a reportable resource while still residing in the line of credit
purchase long-term care insurance*
32 | TRR
*When financial planners suggest clients use reverse mortgage proceeds (directly or indirectly) for the purchase of financial products, they must do so only when in the best interests of their clients, and in accordance with product issuer’s sourcing/seasoning rules/guidelines.
SPOTLIGHT
EXAMPLES: The Loss of a Spouse’s Income Couple No 1Late in 2013 a
A number of academic studies have concluded that if a senior follows an “active strategy,” funds can be drawn from the HECM’s line of credit when cash is needed rather than drawing down an underperforming portfolio. When the portfolio rebounds, it can repay the line of credit. The probability that this strategy would create sufficient cash flow for 30 years is greater than 90 percent, compared with about 50-55 percent if the portfolio is nearly exhausted before a reverse mortgage is secured.
Conclusion So there you have it: my reasons why financial planners need to consider the value HECMs can offer their clients. I do not claim that every suggestion I make is applicable to every senior, but I do believe every one applies to at least a few. And, since I know I am not brilliant enough to have thought of every possible benefit, I encourage readers to pick up where I have left off and share their own ideas. It is critical that we all spread the good word wherever we are, because doing so will help the entire industry grow. n reversereview . com
8 TRR | 33
SPOTLIGHT
And think of this: In addition to being able to serve their senior customers better, those financial planners who are paid as a percentage of their clients’ assets will be assured that those assets will actually survive through the years.
SERVICING
Now, while this strategy may seem somehow sneaky or illegitimate, it is not. In fact, a few years ago, one lender actually included a disclosure advising borrowers to employ it if this
I have just begun speaking with the children of a senior who told me, “Mom’s retirement account value is down to about $X and we are thinking it’s time to explore getting a reverse mortgage to supplement her cash flow.” Well, I had news for them: It’s way past time to do this.
TAX TIP
Particularly for those seniors who have a small initial loan balance and an associated large initial line of credit, this could be a huge improvement to the senior’s legacy if, during the life of the loan, home values do not increase as expected and after some years the lineof-credit amount actually exceeds the value of the house. Some time between when that happens and when the last borrower permanently leaves the home, that senior should request the full line of credit then available. Although this action would put the house “under water,” that would be of no consequence because the heirs or the seniors themselves can simply walk away from the house and the loan and be flush. I often tell my senior customers to take this step without fail 15-30 days before they die. (This always gets a good laugh.)
Optimizing a Portfolio
TECH
came to me looking to get a HECM for Purchase. Unfortunately, the husband’s new wife owned a condo with an FHA loan, which of course had to be paid off in order to obtain a HECM. The husband took about $100,000 out of his retirement account to pay it off and then, at the last minute, decided to use those funds to simply pay cash for the new house and not get a reverse mortgage. On the surface, that may sound like an OK thing to do, until other facts are known. Couple No. 2 would face an even more dramatic household income drop than couple No. 1, something approaching 90 percent upon the husband’s death. The couple told me that the wife would get a reverse mortgage to supplement her income when the husband passed, but I’m not sure a beneficial reverse mortgage would be likely. Besides the very low income she would then have, she would still be forced to pay off the condo’s mortgage (and it was already “upside-down” when we began talking). I am still in contact with this couple in the hopes that they will see the light and get a HECM in place in time.
Although the initial proceeds and the related line-of-credit balance are based on the initial appraised value of the home, the growth rate of the line of credit has nothing to do with the subsequent actual appreciation of the home value over time. The line of credit is guaranteed to grow by the loan rate (which will at least be equal to the chosen margin), even if the home value plummets over time (which we now believe can actually happen).
The other noted benefit of the line of credit, the in-out capability, combined with the growth feature, allows a financial planner to optimize seniors’ portfolios in a way described in the next and final section of this treatise.
UNDERWRITING
Couple No 2 A couple
We all know why a HECM credit line grows over time: Seniors get older without taking it, even though they could, and thereby reduce the likelihood that the loan will “go upside down.” And we also know that the increase is nothing more than a dollar figure in the computer; it is not interest and it is not taxable.
situation ever occurs. Does anybody else remember this?
ORIGINATING
financial planner contacted me about a senior couple who knew that the husband was going to die soon because of an inoperable tumor. He was given three months to live. The financial planner told me that the couple’s current monthly income was several thousand dollars, but the wife’s total monthly income would drop to barely a thousand dollars upon his death. We faced several hurdles, among them an incorrect federal tax lien, a twoweek government shutdown, several vacations the couple insisted on taking and the need to modify the husband’s trust, but we managed to get the reverse mortgage closed in the nick of time. The husband passed away the day after the loan was funded. Had this woman come to me after her husband passed and after Financial Assessment was already in play, I’m not at all sure we would have been able to get a reverse mortgage that would be beneficial to her. (The couple had a $40,000 HELOC in place and the home was modest, even by Midwest standards.)
credit grows over time at the same rate as the loan balance does, and money taken out can be repaid with the line-ofcredit balance increasing dollar-for-dollar by the exact amount as the loan balance simultaneously shrinks: the amount of the repayment check.
