The Reverse Review March 2017 by The Reverse Review

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INSIDE THIS ISSUE | BECOMING A CRMP

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PG. 15

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Jim Cory sits down in our Hot Seat

REVERSE THE

Ten ideas to grow your business

B2B social media marketing tips

The relative value of HREMICs

The Reverse Review March 2017

2 | TRR

Our focus is your borrower. Our team of industry experts has a wealth of reverse mortgage products and systems knowledge helping you focus on what is most important to you: Your Borrowers.

“I’ve been in mortgage lending for a long time and it takes quite a bit to impress me. I was more than impressed with the service I got from AAG. I am ready to build and expand for 2016 and beyond” -Danny S., Broker & Loan Ofﬁcer of 22 years

Call now and join the AAG family today! 866-964-1109 or visit AAG.com/Wholesale American Advisors Group, NMLS #9392, headquartered at 3800 W. Chapman Ave., 3rd & 7th floors, Orange, CA 92868. For industry professionals only – not intended for distribution to the general public. This material is not from HUD or the FHA and were not approved by HUD or a government agency. License information can be viewed on: http://www.nmlsconsumeraccess.org www.nmlsconsumeraccess.org or http://www.aag.com/disclosure reversereview . com 8 TRR | 3

The Reverse Review March 2017

From the editor RE

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MARCH 2017

A NOTE FROM JESSICA GUERIN

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INSIDE THIS ISSUE | BECOMING A CRMP

In this issue of TRR, we break down HUD’s latest round of reverse mortgage policy changes. With help from Jim Milano, the industry’s leading regulation expert, we highlight some of the key mandates and take a look at what they mean for originators and

ORIGINAT ING

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HMBS

PG. 15

PG. 19

PG. 20

PG. 23

Ten ideas to grow your business

B2B social media marketing tips

The relative value of HREMICs

PUBLISHER

Erik Richard EDITOR-IN-CHIEF

HUD’s final rule comes nine months after its

CREATIVE DIRECTOR

deal of thought into its reverse mortgage policy, weighing more than 200 comments and suggestions submitted by members of the industry and other interested parties.

Traci Knight

COPY EDITOR

Kersten Deck MARKETING DIRECTOR

Alycia Greer

Its efforts confirm its commitment to the

MARCH 2017

program’s success and belief in the role it can play in solving the

ON THE COVER A look at HUD’s final rule

country’s looming retirement crisis. But the timing of the rule’s release suggests that perhaps HUD was under pressure to get it on the record before the administration turnover. There are key issues that still need to be addressed and rulings that need extensive clarification. The industry can only hope that the department will respond efficiently to its requests for clarification, and that Trump’s two-forone executive order won’t impact the HECM program and detract from HUD’s hard work.

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

Reza Jahangiri

Jessica Guerin

last May. It’s clear that the agency put a great Jim Cory sits down in our Hot Seat

SENIOR PUBLISHER

their borrowers.

proposed program revisions were released H OT SE AT

Meet the Team

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

19 / ORIGINATING

January top lenders and HECM endorsement stats through December REVERSE MARKET INSIGHT

20 24

Raising the Bar in 2017 Ten ideas that will help you advance professionally in the year ahead MICHAEL J. WELTMAN

20 / MARKETING

B2B Social Media Marketing Tips

13 / ROUNDUP

How to enhance your brand and promote your business

A collection of recent facts and surveys affecting the reverse market

SEAMUS McKEON V IE

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REVERSE The Relative Value of HREMICs

Why these securities are appealing to today’s investors DARREN STUMBERGER

Becoming a CRMP

Fast Facts

Reviewing HUD’s data on HECM lending in 2016 MATT ALLEN

23 / HMBS

24 / SPOTLIGHT

18 / ORIGINATING

H 2 017

GEORGE DOWNEY

S E REVI E W

Senior homeowners have a choice, but most make the wrong decision and don’t know it.

VER

Reverse Mortgage or Home Equity Lone of Credit—Which Is Best?

programs can impact a loan file CHRISTIAN FISHER

16 / ORIGINATING

Dealing with PACE/HERO Liens

INSIDE THIS ISSUE | BECOMING A CRMP How energy efficient renovation

Senior VP at Live Well Financial

15 / HOT SEAT

22 / TITLE TIP

Read about the association’s current initiatives.

10 / NRMLA NEWS

Jim Cory

TRR 3/17

review

Dedicated reverse professionals work hard to earn this important designation.

30 / LAST WORD

Reevaluating Our Unique Selling Proposition Are we turning off potential clients with our “no payments ever” slogan? HARLAN ACCOLA

FEATURE

26 / FEATURE

YOU CAN DO IT!

The Final Rule

HUD releases a new round of program changes. How will they impact you and your borrowers? JESSICA GUERIN

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

“With help from Jim Milano, the industry’s leading legislative expert, we break down the new policies and take a look at how they will affect reverse mortgage lending. reversereview . com

8 TRR | 5

The Reverse Review March 2017

6 | TRR

contributors

John K. Lunde

Jim Cory

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

With more than 16 years of industry experience leading Top 10 reverse lenders, Joshua Shein is a seasoned reverse mortgage leader. Shein is frequently called upon by national and trade news media to provide insight regarding mortgage industry trends and legislation, and has repeatedly been selected for the “Hot 100” list by Mortgage Professional America. Currently, Shein is a senior director at Home Point Financial. Previously, he was responsible for developing and growing Maverick Funding’s Reverse Mortgage Platform.

8 | Stats g

15 | Hot Seat g

George Downey

16 | Reverse Mortgage or Home Equity Lone of Credit—Which Is Best? g Lorraine Geraci is VP of learning and development at Finance of America Reverse, where she oversees all wholesale training, training technology and technical writing. She has more than 12 years of experience in the reverse industry and 20 years of experience in training, coaching and customer service. Formerly a top-producing originator, Geraci has trained more than 1,000 HECM LOs nationwide in classroom and webinar settings. A certified professional coach, she is the author of Living a Rock Star Life.

Matt Allen

18 | Fast Facts g Brad Bennett is manager of reverse mortgage operations for GSF Mortgage Corporation. He is responsible for providing the tools and support necessary for the division to quickly and efficiently close reverse mortgage loans. Bennett’s natural talent in sales and leadership, as well as his entrepreneurial spirit, led him to the mortgage industry in 2007.

Michael J. Weltman

19 | Raising the Bar in 2017 g Brad Bennett is manager of reverse mortgage operations for GSF Mortgage Corporation. He is responsible for providing the tools and support necessary for the division to quickly and efficiently close reverse mortgage loans. Bennett’s natural talent in sales and leadership, as well as his entrepreneurial spirit, led him to the mortgage industry in 2007.

PARTICIPATE IN THE CONVERSATION.

Seamus McKeon

Christian Fisher

Darren Stumberger

Marc Montgomery has 40 years of sales experience. From the very beginning, he has embraced the technology offered by computers and the Internet. In 2008 Montgomery started BusinessETouch, where he built an easy-to-use CRM system that included all the features he found lacking in the mega CRM companies. The National Association of Mortgage Brokers recommends BusinessETouch.

Mark King is a senior vice president at PRC. Since joining the company in 2008, King has worked in numerous roles assisting in PRC’s day-to-day operations. Before transitioning into title and escrow in 1991 with North American Title, King worked as a legal assistant specializing in legal malpractice and real estate law.

Scott Norman has led all five campaigns to amend the Texas Constitution to allow, expand and promote reverse mortgages. Since he founded the Texas Association of Reverse Mortgage Lenders in 1999, he has testified numerous times before the Texas Legislature and has worked with lawmakers in other states. Norman has also served as president of the Texas MBA and the Austin MBA. He is currently the national field retail vice president of Finance of America Reverse.

