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INSIDE THIS ISSUE | HUD’s Karin Hill talks HECM policy
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Jeffrey Birdsell sits down in our Hot Seat
Past clients lead to future business
An industry investor brings tech solutions
A lesson in payoff demands
The Reverse Review September 2016
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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 September 2016
From the editor RE
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S EPT EM BER 2016
HOT SEAT
ORIGINATING
TECH
PG. 17
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Jeffrey Birdsell sits down in our Hot Seat
Past clients lead to future business
COVER
The industry responds to HUD’s proposed policy change.
In its mission to ensure the longterm stability of the reverse mortgage program, HUD released yet another round of proposed policy change in May. The 200-page document outlined a multitude of proposals set to impact the program, seeking feedback from industry participants who responded fervently to HUD’s call for input.
In this month’s issue, we take a look at some of these responses, highlighting the proposals that were the most applauded and those that incited the greatest protest. With HUD’s comment period now closed, the industry will have to wait to see how its input will impact the final rules.
An industry investor brings tech solutions
SEPTEMBER 2016
A NOTE FROM JESSICA GUERIN
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INSIDE THIS ISSUE | HUD’s Karin Hill talks HECM policy
T IT L E T IP
A lesson in payoff demands PG. 23
The detailed feedback submitted by HECM advocates highlights just how much people care about the shape of the reverse mortgage program. With HUD working toward a shared goal to improve the product—and seeking input from those invested in its success along the way—HECM proponents can rest assured that the HECM will be around to help seniors for years to come.
Connect with me about how you can participate. Reach me at jessica@reversereview.com
GET THE LATEST ISSUE DELIVERED DIRECTLY TO YOUR INBOX
Feedback
4 | TRR
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
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.
Meet the Team
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table of contents 09 / MOVERS & SHAKERS The latest developments in companies across the reverse space
10 / STATS
TRR 9.16
21 / ORIGINATING
18 24
Rising Above It
Why professional partnerships are the key to this industry’s success JOHN SMALDONE
July top lenders and HECM endorsement stats through June REVERSE MARKET INSIGHT
12 / NRMLA NEWS Read about the association’s current initiatives.
15 / ROUNDUP
22 / TECH
A CRM Worth Noting With more capital and new features, InSellerate eyes expansion in the reverse market.
23 / TITLE TIP
Let’s Talk Payoff Demands
A collection of recent facts and surveys affecting the reverse market
17 / HOT SEAT
Customer service, communication and consistency are key to effective payoff documentation. HEATHER MOULDEN
Jeffrey M. Birdsell VP of professional services at ReverseVision
18 / ORIGINATING
Stop Leaving Business on the Table Past clients are the key to future residual business. MICHAEL J. WELTMAN
20 / ORIGINATING
24 / SPOTLIGHT HUD’s Karin Hill
The senior policy advisor for singlefamily housing talks about the evolution of the HECM program.
20
21
30 / LAST WORD
A Birthday and a Milestone Assessing my own ability and willingness as I turn 62 RALPH ROSYNEK
30
Life Under the Big Top With a skeptical audience to sway, reverse consultants have to have the talent to thrive in the center ring. JANICE COHEN
FEATURE
26 / FEATURE
YOU CAN DO IT!
Dear HUD...
Reverse professionals respond with passionate commentary to proposed policy change. JESSICA GUERIN
REACH OUT TO US ABOUT WRITING FOR TRR. INFO@REVERSEREVIEW.COM
“The fact that the department seeks feedback from those invested in the success of the reverse mortgage space highlights its commitment to working collaboratively to improve the program for America’s seniors.
reversereview . com
8 TRR | 5
The Reverse Review September 2016
6 | TRR
contributors JOHN K. LUNDE
10 | 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
Jeffrey M. Birdsell MICHAEL J. WELTMAN
18 | Stop Leaving Business on the Table g
Michael J. Weltman
Janice Cohen
Michael J. Weltman, CSA, SRES, CAPS, is the Florida-area sales manager for AAG. Weltman has spent 16 years in the industry managing sales teams for major lenders. With a degree in business management and a master’s in finance, Weltman has taught college courses in real estate, finance, sales and marketing. He has taught reverse mortgage CE courses to Realtors and has served on the board of directors for the Tallahassee Board of Realtors and the Tallahassee MBA.
JOHN SMALDONE John Smaldone
Heather Moulden
Ralph Rosynek
21 | Rising Above It g
John Smaldone is the executive VP of Hanover Financial Services, a consulting firm that focuses primarily on the reverse mortgage industry. Smaldone is the founder of Taylor, Bean and Whitaker and is the former senior VP of TransLand Financial Services’ reverse mortgage division. He has been in mortgage banking for 48 years, focusing on reverses for the past 19 years. john@hanoverfinancial.com hanover-financial.com
JEFFREY M. BIRDSELL
17 | Hot Seat g
Jeffrey M. Birdsell is the vice president of professional services at ReverseVision. Birdsell, who designed the Reverse Mortgage Analyzer, one of the first reverse mortgage software applications, worked previously as CIO of Financial Freedom’s product development group. A Certified Mortgage Banker and current NRMLA board member, he is one of NRMLA’s original board members and served as the association’s secretary.
JANICE COHEN
20 | Life Under the Big Top g
Janice Cohen is a reverse mortgage consultant with Retirement Funding Solutions. She began her career in the industry in 2006 and has worked for Wells Fargo, MetLife and Security One Lending. Previously, Cohen worked for 25 years as a professional cantor in a reform synagogue in New Jersey.
HEATHER MOULDEN
23 | Let’s Talk Payoff Demands g
Heather Moulden is senior vice president of sales at PRC, responsible for strategic business relationships and customer-centric growth for the reverse mortgage market. Moulden, who has a history in public relations, real estate and sales, has been an integral part of designing marketing, educational and motivational strategies for PRC.
RALPH ROSYNEK
30 | A Birthday and a Milestone g
Ralph Rosynek is the senior vice president of the Money House, Inc. – U.S. Division, 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 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 September 2016
You are their face of
confidence.
They come to you so they can borrow with confidence— and with Celink as your reverse mortgage servicing ally, you’ll never let them down.
celink.com | (844) 228-2101
8 | TRR
movers & shakers READ ABOUT THE LATEST DEVELOPMENTS IN COMPANIES ACROSS THE REVERSE SPACE. HAVE A COMPANY UPDATE YOU WOULD LIKE TO SEE PUBLISHED?
email it to jessica@reversereview.com Landmark Network Expands Operation with Acquisition, Hires New Chief Strategy Officer Landmark Network has acquired national appraisal management company AppraisalPro. Founded in 2006, AppraisalPro will continue to operate from its North Carolina location under Landmark’s umbrella. “Along with our Maine operation center, this adds to our existing presence on the East Coast and will allow us to enhance our coverage in the southeastern United States,” Landmark CEO Erik Richard says. The AMC has also hired a new chief strategy officer. Robert Scheer will be responsible for growing client relationships and ensuring customer relations with his longtime, proven commitment to customer service. Scheer served previously as SVP at another national AMC, where he was responsible
for maintaining customer service and internal performance levels. He previously held the position of production manager at First Choice Bank, and managerial and executive positions for Maverick Residential Mortgage, Synergy Mortgage Corp., WMC Mortgage Corp. and Infinity Funding Corp.
