The Reverse Review April 2017 by The Reverse Review

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INSIDE THIS ISSUE | NEW STUDY: WHY MORE SENIORS ARENâ&#x20AC;&#x2122;T TAKING REVERSE MORTGAGES

S E REVI E W

PG. 17

VER

Ami Kellogg sits down in our Hot Seat

H O T S EAT

ORIG INAT ING

Guiding your clients toward a secure retirement plan PG. 18

OR IGINATING

MAR K ETING

PG. 20

PG. 22

The golden rule of HECM origination

Expanding your online presence

review

AP R I L 2 0 1 7

REVERSE THE

The Reverse Review April 2017

The Training You Need to Succeed Powered by ReverseVision

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The Reverse Review April 2017

From the editor RE

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review

APRIL 2017

A NOTE FROM JESSICA GUERIN

REVERSE THE

REVI

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INSIDE THIS ISSUE | NEW STUDY: WHY MORE SENIORS AREN’T TAKING REVERSE MORTGAGES

Most seniors are not interested in tapping their home equity, and a great many still harbor misconceptions about the loan. A recent study by the Housing Finance Policy Center at Urban Institute revealed this and more in its examination of seniors and their reluctance to utilize home equity. (Read more

Meet the Team SENIOR PUBLISHER

Reza Jahangiri PUBLISHER

Erik Richard EDITOR-IN-CHIEF

Jessica Guerin

about this in our Spotlight story on page 24.) The study highlights just how important it is for reverse mortgage professionals to continue H OT SE AT

Ami Kellogg sits down in our Hot Seat PG. 17

ORIGINAT ING

Guiding your clients toward a secure retirement plan PG. 18

O RIGI N AT IN G

M A RKE T IN G

PG. 20

PG. 22

The golden rule of HECM origination

Expanding your online presence

to spread the word about how home equity can be strategically used to support a smart retirement plan. So many Americans are unaware about how it could help bolster their

Traci Knight

COPY EDITOR

Kersten Deck MARKETING DIRECTOR

Alycia Greer

finances in their later years, held back by fear and misinformation.

APRIL 2017

ON THE COVER How to build connections with professional partners

HECM specialists must chip away at these barriers one block at a time. One great way to do that? Partnering with other professionals: CPAs, Realtors, financial planners, attorneys and others. Each of these professionals can share the facts with their clients, showing them how a HECM can be used to purchase a home, pay for in-home care or delay draws on Social Security. In this issue, we outline 12 tips to help originators better connect with other professionals. A reverse specialist who is able to build a solid referral network can elevate their business and help propel the product forward.

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

CREATIVE DIRECTOR

FIND US ON FACEBOOK AND LINKEDIN

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 © 2017 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.

table of contents 08 / STATS

22 / MARKETING

22 24

TRR 4/17

Expanding Your Online Presence

February top lenders and HECM endorsement stats through January

How to market yourself in a digital world

REVERSE MARKET INSIGHT

SCOTT GORDON

10 / NRMLA NEWS

23 / TECH

Read about the association’s current initiatives.

Succeeding With Traditional Lenders by Playing Their Tune

13 / ROUNDUP

The role reverse-specific technology can play in engaging these lenders

A collection of recent facts and surveys affecting the reverse market

WENDY PEEL

14 / TRR TURNS EIGHT!

24 / SPOTLIGHT

We celebrate eight years of coverage in the reverse mortgage market.

Why Aren’t More Seniors Taking Reverse Mortgages?

17 / HOT SEAT

A new study from Urban Institute explores roadblocks to greater acceptance.

President of PRC

30 / LAST WORD

Ami Kellogg

An End to the Drought

18 / ORIGINATING

V IE

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Climbing Toward Financial

Preparing for a surge by perfecting our infrastructure REVI

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INSIDE THISSecurity ISSUE | NEW STUDY: WHY MORE SENIORS AREN’T TAKING REVERSE MORTGAGES MICHAEL D. KENT HE

EVERSE

Learning how to guide your clients toward a secure retirement income plan

VER

S E REVI E W

DON GRAVES

20 / ORIGINATING

The Golden Rule of HECM Origination

Why it’s important to assess alternative solutions with your clients

review

PAUL E. SCHEPER

FEATURE

26 / FEATURE

YOU CAN DO IT!

Build Your Referral Network How to establish partnerships that will grow your business JESSICA GUERIN

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

“It’s clear that a strong referral base can be a serious boost to business, but how, exactly, can one connect with enough professionals to build a solid network? To find out, we spoke with seasoned originators who have built their businesses from referral relationships…. From this, we’ve gleaned 12 tips to help you build your referral network, one partner at a time.

reversereview . com

8 TRR | 5

The Reverse Review April 2017

6 | TRR

contributors

John K. Lunde 8 | Stats g

Ami Kellogg

17 | Hot Seat g

John K. Lunde Ami Kellogg is president is president and of Premier Reverse founder of Reverse Closings (PRC) and Market Insight, Inc., has been in the title a performance data and escrow business analysis and consulting for more than 35 firm specializing in years. Prior to joining the reverse mortgage PRC, Kellogg worked industry. RMI clients in leadership roles at include eight of the top various national title 10 reverse mortgage companies. Her growth lenders, plus investors, initiatives, staff retention servicers and vendors and development to the industry. capablities have been 949.429.0452 integral in sucessful rminsight.net business ventures throughout the years.

Scott Gordon

22 | Expanding Your Online Presence g Scott Gordon is the founder and CEO of Open Mortgage, LLC in Austin, Texas. Gordon is also a serial entrepreneur, investor, board member and author. Gordon is passionate about business mentoring, social media, mortgage marketing, senior finance and idea sharing.

Wendy Peel

23 | Succeeding With Traditional Lenders by Playing Their Tune g Wendy Peel is the VP of sales and marketing for ReverseVision, where she is tasked with communicating the companyâ&#x20AC;&#x2122;s corporate goals and value proposition to the market. A highly seasoned technology sales and marketing executive, Peel is wellversed in promoting B2B technology-driven enterprise solutions. Peel graduated from the University of West Florida with a B.A. in communications/ advertising.

Don Graves

Paul E. Scheper

Don Graves is a principal at the HECM Mortgage Advisors Group, an education and consulting practice devoted to honest and transparent dialogue. Graves and his colleagues provide the institutional and advisor communities a trusted resource for accurate and current HECM information. Since 2000, Graves has assisted more than 2,300 retirees obtain a reverse mortgage. He is a certified instructor with the Department of Banking and Insurance and the Real Estate Commission.

Paul E. Scheper (CRMP, MBA, CSA) is a reverse mortgage trainer and originator (paulscheper.com), the author of The ABCs of Self-Improvement: The Psychology of Improving, and a licensed MLO and national field sales manager with a topfive reverse mortgage originator. He is a graduate of Harvard University (psychology AB) with an MBA in finance from the University of Southern California. Scheper believes that the biggest room in the world is room for improvement (for everybody, especially for himself).

18 | Climbing Toward Financial Security g

20 | The Golden Rule of HECM Origination g

LOOKING TO CONNECT WITH THE REVERSE COMMUNITY?

Michael D. Kent

30 | An End to the Drought g Michael D. Kent is president of Liberty Home Equity Solutions. Kent, who has 34 years of mortgage banking experience, previously served as executive VP and president of loan origination at RMS. He is chairman of the board of directors of Community Technology Alliance, a 501(c)3 organization that provides technology solutions for ending homelessness. Kent is also president of the board of directors of the Nancy Yeary Womenâ&#x20AC;&#x2122;s Cancer Research Foundation, a nonprofit specializing in gynecological cancer research.

ADVERTISE IN THE REVERSE REVIEW!