20 | B2B Social Media Marketing Tips g

22 | Dealing with PACE/HERO Liens g

23 | The Relative Value of HREMICs g

Harlan Accola

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

30 | Reevaluating Our Unique Selling Proposition g Shannon Hicks serves as president of Reverse Focus (formerly Reverse Fortunes), a training and technology company for the reverse mortgage industry. Hicks was instrumental in the development of the first national reverse-specific CRM and produced the e-learning course interface for Reverse Basics, an e-learning tool for the industry. He also hosts a weekly podcast, “Reverse Focus Weekly,” in addition to two weekly videos: the “Industry Leader Update” and “Friday’s Food for Thought.” reversereview . com

8 TRR | 7

The Reverse Review March 2017

stats January 2017 Top Lenders Report

12345 American Advisors Group

Reverse Mortgage Funding

Finance of America Reverse

One Reverse Mortgage

Synergy One Lending

Endorsements

963

424

366

287

237

Lender Endorsements LIBERTY HOME EQUITY SOLUTIONS INC

227

Lender Endorsements SUN AMERICAN MORTGAGE

RMS/SECURITY ONE LENDING

163

HOMEBRIDGE FINANCIAL SERVICES INC

152

LIVE WELL FINANCIAL INC

NORTHERN OHIO INVESTMENT

FIRSTBANK 112

MONEY HOUSE INC

HIGHTECHLENDING INC

109

COMMUNITY FIRST NATIONAL BANK

NATIONWIDE EQUITIES CORPORATION

108

FRANKLIN FIRST FINANCIAL LTD

ADVISORS MORTGAGE GROUP LLC

TOTAL MEDIA MANAGEMENT LLC

REVERSE MORTGAGESCOM INC

EVOLVE BANK & TRUST

HOME POINT FINANCIAL CORPORATION

MORTGAGE BROKERS SERVICES

PLAZA HOME MORTGAGE INC

PRIMARY RESIDENTIAL MORTGAGE INC

RESOLUTE BANK

LENOX FINANCIAL MORTGAGE CORPORATION 10

OPEN MORTGAGE LLC

GATEWAY FUNDING DIVERSIFIED MORTGAGE

THE MONEY SOURCE INC

DOLLAR BANK FSB

UNITED NORTHERN MORTGAGE BANKERS LTD 46

AMERICAN FINANCIAL NETWORK INC

FAIRWAY INDEPENDENT MORTGAGE CORP

JAMES B NUTTER AND COMPANY

CHERRY CREEK MORTGAGE CO INC

PACIFIC RESIDENTIAL MORTGAGE LLC

ALL REVERSE MORTGAGE INC

MORTGAGESHOP LLC

WHOLESALE CAPITAL CORP

VIP MORTGAGE INC

YADKIN VALLEY BANK AND TRUST

NOVA FINANCIAL & INVESTMENTS CORP

MANN MORTGAGE LLC

M & T BANK

LONGBRIDGE FINANCIAL LLC MCM HOLDINGS INC

THE FEDERAL SAVINGS BANK PEOPLES BANK

QUONTIC BANK FSB

AMERICAN NATIONWIDE MORTGAGE COMPANY 7

FULTON BANK 7

HOMEOWNERS MORTGAGE ENTERPRISE

GOLDWATER BANK 6

LAND-HOME FINANCIAL SERVICES BROKER SOLUTIONS INC

AMERICAN PACIFIC MORTGAGE BANK OF ENGLAND

GSF MORTGAGE CORPORATION

SUN WEST MORTGAGE CO INC

RESIDENTIAL HOME FUNDING CORP

UNIVERSAL LENDING CORPORATION

ALPHA MORTGAGE CORPORATION

BANC OF CALIFORNIA

AMERIFIRST FINANCIAL INC

TOWNEBANK 14

BERKSHIRE BANK

8 | TRR

stats HECM Endorsement Stats Through December 2016 { FIGURE }

PURCHASE

$1,200

REFI STANDARD

$800 $600 $400 $200

12/1/16

11/1/16

10/1/16

9/1/16

8/1/16

6/1/16

{ FIGURE }

7/1/16

5/1/16

4/1/16

3/1/16

2/1/16

1/1/16

$0 12/1/15

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%

2,199 -12.88%

1,690 -0.88%

3,889

Retail Endorsement Growth

2,645 20.28%

1,932 14.32%

4,577 17.69%

2,669

0.91%

1,857 -3.88%

4,526

-1.11%

2,465

-7.64%

1,775 -4.42%

4,240

-6.32%

2,034 -17.48%

1,605 -9.58%

3,639 -14.17%

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%

Wholesale Endorsement Growth

16.9%

2,000 1,000

Total Endorsement Growth

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

MO.

22.5%

4,000

INDUSTRY SUMMARY

Wholesale *Numbers Represent Months

19.88%

* Figures Above Reflect Change from Prior Month

TOT

27,652

WHOLESALE

21,080

TOTAL UNITS CHG%

-8.04%

48,732

%%%%% 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 March 2017

nrmla news BROUGHT TO YOU BY NRMLA STAFF

REVERSE MORTGAGES IN A TIME OF CHANGE We have a new HECM rule. We have a new president and incoming management team at the HUD. How will these changes impact your businesses? NRMLA’s Eastern Regional Meeting & Expo, Reverse Mortgages in a Time of Change is a great opportunity to get exclusive information on the HECM final rule from NRMLA’s outside counsel, Jim Milano; to obtain timely updates on other marketplace issues and trends; and to network with hundreds of other loan officers, business owners, servicers and wholesalers. The 1.5-day conference in New York, April 3-4, will feature engaging panels with dynamic speakers from all areas of the reverse mortgage industry, as well as outside speakers such as Jamie Hopkins of the American College of Financial Services, one of America's leading retirement income planning experts. G E T M O R E I N F O R M AT I O N O N THE 2017 EASTERN REGIONAL MEETING. R E G I S T E R AT NRMLAONLINE.ORG.

NRMLA PROPOSES HECM LOAN DOCUMENT REVISIONS Comments were submitted by NRMLA to HUD recommending updates to existing HECM loan documents that take into account recent regulatory changes, such as financial assessment and non-borrowing spouse protections. Forms that NRMLA would like to see updated include: HUD Form 92800.5B-Conditional Commitment; HUD 92900A-HUD Addendum to URLA; Fannie Mae 1009; HUD-1 and the Good Faith Estimate. Download NRMLA’s comments to view its recommendations. NRMLA submitted its comments in response to a 60-Day Notice of Proposed Information Collection published by HUD on November 22. We will alert members if any form changes are implemented.

NRMLA ADDS ONLINE ETHICS COMPLAINT FEATURE

SAVE THE DATES: REVERSE MORTGAGE EDUCATION WEEK

NRMLA’s new online form streamlines the process for reporting ethics violations to NRMLA’s Ethics Committee. Information and documents can now be uploaded for submission on nrmlaonline.org. The portal is accessible to both members and nonmembers.

Join us for Reverse Mortgage Education Week, beginning April 24, and spread a positive message about the versatility of using home equity as a retirement planning tool to other professional organizations that provide services to aging Americans.

Anytime you see a questionable advertisement or inappropriate behavior that may violate NRMLA’s Code of Ethics, we encourage you to submit a complaint for review by the Ethics Committee. To help us in our investigations, we ask that you cite the Values and/ or Rules within the Code of Ethics that are being violated.

The first Reverse Mortgage Education Week was organized last April to teach Realtors, health care workers, financial advisors and other professionals how reverse mortgages work and how they can help meet their clients’ financial needs. We will be organizing similar activities this year. Stay tuned for updates.

You can review the Code of Ethics and supplemental Ethics Advisories by visiting nrmlaonline.org.

Duffy Appointed Chairman of Housing Subcommittee Rep. Sean P. Duffy, a four-term congressman who represents northern Wisconsin, will be taking over as Chairman of the Housing and Insurance subcommittee, which has jurisdiction over policy matters impacting the Federal Housing Administration. Rep. Duffy is a former ESPN sports commentator and reality television personality. He first entered public life as a cast member on The Real World: Boston, followed by 1998's Road Rules: All Stars and 2002's Real World/Road Rules Challenge: Battle of the Seasons, before going on to serve as district attorney of Ashland County, Wisconsin. Rep. Duffy has served on the House Committee on Financial Services since first winning election in 2010. He succeeds Rep. Blaine Luetkemeyer (R-MO), who became Chairman of the Financial Institutions and Consumer Credit subcommittee. Jeb Hensarling (R-TX) will remain Chairman of the Financial Services Committee during the 115th Congress, while Rep. Maxine Waters (D-CA) was re-elected as the committee’s ranking Democrat.

