The Reverse Review August 2016 by The Reverse Review

VER

S E REVI E W

REVERSE

THE

E EV

EVI ER

EW THE

VERSE R EV E RE

INSIDE THIS ISSUE | Charitable Ventures: Reverse companies take time to give back.

review

AU GU ST 2 0 1 6

More than half of potential reverse mortgage borrowers learn about the loan from TV commercials.

H O T S EAT

ORIG INAT ING

APP R AISING

PG. 15

PG. 17

PG. 18

Michael Josephs sits down in our Hot Seat

Division head dilemmas

How new appraisal rules can impact you

LEGAL

What to know about default and notice issues PG. 22

The Reverse Review August 2016

Close More Loans—FASTER.

Whether you use a different solution or have never used a contact management solution (CMS), RVSA was developed to help you sell in today’s market. Better manage your contacts, referrals, leads and prospects with the only web-based solution that connects with your RVX database. Why use a centralized CMS? ❱ Prioritize opportunities ❱ Track all customer interactions ❱ Focus marketing efforts and messaging ❱ Improved RVX data = better reporting ❱ Better reporting = better ROI tracking

New RVSA Features Include: ❱ Notifications ❱ Import leads ❱ Quick calculators ❱ Loan comparison

Use RVSA Now for FREE!

Log in now at: rvsa.reversevision.com RVSA connects with the RV Exchange (RVX) database so contacts become borrowers with a click of a button.

LOAN OFFICERS!

Take Our RVSA Closed Loan Challenge. You could win a free annual subscription to RVSA ($490 value). Go to www.reversevision.com/RVSA for details.

CONNECTING THE REVERSE MORTGAGE INDUSTRY SINCE 2007.

Reverse Loans | One Platform | All Connected 2 | TRR

www.reversevision.com

reversereview . com

8 TRR | 3

The Reverse Review August 2016

From the editor RE

V IE

E REVE W TH RS

VER

S E REVI E W

REVERSE review

AUGUST 2016

More than half of potential reverse mortgage borrowers learn about the loan from TV commercials.

HOT SEAT

ORIGINATING

APPRAISING

PG. 15

PG. 17

PG. 18

Michael Josephs sits down in our Hot Seat

Division head dilemmas

How new appraisal rules can impact you

AUGUST 2016

COVER

A look at TV marketing

LEGAL

What to know about default and notice issues PG. 22

A NOTE FROM JESSICA GUERIN

THE

IEW

REVI

EW THE

VERSE R EV E RE

INSIDE THIS ISSUE | Charitable Ventures: Reverse companies take time to give back.

Three leading lenders have been working hard these last few months to craft new television campaigns promoting reverse mortgages. Images of seniors enjoying that long-awaited vacation have been replaced with conversations about how the product has enabled borrowers to pay medical expenses and stay in their homes. Now, the focus rests squarely on the stability a HECM can bring to one’s retirement. While each lender has taken a different approach to their messaging, one common thread remains: a mission to educate consumers and represent the product as a smart financial tool for retirement.

Collectively, the reverse mortgage commercials airing on TV right now have a definite impact on public perception. While the industry is admittedly fighting a tough battle as it works to address skeptics and negate misconception, many are confident that we can do this through smart, consistent and quality messaging. Together, we can chip away at the negativity, reshaping the way consumers view the product and ushering it into the mainstream.

Meet the Team SENIOR PUBLISHER

Reza Jahangiri PUBLISHER

Erik Richard EDITOR-IN-CHIEF

Jessica Guerin

CREATIVE DIRECTOR

Traci Knight

COPY EDITOR

Kersten Deck MARKETING DIRECTOR

Alycia Greer

Printer The Ovid Bell Press Advertising Information phone : 630.207.3882 email : jessica@reversereview.com Subscriptions email : information@reversereview.com Editorial Content email : jessica@reversereview.com © 2016 Reverse Publishing LLC All rights reserved. Reproductions or distribution of any materials obtained in the publication without written permission is expressly prohibited. The views, claims and opinions expressed in articles and advertisements herein are not necessarily those of The Reverse Review, its employees, agents or directors. This publication and any references to products or services are provided “as is” without any expressed or implied warranty or term of any kind. While effort is made to ensure accuracy in the content of the information presented herein, Reverse Publishing LLC is not responsible for any errors, misprints or misinformation. Any legal information contained herein is not to be construed as legal advice and is provided for entertainment or educational purposes only.

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

GET THE LATEST ISSUE DELIVERED DIRECTLY TO YOUR INBOX

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

4 | TRR

FIND US ON FACEBOOK AND LINKEDIN

table of contents

TRR 8.16

08 / STATS

18 / APPRAISING

REVERSE MARKET INSIGHT

What you should know about Handbook 4000.1 and its impact on reverse mortgage appraisals

June top lenders and HECM endorsement stats through May

10 / NRMLA NEWS

16 24

Clarifying the Rules

JOHN DINGEMAN

Read about the association’s current initiatives.

22 / LEGAL

Default and Notice Issues

13 / ROUNDUP

A collection of recent facts and surveys affecting the reverse market

15 / HOT SEAT

An overview of how these concerns can impact HECM borrowers MICHAEL THURMOND

24 / SPOTLIGHT

Charitable Ventures

Michael Josephs Chief information officer at AAG

Reverse companies take time to give back.

16 / ORIGINATING

30 / LAST WORD

A “Can Do” Positive Attitude Tips for success in the lending world DON CURRIE

The Journey From the Sandlot to the Major Leagues How reverse mortgage servicing has come a long way in a few short years

RYAN LaROSE

17 / ORIGINATING

Division Head Dilemmas The challenges of running a forward company’s reverse division GLENN WALLACE

FEATURE

26 / TV ADVERTISING

How lenders are using this powerful medium to educate consumers about reverse mortgages. JESSICA GUERIN

YOU CAN DO IT!

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

“Nearly half of potential reverse mortgage borrowers say they learned about the loan from television commercials. Considering this notable fact, it’s no wonder the industry’s leading lenders are channeling serious ad dollars toward television in an effort to reach consumers. reversereview . com

8 TRR | 5

The Reverse Review August 2016

6 | TRR

contributors JOHN K. LUNDE

8 | Stats g

John K. Lunde

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

Michael Josephs

DON CURRIE

16 | A “Can Do” Positive Attitude g

Don Currie

Glenn Wallace

Don Currie is the president of HighTechLending dba americansenior.com and has been a mortgage professional for more than 35 years. Currie formed HighTechLending in 2006 after a successful career as SVP of Impac Lending Group. HighTechLending, an experienced forward and reverse mortgage banking firm with Fannie Mae and Ginnie Mae approvals, is located in Irvine, California, and has 53 branches nationwide. It ranks in the top 10 reverse mortgage lenders in the country.

JOHN DINGEMAN John Dingeman

Michael Thurmond

Ryan LaRose

18 | Clarifying the Rules g

John Dingeman is the chief appraiser at Landmark Network. He is a Certified Residential Appraiser in a California, Nevada and Arizona, and a registered property tax agent in Arizona. He serves as VP of the National Association of Appraisers and was the president of the Coalition of Arizona Appraisers. He has extensive experience in the appraisal of single-family dwellings; small, income producing properties; and vacant land. As an FHA appraiser, he specializes in HUD/REO properties.

MICHAEL JOSEPHS

15 | Hot Seat g

Michael Josephs is the CIO at AAG. Before joining AAG in January 2016, Josephs served as CIO for the Insurance Workers’ Compensation Solutions and Services group at Xerox (StrataCare). Josephs has worked previously for E*Trade, Triad Financial, and has assisted in the establishment of information collection, dissemination and presentation platforms and services for agencies working in our national interest. He has a degree in computer science from the University of Maryland.