Veteran Reverse Mortgage Educator Dan Hultquist Joins ReverseVision ReverseVision has hired industry educator Dan Hultquist as director of learning and development. In this role, Hultquist will apply his experience in originating loans and working with retirement advisors to help ReverseVision bring a range of products, financial tools and educational techniques to the industry, ultimately driving volume growth. A CRMP, Hultquist co-chairs NRMLA’s education committee and is author of the book Understanding
Reverse, which answers the top questions he has received as a national reverse mortgage trainer with a special focus on the point of sale. Hultquist most recently served as reverse mortgage training manager for Open Mortgage.
Reverse Mortgage Funding Hires Tom Dickson RMF hired seasoned retirement and financial planning expert Tom Dickson as national leader of its financial advisor channel. Dickson, who has been educating financial advisors on reverse mortgages for almost a decade, will be responsible for managing RMF’s Retirement Experts Network, an online educational platform designed to help financial advisors learn more about important retirement issues. “Tom’s work with Harold Evensky and John Salter, FINRA, and his educational webinars have been instrumental in reshaping the industry’s relationship with financial advisors. We are excited to combine his robust network of relationships and platform-building experience with our industry-leading brand recognition to create an unmatched web-based educational portal for financial professionals,” says RMF President David Peskin.
N AT I O N A L R E V E R S E M O R T G A G E L E N D E R S A S S O C I AT I O N
Annual Meeting & Expo
A Better Borrower Experience Join us at the largest annual gathering of reverse mortgage professionals.
Nov. 14-16, 2016
Chicago, IL Swissotel Chicago
For more information and to register, visit NRMLAonline.org reversereview . com
8 TRR | 9
The Reverse Review September 2016
stats
July 2016 Top Lenders Report
12345 American Advisors Group
Finance of America Reverse
One Reverse Mortgage
Reverse Mortgage Funding
Synergy One Lending
Endorsements
Endorsements
Endorsements
Endorsements
Endorsements
873
298
271
264
174
Lender Endorsements LIBERTY HOME EQUITY SOLUTIONS INC
161
Lender Endorsements
LIVE WELL FINANCIAL INC
105
NOVA FINANCIAL & INVESTMENTS CORP
10
87
BROKER SOLUTIONS INC
9
NATIONWIDE EQUITIES CORPORATION
82
WHOLESALE CAPITAL CORP
9
80
WILLOW BEND MORTGAGE CO
9
66
AMERICAN NATIONWIDE MORTGAGE COMPANY 8
HOME POINT FINANCIAL CORPORATION
63
FIRSTAR BANK 8
OPEN MORTGAGE LLC
61
COMMUNITY FIRST NATIONAL BANK
RMS/SECURITY ONE LENDING HIGHTECHLENDING INC
REVERSE MORTGAGESCOM INC
BANK OF ENGLAND
10
8
FIRSTBANK 47
PACIFIC RESIDENTIAL MORTGAGE LLC
8
CHERRY CREEK MORTGAGE CO INC
RESIDENTIAL HOME FUNDING CORP
8
UNITED NORTHERN MORTGAGE BANKERS LTD 35
LAND-HOME FINANCIAL SERVICES
8
UNITED SOUTHWEST MORTGAGE CORP
34
PROFICIO MORTGAGE VENTURES LLC
7
27
TOTAL MEDIA MANAGEMENT LLC
7
26
PEOPLES HOME EQUITY INC
6
25
HOMEOWNERS MORTGAGE ENTERPRISE
6
25
ALPHA MORTGAGE CORPORATION
6 5
PLAZA HOME MORTGAGE INC
FAIRWAY INDEPENDENT MORTGAGE CORP QUONTIC BANK FSB
LONGBRIDGE FINANCIAL LLC
44
SUN WEST MORTGAGE CO INC
25
ACADEMY MORTGAGE CORPORATION
THE FEDERAL SAVINGS BANK
23
FULTON BANK 5
RESOLUTE BANK
23
GEORGETOWN MORTGAGE
5
M & T BANK
22
HOMEBRIDGE FINANCIAL SERVICES INC
5
21
NEW AMERICAN MORTGAGE LLC
5
20
US MORTGAGE CORPORATION
5
19
YADKIN VALLEY BANK AND TRUST
5
4
SUN AMERICAN MORTGAGE AMERICAN PACIFIC MORTGAGE UNIVERSAL LENDING CORPORATION
TOWNEBANK 16
UNITED MORTGAGE CORP
VIP MORTGAGE INC
16
SOUTHERN TRUST MORTGAGE LLC
4
MONEY HOUSE INC
15
SKYLINE FINANCIAL CORPORATION
4
15
MORTGAGE BROKERS SERVICES
4
14
ON Q FINANCIAL INC
4
4
PEOPLES BANK
ADVISORS MORTGAGE GROUP LLC
MCM HOLDINGS INC
13
OPPORTUNITY BANK OF MONTANA
BANC OF CALIFORNIA NA
12
PREMIER MORTGAGE RESOURCES
4
12
JAMES B NUTTER AND COMPANY
4
FRANKLIN FIRST FINANCIAL LTD 10 | TRR
stats
HECM Endorsement Stats Through June 2016 { FIGURE }
01
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
02
HECM ORIGINATORS (FHA & NON-FHA)
INDUSTRY SUMMARY
TRAILING TWELVE MONTH ENDORSEMENTS 6,000
INDUSTRY SUMMARY
MO. 7
2,694
-9.32%
Retail Endorsement Growth
8
2,929
8.72%
2,820 20.98%
5,749 14.41%
9
2,589 -11.61%
2,080 -26.24%
4,669 -18.79%
10
2,427
-6.26%
1,901 -8.61%
4,328
-7.3%
11
2,467
1.65%
1,553 -18.31%
4,020
-7.12%
12
2,524
2.31%
1,705
9.79%
4,229
5.2%
1
2,199 -12.88%
1,690 -0.88%
3,889
-8.04%
2
2,645 20.28%
1,932 14.32%
4,577 17.69%
3
2,669
0.91%
1,857 -3.88%
4,526
-1.11%
4
2,465
-7.64%
1,775 -4.42%
4,240
-6.32%
5
2,034 -17.48%
1,605 -9.58%
3,639 -14.17%
6
2,190
7.67%
1,573 -1.99%
3,763
7.67%
4,000
Wholesale Endorsement Growth
-1.99%
2,000
Total Endorsement Growth
0 7 8 9 10 11 12 1 2 3 4 5 6 Retail
Wholesale *Numbers Represent Months
3.41%
* Figures Above Reflect Change from Prior Month
RETAIL UNITS CHG%
TOT
29,832
WHOLESALE UNITS CHG%
2,331
0.3%
22,822
TOTAL UNITS CHG%
5,025
-5.1%
3.41%
52,654
%%%%% LOOKING FOR MORE STATISTICS? Go to rmsinsight.net for all of the industry’s latest stats and rankings. Brought to you by Reverse Market Insight reversereview . com
8 TRR | 11
The Reverse Review September 2016
nrmla news BROUGHT TO YOU BY NRMLA STAFF
HOW CAN WE IMPROVE THE REVERSE MORTGAGE BORROWER EXPERIENCE? Loan officers report they have trouble maintaining their customers’ attention as they explain the details of reverse mortgages. Others tell us they lose customers to HELOCs simply because of the daunting pile of documents. Servicers send out important communications to borrowers in envelopes that are never opened. The CFPB claims borrowers do not understand they are taking out a loan. We can do better than this. For the past few months, NRMLA members have been meeting regularly to review the borrower experience from the beginning to the end of a loan. Join your colleagues in Chicago, November 14-16, for NRMLA’s 2016 Annual Meeting & Expo and work with us on developing “a better borrower experience.” R E G I S T E R AT
NRMLAONLINE.ORG.