10 | TRR

nrmla news

On the first day of President Donald Trump’s term, a regulatory freeze was issued affecting government agencies, including HUD. On Monday, January 30, the Trump administration went one step further, issuing an executive order that requires federal agencies to rescind two regulations for every one new regulation implemented. The executive order also requires that the cost of any new regulation must be offset by the rescinded regulations. The freeze pertains to any proposed regulations, which must now receive approval from a Trump-appointed department or agency head. Furthermore, for regulations already published in the Federal Register but not yet in effect, the freeze temporarily postpones implementation for 60 days. The final HECM rule published by FHA on January 19 has an effective date of September 19, 2017, but at this point it is unclear if the new administration’s regulatory freeze memorandum will act to defer or delay it. Further updates will be provided as we learn more.

NRMLA Op-Ed: Most Reverse Mortgage Foreclosures Don't Lead to Evictions In advance of the confirmation hearing for Treasury Secretary nominee Steven Mnuchin, The Hill, a publication widely read by policymakers and their aides, published an opinion piece by NRMLA President & CEO Peter Bell, titled "The Real Story on Trump's Treasury Pick and Reverse Mortgages.”

Foreclosures can occur, adds Bell, if the borrower fails to meet the obligations of the loan, which include timely payment of property taxes, insurance, and any homeowners’ association fees, and maintaining the property. However, research by Stephanie Moulton from the Ohio State University and others, projects that a combination of policies implemented in 2013 and 2015 to prevent borrowers from missing payments will decrease T&I defaults by as much as 50 percent. “Without taking a position on his appointment, we want to clarify false impressions about reverse mortgage foreclosures because they are unfair to Mnuchin, the industry and the reputation of this loan product that more than 1 million homeowners have used to age in place,” wrote Bell.

FHA is implementing a Loan Review System that provides an electronic platform for FHA loan-level file reviews and other quality control functions for Title II Single Family mortgages. The news was announced in Mortgagee Letter 2017-03. HUD states that as system development is ongoing, the effective date will be confirmed in a subsequent mortgagee letter but will be no earlier than March 1, 2017. While HECMs are not specifically mentioned in ML 2017-03, NRMLA's outside counsel, Jim Milano, reminds us that this guidance applies to all mortgagees approved for FHA Title II Single Family programs. The HECM statute, section 255 of the National Housing Act (codified at 12 USC 1715z-20), falls within Title II.

Under this initiative, HUD plans to implement a new Loan Review System, which will be used to manage Title II Single Family Loan Reviews, Title II Single Family Mortgagee Monitoring Reviews and mortgagee self-reporting of fraud, misrepresentation and other material findings. The Loan Review System builds on recent efforts by FHA to align the documentation of loan review results across various divisions, and it incorporates the Single Family Housing Loan Quality Assessment Methodology (Defect Taxonomy), which was announced on June 18, 2015.

NRMLA CONGRATULATES The following individuals have achieved the status of Certified Reverse Mortgage Professional (CRMP). 4 John Paul Leer III KleinBank Victoria, Minnesota

Tammy Campanella Reverse Mortgage Funding LLC Melville, New York

IF YOU’D LIKE TO JOIN US in our effort to promote the facts about reverse mortgages as a member of NRMLA’s Blog Squad, please email Jenny Werwa at jwerwa@dworbell.com.

{

Bell's column explained how reverse mortgage foreclosures are different from foreclosures on forward mortgages and the fact that most reverse mortgage foreclosures don't end up with an eviction of the borrower.

New Mortgagee Letter: FHA Creating Loan Review System

{

P R E S I D E N T I N I T I AT E S R E G U L AT O R Y F R E E Z E

Thank you FOR JOINING

NRMLA WELCOMES OUR NEWEST MEMBERS 4 Berkshire Bank Tewksbury, Massachusetts 4 Good Day Reverse, Inc. Los Angeles, California reversereview . com

8 TRR | 11

The Reverse Review March 2017

Happy Spring.

Join Our Team.

http://rfslends.com/join/

877-721-3847

#nofilter #integrity #loyalty #diligence #compassion www.rfslends.com 12 | TRR

NMLS #1025894

THIS MONTH

BOOMER CONCERNS

A LOOK AT THE NEWS AND STATS AFFECTING THE MARKET

Many seniors worry about housing.

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

MONEY MATTERS

The number of seniors with college debt reaches an all-time high. Approximately 2.8 million seniors are paying back student loans, a number that has quadrupled in the past decade. These borrowers owe an average of $23,500 in education bills for their children and grandchildren, and two-thirds of them are also paying off mortgages and credit card debt, according to the CFPB.

AGING IN PLACE

In a survey of 1,000 baby boomers, about

42%

of those who were retired said they worry about affording their current homes at least on a daily basis.

Housing problems loom for the growing senior population. A recent study by the Joint Center for Housing Studies at Harvard University addresses concerns regarding the nation’s ability to meet the aging-in-place demands of an aging population. According the report, some of the biggest problems facing this demographic are:

The majority of homes are inaccessible for seniors with limited mobility.

Long-term care at home is exceedingly expensive.

The costs of housing is becoming unaffordable later in life.

The study asserts that 17 million older households will include at least one person with limited mobility, a 77 percent increase from today. But currently, only 3.5 percent of homes have wheelchair accessible features.

RETIREMENT FACTS

Standard savings rates won’t cut it. Americans save on average 5.5 percent and 401(k) plan participants deferred 6.8 percent of their salaries into retirement plans in 2015, but this rate is far below what is needed to retire in today’s market, according to a recent research report.

For more facts and stories about the reverse space, visit us online at reversereview.com.

Americans today need to save more for retirement because:

NUMBER CRUNCH

3Lower investment returns are expected in the future. 3Retirement income will also decrease. 3People are living longer.

3Legacy goals are increasingly expensive. -Report, “Required Retirement Savings Rates Today”

1 in 5 Americans will be over 65 in the next 20 years. reversereview . com

8 TRR | 13

The Reverse Review March 2017

14 | TRR

JIM CORY

From his favorite show and first car to the best purchase he ever made, we get the scoop from Jim Cory, senior vice president at Live Well Financial.

Senior Vice President Live Well Financial

My favorite vacation was my honeymoon to

If I were a professional athlete, I would be a

Fiji.

football player.

My first car was a 1977 Chevy Malibu station

If I had three wishes they would be for

For success I have sacrificed world travel.

If I could time travel, I would go back and

I am optimistic about the reverse mortgage

wagon, metallic jade green.

industry because the market of eligible

are starting to realize just how important this program is for retirement. >

When I was younger I wanted to be a

Reverse mortgage professionals can

best support the public image of reverse

mortgages by always doing the right thing by

firefighter.

our potential and current borrowers. The reverse

Every morning I listen to loud music.

When I was a kid I was super skinny.

My first job was greenskeeper at a private golf

mortgage program is such an important part of retirement financing and we are its stewards. >

course, kind of like Bill Murray in Caddyshack. >

find out how a reverse mortgage would work for

stand up for my beliefs and put

Beethoven.

understand about reverse mortgages is if

of money in their retirement, they should at least

My parents taught me how to

My iPod go-to is Ludwig van

The most important thing seniors should

they foresee any chance that they’ll ever run out

their situation.

things in perspective.

I can't go without making puns.

stop the creator of time travel.

borrowers is still growing and financial experts

unlimited wishes, and I’m not sure about the rest.

M Y FAV O R I T E WEBSITE IS R E V E R S E R E V I E W. C O M .