GLENN WALLACE

17 | Division Head Dilemmas g

Glenn Wallace is the president of Nationwide Equities Corporation, which he purchased in 2004 with his partner Paul Lamparillo. Wallace started his mortgage career in 1978 as the first loan originator at Citibank, N.A. and later became an SVP at the Dime Savings Bank. He has been involved in several ground-floor industry developments, including the creation of MortgagePower for Citibank and the “net-branch” concept for Ivy Mortgage.

MICHAEL THURMOND

22 | Default and Notice Issues g

Michael Thurmond has been an attorney since 1998. From his Florida-based practice, Thurmond provides heir location services nationwide. He is also a retired military veteran with more than 30 years of service. Before starting his firm, he served in a variety of legal positions, including assistant state attorney, associate attorney general and, most recently, as the litigation partner at a creditor’s rights law firm.

RYAN L a ROSE

39 | The Journey From the Sandlot to the Major Leagues g

Ryan LaRose is president and COO of Celink, an independent reverse mortgage subservicer. LaRose has more than 12 years of servicing experience and has worked exclusively in reverse mortgage servicing since 2005. In addition, he is an active member of the NRMLA servicing and technology committees. 517.321.5491 celink.com

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.

reversereview . com

8 TRR | 7

The Reverse Review August 2016

stats June 2016

Top Lenders Report

12345 American Advisors Group

One Reverse Mortgage

Finance of Liberty America Home Reverse Equity

Reverse Mortgage Funding

Endorsements

924

283

278

272

190

Lender Endorsements SYNERGY ONE LENDING INC

183

Lender Endorsements

HIGHTECHLENDING INC

159

FIRSTAR BANK

LIVE WELL FINANCIAL INC

BANK OF ENGLAND

134

WHOLESALE CAPITAL CORP

NATIONWIDE EQUITIES CORPORATION

105

VANGUARD FUNDING LLC

HOME POINT FINANCIAL CORPORATION

MOHAVE STATE BANK

RMS/SECURITY ONE LENDING

NOVA FINANCIAL & INVESTMENTS CORP

OPEN MORTGAGE LLC

HOMEOWNERS MORTGAGE ENTERPRISE

ACADEMY MORTGAGE CORPORATION

LONGBRIDGE FINANCIAL LLC

CITYWIDE HOME LOANS

REVERSE MORTGAGESCOM INC

UNITED NORTHERN MORTGAGE BANKERS LTD 48

WILLOW BEND MORTGAGE CO

PLAZA HOME MORTGAGE INC

PACIFIC RESIDENTIAL MORTGAGE LLC

FIRSTBANK 41

DOLLAR BANK FSB

FAIRWAY INDEPENDENT MORTGAGE CORP

ADVISORS MORTGAGE GROUP LLC

RESOLUTE BANK

BROKER SOLUTIONS INC

UNITED SOUTHWEST MORTGAGE CORP

MORTGAGE BROKERS SERVICES

MONEY HOUSE INC

MORTGAGESHOP LLC

AMERICAN PACIFIC MORTGAGE

GATEWAY FUNDING DIVERSIFIED MTG SER.

THE FEDERAL SAVINGS BANK

FULTON BANK 5

PEOPLES BANK

ASPIRE FINANCIAL INC

M & T BANK

AMERICAS MORTGAGE RESOURCE

5 5

SUN WEST MORTGAGE CO INC

EVOLVE BANK & TRUST

SUN AMERICAN MORTGAGE CO

FIRST PRIORITY FINANCIAL INC

MCM HOLDINGS INC

COMMUNITY FIRST NATIONAL BANK

BANC OF CALIFORNIA

AMERICA FIRST FEDERAL CREDIT UNION

CHERRY CREEK MORTGAGE CO INC

CHRISTENSEN FINANCIAL INC

GEORGETOWN MORTGAGE

SENIOR MORTGAGE BANKERS INC

LAND-HOME FINANCIAL SERVICES

US MORTGAGE CORPORATION

QUONTIC BANK FSB

SUMMIT FUNDING INC

VIP MORTGAGE INC

SUCCESS MORTGAGE PARTNERS INC

MANN MORTGAGE LLC

TOTAL MEDIA MANAGEMENT LLC

TOWNEBANK 4

AMERICAN NATIONWIDE MORTGAGE CO 8 | TRR

stats HECM Endorsement Stats Through May 2016 { FIGURE }

PURCHASE

$1,200

REFI STANDARD

$800 $600 $400 $200

{ FIGURE }

4/1/16

3/1/16

2/1/16

1/1/16

12/1/15

11/1/15

10/1/15

9/1/15

8/1/15

7/1/15

6/1/15

$0 5/1/15

DOLLARS IN MILLIONS

HECM ENDORSEMENT INITIAL PRINCIPAL LIMITS

$1,000

HECM ORIGINATORS (FHA & NON-FHA)

INDUSTRY SUMMARY

TRAILING TWELVE MONTH ENDORSEMENTS 6,000

INDUSTRY SUMMARY

MO.

RETAIL UNITS CHG%

UNITS CHG%

2,971 19.94%

2,324 29.62%

5,295

24.0%

Retail Endorsement Growth

2,694

-9.32%

0.3%

5,025

-5.1%

2,929

8.72%

2,820 20.98%

5,749 14.41%

2,589 -11.61%

2,080 -26.24%

4,669 -18.79%

2,427

-6.26%

1,901 -8.61%

4,328

-7.3%

2,467

1.65%

1,553 -18.31%

4,020

-7.12%

2,524

2.31%

1,705

9.79%

4,229

5.2%

2,199 -12.88%

1,690 -0.88%

3,889

-8.04%

2,645 20.28%

1,932 14.32%

4,577 17.69%

2,669

0.91%

1,857 -3.88%

4,526

-1.11%

2,465

-7.64%

1,775 -4.42%

4,240

-6.32%

2,034 -17.48%

1,605 -9.58%

3,639 -14.17%

-17.48%

4,000

Wholesale Endorsement Growth

-9.58%

2,000

Total Endorsement Growth

0 6 7 8 9 10 11 12 1 2 3 4 5 Retail

Wholesale *Numbers Represent Months

-14.17%

* Figures Above Reflect Change from Prior Month

TOT

30,613

WHOLESALE

2,331

23,573

TOTAL UNITS CHG%

54,186

%%%%% LOOKING FOR MORE STATISTICS? Go to rmsinsight.net for all of the industryâ&#x20AC;&#x2122;s latest stats and rankings. Brought to you by Reverse Market Insight reversereview . com

8 TRR | 9

The Reverse Review August 2016

nrmla news BROUGHT TO YOU BY NRMLA STAFF

TICKETS FOR N R M L A’ S A N N U A L MEETING GO ON SALE HUD’s changes are in place. Members have adapted. Consumers are more secure. The press is responding well. Now, what else can we do as an industry to expand our universe? Join your colleagues in Chicago on November 14-16 for the largest gathering of reverse mortgage professionals each and every year. Hear from program officials and other guest speakers. Get your CRMP continuing education credits. Network with industry leaders. And help us continue to improve the reverse mortgage experience. R E G I S T E R AT

NRMLAONLINE.ORG.

SENIOR HOME EQUITY EXCEEDS $6 TRILLION IN FIRST QUARTER U.S. homeowners ages 62 and older are holding more than $6 trillion in equity, an increase of $164.9 billion from the last quarter of 2015. The NRMLA/ RiskSpan Reverse Mortgage Market Index (RMMI) reached an all-time high of 209.12 in Q1 2016, up from 203.37 in Q4 2015. The gains were largely driven by an estimated $169.7 billion increase in the aggregate value of homes owned by adults ages 62 and older, which was offset by a $4.9 billion increase in mortgage debt held by that age group.

LISTEN:

seniors, helping attendees recognize the warning signs of abuse and exploitation, and providing a list of resources for reporting abuse and supporting victims.

On June 15, NRMLA took part in World Elder Abuse Awareness Day 2016 by presenting an online tutorial, Strategies for Keeping Older Adults Safe from Financial Predators, for professionals who work with older adults.

