The Reverse Review September 2014

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New Research on HECM Defaults

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HAS THE TIME COME FOR THE RETURN OF THE PROPRIETARTY HECM? PG. 27 THE INTEGRATED WONDERS OF TECHNOLOGY PG. 26 +JOE DEMARKEY SITS DOWN IN OUR HOT SEAT PG. 18

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THE

REVERSE review

september 2014

Illinois Reverse mortgages will be exempted from the Illinois High Cost Home Loan Act.

f o s e t a t s united

HECM

Texas Last state to legalize HECM for purchase

Florida Largest percentage of population over 65 (17.8 percent)

A closer look at reverse mortgage legislation, state by state


The Reverse Review

Look what people are saying about...

September 2014

“It’s not easy to create a course that covers all the necessary details and aspects of this unique product but RVU has succeeded. I highly recommend this course.”

“It’s interactive, easy to use and informative. The Reverse Mortgage Essentials (RME) course is worth it for anyone who is just starting out or for a seasoned veteran.” —Ann-Marie Cutcher, Office and Grants Manager Credit Card Management Services, Inc. dba Debthelper.com

—Beth Paterson, Executive Vice President Reverse Mortgages SIDAC, a Division of Greenleaf Financial

“RVU is a fantastic tool for reverse mortgage professionals. It tackles the challenges being experienced throughout the industry and provides the education needed to accelerate your business.”

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—Jeffrey Taylor, CMB Founder of Wendover Consulting, Inc.

“RV University is the most user-friendly, proactive training system for people in the reverse mortgage space.” —Bob Shields, Columbia Branch Manager The Money Source

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www.reversevision.com/RVU | university@reversevision.com | 919.834.0070


Where “above and beyond” is standard operating procedure At Urban Financial of America, LLC (UFA), we go the distance for our wholesale partners and their customers. When you work with us, you’ll have the advantage of our competitive pricing and best-in-class operational support. Plus access to customizable marketing materials, a robust training program, powerful origination software, and an online portal that puts your most important business resources at your fingertips.

Let us help you take your business to the next level. To learn more: • Call 855-77-URBAN (855-778-7226) • Explore our wholesale & correspondent portal: ufawholesale.com

* Since December 2011. Based on trailing 12 months’ endorsement volume. Source: Reverse Market Insight. For mortgage professional use only, not to distributed to the general public. NMLS ID# 2285. Corporate Office: 8909 South Yale Avenue, Tulsa, OK 74137. ©2014 Urban Financial of America, LLC. All Rights Reserved. CALIFORNIA BUSINESS NAME: URBAN FINANCIAL GROUP OF AMERICA, LLC. NEBRASKA BUSINESS NAME: REVERSE IT! LLC. UFA58 [Exp 03/2015] reversereview.com

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The Reverse Review September 2014

From the editor NRMLA has been watching the status

of these bills closely while also keeping tabs on more than 30 pieces of pending

Senior Publisher

As advocates of the reverse mortgage

Publisher

in all sectors of the industry need to be

Editor-in-Chief

the program and not be afraid to voice

Creative Director

getting it right. If we make an effort to

Assistant Editor

Reza Jahangiri

aware of local statutes that might impact their opinions when lawmakers aren’t

As a unique financial product designed for members of

a protected class, the Home Equity

Conversion Mortgage is subject not

only to federal oversight, but to state

share our thoughts about the product

with state representatives, perhaps we can work together with those shaping the rules to ensure that HECMs are

around to help seniors for decades to come.

Jessica Guerin

it’s vital that these policies are crafted

{ Editor-in-Chief }

Lauren Daniels takes an up-close look

at state-specific legislation that impacts the product and the seniors who wish to use it. As Daniels points out, this

Kersten deck

Marketing Director alycia GREER

Want to contribute to the conversation? Contact jessica@reversereview.com.

© 2014 Reverse Publishing, LLC. All rights reserved. Reproductions or distribution of any materials obtained in the publication without written permission is expressly prohibited. The views, claims and opinions expressed in article and advertisement herein are not necessarily those of The Reverse Review, its employees, agents or directors. This publication and any references to products or services are provided “as is” without any expressed or implied warranty or term of any kind. While effort is made to ensure accuracy in the content of the information presented herein, Reverse Publishing, LLC is not responsible for any errors, misprints, or misinformation. Any legal information contained herein is not to be construed as legal advice and is provided for entertainment or educational purposes only. Postmaster : Please send address changes to The Reverse Review, 3800 West Chapman Ave., Orange, CA 92868

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ed

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.

Copy Editor

t ay ec st onn c

Feedback

LAUREN DANIELS

Editorial Content email : jessica@reversereview.com

In this issue, TRR Assistant Editor

Massachusetts, and

Traci Knight

Subscriptions email : information@reversereview.com

tool can be utilized effectively.

on the books in both California and

Jessica Guerin

Advertising Information phone : 630.207.3882 email : jessica@reversereview.com

with care to ensure that this financial

year has seen new HECM legislation

Erik Richard

Printer The Ovid Bell Press

regulation as well. While rules guiding

the program are essential to its success,

Meet the Team

legislation in 12 other states.

program, HECM professionals working

A note from jessica guerin

l

FACEBOOK AND LINKEDIN


Table of Contents

24 | Appraising

TRR 9.14

An AMC’s Evolution: Changing With the Times Creating software solutions for the future Erik Richard

In this issue... 21 shannon hicks Originating

27 | Legal Field of Dreams Has the time come for the return of proprietary reverse mortgages? Jim Milano

30 | Spotlight Risk Factors: A Data-Driven Approach to Reducing Default New research examines predictors of borrower default. E TH

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Lauren Daniels

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14 | NRMLA News

REVERSE review

A collection of recent facts and surveys affecting the reverse market

18 | Hot Seat Joe Demarkey Principal member of Reverse Mortgage Funding

32 | United States of HECM

A closer look at reverse mortgage legislation, state by state

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HAS THE TIME COME FOR THE RETURN OF THE PROPRIETARTY HECM? PG. 27 THE INTEGRATED WONDERS OF TECHNOLOGY PG. 26

New Research on HECM Defaults this issue

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INSIDE

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+JOE DEMARKEY SITS DOWN IN OUR HOT SEAT PG. 18

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“While 98 percent of the reverse mortgages issued in the United States are federally backed, more FLORIDA Largest percentage ofthan populationhalf over 65 of the states in the U.S. have regulations (17.8 percent) that apply to reverse mortgages.

State-level legislation impacts the reverse mortgage industry.

WT VIE RE

TEXAS Last state to legalize HECM for purchase

september 2014 SE

HECM

Lauren Daniels

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Want the online version? reversereview.com/magazine

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FEATURE

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See more stats inside. Page 33

Want to write for this magazine? 2 Email jessica@reversereview.com for more information.

RE

ILLINOIS Reverse mortgages will be exempted from the Illinois High Cost Home Loan Act

17 | Roundup

THE

Reverse Mortgage Daily

Tech

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month

of the past

26 Rob Katz

Marty Bell

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S E P THeadlining E M B E R 2 0stories 14

Ed O’Connor

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11 | Industry News

Read about the association’s current initiatives.