I would encourage a family member to

consider a reverse mortgage because you can tailor a reverse mortgage to meet your

The best lesson I've ever

needs. Funds can be left to grow in the reverse

in perspective.

income. The program is so versatile; it doesn’t

learned was always put things

The best purchase I've ever made was my

My favorite books are the Hyperion Cantos

wife’s engagement ring.

mortgage or be used to pay off debt or increase mean you’re getting rid of your family’s ability to inherit your home. WHAT JIM THINKS

series.

> I f

I could trade places with someone for a

day, I would choose my bulldog, Petunia.

Industry growth is dependent upon excellent leadership, product innovation, ethical advertising, sound regulation, efficient market participants and overall public acceptance. reversereview . com

8 TRR | 15

The Reverse Review March 2017

ORIGINATING

ASSESS

Reverse Mortgage or Home Equity Lone of Credit— Which Is Best? By George Downey

Senior homeowners have a choice, but most make the wrong decision and don’t know it. Seniors in or nearing retirement face a dilemma: Most have failed to save enough for a secure retirement. Moreover, since the baby boom generation (born after 1946) entered their retirement years, 10,000 to 12,000 are retiring every day. This trend is predicted to continue through 2030. Retirement experts are calling this an individual and a national emergency. Understandably, great numbers of seniors and their advisors are exploring ways to extend savings by using home equity wealth in combination with financial wealth to meet current and future needs. Further, the great majority of seniors state strong preferences to remain in their homes and age in place. So, short of selling the home, the options are limited with most opting to borrow through a traditional HELOC or a reverse mortgage. Industry records reveal HELOCs are selected over HECMs 9 out of 10 times. Why? The answers are not surprising considering what most know (or think they know) and don’t know about reverse mortgages: Lack of knowledge n Homeowners, especially seniors, are familiar with and understand traditional (forward) mortgages. HELOCs offer a low- or no-cost option that provides ready access to funds that are easy to obtain and require minimum interestonly monthly payments. HECMs, on the other hand, are not well understood and are generally viewed in a negative or questionable light as being more expensive, complicated, difficult to get and promoted by self-serving lenders. Misconceptions and myths n Misunderstandings of reverse mortgages are prevalent and, unfortunately, discourage examination. Common misconceptions include: the lender takes ownership of the house; nothing will be left for the kids; and the loan should only be used as a last resort. These and others have deterred many from learning more. Uninformed advisors n Seniors generally have experienced long and comfortable relationships with their bank and other advisors, and typically look to them first for advice and recommendations. Most banks aggressively promote their inhouse HELOC program, don’t offer HECMs, and are not well versed on their attributes or suitability for seniors. Friends and other advisors are just as uninformed about reverse mortgages and default to recommending a HELOC, which they are more familiar with. 16 | TRR

An Important Decision Making the right choice between a HELOC and a HECM is more important than most realize. The right decision requires thoughtful considerations of individual needs and circumstances as well as nearand longer-term objectives. Too frequently, conclusions are reached without adequate information, or through advice from those who may not be qualified or have pure motivations. Both programs have their place and, like most things in life, have pros and cons, costs and responsibilities. Determining the best fit can be done based on a careful evaluation of each loan’s suitability for a particular individual. Conclusion The new realization that financial and retirement planning protocols must change and include home equity wealth is a major development in addressing the retirement security dilemma. Accomplishing this, however, challenges the traditional, old-school thinking of both seniors and advisors. For many, change is hard, but it will come as the need is real and the consequences compelling. The HECM is a unique design that was developed specifically to meet this challenge. However, it is but one solution to consider among many, including the sale of the home to downsize or relocate. When refinancing is the choice, 9 out of 10 seniors today choose HELOCs. Considering the factors discussed on the next page, have they made the right decision? I doubt many really understood the differences and what it would mean to them in the near and longer term. n

ORIGINATING

THE DIFFERENCES This chart compares some of the main points that distinguish HECMs from HELOCs and should be considered before a decision is made to choose either.

MONTHLY PAYMENTS

NONE No monthly payments are required for the life of the loan.

YES Monthly payments are required, usually interest-only for an initial drawn-down period then increase to amortize the loan balance to the maturity date.

UPFRONT CLOSING COSTS

VARIABLE Closing costs include a premium for FHA insurance based on the amount of the initial disbursement. Total costs vary depending on individual factors, including program and rate options. Individual quotes are needed for accurate estimates. Costs are typically paid from loan proceeds, and may include no cost options depending on origination source and individual circumstances.

VARIABLE Not FHA-insured, so no premium is required. Upfront costs vary by lender, but generally feature low or no costs depending on individual lender promotions and borrower circumstances.

CREDIT LINE GROWTH GUARANTEED

YES Undrawn credit line balance compounds monthly at the same rate (interest plus FHA insurance premium) charged on balance owed. Credit line growth is guaranteed and could potentially exceed future property value, effectively providing a hedge against property value declines and interest rate increases.

NO Credit line amount does not grow.

MANDATORY PAY-OFF DATE (MATURITY)

NONE No maturity date; repayment not

YES Maturity date is usually 30 years or less. First seven to 10 years only provide access to funds. In the remaining years there is no access to funds. Payments are reset and increased to pay off the balance by the maturity date.

LIMITATION ON ACCESS TO FUNDS

NONE Funds can be accessed any time for

YES Access to funds is limited to the initial drawn-down period, normally the first seven to 10 years only.

LENDER OPTION TO FREEZE FUNDS

NONE Lender cannot freeze access to funds for loans in good standing for the life of the loan.

YES Most HELOCs enable lenders to freeze access to funds with notice.

PERSONAL LIABILITY

NONE Non-recourse loan; neither borrower nor heirs have any personal liability. Balance owed can never exceed property value at time of repayment.

YES Borrower is personally liable for any deficiency plus legal and collection costs.

LENDER FAILURE ELIMINATES FUNDING

NO If the lender fails or goes out of business,

YES If lender fails or goes out of business, access to further funding will cease, unless or until another lender assumes responsibility.

REAL ESTATE TAX DEFERRAL PERMITTED MASSACHUSETTS ONLY

YES Age- and income- eligible senior homeowners may defer payment of real estate taxes and have a reverse mortgage.

NO Real estate tax deferral liens have a priority over traditional mortgage or HELOC liens and are not permitted by lenders. reversereview . com

8 TRR | 17

SPOTLIGHT

access to funds and servicing of the loan is not interrupted. FHA will assume responsibility for continued performance.

HMBS

the life of the loan as long as the loan remains in good standing.

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required as long as a borrower continues to reside in the property and the loan remains in good standing.

MARKETING

HELOC

ORIGINATING

HECM

The Reverse Review March 2017

2016 HECM Endorsements

ORIGINATING

Fast Facts

Total number of Endorsements - 48,731

By Matt Allen

Interest Rates

Fixed Rate

Adjustable Rate

Endorsements

4,904

4.923%

Average Interest Rate

10.06%

Percentage of HECM Endorsements

Reviewing HUD’s data on HECM lending in 2016 With a quick Internet search, you can find general data about the HECM market, like historical endorsement numbers and the top 100 HECM lenders for any given month. What you

might not find is detailed information about HECM endorsements, including interest rates, proceed use and endorsements by state.