If you were unable to attend the tutorial or want to hear it again, visit NRMLA’s Combating Elder Abuse resource page and log in to nrmlaonline.org for a link to the recording. At the bottom of the page, you will find links to additional resources offered by the National Center on Elder Abuse, Federal Trade Commission, National Adult Protective Services Association and Consumer Financial Protection Bureau.

Strategies for Keeping Older Adults Safe from Financial Predators

Lorraine Geraci, CPC, veteran trainer and member of NRMLA’s Education Committee, did an exceptional job explaining the different types of financial abuse, describing common scams and fraud perpetrated against

Blog Squad Rebuts Misconceptions NRMLA’s Blog Squad was recently activated to respond to several inaccurate and negative comments posted to a cnbc. com article, “Strapped retirees are turning to reverse mortgages,” published on June 28. The original piece includes interviews with a HUD spokesperson and two financial advisors who explain the HECM program, recent policy changes and some perspectives on why homeowners might take advantage of a reverse mortgage. Confused readers who took to the comments section to rail against reverse mortgage loans revealed a general 10 | TRR

misunderstanding of how HECMs actually work. Commenter Jonathan Hanley wrote: “It’s shocking how this article fails to mention that reverse mortgages can be foreclosed upon if the homeowner draws all the equity. The homeowner is required to then make regular mortgage payments—which they can’t afford. The bank then forecloses on someone in their late 70s.” Blog Squadder Dan Hultquist, CRMP, of Open Mortgage, set the record straight with the following rebuttal: IF YOU’D LIKE TO JOIN US in

“Sorry Jonathan. That is clearly incorrect. Not sure where you picked up that misconception, but ‘drawing all of the equity’ has never been a maturity event that causes the loan to be due. In addition, I have never seen a reverse mortgage that required ‘regular monthly mortgage payments.’” Greenleaf Financial’s Beth Paterson, CRMP, and Celink’s Mary Katherine Quasarano provided additional comments. Members are invited to join and expand our Blog Squad.

our effort to promote the facts about reverse

mortgages as a member of NRMLA’s Blog Squad, please email Jenny Werwa at JWERWA@DWORBELL.COM.

nrmla news REVERSE MORTGAGES IN THE NEWS 2 “Reverse Mortgages Continue to Evolve,” by Rachel L. Sheedy from Kiplinger’s Retirement Report, discusses the latest round of regulatory changes sought by HUD to further stabilize the HECM program. She encourages readers to visit the Lender Locator at reversemortgage.org to find a company in their area that specializes in reverse mortgages. 2 “Reverse Mortgages Aren’t for Everyone,” by Jeff Brown in U.S. News and World Report, paints a balanced picture of when reverse mortgages make sense as a retirement option. “Some experts recommend getting a credit line when conditions are good, as they are today, and holding it for a rainy day,” writes Brown. “Over time, the line will grow, as the home’s value is assumed to rise, while some loan terms will be locked in when the loan is approved.”

HUD Awards $11.84 Million in Housing Counseling Grants to Intermediaries HUD awarded more than $42 million in housing counseling grants to hundreds of national, regional and local organizations to help families and individuals with their housing needs and to prevent future foreclosures. HUD’s housing counseling grants, and the additional funding they leverage, will assist more than 1.4 million households find housing, make more informed housing choices or keep their current homes.

Among the grantees are national intermediaries and regional and local organizations that assist senior citizens seeking reverse mortgages. According to HUD’s press release, these agencies provide counseling for the rapidly growing number of elderly homeowners who seek to convert equity in their homes into income that can be used to pay for home improvements, medical costs and other living expenses. The following national intermediaries were awarded a combined $11.84 million in funding: ClearPoint Financial Solutions, Greenpath, HomeFree, Money Management International, Nationwide Foundation for Credit Counseling and the Neighborhood Reinvestment Corporation.

Birmingham, Alabama

Cambria Mortgage

Eden Prairie, Minnesota

2 “48 Years Old and Nothing Saved for Retirement,” a column by CNN Money contributor Walter Updegrave, offers retirement savings advice to a 48-year-old who has worked consistently but has been unable to contribute to a 401(k) or other retirement account. Updegrave presents some solutions that include putting away 20 percent of every paycheck, looking for an employer who offers a 401(k) plan, and thinking ahead to opportunities to generate funds to supplement Social Security, such as with a reverse mortgage.

Bradley Arant Boult Cummings LLP

2 “10 Ways You Can Get More Money in Retirement,” by Selena Maranjian for The Motley Fool investment site, puts reverse mortgages at No. 5 and says retirees should consider one to deliver a welcome income stream.

NRMLA welcomes its newest members:

2 “Reverse Mortgages Have Improved, but Buyer Still Must Beware,” a column by Chicago Tribune personal finance columnist Elliot Raphaelson, says views on reverse mortgages have become more favorable. Raphaelson attributes this change in opinion to FHA’s policy changes that make it harder for families in poor financial condition to get a reverse mortgage, and lenders charging less and offering more attractive line of credit options. “The bottom line is that if you do your homework, a reverse mortgage may be advantageous to you if you intend to stay in your home for a long time,” writes Raphaelson.

NEW MEMBERS

InterContinental Capital Group, Inc. Jericho, New York

Congratulations New CRMPs

4Launi Cooper Retirement Funding Solutions Roseville, California 4Robert Hogg Fairway Independent Mortgage Portland, Oregon 4Kent Kopen Home Point Financial Newport Beach, California 4Ellen Skaggs New American Funding Tustin, California 4Sean Skaggs New American Funding Tustin, California 4Rick Williams Banc of California NA DBA Reverse Mortgage Works Irvine, California

reversereview . com

8 TRR | 11

The Reverse Review August 2016

The Benefits of Choosing

At Premier Reverse Closings (PRC), we are proud to be the ďŹ rst full-service naaonal tle and seelement company to specialize in reverse mortgages, and the ďŹ rst to close over 175,000 transaccons. We are commiied to our clients and senior borrowers, making us a proven industry leader and truly First in Reverse.

First in Reverse 12 | TRR

HOME EQUITY

MONEY MATTERS

HOME EQUITY IS THE LARGEST SINGLE ASSET FOR MANY AMERICANS.

Many Americans lack a solid understanding of finances.

A LOOK AT THE NEWS AND STATS AFFECTING THE MARKET

{

GET UP-TO-DATE retirement facts, home price stats, senior trends and HECM market developments in The Reverse Review’s monthly Roundup.

{

Among households headed by an individual 75 or older, the median financial assets are $29,000, while median net worth (including home equity) is approximately $217,000.

THIS MONTH

-The Bipartisan Policy Center

According to a 2014 FINRA study,

23% of millennials and

19% of Gen-Xers

spend more than they earn. For each group, only about one-third has set up a rainy-day fund.

QUOTED & NOTED

SENIOR STATS

40% of homeowners

65 and older had mortgages in 2014. -Joint Center for Housing Studies of Harvard University

THE SEN IOR AGEN DA

Most seniors want to age in place. A survey by The American College of Financial Services found that 83 percent of respondents who are retired or are nearing retirement want to stay in their homes for as long as possible. Of that group, about half said they would consider using their home equity to do so.

“It does seem, at long last, that reverse mortgages are entering mainstream consciousness. And it may be happening just in time to help millions of Americans who will retire with grossly inadequate 401(k) balances to have a decent standard of living when they stop working.” -Alicia Munnel of the Center for Retirement Research at Boston College in a column for MarketWatch

reversereview . com

8 TRR | 13

The Reverse Review August 2016

THE RFS PLATFORM IS BUILT FOR THE ORIGINATOR BY THE ORIGINATOR.

STRATEGIC INITIATIVES Proven models that deliver repeatable results.

SALES COACHING Cultivation and development with Builders, Real Estate Agents and Financial Advisors.