REACH A NATIONAL AUDIENCE OF RM PROFESSIONALS. CONTACT US FOR MORE INFORMATION. info@reversereview.com

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8 TRR | 7

The Reverse Review April 2017

stats February 2017 Top Lenders Report

12345 American Advisors Group

Liberty Home Equity

Reverse Mortgage Funding

Finance of America Reverse

Synergy One Lending

Endorsements

1,064

376

345

269

223

Lender Endorsements

222

189

DOLLAR BANK FSB

131

UNIVERSAL LENDING CORPORATION

ONE REVERSE MORTGAGE LLC HIGHTECHLENDING INC

LIVE WELL FINANCIAL INC

Lender Endorsements

NOVA FINANCIAL & INVESTMENTS CORP

FIRSTBANK 97

TOWNEBANK 10

ADVISORS MORTGAGE GROUP LLC

YADKIN VALLEY BANK AND TRUST

NATIONWIDE EQUITIES CORPORATION

CALIBER HOME LOANS INC

HOME POINT FINANCIAL CORPORATION

PACIFIC RESIDENTIAL MORTGAGE LLC

REVERSE MORTGAGESCOM INC

MANN MORTGAGE LLC

10 9

THE MONEY SOURCE INC

HOMEBRIDGE FINANCIAL SERVICES INC

OPEN MORTGAGE LLC

PRIMARY RESIDENTIAL MORTGAGE INC

FAIRWAY INDEPENDENT MORTGAGE CORP

AMERICAN FINANCIAL NETWORK INC

SUN WEST MORTGAGE CO INC

COMMUNITY FIRST NATIONAL BANK

MOUNTAIN AMERICA CREDIT UNION

INTERCONTINENTAL CAPITAL GROUP

WHOLESALE CAPITAL CORP

RMS/SECURITY ONE LENDING

BANC OF CALIFORNIA

LAND-HOME FINANCIAL SERVICES

RESOLUTE BANK

MORTGAGE BROKERS SERVICES

UNITED NORTHERN MORTGAGE BANKERS LTD 31

NORTHERN OHIO INVESTMENT CO

CHERRY CREEK MORTGAGE CO INC

CITYWIDE HOME LOANS

THE FEDERAL SAVINGS BANK

MCM HOLDINGS INC

PLAZA HOME MORTGAGE INC M & T BANK

ALL REVERSE MORTGAGE INC

AMERICAN LIBERTY MORTGAGE INC

AMERICAN PACIFIC MORTGAGE

AMERICAN NATIONWIDE MORTGAGE COMPANY 6

AMERICAS MORTGAGE RESOURCE

COLONIAL SAVINGS 6

QUONTIC BANK FSB

FBC MORTGAGE LLC

EVOLVE BANK & TRUST

EAST COAST CAPITAL CORP

ON Q FINANCIAL INC

MOHAVE STATE BANK

SIERRA PACIFIC MORTGAGE CO INC

SUN AMERICAN MORTGAGE

SKYLINE FINANCIAL CORPORATION

VIP MORTGAGE INC

BANK OF ENGLAND

LONGBRIDGE FINANCIAL LLC

MONEY HOUSE INC

TOTAL MEDIA MANAGEMENT LLC BROKER SOLUTIONS INC PEOPLES BANK 8 | TRR

6 6

stats HECM Endorsement Stats Through January 2017 { FIGURE }

PURCHASE

$1,200

REFI STANDARD

$800 $600 $400 $200

1/1/17

12/1/16

11/1/16

10/1/16

9/1/16

7/1/16

{ FIGURE }

8/1/16

6/1/16

5/1/16

4/1/16

3/1/16

2/1/16

$0 1/1/16

DOLLARS IN MILLIONS

HECM ENDORSEMENT INITIAL PRINCIPAL LIMITS

$1,000

HECM ORIGINATORS (FHA & NON-FHA)

INDUSTRY SUMMARY

TRAILING TWELVE MONTH ENDORSEMENTS 5,000

3,000

RETAIL UNITS CHG%

UNITS CHG%

2,645 20.28%

1,932 14.32%

4,577 17.69%

Retail Endorsement Growth

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%

2,190

7.67%

1,573 -1.99%

3,763

3.41%

2,033

-7.17%

1,497 -4.83%

3,530

-6.19%

2,440 20.02%

1,938 29.46%

4,378 24.02%

2,219

-9.06%

1,519 -21.62%

3,738 -14.62%

2,159

-2.7%

1,753

15.4%

3,912

4.65%

2,067

-4.26%

1,817

3.65%

3,884

-0.72%

2,532

22.5%

2,124

16.9%

4,656 19.88%

2,594

2.45%

1,984 -6.59%

Wholesale Endorsement Growth

-6.59%

2,000 1,000

Total Endorsement Growth

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

MO.

2.45%

4,000

INDUSTRY SUMMARY

Wholesale *Numbers Represent Months

-1.68%

* Figures Above Reflect Change from Prior Month

TOT

28,047

WHOLESALE

21,374

TOTAL

4,578

-1.68%

49,421

%%%%% 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 April 2017

nrmla news BROUGHT TO YOU BY NRMLA STAFF

Registration is open for NRMLA’s Western Regional Meeting, May 16-17, in Huntington Beach, California. The meeting theme, Reverse Mortgages in a Time of Change, reflects a period of transition. We have a new HECM rule, a new president and a new incoming management team at HUD. The Western Regional Meeting provides a forum to discuss these changes and other marketplace issues and trends, as well as opportunities to network with hundreds of other loan officers, business owners, wholesalers and other potential business partners. If you’re pursuing the Certified Reverse Mortgage Professional (CRMP) designation, NRMLA will offer the ethics workshop on Wednesday, May 17, from 1:30 p.m. to 3:30 p.m. This course is a mandatory requirement for all candidates and for existing designees who need to recertify.

Education Week coincides with Financial Literacy Month, making it the perfect time to explain home equity and tools for incorporating housing wealth into an overall financial plan for retirement. Online educational sessions during Education Week will help professionals who work with seniors understand how a reverse mortgage works and how it could fit into a client’s plans for aging in place.

REVERSE MORTGAGE E D U C AT I O N W E E K I S APRIL 24-28 NRMLA’s second-ever week dedicated to raising awareness about reverse mortgages as a beneficial financial tool for senior homeowners is scheduled for April 24–28! This year, Reverse Mortgage

In 2016, NRMLA’s Education Week events reached more than 2,000 professionals from around the country. Let’s work together to boost participation in 2017! As webinar details and registration links become available, please notify your business partners of these learning opportunities. Stay tuned to the Reverse Mortgage Education Week page on nrmlaonline. org and NRMLA’s LinkedIn group for more details!

Carson Confirmed as Next HUD Secretary On March 2, by a vote of 58 to 41, the Senate confirmed retired neurosurgeon and former Republican presidential candidate Dr. Ben Carson as the next Secretary of HUD. NRMLA President & CEO Peter Bell issued the following statement: “The National Reverse Mortgage Lenders Association congratulates Dr. Ben Carson on his confirmation to serve as the 17th Secretary of the U.S. Department of Housing and Urban Development. His lifelong commitment to improving the well-being of children and families offers Secretary Carson a unique perspective on the housing programs he will oversee in his new position, including FHA’s Home Equity Conversion Mortgage program. For nearly three decades, FHA has insured HECM reverse mortgage loans for homeowners aged 62 and older, and helped more than a million seniors to age in place. We look forward to working with the Secretary and his new leadership team in support of the program.” The Trump administration must still nominate a Deputy Assistant Secretary for Housing, who will serve as Secretary Carson’s second in command, and Assistant Secretary for Housing/Federal Housing Administration Commissioner, who will oversee FHA’s singlefamily loan programs, including HECM.

G E T M O R E I N F O R M AT I O N ! R E G I S T E R AT

NRMLAONLINE.ORG.

10 | TRR

California Workshops to Help HECM Borrowers Reverse mortgage professionals who are located or licensed in California are reminded that the HOPE NOW Alliance and ClearPoint Credit Counseling Solutions will be co-sponsoring a free educational seminar in Compton, California, on April 27 for families with reverse mortgages to help with concerns and questions. A similar seminar was help in in Garden Grove, California, on March 11.