Using HUD’s HECM SingleFamily Snapshot, which provides monthly updates on borrower stats, I extracted some very interesting data that sheds light on HECM lending in 2016. In reviewing the data, I was surprised by the amount of HECM-toHECM originations. It was almost double that of HECM for Purchase transactions last year. Personally, I spoke with more than 50 people in 2015 and 2016 who wanted to refinance, but only one qualified to do so. In my career, I have only closed one 18 | TRR

such loan. But these statistics have inspired me to rethink this avenue and work harder to connect with seniors who may benefit from a refinance. I was also surprised by how small the HECM for Purchase origination volume was. H4P transactions accounted for more than 15 percent of my business in 2016. I believe this program presents a huge opportunity for growth for any loan officers willing to go after the business. Reviewing HUD’s data allows loan officers to see how their personal production compares with national numbers. I suggest loan officers visit HUD’s site and review the data for their state, which may help them improve their marketing targets. Perhaps if originators are armed with more information about last year’s origination trends, they can better connect with clients in the year ahead. n

94.41%

Used with HECM for Purchase

43,827 4.144%

Average Interest Rate

89.94%

Percentage of HECM Endorsements

77.77%

Used with HECM Traditional

Use of HECM

HECM for Purchase HECM for Purchase

2,305

HECM to HECM (11.26%)

(4.73%)

Number of Endorsements

HECM to HECM

5,487

Number of Endorsements

HECM Traditional

40,939

HECM Traditional (84.01%)

Number of Endorsements

Loan Limits

Average Max Claim Amount

Average Initial Principal Limit

$299,759.38 $138,041.79 Smallest Max Claim Amount - $13,500 from Greensville, Michigan

ORIGINATING

Raising the Bar in 2017 By Michael J. Weltman

civic, networking or other, think about joining the board of directors, running a committee, or taking a leadership role in the organization in some way. The more involved you are, the more you can learn and grow.

O N E . Step up to the board If you are active in a group, whether it be

F O U R . Check out Franklin Covey This global company specializes in performance management. Through webcasts, online courses, events and more, it helps organizations achieve results that require change in human behavior.

T E N . Network with other professionals Reach out to local chapters of the following national groups to enhance your referral base:

(

he Financial Planning T Association

Look into Toastmasters International This nonprofit educational organization operates clubs worldwide for the purpose of helping members improve their communication, public speaking and leadership skills.

(

he National Association of T Insurance and Financial Advisors

(

he National Institute of Certified T Public Accountants

(

he National Academy of Elder T Law Attorneys

(

he Home Care Association of T America n

FIVE.

Learn from Tony Robbins An American businessman, author and philanthropist, Robbins is well known for his infomercials and self-help books,

SIX.

reversereview . com

8 TRR | 19

SPOTLIGHT

Here are some IDEAS TO HELP you set your own goals for professional advancement:

Google “self-help” Research books on personal advancement and buy one that appeals to you. So many amazing authors, so many great topics— there is always something new to learn to help you grow as a salesperson and in your personal life.

THREE.

Join the MBA and NAMP The Mortgage Bankers Association and National Association of Mortgage Professionals provides nationwide access to your peers in mortgage banking and mortgage finance. Many local chapters need a partner in reverse mortgages to explain the nuances of our wonderful program, as many are unfamiliar with everything reverses can do for their prospects.

NINE.

HMBS

Case in point: One year I decided that I needed to do more speaking engagements and write more about reverses, and within a fairly short period of time, I became a regular contributor to The Reverse Review and booked speaking engagements at state conferences and conventions. You can do this too. If you set goals for yourself and make their completion a priority, you can take positive steps toward your own professional advancement. You know the adage: If you don’t know where you are going, how are you going to get there?

RES: A one-day course taught by S the National Association of Realtors on buying and selling homes that are senior-friendly, and dealing with the real estate concerns of seniors

E I G H T. Volunteer Getting involved in your community gives back to those in need and can have the bonus of growing your sales base by allowing you to interact in new circles.

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helps me decide how I will improve myself, my career, my life and my income, and continue to holistically grow as a professional in as many ways as possible.

(

APS: A three-day course taught by C the National Association of Home Builders in conjunction with AARP on aging in place, universal design, reverse mortgages and other topics relevant to senior homeownership

MARKETING

As we begin a new year, I always take a hard look at what I have achieved in the previous year and how I plan to raise the bar in the 12 months ahead. This self-analysis

(

Listen to Dale Carnegie An American writer and lecturer, Carnegie has developed famous courses on self-improvement, salesmanship, corporate training, public speaking and interpersonal skills. The bestselling author of How to Win Friends and Influence People, Carnegie has created an organization that offers online training and courses designed to inspire professional advancement.

SEVEN.

ORIGINATING

Ten ideas that will help you advance professionally in the year ahead

T W O . Take a class Check out the offers at your local college. Consider courses related to sales management, leadership training, marketing or technology. Also, consider the following classes that relate directly to the business of reverse:

like Unlimited Power, Unleash the Power Within and Awaken the Giant Within. His website will direct you to books, events, his leadership academy and much more.

The Reverse Review March 2017

MARKETING

PROMOTE

B2B Social Media Marketing Tips By Seamus McKeon

How to enhance your brand and promote your business

When it comes to marketing, the larger social media networks like Twitter and Facebook are more often seen as better for business-to-consumer (B2C), with professional sites such as LinkedIn viewed as the business-to-business (B2B) platform of choice. This does not

Tips one

Make business pages and get reviews. Consumers trust reviews.

two

Tap into video. If a picture says a thousand words, a 90-second video clip is War and Peace.

three

Learn analytics or risk being totally un-self-aware.

four

Don’t allow insecurity to make you invisible. Having a presence on social media is valuable; don't let the thought of accidentally messing up publicly paralyze you. 20 | TRR

mean, however, that you can’t get a lot of value out of consumer-based platforms like Facebook. A robust marketing strategy is all-inclusive, incorporating and utilizing social media platforms in the ways they most present value. A little effort can still go a long way almost anywhere.

Remember that marketing is all about perception and pivoting your brand to come across as desirable, relevant and useful. Having a presence on all major forms of social media will convey a holistic and thorough presence, with potential customers typically checking out your brand’s profiles across the full spectrum of media platforms. You always want to cover all of your bases, because you never know which social media channel is a customer’s medium of choice. You’re marketing your brand to attract not just business but also potential employees. Social media is an often overlooked HR tool that can draw clients as well as attract top talent to your team. You can and should utilize it to present a thorough understanding of your business to both customers and potential employees.

Get Personal Stock photos are often obvious, especially on sites that use a commonly recognizable layout. Nothing beats featuring actual employees on your social media, especially on Facebook. You don’t have to (and shouldn’t) link your Facebook profile directly to your employees’, but showcasing real people enjoying themselves at work (think company parties, outings, enthusiastic meetings and upbeat candid moments) will go a long way with consumers. People like to engage with friendly people, and your public face should represent that. There’s also a much-dreaded and often underused (or outright disabled) yet ultimately beneficial aspect of social media profiles: reviews. Consider enabling reviews as a method of conveying how you operate. Sure, everyone is terrified of that one first bad review, but remember that there are living, breathing and (more importantly) thinking people who will be reading them. Everyone gets a bad review sometimes, and often it’s obvious when a bad review is really about something entirely different than the business. While positive reviews are great for business, negative reviews offer the opportunity for your brand to respond in a timely and efficient manner, showcasing your ability to handle real-time issues in a prompt fashion, and ultimately presenting your brand’s commitment to communication, remediation and success. Just be sure to reply to all of your reviews (setting up email notifications for reviews and comments is paramount for this). A well-reviewed business looks attractive to both customers and potential employees, and the more reviews, the merrier. A Picture Is Worth a Thousand Words Get visual. Pictures convey more in less time. While most of us in the mortgage industry aren’t drowning in beautiful visual content (although appraisal photos can sometimes be quite horrifying… er, entertaining), creating images for holidays and general use is a good idea. Thankyou, praise, motivational and holiday images are always useful and help associate your brand with positive emotion. Use free tools like PicMonkey to create engaging graphics ranging from images to positive or humorous text.

best tool

MARKETING

Tell a Story. Tell Your Story.