3 6 , 5 0 0 V I S I T O R S I N 3 0 D AY S T O REVERSEMORTGAGE.ORG NRMLA’s consumer website, reversemortgage.org, is a popular destination for consumers who want to learn more about reverse mortgages, attracting more than 30,000 unique visitors each month. To ensure the best possible user experience, NRMLA relies on Google Analytics to monitor traffic on a weekly basis to see where visitors come from and which pages they visit most often. During the past 30 days, we had 36,496 visits (or sessions). Approximately 30,445 were new visitors while the rest were returning visitors. The following graphic shows that the highest concentration of visitors (both new and returning) live in California (5,436 sessions), followed by Florida (2,345), Texas (2,306), Virginia (1,859) and New York (1,755).
5,436 2,345 2,306 1,859 1,755
California
Florida
Texas
Virginia
New York
Google Analytics also shows us that 80,889 total pages were viewed on the website during the same time period. The most popular pages included:
3 Find a Lender 3 Most Frequently Asked Questions 3 Reverse Mortgage Calculator 3 Reversemortgage.org homepage 3 What Is a Reverse Mortgage? 3 Your Road Map to a Reverse Mortgage We will continue to share these types of statistics and invite members to visit reversemortgage.org to give us your impressions of the site, the content we provide, and information or features we might want to add.
HUD Considers Mandatory Assignments at 98% HUD published a Supplemental Notice of Proposed Rulemaking that seeks comment on a regulatory change, which would require HECMs to be assigned to HUD once the loan balance is equal to or greater than 98 percent 12 | TRR
of the maximum claim amount. Public comments must be submitted by September 12. Mortgagees currently have the option to assign loans at 98 percent, at which time HUD assumes responsibility for servicing them until the loan is paid off. The criteria for assigning cases to HUD will not be changed through this rule. Mortgagees can assign loans only if
they are current on making required payments to the mortgagor; current on making required MIP payments to the secretary; the mortgage is not due and payable; and the mortgage is a first lien of record and title to the property securing the mortgage is good and marketable.
nrmla news REVERSE MORTGAGES IN THE NEWS 2 "How to Invest in Retirement,” published in U.S. News and World Report by financial journalist Jeff Brown, states that retirees’ spending needs change as they get older, so budgeting to spend specific amounts per year for 20 or 30 years may not work. Life throws curve balls, like divorce and death of a spouse, which can upend even well-formed financial plans. The last few years of one's life can be quite expensive as medical needs escalate. To improve financial security in retirement, Brown advises that readers: avoid tapping retirement accounts to pay for kids’ college tuitions; save at least 15 percent of their gross income once they reach age 40; pay off their mortgage; and set up a reverse mortgage line of credit as a reserve. “It can be especially valuable to establish a credit line now because you can lock in today's low loan rates,” writes Brown. 2 “Using a Reverse Mortgage to Pay Off Your First Mortgage,” an article on bankrate.com by reporter Polyana da Costa, provides a thorough explanation of reverse mortgages and offers hypothetical examples of how they might work for some homeowners. Da Costa also profiles Barbara Hiebert, who got a reverse mortgage after her husband passed away, but uses it “only when I need it.” Recently, she hurt herself after falling and spent more than $10,000 during her at-home recovery. "I had people come in for three hours in the morning and at night," says Hiebert. "It was expensive. I couldn't have afforded it without the reverse mortgage."
The rules go into effect either 12 or 18 months from the date of publication of the final rule in the Federal Register, depending upon the particular change. We would expect the final rule to be published in the Federal Register in August, so the earliest the rule would be effective would be sometime in August 2017.
To read the full article, log in to nrmlaonline.org.
Thank you FOR JOINING
NRMLA WELCOMES OUR NEWEST MEMBERS Heritage Reverse Mortgage St. George, Utah
4
IF YOU’D LIKE TO JOIN US in
The CFPB finalized proposed amendments to its Mortgage Servicing Rules on August 4, some of which apply to reverse mortgages.
4
2 “The Quiet Comeback of Reverse Mortgages,” an article by The New York Times reporter John Wasik, states that reverse mortgages earned a bad reputation when they were subject to widespread abuses by lenders, but with new reforms in place, they are making a modest comeback and seen as a way of helping retirees fill gaps in their future income. “They can provide cash or ‘longevity insurance’ when other sources of retirement income come up short, or provide money for out-of-pocket health care costs or other sudden financial crunches,” writes Wasik. The article profiles Peter and Joyce Hill, who used a reverse mortgage to build a house in a 55-plus retirement community in Lancaster County, Pennsylvania.
CFPB Expands Foreclosure Protections
TenA Companies, Inc., St. Paul, Minnesota
our effort to promote the facts about reverse
mortgages as a member of NRMLA’s Blog Squad, please email Jenny
NRMLA CONGRATULATES the following individuals for achieving the status of Certified Reverse Mortgage Professional (CRMP). 4David W. Carter Reverse Mortgage Funding LLC Santa Rosa, California 4Robert Paul Charles The Federal Savings Bank Anthem, Arizona 4Matthew Evans Certified Reverse Mortgage Tustin, California 4Tony Guillen Liberty Home Equity Solutions Las Vegas, Nevada 4Hernando Manzano The Reverse Mortgage Group LLC Westin, Florida 4 Nina H. Penny Arizona Wholesale Mortgage, Inc. Phoenix, Arizona 4Paul E. Scheper Liberty Home Equity Solutions Coto de Caza, California 4 Peter Tentler Liberty Home Equity Solutions San Diego, California 4Minh Vu Golden Equity Mortgage Concord, California
Werwa at JWERWA@DWORBELL.COM. reversereview . com
8 TRR | 13
The Reverse Review September 2016
14 | TRR
THIS MONTH
THE COST OF CARE
A LOOK AT THE NEWS AND STATS AFFECTING THE MARKET
The cost of inhome health care continues to rise.
GET UP-TO-DATE retirement facts, home price stats, senior trends and HECM market developments in The Reverse Review’s monthly Roundup.
RETIREMENT FACTS Number Claiming (Thousands)
Most older Americans claim Social Security before the full retirement age. -U.S. Social Security Administration
Health aides up 6.6% to $46,332 annually Homemaker services
Age of Claiming
NUMBER CRUNCH
SAVING STATS Less than half of private-sector workers participate in a retirement savings plan.
80%
The most common financial shocks for retirees are:
-Society of Actuaries
-Genworth 2016 Cost of Care Survey
-Country Financial Security Index
MONEY MATTERS Home repairs
up 11.1% to $45,760 annually
of American workers are worried about their ability to retire
-U.S. Bureau of Labor Statistics
23%
Over the past five years, the cost of home health aide and homemaker services has risen:
24%
Major dental expenses
20%
Medical/prescription expenses
HOME EQUITY Americans 55 and older control two-thirds of the equity in single-family homes. -U.S. Census Bureau reversereview . com
8 TRR | 15
The Reverse Review September 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 16 | TRR
Vice President of Professional Services
MY FIRST CAR WAS A FULL-SIZE CHEVY BLAZER, LIFTED WITH BIG TIRES.
> Something
saxophone.
> My
JEFFREY M. BIRDSELL From his secret talent and favorite book to his thoughts about the reverse mortgage industry, we get the scoop from Jeffrey M. Birdsell, vice president of professional services at ReverseVision.
nobody knows about me is that I play the
>
tendency of the media and people in general is to lead with the negative, I prefer to lead with the positive then
favorite vacation was driving my jeep with my family
address the rest.
around Durango, Silverton, Telluride and Ouray, Colorado.