The Reverse Review June 2015
For originators looking to connect with senior consumers, the Internet has become a powerful tool. By Jessica Guerin It’s no secret that today’s seniors are increasingly tech-savvy. Study after study has revealed that the nation’s older demographic is turning to the Internet for information about health, products and finances, and reverse mortgages are no exception. Nowadays, prospective borrowers are going online to learn about the loan and find a lender, making it more important than ever for reverse professionals to market their services on the Web. In an effort to do so, lenders big and small are taking steps to elevate their online presence: fine-tuning their websites, posting educational resources and utilizing social media to spread the word. 34 | TRR
Knowing Your Audience Nearly 60 percent of American seniors are online, according to a study published last year by the Pew Research Institute. Among those seniors, 71 percent say they log on nearly every day, and 46 percent say they use social media sites like Facebook. Furthermore, global market research firm Radius reports that when it comes to shopping, seniors are likely to do their homework online. A 2013 study by the agency indicated that 86 percent of baby boomers regularly research products on the Web. Our own research falls in line—all five of the reverse mortgage borrowers we spoke with for last month’s cover story said they went online to learn about the loan before picking up the phone. Senior marketing expert Jim Gilmartin says statistics like these highlight how crucial it is for those selling products to older consumers to promote themselves online. “Anyone selling a product or service who doesn’t understand the value or the impact that the Internet has had on purchasing power of the world, and specifically of these folks in the fall and winter of life, is really making a mistake.” “A significant amount of people are getting more and more involved digitally. It’s becoming much easier for people of those generations to get online,” says Gilmartin, whose agency, Coming of Age, based in Oakbrook, Illinois, focuses specifically on marketing to older consumers. Gilmartin says baby boomers are mostly logging on to shop and to research products of interest. “They’re looking for anything that is going to help them improve their quality of life,” he says. “They also check out online what people are saying about the products or the services they’re interested in.” Gilmartin says that older consumers are especially discerning and most research products—talking to friends and family and searching the Internet—before making a commitment. “They walk in with some information; they don’t walk in cold. So they are becoming quite savvy.” Steve Chen, founder of newretirement. com, says this is especially true when
it comes to financial products. His website, which provides information about financial tools like reverse mortgages, has had more 18 million visitors since it launched nearly 10 years ago—proof that consumers really are doing their research. “There are 75 million baby boomers out there, and there are 35 million current retirees. That’s 110 million people just in the U.S., and at least half of them are at risk of having a lower quality of life in retirement,” Chen says. “We think we can help many people make better decisions and use their resources more effectively.” Chen says his site offers a free, unbiased source of information to help discerning consumers explore their financial options. “Consumers are definitely getting more sophisticated. They are shopping around more. They realize that it’s good to talk to different lenders or different providers of various products. There are many more tools available out there for them, so I think they are trying to do as much research and discovery as they can on their own.”
Expanding Your Reach Aware of this trend, reverse lenders are doing what they can to spread the word about their services. Scott Gordon, CEO of top-10 reverse mortgage lender Open Mortgage, says digital marketing is a huge focus for the company. “I would say it is one of the single most important things we do,” he says.
found by an unknown consumer, it validates their integrity for those they have already met. “You might meet someone in person, and they’re going to research you. Your presence online has to look good so when they look you up, they go, ‘Wow, this person clearly has a lot of experience.’ It validates the fact that you’re a professional… The other part of the equation is being found by people who don’t know you. That will happen if you have webpage or a blog.” Gordon says Open provides blog templates for its originators, syndicating content they can publish and also post on social media sites. Gordon says Open believes in the importance of social media, and that it utilizes tools that publish customer testimonials on various sites. “It’s referral-based marketing,” he says. “You’re finding out what your friends think, not just finding ads.” Mary Smith, chief marketing officer at Liberty Home Equity Solutions, says her company also utilizes social media as part of its digital marketing campaign. “Liberty has several social media sites, including a YouTube channel. We use social media when helpful to complement and reinforce the messaging of our traditional digital marketing efforts. For example, we post educational videos and customer 8
Gordon says that it is essential for an originator to maintain a strong online presence because it not only allows them to be reversereview . com
8 TRR | 35
The Reverse Review June 2015
One stop appraisal management.