The Benefits of Collaboration Why we need to work together toward a common goal

ER EV

The latest developments in companies across the reverse space

38 | Last Word

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THE 10 | Movers & Shakers

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New Research on HAS THE TIME COME FOR THE RETURN OF THE PROPRIETARTY HECM? PG. 27 The past few issues of TRR have July’s Top Lenders HECM Defaults Report THE INTEGRATED WONDERS OF TECHNOLOGY PG. 26 inspired lots of conversation +JOE DEMARKEY SITS DOWN IN OUR HOT SEAT PG. 18 Reverse Market INSIDE Insight

online.

Originating

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09 | Readers Respond

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23 adam salti

THE

REVERSE review

SEPTEMBER 2014

ILLINOIS Reverse mortgages will be exempted from the Illinois High Cost Home Loan Act

See more stats inside. Page 33

ES OF

UNITED STAT

HECM

TEXAS Last state to legalize HECM for purchase

FLORIDA Largest percentage of population over 65 (17.8 percent)

A closer look at reverse mortgage legislation, state by state

A closer look at reverse mortgage legislation, state by state reversereview.com

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The Reverse Review September 2014

Contributors

John K. Lunde

Marty Bell

J ohn K . L unde

Ma rty B e ll

joe d e markey

13 | Stats g 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

14 | NRMLA News g Marty Bell is NRMLA’s senior vice president of communications and marketing. This is Bell’s professional Act III after careers in books, journalism and the Broadway theater. Bell is the author of two novels and four nonfiction books, and his writing has appeared in publications including Playboy and New York magazine. Bell wrote and produced the awardwinning documentary film The Boys of Summer and produced 15 Broadway shows (including Ragtime, Fosse and Dirty Rotten Scoundrels) that won 27 Tony Awards.

18 | Hot Seat g Joe Demarkey is responsible for product development and industry relations at Reverse Mortgage Funding. Previously, he worked for MetLife, where he was responsible for product development and government and industry relations for its Reverse Mortgage Division. Demarkey is currently cochairman of NRMLA.

S ha nnon H i cks

Ad am Salti

e r i k r i c h ard

21 | Product or Opportunity? g Shannon Hicks is the vice president of product development at Reverse Focus (formerly Reverse Fortunes), a training and technology company for the reverse mortgage industry. Hicks was instrumental in the development of the first standard CRM offered specifically for reverse mortgage originators and for Reverse Basics, the first e-learning tool for the industry. He also hosts the nation’s only weekly podcast, “Reverse Focus Weekly.”

23 | Adapting and Surviving: The Always-Changing Mortgage Industry g Adam Salti is senior vice president of business development at AAG. Previously, he worked for Associated Mortgage Bankers, where he built the reverse mortgage division into a top 10 retail operation before it was acquired by AAG. After earning an MBA from NYU’s Stern School of Business, Salti worked in corporate finance for BNP Paribas.

24 | An AMC’s Evolution: Changing With the Times g Erik Richard is the CEO of Landmark Network, an appraisal management and compliance company serving the reverse mortgage industry. Richard is also co-publisher of The Reverse Review. Prior to founding Landmark, Richard accumulated more than 10 years of industry experience within the lender services and real estate valuation sectors. Richard most recently served as CFO for One Reverse Mortgage.

r ob kat z

ji m mi lan o

e d o’c on n o r

26 | The Wonders of Integrated Technology g Rob Katz is the executive vice president of ReverseVision, the leading provider of software for the reverse mortgage industry. Katz has more than 15 years of experience in the mortgage banking industry. Before crossing over to the software and technology side of the business, he served as CIO at Monument Mortgage. He has a B.S. in microbiology from UCLA.

27 | Field of Dreams g Jim Milano is a partner with the law firm of Weiner Brodsky Kider. Milano’s practice focuses on regulatory compliance for the financial services industry, particularly with respect to reverse mortgage issues. Milano is nationally recognized as one of the leading lawyers in the area of reverse mortgage law, and is a frequent speaker on topics of interest to industry members at various trade association conferences and webinars.

38 | The Benefits of Collaboration g Edward O’Connor, CRMP, is a reverse mortgage professional with more than 15 years of experience. He was previously the owner of Advanced Funding Solutions in Long Island, and prior to that he owned an accounting and tax practice for 16 years. O’Connor maintains his status as a licensed IRS enrolled agent and is the cofounder of the Long Island chapter of the National Aging in Place Council. O’Connor has a finance degree from NYIT and is a retired Nassau County police detective. edward.oconnor@icloud.com 516.984.3731

Joe Demarkey

Shannon Hicks

Adam Salti

Erik Richard

Rob Katz

Jim Milano

Ed O’Connor

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Contributors before we begin

9

pg.

See what our readers had to say about previous issues of The Reverse Review.

Be a part of the conversation.Write for us! We are looking for new contributors. Share your thoughtful commentary with our readership today.

Email jessica@reversereview.com to learn more.

Ginnie Mae considering an increase to issuer requirements to protect against losses. PG.11 page 21

comments we loved

“Collectively, we face strong headwinds in 2014. Yet the promise of a more widely accepted product, coupled with a rapidly expanding demographic, give cause for a resurgence of the HECM in the near future.” —Shannon Hicks

Be a part of the conversation.

Do yo have wu it take hat s?

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There’s no such thing as a stupid idea. What do you want us to write about? Tell us! info@reversereview.com

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

WE CAN LEAD THE WAY!

Title - Settlement - Valuations

800.877.7557 ext 1222 www.mtginfo.com reversereview.com

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The Reverse Review September 2014

What’s the best path in reverse mortgage servicing? Explore for yourself in the October issue.

celink.com | (866) 654-0020 8

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Readers Respond The last few issues of TRR inspired lots of conversation on the Web. Here’s what our readers had to say:

respond

readers

Do you have something to say?

www.reversereview.com 8

Spotlight: The Funding Longevity Task Force By Jessica Guerin “Today, Reverse Mortgage Daily quoted a recent Census report to the effect that 57 percent of Americans age 50 and older are carrying mortgage debt. I have yet to see a financial advice column on the topic of carrying a mortgage into retirement ever discuss the option of refinancing with a HECM and continuing to make now optional payments as long as possible as a means of managing one’s debt and building up one’s credit line, even though that is a far more flexible strategy for managing one’s cash-flow needs. After 15 years as a reverse mortgage originator, I continue to find the opposition to, and willful ignorance of, the HECM to be a major disservice to older homeowners, especially those who are carrying mortgage debt.” –Jim Dean E REVIEW THE VERS RE R

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Originating: Know and Become Known

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BUILDING A POWERFUL ONLINE PRESENCE PG. 27 A HISTORY OF HMBS ISSUANCE PG. 29 +JIM MILANO SITS DOWN IN OUR HOT SEAT PG. 16

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–Keith Morgan

Feature: HECM Retrospective

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“While writing a marketing booklet for my existing and prospective customers, I found myself perusing through boxed copies of The Reverse Review for historical information… I firmly believe in looking forward with anticipation to your next issue, [and] I no longer allow TRR to sit on my bookshelf without a thorough second (and third) read. Thanks to your editorial staff for the up-todate and timely articles that keep me conversant and knowledgeable in front of my financial planners and prospective customers.”