Recycle Content in Different Forms

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Not everyone is going to watch your video, and that’s fine. Some people like visuals, some people like text, and almost no one likes sitting on hold, waiting to ask a question. Remember that everything you do is a source of content, so repurpose it. Transcribe the audio from your videos into text and offer content in that form in accompaniment to the video. Many people can read at their desk but not listen to audio

Remember, even though sites like Facebook and Twitter aren’t the usual go-tos for B2B marketing, they still have unique potential to help buoy you at almost every level of your sales funnel, so don’t write them off out of neglect or trepidation. Trying is better than not; just be sure to keep trying. Nothing is worse than a looming two-year hole in your social media presence. Marketing is always a work in progress, because media and technology change so rapidly in the digital age. As long as you’re along for the ride, you’ll pick up loyal clients along the way. n

MARKETING

Remember that part about making it personal? I meant it. Customers will remain loyal to a brand they feel that they know. This is why having positive, helpful and upbeat customer service representatives is so important. If interacting with your brand is an absolute pleasure, customers will stick with you even through hiccups and other inevitable service issues. You want your

social media presence to tell a story, and there is no story better than your own. Did you begin as a small business? Talk about those days. Were you a startup? Describe it to people. Show them how far you’ve come, and what you’ve overcome. Compare your company to the old you, especially on #ThrowbackThursday. Employee of the month photos? Feature anyone’s newest picture against their oldest, and people will eat it up with a spoon, and maybe even comment, much to your employees’ chagrin. Telling and showing your history and evolution makes you more relatable.

or hear video. If you have enough verbal content, consider creating a white paper with it and offer that as well. This also goes for webinars; transcribe them and offer their content as an industry white paper. These can be especially useful draws to collect the email addresses of industry professionals via unique landing pages that will show you how your audience is getting to your website. Getting people to subscribe to an email list is easy with incentives like white papers and webinars. If you can help them, they can probably help you as well with their business. Think about what you have to offer, and go ahead and try it out.

ORIGINATING

If a picture is worth a thousand words, a video is a novel. Remember that you are the best advocate for your business, and you can act as such by speaking directly to your fans on Facebook. Consider videos that help clients use your services, such as softwareuse tutorials, and videos lending advice on your industry, such as how to avoid pitfalls and how best to accomplish something complementary to your services. You don’t need a professional videographer to do the job anymore thanks to the newfound familiarity of amateur online video; short and simple will do the trick. Just like with your profile in general, remember to reply in short order to any comments or questions on the videos.

Google Analytics. Learn where your audience is, where they come from and where they go. Knowing your consumer means knowing their online activity.

HMBS SPOTLIGHT

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8 TRR | 21

The Reverse Review March 2017

R E V E R S E R E V I E W. C O M

THE

REVERSE review

TITLE TIP

LEARN

Dealing with PACE/HERO Liens By Christian Fisher

there is nothing more exciting than moving and shaking The Reverse Review wants your company news! Be a part of our new Movers & Shakers column, where you can read about the latest company initiatives, programs, hires, acquisitions and more. Send us your companyâ&#x20AC;&#x2122;s press releases or email us news of your latest venture, and weâ&#x20AC;&#x2122;ll consider printing it in the next issue.

NEW HIRES

DEVELOPMENTS

ACQUISITIONS

SEND YOUR NEWS TO JESSICA@REVERSEREVIEW.COM

How energy efficient renovation programs can impact a loan file What is a PACE/HERO lien? As we know from HUD's Mortgagee Letter 2016-11, which was released in July, "Properties with PACE obligations are not eligible for an FHAinsured HECM." PACE

How do they show on a title report?

Related to PACE is the HERO program, which stands for Home Energy Renovation Opportunity. We see PACE/ HERO liens most commonly in California, but have also seen them in Florida and they exist in other states as well.

How do you pay them off?

stands for Property Assessed Clean Energy and is a community loan program that enables financing of energyefficient and water-saving home upgrades. It is typically paid back over time through property tax bills.

When these liens are created, documents such as "Notice of Assessment" and/or "Payment of Contractual Assessment Required" usually get recorded by the county recorder for the county where the property is located (sometimes as separate documents or sometimes combined into one document). The title report will show an exception for the PACE or HERO lien when we find them in a title search.

The recorded notice should give contact information that you can use to confirm the process for requesting a payoff demand to pay the obligation in full. Processes and turnaround times vary depending on the

"We recommend asking your borrowers early on about whether they have made any home improvements and how they paid for them." 22 | TRR

entity, but we've typically seen turnaround times of about 72 hours. Also, some entities charge upfront fees to provide a payoff demand.

What else should you keep in mind when it comes to PACE/HERO leins? We recommend asking your borrowers early on about whether they have made any home improvements and how they paid for them. Specifically, ask them whether they used a PACE/HERO program (and please share those answers with title when you open an order). The dollar amounts due on these can be higher than you might think, and could make the difference in whether any contemplated loan might come to fruition. Also, depending on how recent the lien was created, the existing property tax bill for the current year may already reflect portions for the current year installment due. Depending on the circumstances, this could have an affect on LESA calculations. Check with your lender for specifics for any particular situations. n

HMBS

KNOW

The Relative Value of HREMICs By Darren Stumberger

Why these securities are appealing to todayâ&#x20AC;&#x2122;s investors

3Furthermore, as capital requirements are becoming more onerous for securitized products and banks across the

3There have been recent increases in the number of deals in the market and dealers sponsoring the sector, so supply is available. We expect supply to stay elevated and continue to be dominated by HECM ARM collateral. 3Lastly, one may see good relative value in HMBS. In the current spread environment, where many asset classes are trading at historically tight levels, focusing on this niche government-guaranteed sector is one of the best ways to pick up yield. Recall that HMBS cash flows can be erratic as there are no scheduled payments, however the investor is often compensated with a much larger spread. As a result, HMBS can look attractive to yield and total return-oriented investors, but less appealing to current income seeking investors. n reversereview . com

8 TRR | 23

SPOTLIGHT

"In the current spread environment, where many asset classes are trading at historically tight levels, focusing on this niche governmentguaranteed sector is one of the best ways to pick up yield."

3HMBS and HREMICs are Ginnie Mae securities so they carry the full faith and credit of the U.S. government and trade at a 0 percent risk weighting for banks. Banks do not have to hold additional capital against these assets. This provides better risk capital-adjusted returns than competing alternatives.

3As these products lack rate sensitivity and age more, HMBS have overall good convexity.

HMBS

YIELD

These securities are especially practical now for a number of reasons:

3Ginnie Mae has generally been left out of the policy and headline risk that housing finance and the restructuring of Fannie and Freddie are currently under.

TITLE TIP

In the current rate environment, both floating-rate securities and interest-only securities make a lot of sense for institutional fixed-income investors. Floaters allow investors to stay defensive but have some protection against rising rates. For those willing to take increased prepayment risk (albeit muted and predictable), IOs make sense in the event that rates back up even further. The robust monthly issuance of HREMICs provides a decent opportunity, offering both floaters and IOs off of HMBS ARM collateral.

board, Ginnie Mae securities fare well under Basel III guidelines, increasing their attractiveness and sponsorship.

MARKETING

Since November, rates have backed up substantially and are poised to reset even higher to the extent economic growth and inflation pick up.

ORIGINATING

Although arguably less this month than last, the market continues to deal with a significant amount of interest rate volatility.

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.

The Reverse Review March 2017

SPOTLIGHT IN THIS MONTH’S EDITION

A LOOK AT WHAT IT TAKES TO BECOME A CRMP

Becoming a CRMP Dedicated reverse professionals work hard to earn this important designation.

To Qualify… Originators

march

2017

g Must have a minimum of three years experience OR they must have personally closed at least 50 loans

WANT TO SEE MORE ARTICLES LIKE THIS?

See them at reversereview.com.

hen the National Reverse Mortgage Lenders Association was formed 20 years ago, it set out to enhance the professionalism of the reverse mortgage business, serving as an educational resource, policy

advocate and public affairs center for lenders and related groups.