>
If I were a professional athlete, I would drive in the World Rally Championship series.
>
> My >
If I had three wishes they would be to be fluent in every language; to invent and sell a product so that I
could make enough money to buy my own plane; and to
of the presidential candidates… I know, right?! > If
years old. He was an engineer with GE and has patents
success. > If
you get to see the most amazing athletes ride 2,100 miles
years in time and ride the First Transcontinental Railroad. > The
industry, increase volumes and get this product available to all the seniors that would benefit from it, by ourselves. > Before
> My
favorite time of the
day is anytime my wife
and I are in my jeep, with the top down and in the mountains.
> My
iPod go-to is country music, big bands or Glee
playlists. A good a cappella group like Pentatonix works as well.
>
I never want to stop growing and learning from all the different people I work with, play with and live with.
> The
best purchase I’ve ever made was my 2008 Jeep
Wrangler Unlimited Rubicon.
I entered the reverse mortgage industry I
was a residential homebuilder, building custom homes in California.
beautiful and grueling
Every morning I hit the snooze button multiple times.
biggest challenge in the reverse mortgage
industry is for us to stop thinking that we can grow our
over some of the most countryside.
I could time travel, I would visit 200 years in the future
to see the technology, and then I would go back 147
never miss an episode of the Tour de France. I know,
they’re not really episodes, but for 21 days, once a year,
success I have sacrificed absolutely nothing. If
I had to sacrifice something, then there would be no
on improvements to the atom smasher. > I
If I could trade places with someone for a day, I
> For
I could meet with anyone, past or present, it would
be my grandfather, who passed away when I was 12
favorite book is The Martian by Andy Weir.
would choose Elon Musk.
be able to take the strengths of a dozen different people, combine them into one person and make that person one
I always talk about the positive things first. While the
>
Industry growth is dependent upon our transition from a mostly needs-based attraction to a retirement solution.
This product works equally well as a wealth management tool as it does a needs-based tool. > The
most important influence technology will have
on the reverse mortgage industry is generating the
ability to quickly and clearly present and display screens, documents and charts that visually demonstrate the benefits of the loan and make them easy to understand.
WHAT JEFFREY THINKS
Ideal leaders in this industry realize their company’s success is tied to the growth and reputation of the industry as a whole. reversereview . com
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The Reverse Review September 2016
ORIGINATING
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ENGAGE
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Stop Leaving Business on the Table By Michael J. Weltman
Past clients are the key to future residual business Reverse originators are leaving business on the table. Every time
we forget to check in with a satisfied customer, or communicate with those who helped influence their decision to move forward with the loan, or fail to ask former clients for referrals, we pass up the opportunity to get new clients. We have all heard that past clients are our greatest sales tools, but for some reason folks in this industry don’t seem to embrace them. You know how it goes: You get the clearto-close on a client’s loan, you schedule the closing, the day of the signing goes great, you follow up with a phone call on funding day to be sure the money is in the bank, and you forget to ever talk to that customer again. You probably mean to call them, but maybe you don’t get around to it. You think about sending a thank-you note—maybe you send one, maybe you don’t. You have good intentions, but your follow-through is not what it needs to be to harness this incredible piece of residual business. Remember during the application process your clients were telling you about a friend of theirs who might need your help but you forget to follow up? You’re so busy chasing the next warm lead from your referral partner that you forget about your past clients, their friends and the professionals who help them, and neglect to ask them for more business. I feel so strongly about client referrals from previous customers that I truly believe you can get an additional 12 selfsourced loans per year via a formal followup and follow-through. A regimented process of tracking calls, mail and email touches, and quarterly postcard mailing to all previous clients throughout the year 18 | TRR
“A regimented process of tracking calls, mail and email touches, and quarterly postcard mailing to all previous clients throughout the year will keep your services top-of-mind.” will keep your services top-of-mind. When a friend shares concerns about their ability to retire, your former happy customers will know whom they should call. If you’re a successful loan officer, you never forget about happy clients from your past who loved you, loved your professionalism, loved your tableside manner, and loved how you improved their retirement plan. If you were to call a past customer one or two years after origination and talked to them at length about their experience or how their quality of life has changed, you would be touched. Most will tell you what a valuable, long-term impact you had on their finances. You have changed their lives; this is something not everyone in sales gets to experience.
Ask any Realtor worth their salt and they will tell you that most people who sell a home will probably buy another in five to seven years. So they keep in touch to be sure they are still top-of-mind when it comes to listing the home they once sold. Realtors I know send “just sold “and “just listed” postcards around the neighborhood to let others in that community know that they are helping their neighbors. Why aren’t reverse mortgage professionals more like that? We could send “just applied“ or “just closed” postcards around the neighborhood in our senior-friendly markets to let folks know that we are working locally to help folks in their neighborhood change their lives with a reverse.
ORIGINATING
Stay connected to your happy customers from the past:
KEEP A SPREADSHEET of past clients with their birthdays and closing/ funding dates and send an annual card to each customer to mark the occasion. Use the card to subtly remind them of your contact info should they wish to refer someone in their sphere of influence.
to a lunch event to give a testimonial about my assistance and how a reverse changed his life.
what events and civic activities they are attending this year, what’s happening in their neighborhood, neighbors who might have issues or repair needs, etc. Our best advertising comes from past customers, but few of us take advantage of this free marketing and ask for more business from former clients. n
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Think about this vast resource that is your previous client database. Call them, email them, mail them a postcard or offer to take them to lunch. Don’t be afraid to ask for additional sources of referral business. Ask
REMEMBER that reverses do not happen in a vacuum. When folks are thinking about it, they are talking to friends and advisors. So find out who they are talking to. Connect to those people too.
TECH
It’s also important that we not forget to ask to connect with past clients’ family, neighbors and friends who may need our help. I closed a loan with a client recently who invited me to speak at his Kiwanis club. He was so pleased with his transaction and wanted me to pass this information along to his friends. I also invited a past client from a previous year
MOST OF YOUR CLIENTS likely have a CPA, family attorney, insurance agent or Realtor. Ask for an introduction.
ORIGINATING
START THE CONVERSATION EARLY with all your customers that you are interested in a long-term relationship, not just a transaction, where you would like to communicate with them regularly and offer assistance to educate them, their friends, their family, their church or their civic group.
SPOTLIGHT
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The Reverse Review September 2016
ORIGINATING
Life Under the Big Top By Janice Cohen
crowd toward the next death-defying fact (the fact that could convince them that you are indeed the most competent advisor they could have come across) so they’ll buy some more cotton candy— or start an application. And of course, the customer is always right. Sometimes that means you’re wrong, even though you know you’re right. And not every customer will marvel at the same artist’s material. You have to have all the acts under one roof: jugglers, aerialists, animal acts, human cannonballs, pantomime clowns and, yes, sometimes even a freak show or two. And you, as ringmaster, need to know when to call on which performer to send a customer home happy… forever.
Not a Job for the Faint of Heart
With a skeptical audience to sway, reverse consultants have to have the talent to thrive in the center ring. Ladies and Gentlemen, If You’re Over 62…
consultants have the patience to wait for the roar of the crowd or can take it when their customers start throwing produce their way.
Every single day you walk a tightrope while holding the hand of your customer, whose head is spinning with numbers and banking concepts they’d rather not think about. You try not to lose them, literally and figuratively, while simply working to help them enjoy their golden years. Much of the time your “audience” is skeptical:
To survive in this kind of job, you have to be patient and put in the hours to learn the ins and outs of what works for you. You can’t just hit the trapeze and be a Flying Wallenda; you’ve got to constantly hone your craft and become the flawless expert. Or risk being a Falling Wallenda.