Comment on our stories online for a chance to see your thoughts in print. Be a part of the conversation about how we can better serve our seniors!

review

“Memory lane. I was a loan correspondent with Jeff Taylor’s Wendover Funding back in March of 1991 and paid dearly for ‘state docs’ from the law firm of Burke and Castle. In those days, we were pioneers and HUD welcomed our feedback and we helped set policy. Focus, diligence and Jeff’s fine group (Pat Reed and Paulette Wisch, et. al.) really made the business a joy. Then came Wells Fargo and Financial Freedom and the wheels started to wobble, then fall off.” –hecmvet

Originating: Those Pesky HECM Tax Questions By James Quigley “The author’s approach to this article is excellent. He not only shows HECM lenders why and how to be more helpful to their clients regarding tax questions, but also includes the pertinent IRS 936 Publication link to click on for thorough explanations and answers to every mortgage deduction situation. Also, kudos to him for his savvy thought on doing a Roth Conversion to offset income tax when taking the hefty HECM interest deduction, a good portion or all of which could go to waste when the deduction amount is more than needed to offset tax on other income.” –Taxgal

By Bob Tranchell “Great article, Bob, very informative. Keep up the good work!” –Jeff K “A very well-written success story (golf clap).” –Larry Lau, CRMP 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.

“I love

iew The Reverse Rev

d to and I look forwar n ar every issue. I le y er something ev me month that helps rse ve increase my re .” ss mortgage busine –Owen Coyle

reversereview.com

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The Reverse Review September 2014

Movers & Shakers Read about the latest developments in companies across the reverse space.

Hav e a c o m pa n y u p dat e y o u wou ld lik e t o s ee p u b l i s he d?

Karen C. Tankersley Joins UFG Holdings as General Counsel UFG Holdings LLC, the holding company of top reverse mortgage lender Urban Financial of America, LLC (UFA), has named Karen C. Tankersley general counsel. “Karen brings more than 25 years of legal experience, including in-house financial services firm expertise, to UFA’s businesses,” said Steve McClellan, president of UFA, in a statement. In this role, she will lead the legal department for the entire UFG Holdings enterprise and oversee the implementation of new corporate initiatives, corporate governance principles, and other legal and regulatory functions. Tankersley joins UFG from Nationstar Mortgage, where she was executive vice president and chief compliance officer. Prior to joining UFG, she worked for various financial institutions including Aurora Bank FSB, Lehman Brothers, Finance America, LLC and Amresco, Inc. as well as diverse law firms. Tankersley has a B.A. from Texas A&M University and a J.D. from University of Texas Law School.

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Email it to Jessica@reversereview.com.

“RV Exchange is the lending system of record for a majority of reverse lenders, so we monitor its privacy-protected aggregate data as a useful indicator for industry trends,” says Rob Katz, ReverseVision executive vice president. According to Katz, although first half 2014 applications through RV Exchange were 22 percent lower than in 2013 applications, loan closings for the same periods loan closings held steady at a similar rate of about 45 percent.

National Field Sales Leadership of American Advisors Group Grows American Advisors Group (AAG) recently added a new regional sales manager and two affinity partner executives to its national field sales team. Jim McMinn will help drive the company’s field sales efforts in the Northeast, managing a growing team whose coverage spans from Delaware to Maine. McMinn brings more than 12 years of experience in reverse mortgage sales to AAG. He joins field sales managers Melanie Parks (West), Tracy Laney (Southeast) and Jim Elder (Central) to grow the national field sales team to 120 loan officers by the end of 2014.

More Than 700 Reverse Mortgage Brokers Added to ReverseVision Exchange

Industry veterans Jeff James and Phil Walker will help build AAG’s reverse mortgage footprint by developing affinity partnerships with real estate builders, developers and financial planners.

ReverseVision added 733 mortgage brokers to its RV Exchange (RVX) loan origination software, the leading independent reverse loan origination system and lending system of record for the majority of reverse lenders, between July 2013 and June 2014, including 379 brokers added in the first half of 2014.

James brings more than 18 years of experience as a seasoned mortgage and real estate professional, with particular expertise in the builder/Realtor segment, having financed more than 70 new construction developments. He joins AAG as vice president, builder division and business development. Walker, a 20-

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year veteran of the mortgage industry, is vice president of AAG’s financial planner division and business development. He has extensive previous experience as a Series 7 and 66 licensed financial advisor for both Morgan Stanley Smith Barney and Merrill Lynch.

FirstBank’s West Coast Team Continues to Expand FirstBank is pleased to announce the hiring of Gennaro Faiola as the West Coast area manager. Faiola is an industry veteran with more than 10 years of dedicated experience with reverse mortgages. Three additional new hires—Kathleen Dalzell, Suzanne Causley and Barry Korogodsky— are all veteran originators of the reverse mortgage industry. Led by an experienced industry professional like Faiola, FirstBank is confident that our continued expansion will be both strategic and successful. Additionally, Michael Benke has also joined FirstBank as a reverse mortgage specialist in South Carolina.

TRR wants your company news! Send us your company’s latest s, initiatives, program hires, acquisitions and more, and be pa a rt of our Movers & Shakers column.

Email jessica@ reversereview. com


Industry News

September Edition

Brought to you by:

an update of this past month’s breaking news

News direct to you: The industry’s headlining stories at your fingertips Want even more up-to-the-minute news? Visit reversemortgagedaily.com.

headlining news

3.Reverse Mortgage Volume Up, 5.AAG to Roll Out New Reverse

1.Galante to Depart Post by

HUD data may show a decline in reverse mortgage originations over the past six months, but new data from software and technology provider ReverseVision, Inc. tells a different story. Using ReverseVision’s RV Exchange, a reverse loan origination system and lending system of record for many reverse lenders, the company compared its data against HUD data and uncovered a sharp increase in volume at the end of 2013. FHA requires lenders to process a request for insurance endorsement within 60 days of closing a HECM loan, meaning HUD endorsement data lags actual closing counts by 60 or more days.

Year-End

FHA Commissioner Carol Galante announced she will be leaving her role, which oversees the Federal Housing Administration’s reverse mortgage program, at the end of the year. Following her departure, Galante will take on a new position as a professor of affordable housing at the University of California, Berkeley. She will also serve as director of the Berkeley Program in Housing and Urban Policy and co-chair the Fisher Center on Real Estate Policy Advisory Board. In a letter to colleagues, Galante wrote, “This is a compelling opportunity for me to continue with work I am passionate about and also return home to California.” Biniam Gebre, general deputy assistant secretary for housing, will fill Galante’s role until a replacement is named. // August 11, 2014

2.Bloomberg: Ginnie Mae May increase Issuer Requirements

Bloomberg reports Ginnie Mae, the only securitizer of HECMs, is evaluating whether issuers have enough easily accessible assets to survive in times of distress. Agency President Ted Tozer told Bloomberg the government agency might increase liquidity requirements for the firms that issue and service Ginnie Mae bonds to protect its profits and taxpayers from losses. The concern stems from the growing role of nonbanks in the mortgage market. The report states that as of June, nonbanks serviced 35 percent of Ginnie Mae’s singlefamily loans and issued 54 percent of its new securities that month. // August 11, 2014

contrary to popular belief, or contrary to HUD data?