The seminars are the first in a series that will be held in California throughout 2017 by HOPE NOW and ClearPoint. Reverse mortgage borrowers who are in technical default and need assistance, or who have questions about their loans, can speak directly with HUD-approved HECM counselors. For more information to share with your clients, visit hopenow.com. Further updates will be provided as more seminars are scheduled.

nrmla news B U I L D I N G A C C E P TA N C E O F REVERSE MORTGAGES Improving reverse mortgage financial literacy, reducing borrowing costs and expanding product options are among the recommendations put forth by the Urban Institute to help ease barriers to home equity extraction in new study titled “What’s Stopping Seniors From Accessing the Wealth Stored in Their Home Equity?” “Seniors are sitting on a mountain of housing wealth. Homeowners ages 65 and older could access more than $3 trillion in extractable primary residence home equity, but only 6 percent of senior homeowners are interested in tapping into their home equity to help meet retirement financial needs,” note authors Karan Kaul and Laurie Goodman, the latter of which discussed some of her initial findings at NRMLA’s 2016 Annual Meeting in Chicago. “At the same time, nearly 37 percent of senior homeowners are concerned about their financial situation in retirement.” Aversion to debt and continued improvements to health and medicine are allowing more seniors to work and earn well into old age, reducing the need to depend on home equity extraction, the authors added. To help reverse the trend, the Urban Institute proposed improving reverse mortgage financial literacy by introducing the product to people at a younger age. “This could be achieved by incorporating housing wealth and reverse mortgages into retirement planning,” said the study. “Reverse mortgage literacy might also be improved through enhancements to the Federal Housing Administration’s HECM counseling efforts, via customizing counseling based on the potential borrower’s characteristics and financial needs, and by starting counseling earlier in the borrowing process.”

NAR H4P Webcast Available to Share A recent webcast on HECM for Purchase, coordinated by NRMLA and hosted by the National Association of Realtors, can be watched on nrmlaonline.org and shared with your Realtor friends. NRMLA collaborated with NAR to develop a webcast for Realtors that featured Scott Trembley, CEO of The Trembley Group, a real estate firm based in Myrtle Beach, South Carolina, and loan originator Frank McInerney of Reverse Mortgage Funding LLC. The two shared their insights on how HECM for Purchase works and offered practical advice for introducing this valuable tool to buyers.

Preparing for FHA’s Loan Review System To help mortgagees better understand the features and functions of the upcoming Loan Review System (LRS), FHA created an information page on hud.gov, archived the January 26th webinar that introduced mortgagees to LRS and organized a second webinar on March 15. LRS will provide an electronic platform for FHA’s Title II Single Family quality control functions. FHA is in the final stages of technology development and will announce the implementation date soon. As we first reported in the January 12th Weekly Report, the HECM statute, section 255 of the National Housing Act (codified at 12 USC 1715z-20), falls within Title II.

NRMLA Submits Comments on Form HUD92800.5B In response to a 60-Day Notice of Proposed Information Collection published on December 20 by HUD, NRMLA submitted comments on ways to enhance the quality, utility and clarity of information collected on Form HUD-92800.5B— Conditional Commitment. NRMLA proposed that the form be reduced

NRMLA CONGRATULATES Scott Harmes of C2 Financial Corporation, based in San Diego, California, for earning the CRMP designation. Harmes is the Director of the Reverse Mortgage Division of C2 Financial, the largest mortgage broker in California and second-largest nationally. Harmes has 34 years of experience in the mortgage business, the last six specializing in reverse mortgages. Over the last five years, Harmes has partnered with his daughter, Christina, who works with him at C2 as assistant director of the reverse division, where they are commonly called “the Harmes father/daughter team!"

from six pages to two and that certain technical wording changes be made. At or before closing, lenders must provide to loan applicants either a completed copy of form HUD92800.5B or a copy of the completed appraisal report. Form HUD 92800.5B serves as the mortgagee's conditional commitment/ direct endorsement statement of value of FHA mortgage insurance on the property. HUD uses

the information only to determine the eligibility of a property for mortgage insurance. In addition to these comments, NRMLA submitted a separate letter to HUD on January 30 that provided additional input on how existing HECM loan documents should be amended to take into account recent regulatory changes, such as financial assessment and non-borrowing spouse protections.

reversereview . com

8 TRR | 11

The Reverse Review April 2017

12 | TRR

MONEY MATTERS

THIS MONTH

Ideas about retirement income vary by generation.

A LOOK AT THE NEWS AND STATS AFFECTING THE MARKET

Younger generations say they will have to rely less on government support and employee benefits and more on personal savings when it comes to finances in retirement.

GET UP-TO-DATE retirement facts, home price stats, senior trends and HECM market developments in The Reverse Reviewâ&#x20AC;&#x2122;s monthly Roundup.

RETIREMENT FACTS

Retirement is the most expensive life event.

$738,400

THE AVERAGE COST

$245,300

$278,300

A College Education

A Child

(raising them to age 18)

A Home

Source: Age Wave/Merrill Lynch, "Finances in Retirement: New Challenges, New Solutions," 2017: Base Age 25+

$83,400 A Retirement

Source: CollegeData.com, 2016; USDA/Consumer Expenditure Survey; 2014; U.S. Census Bureau, 2015-2016; fidelity.com

THE SENIOR AGENDA

Most say they would downsize to free up retirement funds. When asked what house-related decisions they would make in order to live a more financially secure retirement, 75 percent of respondents in a new Merrill Lynch/Age Wave study chose downsizing first. COURSE CORRECTIONS - HOMES Source: Age Wave/Merrill Lynch, "Finances in Retirement: New Challenges, New Solutions,"2017: Base Age 50+, select all that apply Downsize

Limit or cut back on improvements or repairs

Move to a less expensive location

Sell my home and rent another place to live

Take equity out of my home or refinance my home

Take out a reverse mortgage

Take a housemate(s) or become a housemate

Rent a room or part of my home on a short-term basis

75% 67% 67% 47% 42% 31% 28% 27% reversereview . com

8 TRR | 13

The Reverse Review April 2017

JESSICA GUERIN

Editor-in-Chief of The Reverse Review

Eight Years We celebrate

Here’s a recap of some of the highlights over the years:

NOVEMBER

The HECM Saver is introduced.

BIG TH

ANK-Y

OU TO OU R LOY AL READE RS, WR ITERS AND A DVERT ISERS!

MARCH

22 22 22 22

HAPPY

ANNIVERSARY

| TRR TO14THE REVERSE REVIEW

2011

I would like to thank our valued community of readers, writers and advertisers for helping to make the magazine the leading publication for reverse mortgage professionals. Our dedicated staff works hard every day to bring you valuable content, insight and news to keep you informed of the numerous issues that continue to affect this ever-changing industry. Without feedback and contributions from people like you, we would not be able to successfully accomplish this goal. Thanks for supporting us along the way!

2010

Thank You

2011

With Bank of America on its way out, MetLife’s Craig Corn talks about opportunity in the market.

DEC./JAN.

TRR celebrates

eight years of coverage in the reverse mortgage

industry.

The SAFE Act impacts the origination landscape. J U LY / A U G U S T

The passage of Dodd-Frank gives rise to the CFPB.

Looking Back! As we celebrate eight years in the reverse mortgage industry, we canâ&#x20AC;&#x2122;t help but think of how the HECM program has changed since we first began covering this market. TRR has been there to document it all, talking to industry leaders, dedicated originators and market experts about how we can continue to adapt and grow to better serve senior borrowers. JUNE

OCTOBER

DEC./JAN.

2016

New underwriting standards impact the nature of HECM origination.

2015

2014

FHA overhauls the reverse mortgage program with drastic policy change.

2013

2012

Congress holds an oversight hearing to discuss the health and future of the HECM program.