“SAY! WHAT’RE YOU TRYIN’ TA PULL?”
Death-Defying Feats in the Big Top!
“YEAH, WHAT’S THE CATCH?”
At its most basic, you need to be the ringmaster of your success, steering the
Your critics force you to perform acrobatics in your head, so you trying to keep the lions from biting yours off.
Come One, Come All! You have to have a certain type of personality—or persona, under your makeup—to thrive in the center ring. You’re performing for the audience’s ultimate pleasure, and not all reverse mortgage 20 | TRR
This life you have chosen is not for the thinskinned. Your feelings could get hurt if you let them. You always need to bear in mind that tomorrow there’s another show—with a new audience. And sometimes, even after years and years, a customer could return to see the show again, and catch something she or he missed the last time. My husband says he’d be in prison for life if he had to do my job for one day. Some roustabouts aren’t suited for this reverse mortgage carny circuit. I’ve been in the business for 11 years and I have had my ups and downs, and I have seen reverse mortgage consultants come and go at five different companies. The ones who don’t go have mastered the show, and they too love life in the circus. n
ORIGINATING
Rising Above It By John Smaldone
Why professional partnerships are the key to this industry’s success
Volume in the reverse mortgage space has been down just about everywhere, and some originators may be feeling pretty negative about their work right now. In this postFinancial Assessment landscape, the industry has lost about 30 percent of its market since April 2015 and industry participants may rightly feel discouraged.
ORIGINATING
Many of us are tired from working endlessly to get a handle on HUD’s latest round of changes. Just when we think we’ve tackled the new guidelines, another mortgagee letter changes the game. It’s an exhausting race.
TECH
FA has changed the nature by which we do business, and learning the ropes has many of us feeling a bit weary. I am not saying that all the proposed changes are bad! Some are very good, but they have forced us to work harder to help our senior clients.
TITLE TIP
We cannot succumb to this feeling of defeat. INSTEAD, LET’S ASK OURSELVES the following to help assess what we can do to turn business around: How many new markets have we penetrated successfully? TWO
How much time have we taken to thoroughly understand FA? THREE
How much time have we taken to learn about the financial planning community? FOUR
How much time have we taken to understand what truly motivates the small community banker or credit union so that we can better connect with them?
These professionals, especially financial planners and advisors, look at restructuring their clients’ financial assets and risk much differently than we do. It is extremely important for us to learn as much as we can about their work and adapt their terminology so that we can show them how a HECM can help the right client in the right situation. If we communicate with them within their world, they will find we can be of value to them and their clients. In return, they will want us to teach them about our world and the HECM product. Talk about a win-win. By going out and building new partnerships, we can offset our losses and connect with professionals who may be able to help us originate higher-quality loans with higher home values. FA is here to stay, so we must embrace it enthusiastically or we will not succeed. It is more critical than ever that we reach outside of our comfort zones and work to build long-lasting professional partnerships. n
FIVE
How many small banks, credit unions, financial planners, attorneys and accountants have we called on since FA came into play?
ACCORDING
TO JOHN
“By going out and building new partnerships, we can offset our losses and connect with professionals who may be able to help us originate higher-quality loans with higher home values. FA is here to stay, so we must embrace it enthusiastically or we will not succeed.” reversereview . com
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SPOTLIGHT
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The Reverse Review September 2016
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Learn more at insellerate.com.
By Michael J. Weltman
Josh Friend saw a hole in the market. With 17 years of
experience in the mortgage industry and the launch of six call centers under his belt, Friend thought that the sales support technology for mortgage loan officers was distinctly lacking. “I understood what the marketing managers needed, what the loan officers needed, and there wasn’t any good, viable solution available in the marketplace that had all the tools and technology that we needed,” Friend says. “And so, we built our own.”
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A CRM Worth Noting With more capital and new features, InSellerate eyes expansion in the reverse market.
ADVANCE
Friend created InSellerate, a customer relationship management system designed to help loan officers stay connected to their prospects. The software utilizes a three-step process to help originators engage leads: Flow
A sales force automation and lead management tool
inSight A dashboard featuring sales reports in real time n automated, customizable email marketing inTouch A platform The system can also be easily integrated with online lead providers, web lead sources and call center controls. Friend says InSellerate is particularly helpful to reverse origination because of its helpful reminder functions. “For reverse mortgages, the consumer’s buying cycle is very extended. The first time someone asks about a reverse mortgage, they are not buying one,” he says. “Around month six, after it’s been percolating for some of these folks, they try to get back in touch and engage. So you have to stay in front of people and keep constantly communicating. Our lead management and market automation sends out an email at the appropriate time, reminding you to give them a call. It continually reminds you of your database of leads so they don’t go stale.” Impressed with InSellerate’s abilities, longtime industry investor Mike Sekits offered his financial backing through his company Sekits Capital, which invests between $50,000 and $1.5 million in financial services and financial technology companies. Sekits worked previously for Jacob Asset Management, which has invested heavily in the reverse market, and has served on the board of directors for AAG, RMS and Security One Lending. His backing allowed for a major upgrade to the software, making it even more appealing for mortgage call center operations. Sekits says there is a considerable need for specialized CRMs like InSellerate. “Most small and midsized mortgage companies don’t have the resources to customize off-the-shelf platforms to meet their needs, and there’s a lot of risk in trying to build your own proprietary system,” he says. “InSellerate has created what we think is a great customized product for midsized call centers.” Currently, most of InSellerate’s users are forward originators, although HighTechLending, based in Irvine, California, has been using the CRM for more than three years. Friend says he thinks InSellerate has a lot to offer reverse companies. “We can give them tools to help them become better at their job. Our goal is to continue to innovate and give people the right tools and technology so they can sell more and sell more efficiently.” n
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Let’s Talk Payoff Demands By Heather Moulden
Customer service, communication and consistency are key to effective payoff documentation.
Have you ever jumped on the phone while multitasking and it’s a voice recognition system? I can’t tell you how
Join our conversations or see who is in our network. Join The Reverse Review group on LinkedIn or follow us on Facebook.
Many payoff demands are ordered using an automated phone system, and some companies might require a borrower’s authorization prior to ordering the demand. Some companies are very efficient, while some are so antiquated that they seem to be lost in a deep, dark cabinet.
Depending on the difficulty in addressing a lien, the statute of limitations and other extenuating circumstances, a settlement officer will escalate the matter to legal counsel or their title insurance underwriter if needed. In the reverse mortgage world, we always take into consideration our borrowers first. Customer service, communication and consistency are key to effective payoff documentation. Because there are so many variances, it is never recommended to close without proper written records. n
Some of the daily problems that we face
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SPOTLIGHT
As it pertains to title insurance and the settlement process, it’s our job to identify and address any problems that are clouding title. Old liens are considered a cloud on title and need resolution. Unlike other types of insurance, title insurance actually works in reverse (how apropos, right?) in that it insures against what has happened in the past on a given property.
Judgments are usually ordered via fax or email, and it’s typically a very difficult and laborintensive process. IRS liens require a borrowercompleted form, FHA sometimes collects interest all the way through the end of the month and VA liens may have up-front fees for ordering payoffs. Reverse mortgage demands require a signed authorization, and it’s best to notify your settlement officer whether there is a monthly draw or a line of credit.