// August 18, 2014

4.Urban Launches New, Private HomeSafe Reverse Mortgage

Urban Financial of America is introducing a proprietary reverse mortgage. The fixed-rate HomeSafe mortgage, with a maximum loan amount of more than $2 million, is designed for borrowers with high-value homes. Initially available in five states (California, Florida, Hawaii, New Jersey and Texas) more states will be added soon. Urban is partnering with a private investor group on the new product, which has been a long time in the making, says Urban Financial President and CEO Steve McClellan. HomeSafe provides an opportunity to work with homeowners with non-FHA-approved condos or those with high-value homes. In an example scenario provided by UFA, a homeowner with a $1.5 million home with a $100,000 mortgage can qualify to borrow roughly $410,000 under the fixed rate HECM program, including a $246,000 upfront draw. With the HomeSafe, the same borrower can access $575,000, all upfront.

Mortgage Product

In the coming months, American Advisors Group will launch a new reverse mortgage product, Bloomberg Businessweek reports. The unnamed product is designed for older borrowers whose homes are worth more than the $625,500 limit for debt backed by FHA. The loan will bring competition to the proprietary reverse mortgage market. Since 2010, only Generation Mortgage’s Generation Plus jumbo loan has been available. Analysts estimate demand for reverse mortgages will increase in the coming years. “Retirement needs have expanded and the system has contracted, so more people will need to turn to their homes for income,” Alicia Munnell, director of the center for retirement research at Boston College, told Bloomberg. // August 24, 2014

6.USA Today: Reverse

Mortgages Work Even When Selling the House

A reverse mortgage could provide relief for cash-strapped homeowners preparing for a sale. “The question [is] whether it makes sense to incur the costs of the reverse mortgage for such a short period of time,” NRMLA President and CEO Peter Bell told USA Today. Origination fees, closing costs, insurance costs and the mandatory counseling fee must all be taken into consideration. Potential borrowers also must clear the home of any liens before a reverse mortgage can be approved, the article notes. “When the home is sold, the proceeds from the sale will be used by the closing agent to pay off the reverse mortgage. So, if someone needed the cash to get by until the home is sold, this strategy could work,” Bell added. // August 14, 2014

// August 19, 2014 reversereview.com

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The Reverse Review September 2014

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Stats July 2014

Top Lenders Report

S1L / RMS

One Reverse Mortgage

Liberty Home Equity

Endorsement

Endorsement

12345 American Advisors Group

Endorsement

381

Endorsement

1,069

Lender

372

Endorsements

296

Urban Financial of America

Endorsement

222

Lender

Endorsements

PROFICIO MORTGAGE VENTURES LLC

117

NATIONSTAR MORTGAGE LLC

11

GENERATION MORTGAGE COMPANY

115

LAND-HOME FINANCIAL SERVICES

11

REVERSE MORTGAGE FUNDING LLC

114

GMFS LLC

10

LIVE WELL FINANCIAL INC

97

BANK OF ENGLAND

10

NET EQUITY FINANCIAL INC

65

DOLLAR BANK FSB

10

HIGH TECH LENDING INC

60

NORTH AMERICAN SAVINGS BANK

10

MAVERICK FUNDING CORP

59

TOP FLITE FINANCIAL INC

10

SUN WEST MORTGAGE CO INC

46

UNIVERSAL LENDING CORPORATION

9

UNITED NORTHERN MORTGAGE BANKERS 44

VIG MORTGAGE CORP

9

PLAZA HOME MORTGAGE INC

40

SENIOR MORTGAGE BANKERS INC

9

M & T BANK

40

ASPIRE FINANCIAL INC

9

ASSOCIATED MORTGAGE BANKERS INC

28

ADVISORS MORTGAGE GROUP LLC

26

GATEWAY FUNDING DIVERSIFIED MORTGAGE SERVICES

9

OPEN MORTGAGE LLC

25

FULTON BANK

8

MCM HOLDINGS INC

23

GERSHMAN INVESTMENT CORP

8

FIRSTBANK

22

BROKER SOLUTIONS INC

8

FIRSTAR BANK NA

21

AMERICAN NATIONWIDE MORTGAGE CO

8

CHERRY CREEK MORTGAGE CO INC

21

CHRISTENSEN FINANCIAL INC

7

NATIONWIDE EQUITIES CORPORATION

19

UNITED SOUTHWEST MORTGAGE CO

19

TOWNEBANK

18

MONEY HOUSE INC

16

MORTGAGESHOP LLC

14

HOMEOWNERS MORTGAGE ENTERPRISE

14

AMERICAN PACIFIC MORTGAGE

14

THE FEDERAL SAVINGS BANK

14

MLD MORTGAGE

13

MORTGAGE SERVICES III LLC

12

ATLANTIC BAY MORTGAGE GROUP LLC

12

SOUTHERN TRUST MORTGAGE LLC

12

SUCCESS MORTGAGE PARTNERS INC

12

SUN AMERICAN MORTGAGE CO

11

PEOPLES BANK

11

Reverse Market Insight - Logo

HOMESTREET BANK October 9, 2009

7

PANTONE COLORS

3005C

Process Blk C

Brought to you by:

REVERSE MARKET INSIGHT

%%%%% Looking for more statistics? Go to rminsight.net for all of the industry’s latest stats and rankings. reversereview.com

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The Reverse Review September 2014

NRMLA News

In the States

MA Legislature Delays Face-toFace Counseling Requirement Until 2016 In its final act before adjourning, the Massachusetts legislature passed an economic development bill that, among other things, delays implementation of face-to-face counseling in the reverse mortgage loan process for another two years. NRMLA members have been aggressively arguing to Massachusetts legislators that they do not have the counseling capacity within the commonwealth at this time to implement such a rule without eliminating opportunities for many potential borrowers. We will continue to monitor this pending legislation. For the next two years at least, the origination process and counseling will continue as is.

The Market

Boston College: Average Worker Needs to Save 15% to Fund Retirement

Research published by the Center for Retirement Research at Boston College concluded that the average American household must save roughly 15 percent of its annual income to sustain the same lifestyle in retirement. The brief—entitled “How Much Should People Save?”— said that middle-income workers need the equivalent of 71 percent of their pre-retirement income to maintain their standard of living. Roughly 41 percent of a retiree’s income will come from Social Security, while the next largest source (21 percent) will be derived from retirement savings plans. The Center for Retirement Research assumes in its research that qualified households will use a reverse mortgage to generate another 4 percent of their annual income.

Another Record Month for Our Consumer Website Visitation to our consumer website, reversemortgage.org, continues to swell. In June, we had 33,066 unique visits, another new record.