APRIL

M AY

Walter Investment Management and Ocwen Financial acquire leading reverse lenders.

APRIL

Reverse mortgages see an uptick in positive press following FHA program changes.

Industry proponents submit impassioned feedback to HUDâ&#x20AC;&#x2122;s suggested policy change.

reversereview . com

8 TRR | 15

The Reverse Review April 2017

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

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NMLS #1025894

AMI KELLOGG

From her favorite TV show and her most memorable moment to her thoughts about the reverse mortgage space, we get the scoop from Ami Kellogg, president of PRC, in this monthâ&#x20AC;&#x2122;s Hot Seat.

President

Ten years from now I will still be president of PRC, and in my free time I will be sharing my

hobbies with my grandkids and kids. Boating, water skiing, snow skiing, golfing, hiking and

The worst purchase I've ever made was a

The best purchase I've ever made was our

If I could trade places with someone for a

People should seek a career in the reverse

shopping will be on the agenda! >

Something nobody knows about me is that I have visited 48 states in the United States; I still need to visit Alaska and North Dakota.

My favorite vacations are warm, sunny beach

home in 2005.

first home at age 19.

day, I would choose the Secretary of State. mortgage industry because they can be a

part of a financial tool to enhance seniors' ability

vacations with my family and friends.

to age in place.

My first car was a yellow Honda Civic with a

The craziest thing Iâ&#x20AC;&#x2122;ve ever done was

proved to be the industry leader in supporting

skydive on my 50th birthday. It was thrilling and I

both seniors and clients in reverse mortgage

have become a fan of the sport.

settlement services since 2002.

pop-up sunroof and a manual transmission.

When I was younger I wanted to be a flight

attendant, but there were height restrictions and

my 4'11" height disqualified me. >

Every morning I thank God for always being here for me.

to do. >

The best lesson I've ever learned was a

The most memorable moments in my life

The most important thing financial advisors can learn about reverse mortgages is that

a reverse mortgage can be a viable resource for

mom told me she had terminal

work ethic and do what you say you are going

best support the public image of reverse

for the senior borrower.

I'll never forget the moment my

My parents taught me how to have a strong

Reverse mortgage professionals can

term issues and can result in dire consequences

to sit in the front row in class

their clients' retirement planning strategy.

cancer. >

opportunity to join a great company that has

advertise. Misleading advertising creates long-

because I wore glasses and

I entered this industry because I had the

mortgages by sticking to the basics when you

When I was a kid I always had

talked too much.

The ideal characteristics of leaders in the industry are honesty, doing the right things

for the right reasons, leading by example and uplifting others. WHAT AMI THINKS

trampoline and cocktails lead to knee surgery.

were when my son and daughter were born.

I CAN'T GO WITHOUT DARK C H O C O L AT E .

The biggest challenge in the reverse mortgage industry is educating the borrower's family members. reversereview . com

8 TRR | 17

The Reverse Review April 2017

Retirement Income Planning Climbing Toward Financial Security

Learning how to guide your clients toward a secure retirement income plan By Don Graves, RICP

It’s a Different World For 15 years, I have worked with retirees, helping them understand the role home equity can play in creating better retirement outcomes. In 2015, I was challenged to expand my knowledge and expertise of retirement by becoming a Retirement Income Certified Professional (RICP) through the American College of Financial Services. At first, I was hesitant because I had not come from a traditional financial planning background and I didn’t know if I could handle the concepts. Undeniably, I now realize it to be one of the best decisions of my life. Understanding the principles of retirement income has helped me better serve my clients and has shaped every conversation I have with a client. I hope to share some of the wonderful, life-changing, retirement-boosting concepts from which all of us who serve baby boomers can benefit.

The Retirement Income Revolution Quietly and almost imperceptibly, there has been a shift in the financial services arena. If you were not paying close attention, you may have missed it. The language of retirement planning has subtly added a word to its vocabulary. The word is “income.” One word has made a world of difference. Every professional who makes their living working with those at, in or near retirement must understand its significance. 18 | TRR

KEEP AN OUT FOR EYE M RETIRE ORE INCOME MENT PL ARTICLE ANNING S FROM DON.

Is Retirement Income Really a New Idea? What is the difference between retirement planning and retirement income planning? Retirement planning has referred primarily to saving for retirement, or the accumulation phase. The emphasis was upon allocating assets in order to help clients generate enough wealth for retirement. By definition it simply means “how to grow the nest egg and generate as much wealth as possible for the day of retirement.” Retirement income planning, however, is a relatively new discipline. Early musings began in the mid-2000s, but the term was not really codified until 2010 when the American College of Financial Services gathered insurance and financial service leaders at the Retirement Income Summit.

Three Differences Between Retirement Planning and Retirement Income Planning There are many differences between the two disciplines, but here are three that I consider the most important:

Don's Corner : Originating

1. The Challenge of Coming Down the Mountain

"In retirement, drawing from the wrong bucket at the wrong time could have devastating consequences."

The chief goal of retirement income planning is focused on how the individual will draw upon their nest egg in order to create enough predictable income to cover all of their remaining life without having to change their lifestyle to do it.

reversereview . com

8 TRR | 19

SPOTLIGHT

RIP Has a New Meaning

TECH

2. The Challenge of a Rapidly Changing Landscape

MARKETING

3. The Challenge of Building Genuine Consensus

ORIGINATING

Herein lies a good way to describe the accumulation or savings phase of retirement planning: summiting Mount Everest! Every TAXABLE TAX DEFERRED TAX FREE year, hundreds of climbers attempt to climb the mountain with their Sherpas, and many make it to the top. Our clients had a The rise of the baby boomers, those 76 million individuals born goal in terms of the money they wanted to save (their number) between 1946 and 1964, has already shifted the demographic and they worked landscape. Now, hard, saved and approximately 8,000 sacrificed. Finally, retire daily. Their upon summitting, "The retirement income revolution has given way for a biggest challenges are they planted their new type of guide to emerge: a financial planner who not related to the grim financial flag at reality that they have the top of financial only knows the way up the mountain of retirement but not saved enough to Everest. Mission who is equally trained in getting you home as well." cover their projected accomplished, life expectancy. number attained, Therefore, creating time to retire! and maintaining lifelong income for this demographic will But the truth of the matter is that nearly two-thirds of the deaths require tremendous skills and an openness to see and do things that occurred on Everest have happened on the way down! differently. This is the first and perhaps most profound difference between retirement and retirement income planning. The latter is all about what happens after you plant the flag. The descent, or the distribution phase, is where the real retirement dangers lie. It’s when one comes down the financial mountain that risks can be It is a commonly known fact that those who have a financial costly, unrecoverable and even financially fatal. planner and a written plan will do better in retirement than those who don’t. The retirement income revolution has given way for a new type of guide to emerge: a financial planner who not only knows the way up the mountain of retirement but who is equally trained in getting you home as well. The challenge that lies before It may come as a surprise that retirement as we know it today us is in finding common ground in the uniqueness of this new is a fairly recent phenomenon. This contemporary experience model and creating a plan to implement it. Most of the issues is a product of the 20th that require examination revolve around a clear understanding of century. The notion that the actual risks of coming down the mountain, how many risks LIFE EXPECTANCY a person would work, exist and what to do about them. The timing of Social Security, BY GENDER accumulate money and the methods of distribution, as well as the most efficient order in then live 20 to 30 years on which to draw your nest egg are just a few planning points. that money is a product of modernity. As one article noted: “In 1884, Baltimore and Ohio Retirement income planning simply means that our clients want Railroad establishes the to retire in peace before they rest in peace. In this article, you saw first pension plan by a that R involves the descent down the mountain; I means creating major employer, allowing income for life; and P is planning with consensus and research workers at age 65 who MALE FEMALE in view. Your clients are counting on you. Perhaps you will never had worked for the become a professional financial guide, but learning the principles railroad for at least 10 years to retire and receive benefits ranging will certainly help you navigate new terrain and position your from 20 to 35 percent of wages.” This is fantastic, excluding the practice to prosper in the years to come. n fact that life expectancy in 1884 for men was not even 47 years of age!