TURNKEY MARKETING PLATFORM Robust library of unique collateral to support your B2B and direct consumer efforts.

877-721-3847

#integrity #loyalty #diligence #compassion www.rfslends.com 14 | TRR

NMLS #1025894

MICHAEL JOSEPHS

Chief Information Officer

From his favorite vacation and the craziest thing he’s ever done to his most memorable moment, we get the facts from Michael Josephs, chief information officer at AAG.

My favorite vacation was in St. Tropez,

France, with my wife. >

he gets there. >

in order to align my skills, experience and

My first car was a ’73 Olds Cutlass with

technical interests with the needs of our

Rocket 350. >

seniors. With aging parents of my own,

The craziest thing I’ve ever done was

I am passionate about contributing to

Department advised against it.

understandable) opportunities to make

If I had three wishes they would be health

can possibly be in their golden years.

the expansion of easy-to-leverage (and

go to Russia on business when the State

and happiness for my family and friends; a cure for cancer; and a cure to the political

seniors as confident and comfortable as they

vertical within Xerox.

change due to party-centric representation. >

If I could meet anyone, past or

advisors can learn about reverse

and author whom my father studied

tool in the overall portfolio of a senior who

mortgages is that it can be an instrumental seeks to carefully manage the depletion of

and wrote about. Every morning I walk the dog and putting me behind schedule. My first job was working in electrical

warehouse summers during high school. >

The most important thing financial

present, it would be Denis Diderot,

think about how walking the dog is

an 18th-century French philosopher

Before I entered the reverse mortgage

industry I was CIO for insurance and WC

quagmire we have that precludes positive

My iPod go-to is Rush, all the time, anytime.

I entered this industry because I chose to become part of the amazing AAG team

up. >

If I could time travel, I would see how my

16-year-old son handles his 16-year-old when

If I were a professional athlete, I would

be a curler, as I am used to mopping things

M Y FAV O R I T E M O V I E IS THE EXORCIST.

My parents taught me how to treat other’s

tax-deferred savings. >

The ideal characteristics of leaders in the industry are a deep understanding of the

financial ramifications to all the stakeholders in a reverse mortgage and a passion to provide an expanding array of opportunities to seniors looking to age in place. WHAT MICHAEL THINKS

perspectives with respect, even when they are radically different from my own. >

The most memorable moment in my life was when the doctor handed me my son when he was born.

My favorite book is The Blood of the Lamb by Peter DeVries.

The future of reverse mortgages is outstanding, as it is just the beginning of focused service on a demographic that needs support in a number of ways beyond merely the unlocking of home equity. reversereview . com

8 TRR | 15

The Reverse Review August 2016

ORIGINATING

IMPROVE

A “Can Do” Positive Attitude By Don Currie

Tips for success in the lending world In my 35 years in the mortgage business, I have been promoted many times. More importantly, I have had the honor of promoting hundreds of talented individuals over the years, changing their lives for the better. It is the most rewarding event in business—getting promoted, being recognized by your peers for your hard work and earning more money! So, what is the secret sauce that helps people climb that ladder toward success? Is it aggressiveness? Sometimes. Putting in the most hours? Not necessarily. Being commanding and demanding? Definitely not. A “can do” positive attitude is the answer. Get positive, dude!

What is a “CAN DO” attitude? Here are the TOP 10 TRAITS: Be a problem solver, not a complainer. Look for the solution and present it.

2. Be friendly! Have a smile in

6. Learn your trade! Strive for protection and be a trusted advisor in your field. 7. Maintain a sense of urgency.

your voice on the phone and be ready with a smile in the halls.

Speed is the name of the game. Take the ball and run, don’t walk.

3. Say the right thing but find the positive lining, even under difficult and stressful circumstances.

8. Maintain your composure and professionalism. Never be short, mean or rude with colleagues or clients.

4. Be a duck on water—appear

9. Losing that loving

to be calm, but work like a mad man beneath the surface. Leave your personal issues at home—we all have them. 16 | TRR

feeling and ready to kick someone’s butt? Take your issues to upper management.

10. Answer your phone.

Want to build a great team? A “can do” attitude can start with you. If your co-workers are happy and feel appreciated, they will be motivated to help the company thrive. I have found that it’s important to stress the following in any office environment:

3 Commit to a positive attitude 3 Commit to teamwork 3 Commit to closing loans faster 3 Commit to exceptional customer service Do you have a positive attitude? It is not something that is taught in school or learned in a seminar. It comes from a personal desire to be exceptional and to strive for success in all you do. It must come from within. Can you start your day with a sense of urgency and end it with a sense of accomplishment? Can you be exceptional today? Look at yourself in the mirror each day and say, “Absolutely, I can do that!” n

ORIGINATING

Division Head Dilemmas By Glenn Wallace

The challenges of running a forward company’s reverse division

forward brothers are plagued with what I call the “crisis of expectation,” asking, “Why aren’t we making money yet?” They are not going to wait a year or so to close 10 loans a month! They soon get disenchanted and their accountants decide to pull the plug.

There are several reasons why it is very difficult for a forward shop to find success in the reverse space. The first is scale. Many of these lenders are closing 500-1,000 loans a month. Meanwhile, on the reverse side, there are only 35 companies closing 10 or more loans per month! On a per unit basis, the profits in the reverse sector look phenomenal. However, scalability is a long and dedicated process. Unfortunately, our

Consider asking the following questions: l What are the volume and profit expectations of the division? l What are the timelines to achieve these goals? l Is the company DE-approved by HUD for reverses? l Do you plan to broker loans, close in your own name and underwrite in-house? l Do you have a reverse DE? l How many states are you licensed in? l How do you pay your loan officers? l What type of marketing budget, if any, is there for the reverse division?

There are dozens more questions that you should ask, but the bottom line is: Make sure you are certain that you will have the time and support needed to make your division successful. n reversereview . com

8 TRR | 17

SPOTLIGHT

While these companies paint a very rosy and glorious picture for their new hires, one needs to face several realities before leaping into this often “too good to be true” opportunity. First of all, many forward companies have no clue what to expect

in production volumes, the resources necessary to be successful or the timelines required to build this business. And the failure to recognize these pitfalls usually leaves the division head looking for another position within a year.

LEGAL

Every day I read a new article about forward mortgage companies looking to get into the reverse space. Attracted by double-digit secondary market pricing and a more flexible regulatory environment, these companies are looking for seasoned loan officers or sales managers to head up their new reverse divisions. And many of our faithful are taking the bait!

APPRAISING

It is a natural progression for good loan officers to look to leverage their talents and be a sales manager, to earn overrides on other salespeople and make more money. Therefore, the idea of heading your own division sends your ego in hyper-drive. Just be careful. Before accepting an alluring position, get some straight answers.

ORIGINATING

Another problem is that many forward shops try to run their reverse business like their forward business, using forward underwriters and processes. Getting a reverse loan closed in that environment is almost impossible. It is a separate business with different marketing strategies, different compliance rules, different underwriting and different compensation. It’s just different. Most forward players can’t understand that and end up paying the price.

The Reverse Review August 2016

APPRAISING

LEARN

Clarifying the Rules By John Dingeman

duties and mortgagees were shifting responsibilities. As a chief appraiser for Landmark Network, I sit in between both parties and find myself on the phone with HUD on a near weekly basis to assist in resolving a misinterpretation or finding a solution that would be acceptable to all. Phone calls suggesting that an appraiser or underwriter should know the new guidelines by now are as common as those that recite a guideline that no longer exists in the 4000.1.