Unplanned Child Support

Traditionally, when people make a plan for their retirement, they expect to support their children as best they can through their educational years and then, hopefully, the kids are on their own. But in the protracted wake of the recession, and partially due to behavior choices of the younger adult generations, support of children has become a frequent additional burden upon retirement planning. At the recent Center for Retirement Research conference in Washington, Rick Miller, the keynote speaker and a certified financial planner with Sensible Financial Planning in Boston, reported that his firm has about 200 clients who are mostly not rich but have planned well for their retirement—and yet many of them have retirement funding issues. Often, the problem is their children. Miller ran off a list of post-college issues that today’s young or even middle-aged adults face that are in need of support: big weddings, bad marriages and their results, costly housing in the cities they tend to drift toward, health issues, disappointing jobs or no jobs at all, entrepreneurism that goes awry and substance abuse. The issue for retirees is: How do you plan for any of this? And this is in addition to the other great unknowns: health issues and longevity. One potential solution for life’s cruel surprises is a HECM line of credit. 14

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NRMLA News

brought to you BY MARTY BELL: national reverse mortgage lenders association

events: Annual Meeting, Reverse Mortgage Reset in Miami Beach

Join our expert speakers and the largest annual gathering of your colleagues as we take a hard look at where we are as an industry and where we are heading at NRMLA’s Annual Meeting & Expo, “Reverse Mortgage Reset,” at Loews Miami Beach Hotel on November 10-12, 2014. 3R egistration is now open. Register today at nrmlaonline.org.

Newest CRMP NRMLA congratulates Vickie Nguyen of HighTechLending Inc., in San Diego, California, for achieving the status of Certified Reverse Mortgage Professional.

NRMLA member

This month, NRMLA welcomes two new international members: • Family First Funding Toms River, New Jersey (Lender) • Consolidated Credit Solutions, Inc. Fort Lauderdale, Florida (Counseling Agency)

And Also... NRMLA’s Social Media Following Grows During the first three weeks of NRMLA’s new social media campaign, we saw a noticeable increase in followers on LinkedIn, Twitter and Facebook. We now have 578 followers on Twitter—a gain of 40 people—and 36 more members on LinkedIn, bringing the current total to 2,269.

Press Positive Press Surges in June Driven largely by positive stories about HUD’s mortgagee letters addressing non-borrowing spouses and unacceptable advertising, as well as by bloggers, the press results for June are the most positive since we began auditing last August. Overall, there were 195 positive stories nationally last month and just 14 negative stories, a 13:1 ratio or 93 percent favorable result. Pros and Cons of Using Reverses to Pay Off Existing Liens Polyana da Costa, a senior mortgage analyst/writer for bankrate.com, published an article that used consumer testimonials and comments from an academic researcher to explain why using a reverse mortgage to pay off an existing lien can sometimes be a wise strategy. “Reverse mortgages have gained a bad reputation over the years, but they can be a useful financial tool to seniors when used appropriately,” says David Johnson, associate professor of finance at the University of Wisconsin-Superior and coauthor of a recent study discussing the growing importance of reverse mortgages in retirement. Nationally Recognized Economics Reporter Endorses New Reverse Mortgage In response to a consumer’s question about the drawbacks of reverse mortgages, Scott Burns, an economist, MIT graduate and one of the most respected financial columnists in the country, said recent reforms have lowered costs and transformed the product into a better financial tool for retirees. “If you are retired, healthy and not dead broke, new research indicates that a reverse mortgage can be what they were hoped to be— another tool for managing retirement income and spending,” wrote Burns in a syndicated column that appeared in The Dallas Morning News and Seattle Times. reversereview.com

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NEWS FROM NRMLA

Sometimes you need to rethink the way you’ve been doing business. With financial assessment, upfront draw limitations, new non-borrowing spouse rules, a changing consumer target base, increased interest from financial and estate planners, CFPB publication of consumer complaints and calls for face-to-face counseling in some states, this may well be one of those times.


The Reverse Review September 2014

“ >> Nationwide title and settlement experts

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Things are not always as they appear. With PRC, you get more than 15 years of experience and knowledge working for you. Our commitment to be the partner that you rely on has never changed. Don’t be fooled by imposters, what you see is not always what you get. Experience, knowledge and commitment are what make the difference. You will find that difference at PRC.

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www.PRClosings.com


Roundup Here is a look at the latest

news and stats

affecting the market.

this month

{

Get up-to-date retirement facts, home price stats, senior trends and HECM market developments in The Reverse Review’s monthly Roundup.

mone y matters

to d ay ’s tren d s

Savings Emergency

Twenty-six percent of Americans have no emergency savings, a recent survey by Bankrate found. Older Americans tended to be better savers than younger Americans with 36 percent of retirees having saved six months of living expenses, compared with 16 percent of 18- to 29-year-olds. Retired workers are less confident than their stillemployed counterparts about their financial situation. Thirty-six percent of those currently in the workforce felt “better” about where they stood in June 2014 versus May 2014, while half (18 percent) of felt the same.

Earning Power The average income for those between the ages of 65 and 6 9 i s $ 3 7 , 2 0 0 , b u t i t d ro p s t o a little less than $20,000 for t h o s e o v e r a g e 8 0 , a c c o rd i n g t o C e n s u s B u re a u d a t a compiled by U.S. News & Wo r l d R e p o r t .

S enior sentiment

Seniors Want to Age in Place

According to the Joint Center for Housing Studies of Harvard University’s latest State of the Nation’s Housing Report, 78 percent of seniors plan to age in place. Although seniors wish to stay in their homes, some analysts are concerned they won’t be able to. Housing market trends and stagnant incomes have left many with mortgages they cannot afford. While many seniors wish to age in place, the limited supply of first-time homebuyers is limiting the options of seniors who wish to move in with family members or to assisted living facilities. Low incomes, the lack of available credit and student loan debt are a few factors keeping younger buyers out of the market, the report states.

N umber C runch

A 65-year-old couple retiring this year needs an average of $220,000 to cover medical expenses throughout retirement. -Fidelity

$220k

R E T I R E M E N T FA C T S

Population Boom Baby boomers are flocking to metropolitan areas, recently released Census data shows. The top choices are Southern states like Texas and the Carolinas. Austin, Texas, saw the largest boomer growth, growing by 4.4 percent from 2012 to 2013—the highest of any metro area. Raleigh, North Carolina, came in second with a 4.3 percent increase. Dallas rounded out the top three, increasing its boomer population by 3.5 percent.

dallas, Tx

up 3.5% raleigh, NC

up 4.3%

Austin, Tx

up 4.4%

reversereview.com

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The Reverse Review September 2014

the

THE

REVERSE

hot

review

seat

september 2014

Joe

From his favorite movie and his most embarrassing moment to his thoughts about the future of the reverse mortgage market, we get the personal and Reverse Mortgage funding

Principal Member

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professional facts from Reverse Mortgage Funding’s Joe Demarkey in this month’s edition of The Hot Seat.


P E R SO N A L > My

favorite vacation was in 2012, when

my wife and I took our children to Italy and France for 10 days. >M y

celebrity crush is Scarlett

Johansson—isn’t that every guy’s celebrity crush? > I f

I were a professional athlete, I would

be a professional golfer. >M y

first car was a 1986 Nissan Pulsar.