The Reverse Review April 2017

Originating

The Golden Rule of HECM Origination By Paul E. Scheper

SOMETHING ON YOUR MIND? Need to get something off your chest? Hate something we do? Love something we do? Letters to the editor may be emailed to JESSICA@REVERSEREVIEW.COM.

Why it’s important to assess alternative solutions with your clients

"Every time you meet a new potential client, give them the rundown of alternatives to a reverse mortgage so they can make an informed decision that everyone feels good about." 20 | TRR

In life, the Golden Rule is a basic principle that should be followed to ensure success in everything you do. It goes like this: “Do unto others

as you would have them do unto you.” In reverse mortgage lending, the Golden Rule is also important, and it can be revised to: “Lend unto others as you would have them lend unto you.” As a reverse mortgage originator, one of your primary goals is to close as many loans as you can. I’m an industry veteran, and I’ve learned over the years that the best way to do that is to give your clients honest feedback about all of their available choices. Treat each client the way you would want to be treated. After all, most people don’t have financial advisors to help them weigh their options. They look to us to give them candid answers about the pros and cons of each situation and need our help evaluating the merits of each alternative. It’s a good idea to treat each client like your own mom or dad—what would they want to know? Typically, you would want your parents (and each client) to know how a reverse mortgage measures up against other alternatives.

There’s gold when you deliver the Golden Rule with integrity, empathy and love. Once you apply the Golden Rule, reverse mortgages can resonate better once the customer knows “the rest of the story,” because they have assurance that they’re making the best decision. Just like any other consumer making a major purchase, reverse mortgage borrowers want to exhaust and evaluate all of their options. We all want to do business with someone we trust, especially when that means getting the best advice and the best solution to our problem. It’s up to the loan originator to provide the rest of the story—not just the reverse mortgage story. It’s the right thing to do and results in a positive experience, which can lead to future referrals from the client. Every time you meet a new potential client, give them the rundown of alternatives to a reverse mortgage so they can make an informed decision that everyone feels good about. Always ask yourself, “Is this solution suitable and appropriate for my client?”

Originating Here is a checklist of 10 alternatives you can review with them in a qualifying conversation: Do nothing and wait. In some instances, a client may prefer to continue with the current plan, even if meeting the monthly mortgage is tight. They can look at cutting back on living expenses if possible, particularly if they’re waiting for future benefits to kick in.

Take advantage of government assistance programs. Encourage your client to visit benefitscheckup.org, where they can find local programs designed for helping seniors. They can also check local and state programs for weatherization assistance, relief from country real estate taxes and other perks.

10.

Tap into other assets. Your client might have a life insurance policy they can tap into to assist with ongoing expenses. It may also be time to consider withdrawing from a 401(k) or other retirement plan, if they haven’t already.

None of these ideas are silver bullets when a senior is trying to stay in their home, and most won’t work for everyone. It’s important for each client to determine what their main priority is in their elder years. Maybe they always had a plan but when the time arrived to execute it, their priorities shifted. Be supportive and lend an ear to help them talk out their options so they can figure out what they actually want and what is possible. Never forget to listen with your eyes, care with your soul, and, of course, apply the Golden Rule. Once you review a list of possible alternatives with a potential client, you can then discuss the advantages and potential limitations of a reverse mortgage. At that point, they have all the information they need to make a smart, well-informed decision. By applying the Golden Rule, doing the right thing at the right time for the right client, you will have earned the client’s trust. Without trust in you, in the program and in their decision, they cannot develop a solid retirement game plan. n reversereview . com

8 TRR | 21

SPOTLIGHT

Review medical coverage. Depending on their income level, some seniors may qualify for Medicaid, which can free up cash by reducing medical expenses. If your client is a veteran or the widowed spouse of one, make sure he or she is taking advantage of potential VA benefits.

Get a part-time job. A lot of retirees work part-time to supplement their income, but it’s important that they don’t earn too much to impact their Social Security benefits. Retail, tourist attractions like museums, and even driving an Uber are great options for retirees to consider.

TECH

Rent out a room. Rather than downsizing, renting out a room is a good option to help pay the mortgage without having to move. They can either find a longterm renter or list a room to tourists on a website like Airbnb.

Get help from children. Depending on the client’s personal situation, an adult child might be able to help, whether by ongoing financial support, a place to live or even something as simple as adding them to a family cell phone plan. Sometimes, the children can refinance or tap their equity lines to help Mom and Dad.

MARKETING

Downsize the current home. Many people want to live out their retirement years in the house where they raised their children, but others may feel less sentimental about it. A smaller home or condo requires less maintenance inside and out while costing less, which is very attractive to some retirees. (Incidentally, a HECM for Purchase might be a nice option when selling makes sense.) 5.

Borrow with a HELOC. Again, a HELOC adds to those monthly payments but can help if a senior needs upfront cash for an emergency or a regular draw to help with recurring expenses. It depends on what type of monthly burden they want to eliminate and it requires equity in the home. (Don’t forget to compare and contrast the reverse credit line and how the borrowing power grows over time.) 3.

ORIGINATING

Take out a traditional loan. With low interest rates (even though they’re beginning to rise), a refinance to lower monthly payments or cash-out equity could be a viable option for some. It allows for a child to inherit the home (with more equity), but the client will still need to keep up with that mortgage every month.

The Reverse Review April 2017

Marketing

PROMOTE

Expanding Your Online Presence By Scott Gordon

How to market yourself in a digital world Financial marketing has changed dramatically in the last decade. Many loan originators have taken their money out of

direct mail, newspaper ads and networking events, and have switched to investing in online leads and campaigns. As you continue to grow as a loan officer, it becomes more important than ever to continue to broaden your online presence and find new ways to reach a larger audience. What Is an “Online Presence”? Your online presence is your ability to be found online from a variety of channels, not just the lending website. It’s the reach that your name and brand have, measured by how easily people can find information about you. Your online presence includes channels such as:

l Websites about you, your products and services lA ctive social media accounts, including Facebook, Twitter and LinkedIn

lO nline news articles in which you are quoted, guest posts

on industry websites and articles written by you for industry publications

Many loan originators find clients through referrals and word of mouth. But in today’s increasingly digital world, your online and offline presence have a synergy that can help you grow your business dramatically. That is because a strong online presence has many important benefits. The Benefits BUILDING TRUST: Word of mouth is still a great way to market. Yet few clients simply call a number because a friend gave it to them. What do they do first? They Google you. They try to learn more about you. The more they see your expertise, the more trust it builds.

Even if they like what they see, they may not be ready to call. But the more they find about you online, the more they will remember you when their needs arise in the future. BRANDING:

As you grow, you may discover that you are finding more and more leads through your marketing presence. If you already have a website and you’ve started building your online presence, you’ve got a head start when you decide to switch to online campaigns.

MARKETING:

22 | TRR

As a loan originator, your ability to network and build a client base through word of mouth is an important part of your success. But having a strong online presence will take your business to the next level. How to Get Started If you are new to creating an online presence, there are many opportunities out there. Here is the best way to start: CREATE AND MANAGE PROFESSIONAL SOCIAL MEDIA PAGES

MONITOR AND MANAGE YOUR YELP/GOOGLE PLUS REVIEWS

Create a business page for your lender services on Facebook and Twitter.

Be active in monitoring and encouraging reviews on all local review sites. Most sites will show your star rating in a search. If possible, try to address any negative reviews and see if there is a way to boost your star rating.

: Create a website and start adding active content, including service pages, a blog, and helpful tips and links.

CONTENT MARKET YOUR WEBSITE

: See if there are websites that will allow you to post something under your name.