Part of this mission involved the creation of a professional designation to help dedicated members of the industry stand apart, and so in 2009, it launched its Certified Reverse Mortgage Professional (CRMP) program. It took a committee of industry experts two years to establish the necessary education platform with a national testing firm for the CRMP designation, which now counts 149 reverse specialists in its ranks. The goal, according to NRMLA spokesperson Jenny Werwa, was to create a program, “that reflects our commitment to ensuring industry participants are knowledgeable, responsible, and trustworthy.” CRMPs receive special recognition on NRMLA’s consumer website, reversemortgage.org, which lists them by state in its Lender Locator. Werwa says the association hopes the number of certified professionals will continue to grow. “The Independent Certification Committee, which oversees the policies and procedures guiding the certification program, and NRMLA’s Education Committee are working diligently to offer more online courses to current and prospective CRMPs, an effort we expect to drive even more interest to the program,” she says. 24 | TRR

NonOriginators g Must have spent at least five years in either reverse mortgage underwriting, processing, management and operations, title and closing services, appraisals, or loan servicing

AND

All Applicants Must g Complete 12 hours of continuing education credits g Take a proctored exam g Undergo a background check g Uphold NRMLA’s Code of Ethics g Complete eight hours of CE credits annually for recertification

SPOTLIGHT

I Am a CRMP Designated reverse mortgage specialists from around the country talk about the value of the program. Neil Sweren CRMP

Southern Trust Mortgage Owings Mills, Maryland

I view the role of a loan officer as an educator and not a salesperson. I believe that people can only make the best decision by having all the information. Studying for the CRMP provided me the opportunity to become more knowledgeable.

I would definitely encourage a peer to pursue the designation because we need our industry to show our professionalism to everyone—our peers, the media, complementary professionals like financial planners and consumers. This designation will elevate you in the eyes of the consumer. It is a must-have badge of knowledge, and even an honor. These letters represent to your industry peers that you are serious about your career and the knowledge level you have obtained through hard work and study.

A necessary step to earning the designation is reading the mortgagee letters. It’s great if you enjoy history. I would encourage colleagues to become a CRMP because it strengthens our industry to have like-minded, passionate professionals investing in themselves to be the best. My advice for someone pursing this designation? Embrace learning about HECMs at a deeper level and do treat it as a test. No matter your experience level, if you don’t study, you won’t pass.

SPOTLIGHT

Learn more about the CRMP program at nrmlaonline.org/about/crmp-designation. Kent Kopen CRMP

United American Mortgage Orange County, California

I became a CRMP because my primary referral partners are financial advisors, accountants, estate planning attorneys and insurance agents. Each of those professional categories have the following in common: they are highly regulated; they have various sub-specialties and credentials; their credentials are often challenging to acquire, which means they connote value and expertise; and they have on-going continuing education

requirements. So, these strategic partners understand, respect and at some level expect their lending partners to be as serious about their craft as they are. Having a meaningful credential also gives the referral partner something to promote when they’re referring their client to me as an allied professional.

The CE credits are an important and valuable part of the certification. Jim Rohn was famous for saying, “The major reason for setting a goal is for what it makes of you to accomplish it.” To me, the CE courses

don’t make you an expert, but they do make you aware of issues you didn’t know were important, they make you aware of strategies that might help you, and they introduce you to people who might be resources in the future. Isn’t that pretty much the value proposition behind getting a college degree? It doesn’t make you an expert, but it deepens and broadens your vocabulary and understanding.

reversereview . com

HMBS

My advice to someone considering it? Make a commitment and earn this designation—this year. Don’t wait.

Direct Finance Corporation Hanover, Massachusetts

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The designation elevates the industry because it shows that we are not who the media sometimes makes us out to be. We are educated, knowledgeable and experienced professionals who take our work with seniors very seriously.

It demonstrates to my peers, the media, senior advisors, professionals and especially consumers that I am truly an industry expert and one of just a handful of HECM professionals who really know, and understand, the program. It puts me on the highest pedestal.

HECM Senior Home Financing Orlando, Florida

MARKETING

I receive referrals fairly regularly from industry or other related professionals who told me they chose me over someone else because of my CRMP designation.

Alain Valles CRMP

ORIGINATING

I take something useful away from almost every CE class. Professional athletes at the very top of their game still study and practice basic skills. Why should it be different for us?

Tim Linger CRMP

8 TRR | 25

The Reverse Review March 2017

By Jessica Guerin

On the last day of Obama’s presidency, just hours before the administration turnover, HUD released its longawaited ruling on changes to the reverse mortgage program. The 53page document codified policies outlined in past mortgagee letters and instituted new rules that will impact HECM origination and servicing. The final ruling follows a proposal released by the agency in May, which inspired more than 200 public comments. It took HUD exactly nine months to weed through the feedback before issuing its final ruling, 26 | TRR

including 18 pages of responses to the commentary. In this month’s feature story, we outline the highlights of HUD’s final rule, taking a look at what was put into rule, what was left out, and discussing the changes that will likely have the greatest impact on HECM origination when they take effect September 19. With help from Jim Milano, the industry’s leading legislative expert, we break down some of the new policies and take a look at how they will affect reverse mortgage lending.

3. HUD’s final ruling, titled

“Strengthening the Home Equity Conversion Mortgage,” contains more than

50 mandates. Here are some of the

highlights: 1.

H4P seller concessions → HUD has finally agreed to allow the seller in an H4P transaction to “pay fees customarily covered by this party in the locality of the subject property.” This rule is considered a major win for H4P proponents, who have long claimed that a ban on seller concessions was holding back the product from achieving any real success in the marketplace. HUD has also granted the Commissioner the power to determine what other types of interested party contributions will be allowed. Milano’s take → This change

will finally do away with the negative audit feedback a few HUD Homeownership Centers were giving to lenders for allowing sellers to do what is required under some state laws—the payment of mortgage recording taxes. The new rule allows so-called interested party contributions as follows: (i) fees required to be paid by a seller under state or local law; (ii) fees customarily paid by a seller in the subject property locality; and (iii) the purchase of the Home Warranty policy by the seller. The new rule also provides that FHA may define additional permissible interested party contributions and impose requirements for these contributions through a notice in the Federal Register. Some have already questioned what includes fees customarily paid by a seller, and this is an area for clarification that the industry may wish to submit to FHA.

2. Full disclosure → Lenders must fully disclose all HECM loan features and options, even if this includes products that it does not offer. When mentioned in its proposal last spring, this policy drew applause from advocate groups like the AARP, who commended HUD for “implementing this important provision.” Milano’s take → While this is a

positive development for consumer protection and builds on prior guidance from HUD under Mortgagee Letter 201410, as drafted, this provision could use some further guidance or clarification from FHA regarding how and when all available HECM products must be disclosed.

Loosened seasoning requirements → HUD will now allow borrowers to pay off at closing HELOCs that do not meet seasoning requirements as long as the draw on HECM funds does not exceed draw limits during the first 12 months of the loan. Milano’s take → This is a positive

development both for lenders and potential HECM consumers.

4. Non-borrowing spouses on title → By redefining “borrower,” HUD will now allow non-borrowing spouses (NBS) to remain on title even if they do not qualify for the loan. This is a win for originators who complained of the unnecessary burden and potential legal issues involved in removing an NBS from title to complete the loan. Milano’s Take → This is a positive development for seniors and takes away the need for younger, non-qualified spouses to come off of title before a couple obtains a HECM. 5. Super lien restrictions removed → In its proposal, HUD suggested that homeowner association fees and condominium super liens take priority over HECM liens, inciting staunch criticism from numerous commentators who claimed that this would make such properties unloanable (and potentially prevent more than 4 million seniors living in condominiums from qualifying for a HECM). Acknowledging these protests, HUD withdrew its language regarding super liens in a major win for the industry. HUD did, however, include a reminder to lenders that “in order for a HECM to be eligible for loan assignment, the mortgage must be a valid, legally enforceable first lien and title to the property securing the mortgage must be good and marketable.” The agency added that, “in the event that HUD discovers later that good and marketable title is lacking due to a lien, HUD may require a purchase.” Milano’s take → HUD received a number of comments on this issue, especially from “homeowner’’ associations, indicating had this rule been finalized as proposed it would have severely impacted HECM lending secured by condominiums. HUD’s clarification has made this issue less onerous, preserving HECM lending on condominiums.

Cash for Keys → Designed to prevent borrowers from undergoing a lengthy foreclosure process, the “Cash for Keys” program is largely considered a benefit for both the lender and the consumer. Milano’s take → This is a positive

development for the HECM program as it is designed to lessen the timeline for consensual HECM property liquidations and thus lessens the impact of such loans on the MMI Fund.