TITLE TIP
Welcome to the world of settlement officers ordering payoff demands for existing liens on a borrower’s property. It’s one filled with voicemails, automated systems, faxes, emails and sometimes a little elbow grease to find payoff demands.
TECH
many times I’ve wanted to chuck my phone across the room when I hear, “I’m sorry, I didn’t get that” because I accidentally coughed or shuffled papers in the middle of the recording. It’s truly ridiculous at times.
Another hurdle to cross when ordering payoff demands is the expiration of the demand. Home equity lines of credit can expire fairly quickly; within one to three days. Other payoffs, like those on first mortgages, often have a good-through date of 30 days.
ORIGINATING
“Just talk to me.” That’s what we all want to hear when we pick up the phone, right? In the era of the automated phone system, it might feel virtually impossible to find someone who picks up the phone.
include ordering demands from private beneficiaries. Not only do we have to be incredibly resourceful, but this also requires diligent follow-up on behalf of our clients. If we foresee a problem with obtaining a demand, typically a settlement officer will bring the file to the attention of the loan officer, processor and/or the borrower, depending on the client. We will work with the borrower, processor and loan officer to obtain the original note, original deed of trust and a recordable release from the beneficiary.
The Reverse Review September 2016
SPOTLIGHT IN THIS MONTH’S EDITION
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WE TALK HECMs WITH HUD’S KARIN HILL.
HUD’s Karin Hill
The senior policy advisor for single-family housing talks about the evolution of the HECM program.
K
ARIN HILL HAS SPENT THE PAST SIX YEARS HELPING SHAPE THE HECM PROGRAM. A former
high school history teacher turned mortgage banker, Hill brings a unique set of skills to the table. In 2013, when the HECM program underwent a massive overhaul, she turned her focus entirely to the reverse mortgage product and became a regular speaker at industry meetings. Inspired by her belief in the importance of the product, Hill says she is confident in its future demand and stresses the need for HUD and the industry to work together to ensure its sustainability. 24 | TRR
HAT steered you toward this n W line of work?
It was totally accidental. I have a master’s degree in education, with a B.A. in political science and history, and I always dreamed of living and working in D.C. My career started in the Chicago area as a high school teacher of American and world history. When I moved to California in the late '60s, there weren’t many teaching positions available, so I registered with a temporary employment agency and was assigned to a new Construction/Builder Take Out division at Great Western Savings. Within a few weeks I was offered a permanent position, and so began my mortgage banking career. My career in mortgage lending spans single-family, multifamily, commercial and construction lending. I worked for the California Savings and Loan League in the '80s—a very active time for the S&L industry—where I was responsible for managing the relationship between the league and the mortgage
SEPT. 2016
WANT TO SEE MORE ARTICLES LIKE THIS?
See them at reversereview.com.
side of the industry. In the ’90s I moved on to American Savings, which was eventually purchased by Washington Mutual Bank (WAMU). During that time, I had leadership roles in compliance, credit policy development, risk management and acquisition integration involving a number of WAMU-acquired companies. I was responsible for leading large cross-functional projects, system implementation, strategic planning and operational execution in all of these roles.
HAT is the greatest reward of n W your job?
There are so many dedicated, smart, experienced federal employees who continue to excel in serving the public despite challenges in staffing, technology, funding support and operational processes. Although I have an extensive mortgage lending background, I learn something new every day. Working on the HECM program has been incredibly satisfying. It is a very challenging and
SPOTLIGHT complex program, which is so important to so many people. At this point in my career, it has been a privilege to have the opportunity to work on a program of this magnitude.
N THE LAST FEW YEARS, HUD n Ihas made significant revisions to the HECM program. What were the goals of this policy overhaul? Do you feel that HUD has been successful in achieving them?
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OW can lenders work with H HUD to help ensure the success of the program?
I think maintaining a positive outlook (in spite of the complexity and numerous changes) is critical. When we see a problem, we need to be realistic about how to resolve it. And when we see opportunities to introduce a change that enhances the program, we need to work together to accomplish it.
HY do you think the product n W is so often misunderstood by consumers and financial professionals?
Because it is complicated! In order to really understand how this program works, you have to get into the details. I think we could develop tools that are more consumer-friendly, easier to read and understand, presenting complexity in pictures if necessary to clarify how the program works. I think it is important for families to be more engaged when
HE PRODUCT has a startlingly n Tlow penetration rate, just about
3 percent of the potential market. What do you think it will take for this to change?
I think continuing to improve the program’s reputation and educating the public on how the program works is critical. Lenders and servicers must be vigilant about how the program is being sold, and provide life-of-loan interaction, communication and support to the borrowers. These are high-touch customers, and because we’re talking about seniors, the headline risk is high. So, it is critical for the industry and HUD to work together to ensure that lenders and servicers are following program guidelines. But it’s equally important that we ensure customers are wellinformed through clear/understandable disclosures, counseling, sales and underwriter communications, and their interactions with servicing staff.
n
HAT is your projection for W the program three to five years down the road?
It is hard to imagine that the program won’t grow when you see the increased number of seniors retiring. It will be interesting to see if this program can be more integrated with other tools designed to support seniors and their desire to age in place. We are visited often by representatives from other countries who are exploring ways of supporting aging populations, and this program is viewed by many countries as a very important tool. n
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SPOTLIGHT
The industry has been very supportive. There have been a few rough spots— not unexpected when you think of the complexity of the work and the number of changes that have been made. As we learn more from the data we are now collecting, we will continue to assess the impact of the changes made and determine whether further changes are needed. Having been in the business for a very long time, I have experienced, as a lender, the challenges of dealing with massive changes, market swings, etc. So I do appreciate that the process of operationalizing significant change
ARM loans are now 90 percent of our volume and 62-64 percent of initial draws are 60 percent or less of the principal limit. Draw patterns following the initial disbursement limit are consistent with assumptions that were made in designing the policy. Based on research, we expect to see reduced property charge defaults. It is too early for us to be able to assess performance on the loans that have been originated in just the last year and a half, but we are collecting additional data related to Financial Assessment, servicing and assignment policies, which will enable us to measure the impact of the changes over time. As the industry knows, we are experiencing a decline in volume, but with more public support for the program and the growing senior population, we expect that trend to be temporary.
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HOW do you think the industry has adjusted to policy change?
OW have HECM policy H changes impacted the book of business thus far?
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I think we’ve been successful in reducing risk to the MMI Fund; improving public perception of the program; enhancing functionality in our HERMIT system; reducing claims backlogs; and engaging frequently with both originators and servicers. I think one of our most complex accomplishments was to provide new policy on non-borrowing spouses, while the origination and servicing policy changes have certainly enhanced public support for the program.
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seniors are considering a HECM. I also think it would be helpful if consumers had a better understanding upfront about what happens when a borrower dies, along with more communication on how HECMs are serviced.
ORIGINATING
The goals are to ensure that the HECM program is a sustainable solution for the borrower and to manage risk to the MMI Fund; reduce defaults on property charges and other borrower responsibilities under the terms of the loan; ensure that servicing and claims processes are well-defined and enhanced to reduce risk to the fund; and provide clear guidance for servicers.
is challenging, both for us and industry participants.
The Reverse Review September 2016
n its continued efforts to strengthen the reverse mortgage program, HUD has released yet another round of suggested policy change. In May, the department published a 200-page proposal detailing numerous amendments to HECM guidelines—some much-needed, some rather benign and others quite impactful.