Customizable vendor selection algorithm
Manage all of your appraisers and AMCs with one solution. Streamline your in-house appraisal management with Landscape™, while maintaining total control over your process. We have fully integrated your preferred AMCs to facilitate quick and easy order placement, tracking, and messaging so you don’t have to manage multiple platforms. Everything is consolidated in one place, creating one centralized and seamless experience.
Call today or visit us online to schedule your free demo and see how Landscape™ can be incorporated into your organization.
36 | TRR
888.840.1600
landmarknetwork.com
Intuitive user controls let you design your appraisal workflow
Like Open, Liberty provides support for originators to promote themselves online. “We provide our originators personalized example websites (with their photos and contact information) and templates for social sites such as LinkedIn and email marketing. This way, we ensure that everything that interfaces with our consumers is fully compliant with effective and tested messaging.” Smith says online marketing is ideal for testing the effectiveness of a campaign. “What I love about digital marketing is the speed in which you can test, improve and optimize your marketing campaigns. You can test copy, design and layout without investing a lot of money and get insights into its effectiveness within hours, compared to weeks and months for traditional media. This means you can quickly improve performance.” However you choose to go about it, the bottom line is that digital marketing is increasingly important. “Seniors are turning to the Internet more and more for information and education,” Smith says, “so lenders that don’t have an online presence are missing out on an opportunity.”
Source: Pew Research Center’s Internet Project tracking surveys
100
65+
80 60 40
Enhancing Your Visibility For originators looking to improve their online visibility, establishing a quality website is the first step. According to Gilmartin, the No. 1 error people make when marketing to seniors online is in their site design. “They design their site for a youth market, they don’t design them for people who are having problems with their vision. They use colors that aren’t really effective in these markets. The size of the copy should be at least 16 point, using serif type,” he says. “Make sure all the links work, that it makes sense and that your information flows like a story… Less is really more when you’re online. People squeeze 10 pounds of copy into a 5-pound Web page, and that doesn’t work well with these markets. Less can be more.” Gilmartin says there are companies that can help design a website specifically for older consumers, adding that input from people in your market can be helpful. “If your website is designed by somebody who is under 30, my advice is to get some people who are 62-plus to come in and take a look and give some feedback.” Gordon says blogs can be extremely helpful for originators looking to enhance their online exposure, and that social media sites are equally important. According to Gordon, Google Plus can be key to elevating one’s online searchability.
ACCORDING TO MARY SM I T H
“Seniors are turning to the Internet more and more for information and education, so lenders that don’t have an online presence are missing out on an opportunity.”
2012
2010
2008
0
2006
20 2004
Other key components that can draw visitors are educational resources. Smith says Liberty’s website offers visitors useful tools and information that can help draw them in. “Our website is very rich in educational content for both seniors and loan officers, and features a reverse mortgage calculator that allows users to estimate how much money they might receive from a HECM reverse mortgage.”
Percent of Americans age 65+ who go online
2002
Smith says Liberty places a strong emphasis on digital media. “It is a very, very important part of our marketing mix,” she says, adding that Liberty focuses on “tried and true” strategies like pay-per-click (PPC), display and content advertising.
SEN I O R I N TE R N E T A D O P TI O N OV E R TIME
2000
testimonials on YouTube and often direct customers to the YouTube link from our website or email campaigns.”
“It has never become Facebook, but anything you are putting together to post on Facebook or LinkedIn, you can post on Google Plus too. It allows Google to know you, and Google is the one who ranks you. So even though the world hasn’t adopted Google Plus in a big way, Google pays attention to it.”
Perfecting Your Message While website design and social media activity may be key components to connecting with clients, it’s just as important to offer the right message once the connection has been made. According to Gilmartin, salespeople can be most effective if they strive to understand the client and what he calls their “values and motivators.” “Seniors look for anything that is going to help them put more control in their lives. They look for people who are going to provide experiences and who don’t push the product but push the company and the product as the gateway to the kinds of meaningful experiences these folks are looking for.” Gilmartin says that, for this demographic, building a relationship is key. “If you focus on the values and motivators of the people in the stages of life you’re trying to get to, the chances are you will then connect more effectively and efficiently with them and get them to take the kind of action you want them to take.” Finally, it’s important to be genuine, no matter what medium you use. “If you want to be effective in these markets, be authentic,” Gilmartin says. “Don’t create a lot of hype, a lot of nonsense. These people have been around for quite some time; they’ve experienced quite a lot in their lives; they’ve learned from all of that and they are smarter than the average bird.” n reversereview . com
8 TRR | 37
The Reverse Review June 2015
LAST WORD
RR
THINK
RR
RR
A New Beginning By Donna Harrington
“Today is a new day for the reverse mortgage industry. While my passion for this product remains the same, what will change is the way I present it. With Financial Assessment in place, the hope is that seniors, financial advisors, elder law attorneys and others who service the senior community see this product in a new light.”