7. Greater flexibility on property sales → A new provision adds greater flexibility to the previous requirement that properties must be sold for at least 95 percent of the appraised value. Now, the FHA Commissioner has the power to lower this percentage as necessary to adapt to market conditions and other factors. The new rule also specifies that closing costs from the sale can be no more than 11 percent of the sales price or a fixed dollar amount determined by the Commissioner. Milano’s take → This

is also a positive development for the HECM program as it is designed to not only lessen the timeline for consensual HECM property liquidations, but also allow a borrower’s heirs to purchase the property for less than 95 percent of the appraised value. This item, however, will require FHA to issue further guidance as to what percentage a borrower’s heirs may purchase a home.

8. Reimbursement of property charge advancements → Set to directly impact servicers, this rule limits insurance claim reimbursements to two-thirds of the total payment for taxes, ground rents, water rates, hazard insurance and special assessments, meaning that servicers will have to shoulder these costs. Milano’s take → This rule will cost

servicers more money to service HECM loans as it further limits the amount of reimbursement from HUD for expenses incurred by servicers on matured or defaulted HECM loans. 8

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The Reverse Review March 2017

HUD declined to make a decision on several key issues, stating more time was needed to fully consider the feedback it received. Here are some of the more important mandates that were left out of the final rule:

Interest rate caps → Perhaps the most contested proposal was HUD’s suggested 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. The suggested policy change incited heated comments from members across the industry. Many claimed that the cap would decrease the loan’s appeal on the secondary market. “These proposed caps create significant liquidity and issuer risk in an already delicate HECM market,” NRMLA wrote, referring to a 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.” HUD has left the issue to be determined in future policy guidance. Milano’s take → This proposal was

very controversial for the industry. Interested parties shared their feedback and comments with HUD, and HUD listened. But, the department did state that it may review this issue further in the future.

The CO requirement → H4P transactions require that a Certificate of Occupancy be completed before a loan application can be taken. The rule has long been protested by H4P proponents who claim that the practice seriously impedes seniors from pursuing the loan for new builds. Acknowledging this, HUD said it “appreciates the comments concerning the timing for collecting habitability documentation and will take it under consideration for future policy guidance.” Milano’s take → Originators in the

reverse mortgage industry were perhaps most disappointed that HUD declined to rule on this issue. While the agency did state it will continue to review and consider the CO requirement and perhaps take action in the future, until this issue is addressed, it will continue to have a huge chilling effect on HECM for Purchase lending with new construction.

3. Counseling in H4P transactions → HUD has deferred making a decision on its suggested requirement that all prospective H4P borrowers undergo counseling prior to signing a contract or making an earnest money deposit. NRMLA and others protested the suggestion, asserting that this would be inconsistent with customary real estate practices as most borrowers do not make financial decisions at such an early juncture.

View our digital version... Reverse Review articles (current

and past) are available on our website. Access a wealth of online content about the business of HECMs. reversereview.com 28 | TRR

Milano’s take → While the

Certificate of Occupancy issue needs to be cleared up, this counseling issue also needs to be made more reasonable in order to make HECM for Purchase lending more viable.

4. Utilities → HUD’s proposal to expand the definition of property charges to include utilities was met with objections, as the failure to pay a utility bill could result in a lien against the property. Several respondents claimed that this would be unfair to seniors, burdensome to servicers and unnecessary in furtherance of the goal to protect the MMI Fund. Milano’s take → HUD’s deferring

action on this item was a positive result of the rulemaking process.

5. Initial disbursement exceptions → HUD proposed to establish extenuating circumstance exceptions that would allow borrowers to exceed initial disbursement limits. The rule was praised by some senior advocate groups like NCOA, who wrote that this is particularly important in situations when a borrower or non-borrowing family member is seriously ill and requires home care. Milano’s take → Additional

guidance from HUD in this area is sorely needed.

in the broader discussions of regulatory reform,” he says.

The Quest for Clarification HUD no doubt worked hard to pass its final rule before the administration turnover, but it might not see all of its carefully considered mandates be put into action. Ten days into his presidency, Trump passed an executive order that could seriously impede regulation.

“Given that it was issued on the last day of the Obama Administration and perhaps ‘rushed out the door,’ HUD obviously deferred on addressing many key issues raised by commenters to the proposed rule,” he says. “The industry will need more guidance or confirmation from FHA on this HECM rule before its effective date.”

In a “Presidential Executive Order on Reducing Regulation and Controlling Regulatory Costs,” Trump orders that for every one new regulation issued by a federal agency, at least two prior regulations must be “identified for elimination.”

In the meantime, the industry is digesting the new policies and submitting requests for clarification. Milano says that HUD’s responses will need to be more formal and robust than a simple FAQ, as exact details are needed on numerous issues.

Milano says it’s hard to know what this will mean for HUD and its reverse mortgage program.

“Whenever any new rule comes out, it invariably raises more questions that it was designed to answer. So we will have to go through that process and work through it,” he says, adding that despite this, the final rule could be considered a win. “Overall, I think the industry views this rule as a positive step in the right direction.” n

“As the Trump Administration continues to implement its regulatory agenda, it remains to be seen whether the effective date of this rule will be pushed back; if FHA will issue the further guidance needed that it promised; and if the clarifications that the industry desires will get caught up

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

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 March 2017

LAST WORD

REFLECT

Reevaluating Our Unique Selling Proposition By Harlan Accola

Are we turning off potential clients with our “no payments ever” slogan?

The term Unique Selling Proposition (USP) was developed by television advertising pioneer Rosser Reeves in the 1940s. The idea was to let the customer know

upfront exactly what made your particular product stand apart from the competition. Rosser Reeves’ book, Reality in Advertising, explains three characteristics of a USP: No.1 Each advertisement must say to each reader: "Buy this product, for this specific benefit.” No.2 The USP must be one the competition cannot or does not offer. No.3 The USP must be strong enough to move the masses. You might remember these famous slogans from big-named brands. Each one has a clear USP. Anacin: Fast, fast, incredibly fast relief M&Ms: Melts in your mouth, not in your hand Head & Shoulders: Clinically proven to reduce dandruff FedEx: When it absolutely, positively has to be there overnight! Dominos Pizza: Fresh hot pizza delivered to your door in 30 minutes or less—or it’s free! When marketing the reverse mortgage product, it might be useful to reconsider our own USP. How many times have we used or seen this phrase used in HECM advertising? No payments ever, for the rest of your life, or for as long as you live in the home (as long as you pay taxes, insurance, and property charges). It’s interesting to note that when Reverse Mortgage Funding conducted focus groups, many people responded negatively to “no

30 | TRR

payments ever.” They felt there must be a catch. They associated it with negative amortizing interest and the loss of equity. And yet, that is how our product has been advertised in countless print ads and television commercials. We know that more than 80 percent of retirees have no plans to get a reverse mortgage per last fall’s NRMLA poll. We know that despite 300,000 people turning 62 every month, an average of just 5,000 seniors closed on HECMs every month. Maybe it’s time to change our USP. The biggest advantage of a HECM is that you control when you turn equity into cash and cash back into equity. No other loan lets you do this. Maybe we need to present the HECM as a “flexible payment mortgage.” It is up to you when you would like to make your mortgage payment. Back in the pre-crash days, there were “Option ARMs.” Of course, they were misused and were not at all tailored or insured to deal with a market downturn. They only worked when the value of the home continued to increase. But they were popular because people liked the idea of paying each month what they wanted to pay based on their cash flow. Most seniors have a very unpredictable cash flow during retirement. There are vacations, medical expenses, the death of spouses, long-term care issues, taxes on investment withdrawals, market surprises, etc. Our incredible HECM product allows seniors to make payments when they wish to, regardless of what happens to their income, the market, interest rates and even the value of their home. The protection, the safety, the flexibility and control of equity is something not found in any other lending or financial product. Maybe the time has come to change our USP. Lets move past the “no payments ever” slogan and replace it with something that touts this as a “flexible payment mortgage.” What do you think? n

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