TAKE ADVANTAGE OF CONNECTIONS

: Positive press releases can help make sure that more and more positive information is found about you for those who are looking.

CREATE A FEW PRESS RELEASES

There are many other opportunities to expand your online presence, but this list is the best place to start. It may seem like a lot of work, but the time you spend on it will help you build your network and convert more clients. n

Tech

ADVANCE

Succeeding With Traditional Lenders by Playing Their Tune By Wendy Peel

The role reverse-specific technology can play in engaging these lenders

Compliance In today’s post-TRID environment, compliance alerts and audit support have become mandatory features for any competitive “traditional” LOS. Although TRID doesn’t yet apply to HECM loans, reverse lending has its own regulatory requirements that new participants need to understand from the start. The right technology can help companies maintain day-to-day compliance and respond to audit requests. Traditional firms entering the reverse mortgage space will expect accurate reporting and administrative control over their environment; in fact, many have

Most raditional brokers rely heavily on a customer relationship management (CRM) system to track leads and referrals and maintain client relationships and activities. However, they’re likely unfamiliar with reverse-specific CRM tools that complement effective reverse sales strategies. Effective selling requires financial modeling tools that convincingly show prospects how reverse mortgages can be used as a financial tool to complement or enhance their retirement plan. To set up brokers for success, make sure your brokers know how to use these sales tools.

Operating under a wholesale lender’s license also makes it possible for brokers to enter the reverse mortgage space with virtually no upfront investment and without adding fixed operating costs. While this arrangement can make for an effective recruitment perk, forward-thinking wholesale lenders may prefer to do business with brokers who have some skin in the game. Circumspect broker partners with experience in traditional lending will understand and expect that an investment in technology is an investment in compliance.

Last but not least, traditional lenders expect to be able to prepare a compliant and attractive document package in a reasonable timeframe, using modern tools like eSign that add efficiency to the origination workflow. All too often, new reverse lenders assume the document sources they use in traditional lending activities will meet their reverse needs. Help new participants understand the significant structural and regulatory differences in reverse lending and navigate to technology services that focus on these unique needs.

Education Traditional mortgage brokers may assume reverse mortgages are “just another loan product,” but there are essential differences in product structure, market rate effects, fulfillment and—most importantly—how reverse mortgages are sold. Unlike traditional selling, with reverse lending brokers must first sell the idea that the loan is needed and convincingly present

Sales Tools

Transparency and Consistency

There has never been a more promising time to enter the reverse mortgage industry, and wholesale lenders have the potential to realize incredible growth in a short span of time. With so much to learn at the outset, the key is choosing reverse mortgage technology services that make HECM origination feel a bit more like “business as usual” for new brokers entering the reverse space—rather than an exercise in frustration. n reversereview . com

8 TRR | 23

SPOTLIGHT

Here are some points to consider:

A majority of reverse lending brokers originate under the umbrella of a wholesale lender’s LOS license on a common platform that enables near-frictionless submission and transfer of loan applications between partners. This approach creates a kind of “exchange” in which brokers and lenders can establish multiple partnerships that speed loan transitions to the benefit of all. While similar “supply chain” technology solutions are common in manufacturing, retail and logistics, they are rare to nonexistent in traditional mortgage lending. Explaining the advantages of this exchange to traditional mortgage lending participants is an opportunity reverse wholesale lenders should not miss.

TECH

To keep pace with growing marketplace interest, it’s critical that wholesale lenders who are recruiting traditional mortgage brokers or lenders fully appreciate the differences between the mortgage technology they are accustomed to using and the reverse mortgage technology offered in the market today.

Wholesale lenders can help reverse mortgage brokers achieve compliance and production proficiency quickly by choosing a technology partner that offers hands-on training and integrated product education.

MARKETING

ReverseVision we added more than 800 new companies to our RV Exchange (RVX) loan origination software (LOS) in 2016; more than 90 percent were traditional mortgage lenders. This trend toward HECMs as a commonly offered mortgage product is likely to continue for years to come, especially as rising interest rates drive traditional players to seek products that can replace their dwindling refi businesses.

Loan Data Exchange and Licensing Model

its advantages over alternatives before edging out other firms for the business.

ORIGINATING

Financial marketing has changed dramatically in the last decade. Over the last few years, “traditional” mortgage bankers have increasingly warmed to the idea that HECMs have a place in their product portfolios. As evidence, at

strong views about the necessity of a single system of record for all loan data. Reverse technologies that can integrate reverse loan data into traditional lending systems will be increasingly required.

The Reverse Review April 2017

Spotlight IN THIS MONTH’S EDITION

A NEW STUDY ABOUT REVERSE MORTGAGE USE

april

2017

Why Aren’t More Seniors Taking Reverse Mortgages? A new study explores roadblocks to greater acceptance.

WANT TO SEE MORE ARTICLES LIKE THIS?

See them at reversereview.com.

etirees could improve their financial security by liquidating a portion of their home equity, but a whopping 80 percent of seniors over 55 say they have no interest in doing so. A new study released by

the Urban Institute, a think tank based in Washington, D.C., sets out to explain why.

Published in February, “Seniors’ Access to Home Equity: Identifying Existing Mechanisms and Impediments to Broader Adoption,” takes a look at why such a large percentage of seniors are unwilling to utilize what may be their greatest asset and assesses what can be done about it. Authors Karan Kaul and Laurie Goodman, of the institute’s Housing Policy Finance Center, explain that part of the problem is 24 | TRR

that most seniors fail to consider strategic uses of this resource, and often don’t consider tapping it unless disaster strikes. “Few retirees tap into home equity, and most who do typically wait until they experience a serious financial shock, such as substantial medical expenses or the death of a spouse,” they write. Why are so many unwilling to consider equity? Goodman and Kaul say that some of the impediments are behavioral and “have to do with seniors’ longheld values, beliefs, and attitudes,” while others may be rooted in fear or stem from issues with product flaws.

The study highlights several reasons why seniors don't utilize their home equity: 3 A general trend toward financial

conservatism and a desire to avoid debt in old age

3A desire to leave a bequest 3 A desire to save equity as a last resort for emergency expenses or long-term care costs

3Fear of losing their home 3 The ability to work longer has reduced the need to depend on debt

3Poor financial literacy 3Product complexity and cost 3 Fear of scams, particularly with reverse mortgages

Seniors

Talk Reverses

Spotlight The study extracts data results from Fannie Mae’s National Homeownership Survey. It points out that 47 percent of respondents said they would prefer to sell or downsize before using their equity, while 16 percent said they would prefer a home equity loan or line of credit. Just 6 percent said they would prefer a reverse mortgage.

To promote the smart use of home equity in retirement, the authors make several suggestions. The first is to improve the public’s understanding of reverse mortgages by promoting discussion of the product among younger individuals, which they suggest can be done by incorporating housing wealth and reverse mortgages

In its 53 pages, the study offers insight into why most seniors are unwilling to consider tapping their home equity in retirement in a way it calls “easy, efficient and economical.” While it says that some of these barriers can be addressed through product tweaks, regulation and policy change, it warns that other barriers, like an aversion to debt or a desire to leave a bequest, are not so easy to combat. These, the authors write, “are deeply rooted in traditional beliefs that are difficult, and potentially unwise, to alter.” n

55+ 55-64 65-74 75+ 2

somewhat

not very

not at all

don't know

for which of the following purposes would

you be most interested in tapping into your home equity retirement?

55+ 55-64 65-74 75+ every day living expenses 34

medical care not covered by ins./medicare 40

help meet expenses for your children 18

home improvement expenses other don't know

what, if anything, concerns you most about reverse mortgages?