What you should know about Handbook 4000.1 and its impact on reverse mortgage appraisals Nine months have passed since HUD’s new FHA Single Family Housing Policy Handbook 4000.1 was adopted and there is still confusion among appraisers and mortgagees as it relates to guidelines and who is responsible for meeting them. It is in our nature to resist change, and the release of the Handbook 4000.1 was perceived by many to include massive changes. As vice president of the National Association of Appraisers (NAA), I 18 | TRR

was privileged to serve on an ad hoc committee assigned to review a draft of the 4000.1 against previous handbooks and all mortgagee letters, and to make suggestions to HUD based on our review. From my experience, I can tell you that the new handbook mandates significant change. For starters, HUD relabeled a host of items, changing those once listed as items that “should” be completed or verified to “must.” And they use the word “must” over 4,300 times throughout the new

manual; that is up from 2,700 in the 4150.2. This alone caused so much consternation that some appraisal organizations believed that the 4000.1 is at odds with our standards by forcing an appraiser to violate the USPAP’s Competency Rule. Whether this is true or not, one thing is for certain: HUD believed the “should” was always a “must” and without the use of the correct verbiage appraisers were obfuscating their

On a positive note, FHA appraisal Continuing Education courses have never been so popular. After September 14, 2015, appraisers either removed themselves from consideration for FHA appraisal assignments or declined them until they were able to attend one of these new classes. I believe appraisers are more aware of their responsibilities when completing an FHA appraisal assignment than ever before. I also understand that there are more than 1,200 pages between the Handbook 4000.1 and the Appraisal Report and Data Delivery Guide, and that committing all of this information to memory is not realistic. This is compounded by the fact that many appraisers simply comply with a request (valid or invalid) from a DE underwriter to avoid conflict, and because one appraiser complies, the mortgagee is led to believe that their request was valid.

APPRAISING HERE ARE A COUPLE OF GREAT EXAMPLES: EXAMPLE NO. 1 (

The mortgagee notes five closed sales, three within 12 months of the effective date of the appraisal and two older than 12 months. The appraiser has placed the sales in the grid in such an order that both of the dated sales over 12 months are in positions one and three. The mortgagee, based on the old Handbook 4150.2, requests that the appraiser move those sales to positions four and five.

The mortgagee orders a Single Family Residential appraisal and selects a 1004 URAR. The appraiser identifies that the property as a Site Condo and completes the report on a 1004 URAR as requested. It is not uncommon for appraisers to do this since it has been an accepted practice for years for both conventional and FHA appraisals. If the subject property is a condominium (including a site condominium), Handbook 4000.1 requires the appraiser to complete the assignment on the 1073 Individual Condominium Unit Appraisal Report. It is important to note that in the initial step of the appraisal process, an appraiser must identify the property/ownership type and the results of those findings determine the form type, regardless of how the mortgagee ordered the appraisal. It is recommended that an appraiser notify the mortgagee of the change and, if questions arise, review the prelim and all related documents to ensure that the report is completed on the appropriate form.

The mortgagee can provide the following documents, which are required before the appraiser begins the appraisal process. ONE A complete copy of the executed sales contract for the subject, if the loan is a Purchase transaction, with all contract addendums are included. The contract and any addendums must be signed and dated. TWO The land lease, if applicable. THREE Surveys or legal descriptions, if available. Note that legal descriptions may vary depending on what is noted in public records and to avoid any discrepancies the prelim should be provided. Surveys are extremely helpful, particularly when the property does include private water and sewer systems as the distances are typically noted there. 8 reversereview . com

8 TRR | 19

SPOTLIGHT

An appraiser is only responsible for stating if public or community systems are available for hook-up. Most appraisers would not know the cost to connect. It is the mortgagee’s responsibility to determine if connection is feasible and if the cost is reasonable.

EXAMPLE NO. 3 (

What are some THINGS THAT BOTH PARTIES CAN DO to speed up the process?

LEGAL

The mortgagee notes that the subject is on a private sewer system. The appraiser simply comments that 1) public utilities are available and the cost to connect is unknown; 2) private water or sewer systems are typical for the area, included with all comparables and have no impact on the marketability of the subject property; and 3) the well and septic system meets HUD guidelines as it relates to distance requirements. The mortgagee asks one or all of these questions: Can you provide the cost to connect to public utilities and state whether or not it is feasible to connect? Can you certify that the private water system meets the requirements of the health authority with the local jurisdiction or meets the standards set by the EPA for drinking water? Can you include the distances from the well, septic and property lines and include the distances on the sketch?

An appraiser must be familiar with the minimum distance requirements between private wells and sources of pollution if noticed. An appraiser is not required to sketch or note the distances and only when comfortable may provide those distances. Once the appraiser states the system meets HUD guidelines, it is presumed that the distance requirements have been met.

APPRAISING

EXAMPLE NO. 2 (

An appraiser is responsible for observing the physical condition of the plumbing system and must operate the system to observe its performance. This means confirmation of water pressure, no foul odors or discoloration, no leaks or structural damages, and the availability of both hot and cold water. It is outside the Scope of Work for an appraiser to certify that the water meets any requirements—and really, are they qualified to do so?

ORIGINATING

This guideline was removed from the 4000.1. Gone! The only requirement is that the appraiser include three sales within 12 months of the effective date of the appraisal. Many believe that restricting an appraiser from reporting an analysis in a way that appears to be the most logical compromises the appraisal process.

The mortgagee, not the appraiser, must ensure that the water quality meets certain requirements.

These types of requests and confusion about who “must” address the specified guideline can cause delays. Because there are more classes on the FHA Handbook 4000.1, and because there are more state appraisal organizations educating and supporting their membership on industry-related changes, appraisers are more aware and confident of their position on these matters. And because so many lenders have specific requirements for appraisers that include at a minimum Certified Residential status and inclusion on the FHA Appraiser Roster regardless of the assignment type, it behooves an appraiser to know and comply with the guidelines rather than risk being removed from the FHA Appraiser Roster, which can impact an appraiser’s livelihood.

The Reverse Review August 2016

20 | TRR

APPRAISING FOUR Any other legal documents contained in the loan file. (This is a tough one! There are an awful lot of legal documents in a loan file and some of them are completely unrelated to the appraisal. Nonetheless, if you think it is relevant, you should probably attach it to the order.)

What can LOs do?

Remember, HUD believes there were little to no changes, because the intent of the 4000.1 was to combine the 4150.2, 4905.1 and all mortgagee letters. The department’s goal was to combine both the mortgagee and appraiser’s responsibilities in one document with the intent of eliminating any confusion and minimizing the broad interpretations of the guidelines made by other parties. The 4000.1 is a living and breathing document; changes will be made to it and users should ensure that they are reading from the latest version. After the dust fully settles, I believe the new handbook will have served its purpose well. I also believe, based on my experience with the NAA, that HUD is open to providing clarification when and where it is needed, so ask. Now, their clarifications may not come at a pace you and I would prefer, but they are coming. n

APPRAISING

LOs can also prep the occupant for the FHA site visit and appraisers can do the same when calling to schedule. If there is an attic or crawl space, ensure that they are accessible. Replace any damaged or missing electrical cover plates. Install smoke alarms and CO

detectors where needed (each state will post requirements on its website). For homes built before 1978, ensure that there is no peeling, flaking or defective paint surfaces on any structure or property improvements (yes, this includes fencing). If the property is on a private well or sewer, have the survey ready and point to its location when the appraiser is on site. If possible, have the occupant demonstrate that the appliances are all operational or at the very least that they are free of debris and clutter. Ask if there are any remodeling or other improvement projects taking place on the premises. Finally, for easy observation, ensure that the appraiser has complete access to all rooms, outbuildings, etc. Reducing the number of site visits, or surprises, for that matter, is the ultimate time saver. And contrary to popular belief, appraisers are not interested in completing 1004Ds or CIRs if they can be avoided on the first site visit.

ORIGINATING

FIVE A point of contact and contact information for the mortgagee so that the appraiser can communicate any noncompliance issues. (I understand that a DE underwriter may not be assigned to a loan file at the same time that the appraisal order is processed, but that is of little concern to HUD. A name, email address and phone number should be included with the order.)