Why recent policy change can help propel the product forward Well, it’s finally here: the Financial Assessment everyone in the industry has been talking about. The protocol is new to all of us and has many in the industry wondering what it will mean for the reverse mortgage program. Personally speaking, I think it is a wonderful opportunity for reverse mortgage originators to educate the public about how a reverse mortgage can be an important financial tool for retirement planning. Financial Assessment will provide us with the tools we need to ensure that a reverse mortgage is the right option for a senior homeowner. We all know that a reverse mortgage can provide funds for a senior who can use it to pay off an existing mortgage, establish a line of credit for future needs, receive monthly payments to supplement their income, or delay Social Security payments. With the HECM for Purchase program, they can also use a reverse mortgage to purchase a new primary residence. Under the new guidelines, credit and income qualifiers will be used to ensure the senior will be able to meet their future obligations and pay their real estate taxes and homeowners insurance.
credit report, review their credit history and collect details about their current income. This information is now needed to see if a senior will qualify for a reverse mortgage. When to pull a credit report during the sales process might be a challenge as seniors may not want to give you their Social Security number. However, it is recommended that the credit report be pulled as early as possible and reviewed with your senior. Based on their credit report, it may benefit the senior to wait and work on any credit issues before proceeding with a reverse mortgage application.
As reverse mortgage originators, we now have to pull a potential borrower’s
The results of the new Financial Assessment may require the borrower
38 | TRR
to establish a set-aside of funds to pay future real estate taxes and homeowners insurance. It remains to be seen what impact this will have in the funds available for some senior borrowers. Here is where I believe the reverse mortgage originator will have an opportunity to either recommend the senior delay taking a reverse mortgage, or to refer the senior borrower to a forward mortgage partner as they may qualify for another type of mortgage. Today is a new day for the reverse mortgage industry. While my passion for this product remains the same, what will change is the way I present it. With Financial Assessment in place, the hope is that seniors, financial advisors, elder law attorneys and others who service the senior community see this product in a new light. Recent policy changes will ensure that a reverse mortgage is no longer considered a mortgage of last resort. Some in the industry even believe that a reverse mortgage will be considered the fourth leg in retirement planning. In the end, it amounts to a new beginning for all of us in the reverse mortgage industry. n
Be a part of the conversation.
-
Share your ideas with your colleagues and be a part of the solution. Reach out to us at info@reversereview.com.
A teAm is behind every winner A teAm is behind every winner we Offer wholesale Lending, Correspondent Lending and we Offer wholesale Lending, Aggregation Partnering. Correspondent Lending and Aggregation Partnering.
• We help you serve your customers and earn more • We helprevenue you serve your customers and earn •more Your revenue flexible partner, from originations, servicing, securitization, to REO asset management • Your flexible partner, from originations, servicing, •securitization, Fastest closingtoloans in themanagement industry REO asset Market-leading pricing • •Fastest closing loans in the industry • Advanced, yet flexible • Market-leading pricing technology Continuedyet education, training and marketing • •Advanced, flexible technology support education, training and marketing • Continued support
become a Partner 888-864-3606 become a Partner 888-864-3606 partners.rmsnav.com partners.rmsnav.com NMLS Unique Identifier: 107636 NMLS Unique Identifier: 107636
reversereview . com
8 TRR | 39
Reverse Connected. Reverse Loans. Loans. One Platform. All Connected. The Reverse Review June 2015
ReverseVision need to to be be successful. successful. ReverseVision is is the the only tool you need Fully-integrated solution spanning loan Fully-integrated loan life life cycle cycle Financial Assessment Assessment compliant within Financial within RV RV Exchange Exchange Optimized for for retail, retail, wholesale and correspondent Optimized correspondent channels channels No license license fee for third-party originators No originators Integrated workflow workflow connects back office Integrated office with with originators originators Compliant docs docs configured for your business Compliant business needs needs Ship and and purchase purchase closed loans collaboratively Ship collaboratively with with investors investors
Now is the time for HECMs. Now is the time for HECMs.
Over 25 million potential borrowers are waiting Over 25 Assessment million potential borrowers are Financial (FA) strengthens loanwaiting quality Financial Assessment (FA) strengthens loan quality HECMs can be used to purchase a new home HECMs canare be FHA-insured used to purchase a new home HECMs loan programs HECMs are FHA-insured programs Financial Planners recognize HECMs asloan a viable retirement option Financial Planners recognize HECMs as a viable retirement option 40 | TRR
WWW.REVERSEVISION.COM | CONNECT@REVERSEVISION.COM | 858-433-4970 WWW.REVERSEVISION.COM | CONNECT@REVERSEVISION.COM | 858-433-4970