55+ 55-64 65-74 75+ not sure i'll keep the title to my home 5

worried that my family wont be able to stay they are to costly

difficult to understand

afraid of getting scammed other

none of the above don't know

reversereview . com

8 TRR | 25

SPOTLIGHT

Another issue is the lack of recognizable lenders in the reverse market. “Consumers worried about getting scammed are more likely to choose brand-name lenders over others that are not well known, making reverse mortgages an even tougher sell in the current environment,” they write.

very

TECH

Part of the problem, the authors state, lies in advertising. “Misleading and aggressive advertising often make it difficult for seniors to understand reverse mortgages holistically,” they write.

home equity in retirement?

MARKETING

When asked how familiar they are with reverse mortgages, 43 percent selected either “none of the above,” “don’t know” or “other,” leading the authors to conclude that the “unusually large proportion of uncommitted responses is perhaps a reflection of how poorly understood reverse mortgages are.”

The authors also point to the fact that part of the problem is symptomatic of HECM product flaws. They suggest simplifying product design by eliminating rarely used features and simplifying the line-of-credit disbursement option. They also note that increased competition among lenders would drive down marketing costs, reducing the expense to the borrower. Increasing HMBS liquidity would be another way to lower the cost of the product. The authors suggest increasing the investor base by educating foreign investors, sovereign funds and other fixedincome investors on how HMBS can be a solid alternative to U.S. Treasury securities. “HECM mortgage-backed securities also have yield, prepayment, and maturity profiles different from those of forward mortgagebacked securities,” the authors write. “In that sense, HMBS could also offer a valuable diversification opportunity to investors.” Finally, the study recommends reintroducing a modified version of the HECM Saver, which it says could “expand credit availability for low- and moderateincome borrowers without necessarily exposing HUD or lenders to greater risk.”

How interested are you in tapping your

ORIGINATING

But while nearly half said they would prefer to sell or downsize, 65 percent said they “never” expect to move in retirement. The authors speculate that “one possible explanation for the contradiction is that seniors’ desire to avoid debt might be stronger than their desire to age in place. In other words, seniors may prefer to age in place only if it does not involve borrowing.”

into retirement planning and improving outreach and education through HUD and the Social Security Administration. They also suggest providing different types of counseling for different classes of borrowers.

The Reverse Review April 2017

By Jessica Guerin

For HECM professionals working in the field, building relationships with referral partners can be key to success. There are so many different professionals who work with seniors, from Realtors and estate planners to CPAs, and seniors often look to these trusted advisors for insight. A recommendation from these professionals can go a long way. “When you are referred by someone the retiree trusts, they tend to listen more without getting caught up in the stigmas,” says Bob Tranchell, a HECM specialist with the Federal Savings Bank.

UP YOUR GAME

Kent Kopen, a CRMP with United American Mortgage, agrees. “When someone is referred by a licensed professional they trust, and have maybe even trusted for years, I don’t have to sell myself much and we can quickly pivot to the client’s needs, concerns and aspirations,” he says. It’s clear that a strong referral base can be a serious boost to business, but how, exactly, can one connect with enough professionals to build a solid network? To find out, we spoke with seasoned originators who have built their businesses from referral relationships. We asked how they connect with other professionals, what approaches they have found to be effective, and what originators looking to build a referral base must know. We’ve gleaned 12 tips to help you build your referral network, one partner at a time.

Check out these books for more tips on how to build a thriving referral network.

26 | TRR

High Trust Selling: Make More Money in Less Time with Less Stress By Todd Duncan

The Seven Levels of Communication: Go From Relationships to Referrals By Michael J. Maher

Go-Givers Sell More By Bob Burg and John David Mann

How to Build Your Referral Network Ask for introductions.

Get out there and educate.

A great way to meet potential referral partners is through existing clients. Laurie Libby, a CRMP who has been originating HECMs for 17 years, says this tactic has been hugely successful for her.

If you’re looking to build a vast network, you’ve got to do the legwork. For some, pounding the pavement the old-fashioned way has proved to be effective. You’ve got to get in front of as many people as possible, they say, and educate them about home equity’s role in retirement.

“I have many clients who have financial planners. If I have a client whom I did not meet through a financial planner, I will ask for an audience. I call them and introduce myself, and I have educated more than one of them,” she says. “I give them a case study with one of their own clients.” Libby says this is a great starting point for people who are inexperienced in working with financial planners but who want to begin developing that network. “To get more comfortable with it, talk to a client’s financial planner first. The door is already open, the client introduced you, and the financial planner is probably very interested,” she says. “Clients who refer you to their financial planner—I think that’s one of the best-kept secrets on the planet.”

“I stop in to locations. I don’t always get an audience, but it does allow me to follow up with a phone call,” says Libby. “I’ll leave behind a collateral piece and will follow up about that.” Kopen says it’s important to find ways to share your knowledge. “Blog, give educational talks, comment on others’ social media. Not in a ‘Hey, I do loans, do you need a loan?’ sense, but make an intelligent comment that advances the dialogue,” he says. “Offer to speak at any and every organization you can. You’ll be surprised it’s not that hard to get a chance.”

Joe Conrad, an originator with Skyline Home Loans, suggests partnering with another financial professional to educate people. “Doing seminars and workshops with financial advisors, that’s a good tactic. A comarketing thing is a great way to build relationships.” Tranchell, whose business is 90 percent referral-based, says connecting and educating other professionals will help elevate the product, benefiting your business and also the industry. “Education is everything in our world. The more people you can interact with and educate, the better our product will be received.”

Beef up your LinkedIn profile. It’s also important to establish a solid professional presence online. When another professional wants to learn more about you, LinkedIn is the most common resource. It’s up to you to make sure your profile paints a strong picture. “You’ve got to be active on LinkedIn,” Conrad says. “You’ve got to be posting, you’ve got to be sharing. People go to LinkedIn to check you out, to make sure you’re real. You’ve got to have a good 8

Together, we can take your business to new heights Elevate your success with our: n n n n

Top-flight training Effective business-building tools and strategies Innovative pricing and product options Highly experienced team on your side

877.820.5314 | Partners.Reversefunding.com This material has not been reviewed, approved or issued by HUD, FHA or any government agency. The company is not affiliated with or acting on behalf of or at the direction of HUD/FHA or any other government agency. ©2017 Reverse Mortgage Funding LLC, 1455 Broad Street, 2nd Floor, Bloomfield, NJ 07003, 1-888-494-0882. Company NMLS ID: #1019941 (www.nmlsconsumeraccess.org). Arizona Mortgage Banker License #0927682; Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act; Loans made or arranged pursuant to a California Finance Lenders Law; Georgia Mortgage Lender Licensee #36793; Illinois Residential Mortgage Licensee; Massachusetts Mortgage Lender License #ML1019941; Licensed by the New Jersey Department of Banking & Insurance; Rhode Island Licensed Lender; Texas Mortgage Banker Registration in-state branch address 6044 Gateway East, Suite 236, El Paso, TX 79905. Not intended for Hawaii and New York consumers. Not all products and options are available in all states. Terms subject to change without notice. Certain conditions and fees apply. This is not a loan commitment. All loans subject to approval. L825-Exp2018

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The Reverse Review April 2017

KNOW YOUR POTENTIAL PARTNERS CPAs Elder law attorneys Financial planners Realtors Estate planning attorneys Insurance agents Builders Forward originators

profile and make it clear that you know your stuff.” Conrad says LinkedIn is a great way to showcase your knowledge. “You can post resources. You can show that you’re considered to be an expert and well-educated among your peers.”

Don’t be intimidated. When approaching other professionals, be confident. “Don’t be insecure!” Tranchell stresses. “You have a great product to share.”

Libby also emphasizes the need to be assertive. “People are worried about approaching financial planners, but you know what? They are just people. They really appreciate the education,” she says. “Originators may fear that they are more educated, more skilled, or that they know better than the originator, and that’s not the case. Planners really want solutions, but they come with a whole set of perceptions about what this loan is, and that’s where you come in: You’re unlocking that part for them, offering solutions to extend a client’s portfolio and help them have a more comfortable retirement.”

Listen, learn and ask questions.