“The department’s goal was to combine both the mortgagee and appraiser’s responsibilities in one document with the intent of eliminating any confusion and minimizing the broad interpretations of the guidelines made by other parties.”

LEGAL SPOTLIGHT

reversereview . com

8 TRR | 21

The Reverse Review August 2016

REVIEW

LEGAL

Default and Notice Issues By Michael Thurmond

Want the online version? reversereview.com/magazine

An overview of how these concerns can impact HECM borrowers It is a simple fact of life and law: You should be told when something is happening to your things! In the context of a HECM loan, it means that anyone who has an interest in a property that was used as security for a loan must be given notice before something occurs that will impact them. That is the basic theory of legal notice. However, after the death of the primary borrower on a HECM loan, heirs or beneficiaries are often unaware of the existence of the HECM debt. Sometimes they don’t know that they even have an interest in a property. This article will try to illuminate how this unknown interest occurs and what must be done before the lender can initiate a foreclosure action, if needed. First, we need to have a basic understanding of some legal terms. In this article, the following are used: Default will vary with the context but generally refers to a failure to abide by the terms of an agreement or failure to complete a duty, promise or obligation under a contract. Interest as used with real property rights indicates that a person has a right 22 | TRR

LEGAL TERMS TO KNOW

Default: This definition will vary with the context but generally default refers to a failure to abide by the terms of an agreement or failure to complete a duty, promise or obligation under a contract.

to do something with the property. Every property has a “bundle of rights” that can impact it and an interest can be any one of these from fee simple ownership to the right to occupy for a period of time via a lease. Notice indicates that a formal (normally written) advisement has been furnished to a party that provides knowledge of actions that may impact them. This may include actions to determine if any property interest exists. It is imperative that legal notice (either actual or constructive) is to be given to all interested parties for a final judgment

to provide clear and marketable title to the real property. (These are not exhaustive definitions and like most things in the law, they can be much more complex in application. However, these definitions will help explain the depth of the potential problems of notice.) There are five events that may require acceleration of the HECM loan debt and therefore require legal notice to be provided. Four are fairly straightforward events and will occur with the borrower as the interest holder. In those cases, notice

Interest: Interest as used with real property rights indicates that a person has a right to do something with the property. Every property has a “bundle of rights” that can impact it and an interest can be any one of these from fee simple ownership to the right to occupy for a period of time via a lease.

Notice: Notice indicates that a formal (normally written) advisement has been furnished to a party that provides knowledge of actions that may impact them. This may include actions to determine if any property interest exists. It is imperative that legal notice (either actual or constructive) is to be given to all interested parties for a final judgment to provide clear and marketable title to the real property.

LEGAL will not be an issue since the identity of the borrower is well known. The last one is the most frequent default for these loans and is potentially the most problematic: death of the primary borrower and/or surviving spouse in the home. This event can be the starting point for the “unknown interest” issues, which can delay resolution. Here is a common scenario:

All things considered, it is easy to see how distant members of a family who

Since it is clear that early, accurate deceased borrower searches will save time and

While the intestate statutes can be complicated, they will also be part of the answer. The solution is to ensure accurate heir searches are performed as early as possible after the death of the borrower is discovered and updated prior to the commencement of any legal actions. Since notice is paramount for successful HECM litigation, these heir searches must be prioritized. Done correctly, these searches can help timelines and provide marketable title for those files that must proceed through the foreclosure process.

provide quick and clear resolution on the back end of the HECM process, the priority of this simple step should be carefully reviewed by servicers, lenders and law firms alike. One last word of caution: The fair debt collection laws (both Federal FDCPA and state counterparts) have been interpreted by some courts to define lenders, servicers or litigation law firms filing the foreclosure case as “debt collectors” and therefore restricting those entities from contacting potential heirs without exposure to penalty. Attentiveness to these requirements is certainly key. n

APPRAISING

may not even be aware of the death of this distant relative could be totally unaware of the HECM loan.

ORIGINATING

George, a widowed borrower, obtains a lump-sum HECM in 2010. He uses the money to enjoy his golden years. Sadly, when George dies in 2015 his only son has been dead for over two years. George has no surviving children or grandchildren and did not leave a will. In this case, the vesting of the borrower’s interest in the secured real property will be determined

by the intestate succession laws of the state where that property is located (see the excellent article “Legal: Probate 101” by Alexander J. Chaudhry, The Reverse Review, August 2015). In short, this means the property interest will normally pass to members of the borrower’s family in a specific order. Once the interest passes by law outside the immediate family, the actual knowledge of the HECM loan or of the property itself becomes more unlikely. Many statutes continue intestate succession, if necessary, past blood relatives and include heirs of a pre-deceased spouse as if they had inherited from the primary borrower prior to their death.

LEGAL SPOTLIGHT

In today’s complex regulatory maze, knowledgeable and trustworthy vendors are crucial to your success. Not sure which direction to take or where to go?

WE CAN LEAD THE WAY!

Title - Settlement - Valuations

800.877.7557 ext 1222 www.mtginfo.com reversereview . com

8 TRR | 23

The Reverse Review August 2016

SPOTLIGHT IN THIS MONTH’S EDITION

WE TALK TO REVERSE PROFESSIONALS WHO ARE HELPING OTHERS IN NEED.

Charitable Ventures Reverse companies take time to give back.

august 2016

WANT TO SEE MORE ARTICLES LIKE THIS?

See them at reversereview.com.

THE JOB OF A REVERSE MORTGAGE PROFESSIONAL REQUIRES COMPASSION.

Every day, these people talk with seniors concerned about their financial security, helping them find solid solutions for a better retirement. It’s no surprise that the sensitivity and empathy required to do this job extends beyond the workplace. With the support of their lender and broker companies and in the spirit of giving back, many reverse professionals are actively contributing to a variety of charitable causes. Here are some of the charitable ventures supported by companies in the space.

24 | TRR

AAG Kelsey Galaway AAG has created a foundation to support its charitable ventures. The mission of the AAG Foundation is to engage employees, invest in strategic organizations and inspire change in our global community with the ultimate goals of helping those in need and empowering our workforce to make a difference. The foundation focuses on three key pillars of giving: helping seniors, providing aid to victims of human trafficking and caring for our workforce through the Employee Assistance Fund. The AAG Foundation supports Meals on Wheels, the Orange Senior Center, Willow International, Dorot, the Alzheimer’s Association and the American Red Cross through the provision of volunteers and financial support. For some time, we have focused on Willow International, an anti-trafficking organization that rescues and provide restorative aftercare services to victims of human trafficking in Uganda.

SPOTLIGHT

Though videos, Skype calls, handwritten letters and monthly updates, AAG employees get to connect with those they are helping and hear personal stories about the life-change they make possible. Employees participate in office events to raise money for the cause. Most recently, the foundation hosted a sold-out chili cook-off and a Mother’s Day jewelry sale, which sold items handmade by survivors of human trafficking.

I was blessed with the opportunity to work for Willow International on the ground in Uganda for three years. It was incredible to see the transformation that takes place in the lives of the girls who are rescued. In 2015, I was asked to head the AAG Foundation and work with an incredible group of employees who bring their passion and enthusiasm for helping to company-sponsored giving activities and events.

What does your involvement in the organization mean to you? It brings an understanding of the challenges seniors face and emphasizes the fact that they are not the “lost generation.” Their contribution to society matters and we still have much to learn from them. My colleagues and I feel that giving back brings us a sense of security and pride in our company, highlighting the fact that there is a human element to the product.

Visit occamp.accelraising.com/ event/donate/450 to learn more.

We recently launched a volunteer time-off program that allows employees the opportunity to get paid to volunteer. This month, more than 50 AAG employees will volunteer their time to host a Father’s Day party at a local senior center, deliver Meals on Wheels and write encouraging cards to the survivors of human trafficking at Willow International and homebound seniors in America. Giving provides much greater meaning to our workdays.

Visit willowintl.org to learn more.