By Jessica Guerin
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HUD encouraged interested parties to submit comments regarding the proposed revisions, and also posed a series of specific questions to help the department gain a better understanding of consumers’ needs. In all, it received 247 comments from industry participants, many of whom expressed their fervent objections to some of the most drastic changes and provided detailed insight into their perspectives as HECM advocates. Despite their objections, many respondents also took the time to thank HUD for its devotion to the program and for giving the industry and its partners an opportunity to weigh in. The fact that the department seeks feedback from those invested in the success of the reverse mortgage space highlights its commitment to working collaboratively to improve the program for America’s seniors. The hope is that HUD will carefully consider the feedback and weigh it against any policy change.
A Cause for Applause HUD’s latest proposal was lengthy and detailed, containing suggested revisions on everything from servicing to interest rates to mandatory set-asides. Among some of the more wellreceived rules were: 3The requirement that lenders fully disclose all HECM loan features 3The institution of exceptions in worthy circumstances to initial disbursement limits 3An amendment to allow eligible nonborrowing spouses to remain on title 3The establishment of a “cash for keys” program as an option to prevent borrowers from undergoing a lengthy foreclosure process
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he National Council on Aging was one of several commentators that commended HUD on some of its suggestions. Of the exceptions to initial disbursement limits, Amy Ford of NCOA wrote, “We appreciate the possible addition of some flexibility in the first-year draw limits, particularly when there is an urgent need that cannot wait for the second year. In our experience, this situation arises most often when a borrower, or occasionally a non-borrowing family member, is seriously
ill and requires home care—including for Alzheimer’s and dementia. In such situations, the aim of the reverse mortgage is usually to pay for home care expenses and/or home modifications for accessibility, which will permit the homeowner to remain in the home as long as possible, even if that only means less than a year.” Writing on behalf of the MBA, Stephen O’Connor, senior vice president of public policy and industry relations, applauded the department on its revision of non-borrowing spouse rights. “MBA supports FHA’s amendment to the full-title requirement to provide that non-borrowing spouses and non-borrowing owners may stay on the title to the property that serves as the security interest for the HECM, making them mortgagors. This proposed change would eliminate the burden on non-borrowing spouses or other heirs who were previously not allowed to remain on title, but were still required to establish their legal ownership of the property upon the death of the borrowing spouse.” The AARP also weighed in with some positive feedback. “AARP has long advocated for a rule that would require mortgagees to inform potential borrowers of all HECM products available,” wrote David Certner, legislative counsel and legislative policy director. “We commend HUD for implementing this important provision.”
Rate Caps Raise Concerns Other proposed rule changes were not so well received, mainly the institution of a cap on lifetime interest rate increases on all adjustable-rate HECMs to 5 percent, and the reduction of the cap on annual interest rate increases on HECM ARMs from 2 to 1 percent. This proposed change incited heated protests from numerous respondents who claimed that such a rule would force lenders to increase their fees, making the loan more expensive for consumers. They also pointed out that it would lead to higher margins, which would negatively impact the loan’s appeal on the secondary market. The ultimate impact, many assert, is to reduce loan access to potential HECM borrowers. A statement submitted by Retirement Funding Solutions explains how the proposed caps could be problematic. “In order to keep the HECM loan attractive in the secondary market with a low rate and small cap, lenders would need to increase
the initial margin in order to compensate for the low future cap increase,” the submission states. “This would then lead to lower principal limits for the borrower and a faster accrual of interest on the loan balance. This can lead to additional costs for borrowers who need to come to closing with funds in order to pay off their current mortgage or may not be able to get the HECM at all. A fast-growing loan balance can also lead to an increase in MMI payout due to HECM loans that exceed the value of the home at time of maturity.” n its 30-page response to HUD’s proposal, NRMLA also cited secondary market concerns. “These proposed caps create significant liquidity and issuer risk in an already delicate HECM market,” the association wrote, referring to a recent poll of HMBS investors who nearly unanimously agreed that the appetite for the adjustable rate product under the proposed caps would be “greatly diminished, if not eliminated.” The American Bankers Association also weighed in, asserting that the caps would diminish the value of the unfunded tails of HMBS pools. “By exposing the issuer to the proposed interest rate risk, the proposed rule could cause economic harm and solvency issues for the HECM issuers/servicers,” ABA SVP and Senior Counsel Joseph Pigg wrote. “By putting the issuer/servicer in harm’s way with such interest rate risk, the proposed rule is also putting the end-consumer at risk as quality of servicing could be greatly diminished. At the end of every HMBS asset there is a consumer who could feel the impacts if the quality of servicing is diminished.” 4
"HUD encouraged interested parties to submit comments regarding the proposed revisions, and also posed a series of specific questions to help the department gain a better understanding of consumers’ needs."
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The Reverse Review September 2016
A Problem for the H4P Another frequently cited objection centered on rule changes that would hinder the already struggling HECM for Purchase program. A suggested amendment to the counseling requirement for this type of loan would mandate that prospective H4P borrowers complete counseling prior to signing a sales contract or putting down earnest money. NRMLA asserts that such a policy is inconsistent with customary real estate practices. “Executing a purchase contract and providing an earnest money deposit are often the first steps in a home purchase transaction. Financing choices have not been made at this juncture,” the association wrote, adding that the rule would adversely impact H4P availability and options for seniors. NRMLA asked that HUD maintain its current policy, which requires counseling before the execution of a formal contract or the disbursement of funds. NRMLA also went on to ask that HUD reconsider its current prohibition on seller concessions in an H4P transaction—which includes a ban on payments that are traditionally made by the seller on behalf of the buyer—asking that the department treat the program like all other FHA money purchase loans, which allow sellers and others to contribute.
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he National Association of Home Builders echoed NRMLA’s comments. “NAHB strongly believes that the seller contribution rules for the HECM for Purchase program should be the same as those in the FHA forward market. This would mean a limit of up to 6 percent of the purchase price for seller contributions such as closing costs, appraisal fees, title search, escrow, loan origination fees and taxes.” Mark Browning, president of New Yorkbased lender HomeChex, objects to HUD’s mandate regarding the allocation of closing costs and prohibition on closing cost credits, citing their negative impact on the H4P
program. “The existing rule inflates HECM costs and is averse to consumer interests. HECM Purchase rules should provide for normal, accepted and customary allocations of closing costs between seller and buyer,” he wrote. A final objection concerns a proposal that requires a Certificate of Occupancy be obtained before a HECM loan application can be completed. In H4P transactions involving new construction or renovation, this can be problematic by forcing borrowers to wait until construction is completely finished to enter into a transaction, potentially losing the sale to those able to act faster. As the MBA pointed out, “This rule has the potential to restrict consumer access to newly built homes and places older consumers at a competitive disadvantage.” Retirement Funding Solutions fervently stated its objection to the CO rule. “FHA is unnecessarily penalizing senior HECM buyers who want to purchase a home in a new community,” the lender wrote. “We strongly request that FHA eliminate this requirement and align policy with traditional forward FHA financing guidelines, which allow applicants to apply for a loan prior to the issuance of the CO and instead require that it be issued as a condition of closing.”