>M y

most embarrassing moment was

when I was working at an amusement park one summer during high school, and I told a young woman she couldn’t get onto the roller coaster because she was pregnant… and she wasn’t. > I f

I had three wishes they would be

>T he

best lesson I’ve ever learned was

that influence is more important than authority. >T he

most memorable moments in my

life were when my wife accepted my marriage proposal and the birth of my two children. >M y

favorite movie is My Cousin Vinny.

Even the title makes me laugh. >M y

favorite book is anything by John

If I were a professional athlete, I would be a professional golfer.

Grisham. > I f

I could trade places with someone

for a day, I would choose my son. Ah, to be 13 again. > I f

I could time travel, I would walk the

FBI to the security lines at Newark and Logan airports on the morning of 9/11.

finding a cure for cancer, establishing higher HECM principal limit factors and three more wishes. > I f

I could meet anyone, past or present,

it would be Bruce Springsteen. >M y

favorite website is google.com—it

helps me appear to be smarter than I really am. > I

Professional > The

biggest challenge in the reverse

mortgage industry is positioning the loan as a smart retirement product. > Ten

years from now the reverse

mortgage industry will be thriving. There will be significant product innovation and

never miss an episode of ESPN’s

SportsCenter. >E very

morning I wake up, take a deep

breath and realize the alternative is much worse.

market acceptance. > I

am optimistic about the reverse

is financially ill-prepared for retirement. > If

I could change one thing about the

can’t go without two cups of coffee

in the morning, listening to at least one

be a consistent 6 percent home price

Springsteen tune every day, and spending

appreciation.

some quality time with my wife and children. >M y

first job was working as a caddie at a

local country club. >M y

parents taught me how to remain

true to myself. >M y

favorite time of the day is having

breakfast and reading the newspaper.

My favorite movie is My Cousin Vinny.

mortgage industry because our country

reverse mortgage industry it would

> I

I never miss an episode of ESPN’s SportsCenter.

> The

ideal characteristics of leaders in

the industry are people who have a longterm view of the industry and who possess impeccable moral standards.

The biggest challenge in the reverse mortgage industry is positioning the loan as a smart retirement product. reversereview.com

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GEANE A N P

The Reverse ReviewL

LANDSCAPE

TM

September 2014

MAR OWN

U YO

APPRAISAL MANAGEMENT AT YOUR FINGERTIPS

Landmark Network introduces LandscapeTM, the only appraisal management cloudware you need to manage your appraisal process. Bringing you the industry knowledge and expertise of a veteran AMC, LandscapeTM allows you to take full control, while keeping you compliant with industry standards and regulations.

NO COST

FULL SERVICE AMC

MAINTAIN YOUR

Landscape™ is cloud based, so

BACKBONE

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there is no software to install and

Take advantage of Landmark

Keep up with your existing

account set-up takes minutes.

Network’s expertise as an AMC to

individual appraiser and AMC

Transaction fees can optionally be

build your appraisal panel, or get

relationships to ensure appraisal

paid directly by your vendor to

help completing difficult files.

turn time and quality continuity.

FEATURES eliminate your cost.

Schedule your demo today and see how LandscapeTM can go to work for you.

| TRR 888.840.1600 landmarknetwork.com

20


ADVANCE

originating Product or Opportunity? By Shannon Hicks

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spotlight

Collectively, we face strong headwinds in 2014. Yet the promise of a more widely accepted product, coupled with a rapidly expanding demographic, give cause for a resurgence of the HECM in the near future. x

legal

This quote aptly describes the internal struggle many reverse mortgage professionals face. We can find ourselves fretting over the future of our industry while overlooking the product’s present value. The pure economics of 10,000 mostly unprepared baby boomers retiring each day weighs heavily in favor of our industry’s future.

*

tech

“We worry about what a child will become tomorrow, yet we forget that they are someone today.”

Lawmakers, while inclined to spend money, are resistant to accounting for programs that are a source of red ink, especially with a cash-strapped federal government. The arrival of the CFPB and its report to Congress on the HECM program signaled the beginning of the end—that is, the end of business as usual. Consequently, FHA tightened lending ratios, reducing principal limits by 15 percent, and restricted first-year distributions while effectively eliminating the Standard fixed-rate HECM. As lenders scrambled to adjust, loan officers found themselves with fewer products to offer to a shrinking market. In addition, the FHA was forced to rethink the parameters of the original HECM program, which had gone largely unchanged since its inception in 1989.

In speaking regularly with HECM professionals across the country, I have uncovered a common theme among those concerned about the recent changes to the program: regulations that limit our market. One could agree in part. Yes, HUD and the FHA have limited our ability to serve our typical needs-based borrowers, but they have not limited our overall market. Most industry figures show a mere 2 percent of eligible senior households have taken a reverse mortgage, leaving a staggering 98 percent untouched. Who are these other 98 percent? As the reverse mortgage program becomes an increasingly mainstream option among the public and financial planning community, we will begin to slowly make inroads to a vast and untapped group of homeowners who may not be our historical needsbased borrower. NRMLA, along with industry leaders, has launched the Extreme Summit initiative to rebrand our image while expanding the HECM’s reach. In fact, a recent preview of an upcoming national television commercial shows a new emphasis on a reverse mortgage as just part of one’s track record of making successful decisions. Looking at our industry’s market penetration, one question comes to mind: Should we be focusing on our challenges in serving the 2 percent, or should we concentrate on ways to expand our reach to the other 98 percent?

appraising

Letting Go of Yesteryear

The Day of Reckoning

Is It Product or Opportunity?

originating

T

hose of you reading this column have experienced firsthand the tumultuous changes and challenges that come with originating HECM loans post 2009. The housing and economic crash, repeated loan ratio reductions and product eliminations have left many wondering if this is a viable career. While one’s choice of career is a purely personal decision, the federally insured reverse mortgage does remain a vital and viable product offering for the next generation of retiring homeowners. How did we get here and what can we look forward to in the future?

Much of our collective worry can be attributed to our past experience with a simpler, more generous product with few restrictions and generous payouts. The earlier HECM product design did make sense in a market with rising home values and falling interest rates. Borrowers maximized their utilization of home equity while lenders and FHA enjoyed the security of an appreciating asset, which backed the loan. In fact, many refinanced their reverse mortgage as interest rates fell and the national lending limit offered higher lending limits for many in lower-valued counties. Full withdrawals with fixed-rate HECMs were the loan du jour, with little concern given to future access to funds.


The Reverse Review September 2014

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originating

Adapting and Surviving:

The Always-Changing Mortgage Industry By Adam Salti

I

Lastly, while the industry is dealing with myriad challenges today, remember that the mortgage industry will be around and thriving for a long time after this year. The opportunities that present themselves today will have a long-term impact, so invest the time and capital needed now to make the right moves for your business’ future. x

So, now that we’ve identified the many variables and choices ahead, what is the best path for you? With reversereview.com

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spotlight

The answer lies in facing the industry’s current reality (lower volumes, increased regulations, increased competition for market share), asking yourself the questions above, and

Equally important is a diversified platform that has some combination of the following: direct retail/call center/ branch network; leads/referrals/ builder relationships; wholesale/ correspondent/servicing; forward/ jumbo/HECM products. However, the most important metric within any platform, no matter the size, is the ability to operate efficiently. The ability to track fixed and variable expenses, among many other metrics, is just as important for any lender as growing market share.