Before approaching potential referral partners, do your research. Learn about their work so that you can understand their perspective. “Be interested and well-read in the field of the person you want to build a relationship with,” suggests Kopen. “Read their trade journals; attend their educational events; know the movers and shakers in their field and the key issues of the moment. Reference those when conversing—not in a show-off manner, but just enough to let them know you care about what they care about and you want to help them succeed.” Tranchell also says it’s important to learn more about the partner’s

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line of work and have respect for it. “When trying to connect with financial planners, don’t go in with a ‘Look at what I can do for you’ approach. Find out their core values and share how the HECM validates and enhances those values.” Kopen says to remember to listen more than you talk. “Be interested and forget about being interesting. People who try too hard to be interesting are a bore. The master skill in being interested is being a great listener,” he says. “At Merrill Lynch they used to teach that any meeting where you talk less than 50 percent of the time was a good meeting.”

Tackle misconception right away.

Misconceptions about reverse mortgages are rampant, even among other financial professionals. For some originators, this can be a significant barrier. “The biggest challenge is misconception and the lack of knowledge,” Conrad says.

To combat this, it’s important to address common falsehoods from the start. Libby says this is particularly important with estate planners. “They are often working with the adult children, and the kids are sometimes scared that the house is going to go to the bank. I dispel that myth right out of the gate. I take that myth and I squash it.”

7. Bring collateral.

When networking, leave behind materials that a potential partner can review at their leisure. Create collateral pieces that speak directly to that specific type of professional. For Realtors, distribute a pamphlet on the HECM for Purchase. For financial advisors, share research on how a HECM can be used in retirement income planning. “It’s easy to create collateral materials, door hangers or flyers,” says Conrad. “It shows a potential partner that you’ve got the resources to help them. The idea that you can generate business for them becomes much more real when they see the tangible collateral materials that are there for them to use.”

Don’t bury them in detail.

While you do want to share information on how a reverse mortgage works, you do not want to overwhelm your audience with the details. Especially in introductory conversations, you want to assume a high-level approach and not get bogged down in the specifics, which can seem complex to those who work outside the field. Libby says to keep it simple when meeting in person or posting online. “I’ll try to do one statement,” she says. “When you start burying facts in pages and pages of detail, I feel like you lose people. Stick to one simple statement at a time.” Libby says to remember that even in the best scenarios, HECMs will only ever constitute a small portion of your partner’s business. They don’t need to know as much as you do about them.

“I tell Realtors, you can end up with two different transactions: selling a home and buying a home,” she says. “I say, ‘Just know that there is a great product out there for your 62-plus client. You don’t even have to know what I know, just refer them over and sit through a meeting, because once you go through one, you’re going to start incorporating it into your group of sales tools.’” When their interest has been sparked and your professional partner asks for more specifics, then you can dig into your arsenal of case studies, research and graphs. But in the beginning, keep it simple.

Show your value proposition.

A partnership is give and take, and you’ve got to tell a potential referral partner what you can offer them. Explain how offering a HECM to clients can elevate their business. Will it increase the longevity of their client’s portfolio? Will it allow them to sell more houses? Be clear about your value proposition. “Whether it’s a Realtor or a planner, you’ve got to show them how you can benefit their business. You have to show them how to generate a lot more revenue using reverse mortgages,” says

Conrad. “They want to know, ‘What’s in it for me?’”

Build trust through sincerity and integrity.

10.

While you may be able to successfully demonstrate how a HECM could help your referral partner, this alone will not seal the deal. You also have to convince your contact that you can be a reliable partner. There are lots of HECM specialists out there, and you need to show them that you are the right man for the job. Most professionals are protective of their clients, and they are not going to share them with just anyone. To build a relationship, you must be genuine. “First and foremost, you have to create trust. You have to make sure they understand that you are there to make them look good. Financial planners who refer me clients know that I will protect their business,” says Libby. “Always be full of integrity. This is an industry that commands all of us to have a really strong moral compass.” Kopen echoes this idea. “When it comes to building professional relationships, results come last. They are a function

of doing the small things well, actions that in the act of doing them seem to make no difference at all, but over time they make all the difference in the world. It isn’t what you do; it’s how you do it. Pursue building a referral practice with a giver’s mindset, with grace, a good attitude and a long-term perspective, and a great outcome is all but guaranteed.”

Stay in touch.

11.

Keeping in contact with your partners is essential to building a strong network, and a CRM (customer relationship management) system is the most effective tool to use. “It is key to have a well-built CRM as the cornerstone of any referral strategy,” Kopen says. “You want to know as much about referral sources and prospects as possible. Every time you interact with a referral partner, take notes. Before the next meeting or call, read the previous notes. What’s the cliché? Nobody cares how much you know (about reverse mortgages or asset allocation) until they know how much you care (about them and what they care about).”

Kopen says many CRMs can help you do this. “Build automated workflow and campaigns in your CRM so you are touching people regularly, varying the modality of touch: call, email, text, send handwritten note. On-again, off-again networking is almost useless… You have to be consistent. Never forget a birthday and be thoughtful in your other touches. Avoid canned content; there’s little lift from it.”

Be patient.

12.

The originators we spoke with target different types of professionals and have their own particular methods. But in speaking with them, we found many common threads, highlighting the fact that no matter what type of professional network you are looking to build, the steps toward success are essentially the same.

And while each originator had some unique thoughts to share, there was one tip that everyone shared: Be patient. Building a network takes time. Follow the steps above, and if your work is hard and honest, success will come in time. n

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The Reverse Review April 2017

Last Word

CONSIDER

An End to the Drought By Michael D. Kent

Preparing for a surge by perfecting our infrastructure It is wet in California! After six years of drought, this winter has

been one for the books—record rainfall and snow pack in the Sierras. Our lakes, rivers, creeks and reservoirs are at or beyond capacity. State officials are looking to call an official end to the drought as early as April. This is great, right? After enduring extreme water restrictions, full reservoirs are a beautiful sight. After experiencing several historic fire seasons that ravaged the state, burning thousands of acres of land and hundreds of homes, rain is a blessing. The thought of our farmers fully sowing and reaping again brings joy and jobs to the Central Valley. So yes, all this rain is great! However…

product, but what about us? What have we done to improve the borrower experience? Have we improved our messaging so our customers are better educated? Have we taken the time to better educate our loan officers, processors and underwriters so the answers they give borrowers are accurate?

This record rain and snow has also shown how inadequate and fragile our infrastructure is and how ill-prepared the state was for a deluge of water. Roadways that lacked proper draining simply washed away. Streets and highways in need of resurfacing for years suddenly became an obstacle course of potholes. Bridges that have long been neglected collapsed and dams holding back enormous lakes threaten whole towns due to bad design and maintenance. Six years of a year-round building season and the state did nothing to prepare for the end of the drought. Instead, we focused on how to get by with less water and now we are all paying the price of that neglect. A reverse mortgage veteran may see parallels between the HECM market and California’s predicament. Since its record high of 114,692 HECM endorsements in 2009, volume has steadily declined (less and less rain!) to an 11-year-low of 48.9 thousand units endorsed in 2016. Unfortunately, I don’t see signs of record endorsement rainfall just yet, but I am hopeful. Have we improved our infrastructure during these slower times? I know FHA was hard at work designing a better, more sustainable 30 | TRR

"What have we done to improve the borrower experience? Have we improved our messaging so our customers are better educated? Have we taken the time to better educate our loan officers, processors and underwriters so the answers they give borrowers are accurate?"

I know NRMLA has been focusing on growing the number of CRMPs and improving the educational process, but what about the rest of us? How about turn-times? Have we taken this time to look at our business cycle? Have we made progress in cutting the time from application to funding? As we look to the end of the HECM endorsement drought, I hope all of us use this time wisely. I hope we invest in our people, their education, our customers, our messaging and our processes. I hope we take the time to repair the infrastructure and fix the potholes. n

reversereview . com

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The Reverse Review April 2017

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