Super-Contentious Super Lien Rules Proposed rules set to impact the use of HECMs for condominiums have also incited objections from the reverse community and its partners. HUD suggests a prohibition on HECMs for properties where condominium association and homeowners’ association fees could potentially form super liens. NCOA’s Ford calls the prohibition “overbroad,” asserting that it could prevent homeowners in states that already have super lien laws from utilizing HECMs. “Non-payment of HOA/COA fees is already a condition of default for HECMs,” Ford pointed out. Matt Neumeyer, president of Premier Reverse Mortgage, also stressed his objection. “While this change is only one
sentence, it could have a drastic impact on the reverse mortgage industry. From my research there are 21 states (plus D.C.) that allow some form of super lien status for homeowners’ associations,” Neumeyer wrote. “Considering that seniors regularly choose communities that are part of an association, this change will have a massive impact.” The Community Associations Institute submitted a response that put a number to just how many people could be impacted by this rule. “HUD’s proposal may have the unintentional effect of disqualifying more than 4,090,000 senior citizens living in condominiums in 22 jurisdictions with statutes granting limited priority to community association liens.” The institute asserts that female seniors, who constitute a significant portion of condo owners, would be specifically affected. “CAI members respectfully but strongly urge that the proposal be withdrawn and re-proposed without language limiting the efficacy of state statutes granting limited priority to community association liens,” the institute wrote.
The Futility of Including Utilities HUD has also proposed an amendment that would expand the definition of “property charges” to include utilities, so that failure to pay utility bills could result in a lien against the property. Several respondents took issue with this rule, claiming that it was unfair to seniors, burdensome to servicers and unnecessary in furtherance of the goal to protect the MMI Fund. NRMLA pointed out that there is currently no method to monitor the payment of utilities, and that servicers would likely only become aware of missed payments after a lien has been filed. NCOA claimed that lumping all utilities in the same definition as property charges would “lead to needless trauma for seniors and a great deal of additional work for servicers.” The National Consumer Law Center outlined its objection, concluding that this rule would ultimately put a substantial number of seniors at risk of foreclosure.
"Now that the two-month comment period has closed, HUD has the timeconsuming task of reviewing the responses it has received. The agency will not estimate how long it will take to release a final ruling, but it does say that every comment will be thoroughly reviewed by its staff." 28 | TRR
“Older adults struggling to pay for necessary utility services may be eligible for various needs-based programs that would assist with the payment of utility-related charges or weatherization of the home,” the center pointed out. “Borrowers who fall behind on utility payments should have the opportunity to benefit from state or federal energyassistance programs for which they are eligible.” “Rather than make the payment of utilities a trigger for a due and payable event, servicers should be required to periodically remind borrowers that assistance programs may be available to help them pay their utilities, manage their budget and access other services that would enable them to meet their basic needs and remain in the home.”
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Thorough Review
In its lengthy proposal, HUD lists numerous proposed changes that exceed what we can cover here. You can view the proposal in its entirety at federalregister.gov, and review the 87 comments available to the public at regulations.gov. Now that the two-month comment period has closed, HUD has the time-consuming
task of reviewing the responses it has received. The agency will not estimate how long it will take to release a final ruling, but it does say that every comment will be thoroughly reviewed by its staff. “We read all the comments received and evaluate the support, opposition and suggestions for changes that commenters recommend,” says HUD spokesperson Brian Sullivan. “It’s why we have a comment period. While we have a wonderful staff of dedicated, super-smart people here at HUD, we don’t pretend to know everything, which is precisely why the public’s comment is so necessary.” Sullivan says the department is always open to amending its proposals and values the feedback it receives from those invested in the industry. “Whenever HUD is engaged in rulemaking, we take the comments we receive very seriously, even in the face of strong opposition. I reflect back to a time when HUD was deeply engaged in changing the regulatory requirements under the Real Estate Settlement Procedures Act (RESPA). We knew these rule changes would impact the way millions of American families buy
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homes or refinance their mortgages, so we were extremely careful to strike the right balance. On one hand, you had the need to provide consumers meaningful disclosures so they could actually comparison shop for a mortgage. On the other hand, we had to be mindful that mortgage professionals would be held accountable for cost estimates that can legitimately change between the time of application and closing,” Sullivan says. “HUD’s initial proposal was based on a series of ‘roundtable discussions’ with real estate professionals and consumer groups. In the end, HUD’s final rule was different from the department’s initial proposal, reflecting valuable feedback from our stakeholders and other interested parties. This is just one example of the sort of open-minded approach that is baked into how rules are changed.” Sullivan says industry advocates can expect the same sort of thoughtful review in this latest round of proposed HECM policy change. “Generally, an inherent part of the rulemaking process is to solicit feedback from the very consumers and industry stakeholders who will be impacted by these policy changes,” he says. “In short, good government requires that public policies be informed by the public!” n
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The Reverse Review September 2016
LAST WORD
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REFLECT
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A Birthday and a Milestone By Ralph Rosynek
It would appear that my willingness continues to be strong and present. Having good health, the love and support of family and friends, and the opportunity to continue to grow and give back to what is still an emerging market, I remain excited and positive as this next chapter of my future unfolds.
Assessing my own ability and willingness as I turn 62 March 31, 2016, was a very unusual day in my life. First, my wife and I were
in the “happiest place on earth” experiencing the magic that is Disney World, a birthday gift from my daughter and son-inlaw. Second, my birthday morning began quite early, as I awoke to phone calls and texts before sunrise heralding the news that I had just become a grandfather to Benjamin Andrew Rosynek. Caught up in the moment, it wasn’t until the Disney character breakfast when my two granddaughters sang and helped me blow out the cake candles with Minnie that I realized I achieved the posterchild eligibility age for reverse mortgages. Yes, I was now one of nearly 300,000 American baby boomers who turned 62 that month. For many years, I have been
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an active member of this industry, writing, speaking and participating in conversations about a mortgage loan product that continues to inspire in me a passion and drive to assist senior Americans in pursuit of financial stability, lifestyle maintenance and independence.
Charged by the idea that 62 is the new 52 (and I do believe this to be true in many cases), I feel confident that I can still add to my bucket list and accomplish many more goals and achievements, which I am very willing to do. My ability assessment is greatly supported by remembering the many embraces of satisfied and relieved seniors. My ability has also grown significantly as I work with colleagues and customers to sharpen my own knowledge and skills, as well as impart subject matter expertise to those same individuals seeking reverse mortgage resources and input.
As this is a product that is With the musical notes of “It’s a not “sold,” the education and Small World” in the background training required to truly “right (now you can’t get that song fit” a borrower is out of your a determination head either!) of their ability and an army to succeed of strollers "Now that I was 62, I in the loan. zooming thought of my own ability Contributing to about me, I and willingness, assessing the discussion gave pause. my career and lifestyle. on how to best Now that do this keeps me Was I ready for my own I was 62, moving forward, I thought reverse mortgage?" eager to learn. of my own ability and So, comfortable willingness, in my continuing assessing my career and lifestyle. career, I looked at my lifestyle. Was I ready for my own reverse Would I engage the reverse mortgage? mortgage product as a
component of my retirement strategy? As empty nesters who have raised, educated and encouraged three now married children, with the monthly love letters from Sallie Mae/ Navient requesting a check soon to cease (!), and the two of us hopefully acknowledging we still have a long life ahead, our discussions have begun as to the “right fit” for our current situation. And yes, downsizing a couple thousand square feet is on the agenda, and perhaps a HECM for Purchase is in the near future. For those of you reverse mortgage baby boomer professionals soon to reach poster-child age, my suggestions are quite simple: RELAX. The sun came up; it is just another exciting day. Be grateful for the ability and willingness to participate in an industry that provides tangible results and allows you to use your skills and knowledge to help others. PURSUE. Seek challenges that continue to stimulate you and harness your ability and willingness to continue participating in an industry where flexibility and change keep you on your toes. Lastly, you may wonder why I did not mention retirement. Right around my birthday, the Social Security Administration advised me that Normal Retirement Age tables for individuals born in 1954 indicate my eligibility begins at 66! n
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The Reverse Review September 2016
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