*

legal

These are all valid questions, and perhaps some of the scenarios could work if they fit your risk/reward objectives. However, the challenge going forward is finding the answer that’s right for your business and working to separate yourself from the rest of the industry, because everyone else in this market is thinking and doing the same thing.

As I write this, I keep asking myself what factors are most important to finding future success in this market. Having state licenses, warehouse lines, investors (including Fannie, Freddie and Ginnie Mae, depending on size and platform), and a competent and experienced staff overseeing operations, capital markets and compliance are a given. However, having the balance sheet and capital to make long-term growth and investment decisions will be a necessity to grow and capture market share going forward.

wide variations in company size, location and business models within the industry, the key is to focus on your business’ strengths, make them more efficient and work toward diversifying from those strengths. For example, if you are a mid-size to large wholesale/correspondent lender, are there ways to operate more efficiently so that cost savings can be passed on in the form of reduced margins/ better pricing and lead to increased market share? Also, can the strength of the wholesale/correspondent platform lead to opportunities to start a retail platform through vertically integrating smaller clients into the company? These are some of the many types of opportunities that can help your business thrive in today’s market. Ultimately, there is no right or wrong answer if you can analyze the challenge, come up with a game plan and make good decisions while executing on that strategy.

tech

People have been expecting a slowdown for years, but now that it’s here, what can you do? Start calling Realtors and attorneys for Purchase business? Increase your marketing/ lead budget? Recruit new originators and branches? Offer other mortgage products (HECM, VA, etc.)? Reduce overhead based on the new volume realities? Become a branch of a larger lender? Merge with another lender?

determining what scenario could work best for you and your company. Once you determine your comfort level with the best possible scenario, your best option will be clear. Make your move and execute carefully.

appraising

Yes, it’s still expected to be a trilliondollar market this year and originator market share will be shifting, but we have not yet seen a significant drop on the supply side of the equation (i.e., lenders merging or closing their doors) to balance out the industry’s current supply and demand equation.

“People have been expecting a slowdown for years, but now that it’s here, what can you do? Start calling Realtors and attorneys for Purchase business? Increase your marketing/lead budget? Recruit new originators and branches? Offer other mortgage products (HECM, VA, etc.)? Reduce overhead based on the new volume realities? Become a branch of a larger lender? Merge with another lender? These are all valid questions, and perhaps some of the scenarios could work if they fit your risk/reward objectives.” originating

n today’s market environment, every mortgage originator must be asking themselves, “How do I survive and grow in an industry that just experienced a 40 percent drop in volume within the past 12 months? How do I strategize and operate a business where demand can drop that much within a year? As a manager, how do I model and plan when such a severe swing in demand affects everyone in the industry?”


The Reverse Review September 2014

adapt

appraising An AMC’s Evolution: Changing With the Times By Erik Richard

O

ver the last few years, we’ve seen a significant amount of change in the reverse industry and in how businesses function, which has been dictated by both regulatory and programmatic changes. As these changes occurred within the housing market, we also found ourselves needing to adapt and rethink our business. It was clear we would need to make drastic changes within our organization, both in terms of service and product offerings, in order to best support our clients. We had to pivot from being strictly an appraisal management service to being a true valuation partner. This meant exploiting what we were already doing very well: developing technology. But, in order to understand that progression, you’d have to understand a little bit about the history of Landmark and the appraisal management company. Landmark was founded during a time when AMCs were largely used by lenders with national footprints and preferred to use an organization that could handle their valuation needs, rather than working with and managing individual vendors nationwide. For the most part, brokers 24

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and regional lenders tended to manage their valuation process through an internal solution, which always meant having staff that would order and manage the appraisal orders directly with the local appraisers. It wasn’t until 20092010, with the advent of the Appraiser Independence requirements that stemmed from the HVCC and HUD, that AMCs were pushed to the forefront and spurred significant growth in our industry, leading to the widespread creation of AMCs as we know them today. At that time, many AMCs brought their existing process forward and sold it to lender clients as an out-ofthe-box solution for their appraisal management needs. In truth, the vast majority of AMCs lease thirdparty software platforms to manage the process. We used to do that too, but as the industry evolved, more lenders began dictating the workflow and requesting customizations that weren’t previously a part of the appraisal process. The fact that we were boxed into a third-party software technology that allowed minimal to no customizations forced us to create manual workarounds, resulting in a less efficient and costly operation. In doing so, we quickly realized that we were giving up too much control over our operation by going with the herd and not developing a proprietary appraisal management platform. That was the beginning of our move into technology development. We realized

that we needed to rethink the appraisal process and anticipate the capacity for the change that we knew was coming. Now, lenders have their own specific requirements and requests. It’s no longer a one-size-fits-all appraisal world. An AMC’s ability to quickly evolve and adapt to these new needs directly dictates its success, and fortunately we’ve been very successful at it thus far. In addition to innovative requests and options, we recognize that convenience is key. That’s why, in April 2013, we were the first AMC to bring a smartphone app to market that allows clients and vendors to track order updates and request additional information; and for appraisers to provide scheduling updates easily from the field. As society has become more mobile-centric, we have stayed ahead of the curve by taking desktop technology and placing it in people’s hands, to be used at their convenience. We’ve been leveraging technology so we can do our job better and make the lender’s job easier. We’re proud to be one of the largest AMCs in the reverse space and excited to be a leading innovator of valuation technology. Now, due to the variations in what lenders want, we are taking what we believe is the next big step by rolling out a new version of our cloudware, Landscape, which will allow lenders to manage their own appraisal process while being backed by the compliance and strength of a full-service AMC. We often have conversations with potential clients and we need to make sure that we are offering the best solutions to their problems. When they share their pain points with existing vendors, it’s always easy to assume


appraising

GOING TO THE SOURCE

they specifically need our help. A non-AMC technology company would be prohibited from doing that.

spotlight

A BETTER CHOICE!

Our dedicated team of professionals has the experience and knowledge to smoothly close reverse transactions. Through years of experience, FNC has gained valuable knowledge by building strong relationships with reverse mortgage lenders and brokers, as well as the borrowers we service. We firmly believe that our clients deserve the best treatment, and that is why FNC is where reverse mortgages take center stage.

240-864-4844

fnctitle.com reversereview.com

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*

legal

A nationwide title and settlement company servicing the reverse mortgage industry.