Professional Mortgage Alliance Michael Banner For the past four years, we have worked to collect donations for Backpacks for Kids. This organization supplies elementary school children who live below the poverty level with backpacks filled with school supplies for their first day of school. In its first year, Backpacks for Kids supplied 100 backpacks; in year two they donated 300; and in year three 550. This year, their goal is 900! Last year, Professional Mortgage Alliance donated 150 backpacks filled with supplies, making us the largest single contributor for the second year in a row. This year, we hope to donate 200.

What do you and your coworkers do to support the charity? Since the backpacks need to be delivered to the children’s homes the night before school, which in Florida is very early August, we start our fundraising in late June. We post numerous ads on Facebook, LinkedIn and all sorts of social media. My staff and I start to contact friends, relatives and other business owners for donations. And, of course, we start looking for sales on backpacks, crayons, pencils, rulers, paper, notebooks, folders and anything else that needs to go inside the backpack. What does your involvement in the organization mean to you? That’s a great question. I have several deep passions in life, and underprivileged children, children in need, is the big one for me. (Of course, seniors ages 62 and above are a very close second!) 8 reversereview . com

8 TRR | 25

SPOTLIGHT

We participate in the OC CAMP/Irvine Meals on Wheels, whose mission is to assist homebound seniors with maintaining their independence by delivering nutritious, healthy, great-tasting meals to their homes. When HighTechLending started reverse mortgages programs for seniors, we felt it equally fitting to ensure we understood seniors and the hardships they experience. We’ve been working with Meals on Wheels since 2014.

Uniting around a cause brings us together as a team. It allows employees to connect with the company and one another on a much deeper level. We consistently hear great feedback from our employees who share that the charity work of AAG gives greater purpose to their work and adds to the company culture of caring and giving.

LEGAL

HighTechLending Melanie McAllister

How does company-sponsored charity work boost morale?

APPRAISING

What does your involvement in the organization mean to you?

ORIGINATING

What do you and your co-workers do to support Willow International?

The Reverse Review August 2016

SPOTLIGHT There are so many children out there in need that an everyday working person just can’t help, but we certainly can make a difference. When I was informed by the charity that thousands of children in Florida are living under the poverty level and going to school with no supplies whatsoever, we had to get involved. How does your charity work impact workplace morale?

Finance of America Reverse Tony Arnold

Visit gleaners.org to learn more.

The Indianapolis branch of Finance of America Reverse has partnered with Gleaners Food Bank of Indiana for the past two years to help local citizens. Gleaners was founded in 1980 by concerned citizens who had a simple yet profound vision: No one in Indiana should suffer from hunger and malnutrition. Gleaners’ mission is to lead the fight against hunger in central and southeast Indiana by collecting, storing and distributing food to those in need. The organization distributes food to hungry Hoosiers through a network of more than 250 partner agencies, including emergency food pantries, soup kitchens and shelters. What do you and your co-workers do to support the charity?

It lifts the spirits of everyone involved. I don’t care who you are, helping those less fortunate than you is an incredible feeling. It also helps put things in perspective. The fact that an appraisal came in a few thousand dollars short, or that a certain client was a no-show or didn’t qualify, suddenly seems trivial to what these children go through daily.

Our office volunteers at Gleaners’ warehouse once or twice a year to prepare meal boxes, package food items and fulfill a variety of tasks. In addition, we will do different things throughout the year to raise money for them.

Visit fundly.com/ backpacks-for-kids-2 to learn more.

Reverse Mortgage companies, and financial institutions in general, carry certain stigmas that we are working hard to shake. We truly value our employees, consumers and communities and believe that charity work reinforces our core values. n

26 | TRR

What does your involvement in the organization mean to you? A lot! I like knowing that we are helping people in my state. One in eight people in central and southeast Indiana struggle with hunger and food insecurity. This opportunity provides us a chance to be grateful for our blessings and help people in my home state. Why do you think this is an important cause for a reverse mortgage lender to support?

More than half of potential reverse mortgage borrowers learn about the loan from TV commercials.

By Jessica Guerin

early half of potential reverse mortgage borrowers say they learned about the loan from television commercials. Considering this notable fact, itâ&#x20AC;&#x2122;s no wonder the industryâ&#x20AC;&#x2122;s leading lenders are channeling serious ad dollars toward television in an effort to reach consumers. TV advertising in the reverse space is nothing new. Commercials featuring Fred Thompson, Harry Winkler and Robert Wagner have garnered attention over the yearsâ&#x20AC;&#x201D;convincing some to learn more, inspiring others to poke fun, but effectively educating viewers about what, exactly, a reverse mortgage is.

reversereview . com

++++++++++ ++++++++++

+ + +|+27+ + + + + + 8 TRR

The Reverse Review August 2016

hile the medium isn’t new, the message certainly is. Gone are the days of the “call for cash now” campaigns. With a revamped product geared toward the financial planning set, lenders are aiming to teach consumers how a reverse mortgage can be an important part of a smart retirement plan. Collectively, the reverse mortgage commercials airing on television right now have a substantial impact on the industry. Through the use of such a visible medium, top HECM lenders are helping shape public opinion, guiding the product into the future and, hopefully, toward the mainstream.

New on TV Several lenders are in the process of launching new TV ad campaigns. Among them, of course, is AAG, which made sizable waves earlier this summer when it named Tom Selleck its new spokesperson. Selleck will star in a series of commercials currently in the works that feature the new tagline “Bringing stability to your retirement.” AAG’s Chief Marketing Officer Teague McGrath says the campaign aims to explain how HECMs can be a part of your retirement plan. “Traditionally retirement advisors and others talk about the three legs of the retirement stool: savings, Social Security, and a pension plan or 401k. We want to introduce the idea that because of longevity and increasing medical expenses and retirement costs, that retirement stool is wobbly,” McGrath says. “We want people to add a fourth leg to that stool, which is home equity. It’s the home equity chair—it provides more stability, more comfort and more security for your retirement.”

28 | TRR

In the spring, AAG released a commercial featuring academics and professionals explaining the loan’s benefits, a sharp departure from the company’s finely tuned spokesperson model. McGrath says they’ll continue running this campaign in markets where it has proved effective. “It offers an endorsement from real people, people who are independent from the lenders or the industry and who have no financial interest in pitching,” McGrath says. “These guys were all professors or doctors and they had all done their own research. We thought it was really effective.” Other lenders, like Finance of America Reverse and Liberty Home Equity Solutions, have completely abandoned their former spokesperson approach. Back on TV after its transition from Urban Financial of America to Finance of America Reverse, FAR has launched a campaign with the tagline “It just makes sense.” The spot, airing now on national networks, features active seniors going about their day, offering facts about how a reverse simply makes sense to help bridge the retirement income gap. “We wanted to create a campaign that was clear, concise and drove home a message about what a reverse mortgage would do for an individual consumer,” says Tom Evans, FAR’s vice president of marketing. “We stepped away from the spokesperson model because of the expense, and to see if we could bring

different messaging to the consumer and still gain that level of trust without borrowing it from someone they already know.” Liberty, which once partnered with Robert Wagner to promote the product, has also turned to seniors to convey its message. The lender just announced the release of a new national campaign featuring real stories from Liberty customers. “We thought that our customers could probably tell our story better than anybody else,” Liberty President Mike Kent says. “Our tagline is ‘Changing lives.’ It’s all about our customers, all about the seniors.”

The Message Matters Reverse mortgage lenders may have a tougher battle to fight when it comes to marketing campaigns. According to McGrath, they not only have to educate people, but they need to address the negative perception—all in a 30- or 60-second spot. “Most marketers say, ‘Here’s the product and here’s why you should buy it.’ It’s a two-step conversation. Well, for reverses you have to work backward. You have to start with, ‘This is why this product is not a bad thing,’ and address the negative perception, and then get to why they should buy it. So you are taking three steps to get to the same place, but in the same amount of time, which is relatively restrictive,” says McGrath. spokesperson can help you do that quickly. They can get you credibility from the start,

and that’s why many people use a celebrity spokesperson, to leverage their credibility to get credibility for the product. That’s why it has worked particularly well for reverses. Some people don’t like celebrity spokespeople and some people love it, but that’s the necessity of it.” hether you employ a spokesperson or not, all lenders agree that it’s important to put forth an impactful yet responsible message. Kent says a lot of research goes into the creation of a campaign. “We have an extraordinary amount of continuous feedback from our customers every month that we really examine,” Kent says. “That helps us craft our message. We want a creative piece, we want it visually appealing and we want it to reflect our values as a company. We want it to be aligned with how we view the intent of the HECM program.” McGrath says AAG also culls a lot of research when designing a new campaign. “We take a close look at our best-performing spot and pull it apart to try to determine why it worked so well, and we use that as the baseline for the next one,” he says. “We use a lot of market research to get an understanding of people who don’t get a reverse, why they didn’t move forward and their perception of it. We also get an understanding of what seniors use a reverse for and incorporate that.”

HUD guidelines also play a part in the message lenders put forth. “We need to be conscious of regulatory requirements and what you can and can’t say and what they are frowning upon. They don’t want you to promote a luxurious retirement lifestyle, the idea that you can get a reverse and go to Vegas or sail off into the sunset. We have to show responsible images of getting a reverse, like paying bills or medical costs.”

According to Kent

For many lenders, the focus seems to be on educating viewers, not selling to them. McGrath says that as the largest lender with 25 percent market share, AAG assumes a lot of responsibility on this front. “Our future is not in continuing to grab market share from our competitors. We have to grow the pie and increase awareness and acceptance.” Liberty is also toning down the sale in their new campaign. “I think one of the big messages we want to get out there is that we’re not selling loans, we’re simply trying to educate people,” Kent says. “We educate people, we inform them, and if they decide a HECM is right for them, we hope they choose us. That’s the message we want to get across.”

Evans says negative reactions to the industry’s direct response model shouldn’t be a factor. “I think that as long as the commercials are handled tastefully and the look and feel of the commercial is respectful and professional, we don’t have to worry about being lumped into that particular category… There’s a sense that we are shilling something when in fact we are doing the opposite—we are bridging the gap between the people who need a loan and the people who can provide it for them.” McGrath says he’d like to see the industry move past this model. “We’ve all been stuck in this niche. It might reduce or diminish the reverse mortgage industry, but none of us has quite dared yet to just do brand advertising in the hope that that will float the boat, because you just can’t track it.” The big budget of a major bank or financial institution would certainly help matters, says McGrath. “We need more brand advertising and bigger production values. If someone like Bank of America would do a reverse commercial, that would be amazing.”

Stay Tuned Call Now A distinct part of most reverse mortgage commercials is a timesensitive call to action. This direct response model has drawn ire from skeptics who criticize the industry for its use of what they deem to be underhanded, late-night advertising, but seasoned reverse marketers point out the necessity of this approach. “The reason we do that is because it works,” McGrath says. “It’s a way to track your advertising performance and make it more effective, rather than just doing brand advertising.” “‘Call now’ is ‘call now’ because people recognize it,” says Evans. “It’s an effective means of connecting with a consumer.”

TV marketing for reverse mortgages continues to evolve, and it will be interesting for many industry observers to see the impact of these latest campaigns over time. While each lender has assumed a different approach, their collective message has a definite influence on public perception. “Even beyond how it functions for each individual company, the recognition of the product and the brand on television resonates respect for the product,” Evans says. “The important thing is to continue to get the gospel out. The advantages to the bulk of consumers who can get the loan are so numerous and so exciting and we want people to have an opportunity to know what’s out there.” n

++++++++++ “We educate people, we inform them, and if they decide a HECM is right for them, ++++++++++ we hope they choose us. That’s the message we want to get across.” reversereview . com 8 TRR + + +|+29 ++++++

The Reverse Review August 2016

LAST WORD

REFLECT

The Journey From the Sandlot to the Major Leagues By Ryan LaRose

As the servicing of this product becomes more prescriptive than in the past, it allows servicers to more accurately build system controls and monitoring around each of those required events. Unfortunately, with these changes also comes less flexibility for the servicer to develop creative solutions for borrowers who may not fit into one of the mortgagee letter’s prescribed boxes. As an example, when borrowers defaulted on their taxes or insurance in the past, the servicer was given a level of discretion in terms of the amount of time they could invest in making contact with the borrower, getting them in touch with counseling resources, and (hopefully) working out a potential repayment plan. Only as a last resort, and when all other available tools had been exhausted, would the my mind to grasp all of the moving loan be presented to HUD to be called parts that are involved in servicing due and payable. With the passage of this unique product. There were times mortgagee letters last year, the servicer when I was extremely frustrated; the now has little discretion as it relates requirements in place simply did not to helping the borrower avoid having make sense to me. their loan called due and payable. If the borrower defaults, they have to repay When I take a step back and look at the entire advance within 30 days or the where reverse mortgage servicing servicer is required to request the loan began, and what it looks like now, be called due. If the servicer misses that I can see that the demands in my deadline by even one day, they could “rookie year” were fairly simple and face thousands of dollars in curtailment straightforward in penalties. It is only after comparison to today’s the loan has been called requirements. We have “When I take a step back and due and payable that all recently undergone look at where reverse mortgage the borrower can be an unprecedented servicing began, and what it evaluated to determine amount of changes in looks like now, I can see that if they can afford a how HECM loans are the demands in my ‘rookie repayment plan. originated and serviced. year’ were fairly simple and We talk a lot at Celink straightforward in comparison Just like the kids that I to today’s requirements.” about how these changes help coach, we are all have been a catalyst for trying to grapple with a fundamental shift in executing the basics of the way in which we must service these our new world. My hope is that our loans—and the borrowers associated industry can quickly master these with them. There has always been risk changes so that we can move on to in servicing, and that has multiplied the “advanced strategies” and look in with the additional requirements and the rearview mirror at everything we corresponding curtailments/penalties accomplished this season. Play ball! n that are strictly enforced by HUD.

How reverse mortgage servicing has come a long way in a few short years One of my favorite things to do outside of work is coaching my 10-year-old son’s baseball team. He plays on a local team and the primary goal (outside of simply making sure that the kids have fun) is to ensure that they learn all the skills they will need to advance to the next level of play. While each player starts off with varying skill levels (some very basic), the idea is that each concept we teach them will build upon itself. As each player grasps the basics, we begin teaching them the intermediate and more advanced strategies. This is the third year that I have helped coach his team and I’m continually amazed at the end of the season at how each player has improved, gained skills they didn’t have at the start of the season and broadened their knowledge of the game. When I entered the reverse mortgage industry with Celink back in 2005, the concept of servicing a HECM loan was difficult to wrap my mind around. My prior experience was from the forward mortgage world and I had to reprogram 30 | TRR

You are their face of

confidence.

They come to you so they can borrow with confidenceâ&#x20AC;&#x201D; and with Celink as your reverse mortgage servicing ally, youâ&#x20AC;&#x2122;ll never let them down.

celink.com | (844) 228-2101

reversereview . com

8 TRR | 31

The Reverse Review August 2016

Now Presenting...

JUMBO Introducing The AAG Advantage Jumbo Reverse Mortgage Loan Available to our wholesale partners in select states, for properties up to $6 million. Available on Some Non-FHA Approved Properties Lump sum ďŹ xed product - Full draw at closing No Upfront or Ongoing Mortgage Insurance

#1 Reverse Mortgage Lender in the Nation

Caring. Driven. Ethical.

Call today to see what Jumbo can do for you! Join the AAG family and get started in just 30 days! 32 | TRR

866-964-1109 aag.com/wholesale

NMLS# 9392