*

tech

That’s our vision: We will continue to operate as a full-service AMC, but our cloudware will also be a tool for those lenders who wish to dictate their own process and workflow as the industry and regulation continue to evolve. x

appraising

Case in point: Vendor onboarding and payments are always a concern for banks and lenders. Many institutions have processes that require a lot of work to board new vendors into their system. If you are a lender and you want to add a new appraiser to do an assignment in Chicago, for instance, onboarding them through your approval department can take time and create a bottleneck. We offer the benefit of a two-way solution where lenders can choose to manage their own workflow but the appraisers will be managed as a part of our vendor panel so that we can still do what we are licensed to do (process payments, onboarding, etc.) and remove

that burden from them. As a lender or bank, there is an additional concern that exists around payment collection for appraisals. If a bank or lender wants to collect appraisal deposits or partial payments, they would have to escrow those funds, which can be a hindrance on the operation due to state-specific requirements. As a licensed AMC, we have the ability to collect and process payments, while at the same time allowing the lender to manage their own workflow, if that’s a solution they need.

originating

“Now, lenders have their own specific requirements and requests. It’s no longer a one-size-fits-all appraisal world. An AMC’s ability to quickly evolve and adapt to these new needs directly dictates its success...”

that our appraisal management service is somehow a cureall and utilizing it will solve their problems. But that just isn’t practical. If we are to be a true partner, we need to provide solutions that will actually work for the clients—all of the clients. Sometimes the solutions may be a better way to manage existing AMC relationships or manage their internal process, or a hybrid of the two. With added features to Landscape, we’re able to provide a full range of solutions that are wholly dependent on lenders needs. There are software platforms that lenders use to manage their appraisal process, but ours has a competitive advantage because it’s backed by a licensed AMC. There are many things that we are licensed to do, which allows us to better support lenders where

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The Reverse Review September 2014

Innovate

tech The Wonders of Integrated Technology By Rob Katz

E

ven though the pool of potential borrowers is bigger than the ocean and is growing by 10,000 every day, the reverse mortgage industry is highly competitive. One of the main reasons for this paradox is that you are all essentially trying to sell the same loan program; other than the niche jumbo product, a HECM is a HECM is a HECM. So, how do you differentiate from the competition? You essentially have two competitive levers: price and service. Typically, these two factors move in the same direction. The better the service, the higher the price. The cheaper the product, the worse the service. But it doesn’t have to be that way. By leveraging the technical integration of services, you can actually reduce your operating costs while improving your customer service. Case Study: Streamlining Appraisal Services Let’s take a moment to think about the current inefficiencies you run into when it comes to dealing with an appraisal. Most lenders have one (or more) appraisal management companies (AMCs) that they are approved to work with. When a loan gets to a certain stage, a processor orders an appraisal by logging into the AMC’s website and manually keying in data about the subject property. Then the waiting and checking for updates begins. Some AMCs will send an email as the appraiser schedules the appointment, completes the inspection

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and submits their report. Then the AMC may take some time reviewing the appraisal and approving it before submitting it to you. Once you receive the appraisal, not only do you have to attach it to the loan record in your origination system, but you also need to manually key in critical data elements from the report that will be used for FHA reporting purposes. There are a couple of problems with this workflow. For one, manual data entry into multiple systems is a gateway for errors. It is too easy for someone to transpose numbers when typing or spell something incorrectly, with a result that could range from an appraiser going to the wrong address to reporting false information to FHA. Errors cost you money, either directly (fines) or indirectly (time wasted correcting mistakes). The second issue is the position you end up in by not being able to provide great customer service to your borrowers. The lending process is big and scary to most of your clients, and the faster you can answer their questions and the easier you can keep them in the loop, the better. And because the appraisal is such a big part of the loan process, many people are on pins and needles while waiting to hear how much money they can pull out of their house. But how often does the borrower call the loan officer for an update, only to have the loan officer call the processor, so that the processor can call the AMC (or log into their website) to get a status, who then has to call the LO back, who is then finally able to circle back to the borrower? Yuck. Customer service like that is not the type of

competitive differentiation you need. A Better Workflow By leveraging today’s integrated technology, however, you can both reduce your costs and increase the quality of your customer service. For example, from within ReverseVision’s RV Exchange, you can get set up with an integrated AMC and then simply click a button to place your order. Behind the scenes, the system validates that all of the required data is in the loan record and it sends the request to the AMC. The AMC immediately responds with an order number that instantly shows up on the screen so that you know the order was a success. Then, as each task of the appraisal process is completed, RV Exchange is automatically updated, so your loan officer or processor can simply open the loan record and see exactly when the inspection was scheduled, completed, reviewed, etc. And when the appraisal is completed, it is automatically attached to the loan record and all of the key data needed by FHA is populated in the system. No manual data entry. No chasing down answers to basic questions. You save time, reduce costs and improve customer service. Adoption When it comes to integrated services, the biggest issue facing lenders today is getting their staff to use it. Leveraging an integrated system may require you to change vendors (groan), and it will most certainly require you to change your business process (ugh). But the upside to making a change could be the catalyst that sets you apart from your competitors. x


legal

prepare

Field of Dreams By Jim Milano

reversereview.com

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* spotlight

Under Regulation Z, a reverse mortgage transaction is defined as a non-recourse consumer credit obligation in which a security interest securing one or more advances is created in the consumer’s principal dwelling, and any principal and interest, is due and payable (other than in the case of default) only after: (i) the consumer dies, (ii) the dwelling is transferred, or (iii) the consumer ceases to occupy the dwelling as a principal dwelling.

*

legal

Non-FHA-insured conventional reverse mortgages are by definition not FHAinsured. Therefore, FHA HECM rules do not apply to non-FHA-insured conventional reverse mortgages. However, other federal rules do apply to non-FHA-insured conventional reverse mortgages.

*

tech

Federal Regulatory Issues - Is It a Reverse Mortgage?

Further, reverse mortgages are exempt from the high-cost home loan rules under HOEPA. If a loan failed the definition of a “reverse mortgage” under Regulation Z, regardless of whether it was closed-end or openend credit, it would be subject to the APR and points and fees tests under the recently revised provisions of HOEPA. Generally, a loan is covered under HOEPA if the APR on a first lien loan exceeds by more than 6.5 percentage points the average prime offer rate on a loan with a comparable

appraising

This article addresses the perceived (and real) impediments to reintroducing a proprietary reverse mortgage into the market at this time, and reviews some (but not all) of the legal and regulatory issues that should be considered in designing, marketing and offering such loans.

originating

E

ver since the virtual disappearance of the structured finance market after the financial crisis of 2008, reverse mortgage industry participants have waited and wondered when the secondary market for so-called “proprietary” (or non-FHA-insured) conventional reverse mortgages would return. With all of the changes that FHA has made to the HECM program over the past couple of years, including five successive PLF cuts, the imposition of initial disbursement limits, and the designation all fixed-rate HECMs as single-disbursement loans, one would think that the interest of originators in proprietary (or non-FHA-insured conventional) reverse mortgages would be keen and heightened at this time. Must a secondary market for such loans redevelop first, or will lenders have to take a risk and originate loans in the hopes that investment interest will follow? Perhaps it will be a bit like the quote from Field of Dreams: If you build it, they will come!

A couple of things stand out in this Regulation Z definition of reverse mortgages. First, the loan must be secured by the consumer’s principal dwelling. Similar to the HECM regulations, under Regulation Z, a consumer can have only one principal dwelling at a time. Thus, a vacation or other second home would not be a principal dwelling. So, a question arises as to whether a non-FHA-insured conventional reverse mortgage could be secured by a second home. From this definition, it appears the answer would be “no.” This is not to say that a lender could not make a non-recourse loan with no required monthly payments secured by a second home. It would appear however, that such a loan would not qualify as a reverse mortgage under Regulation Z. And if such “non-reverse” mortgage loans were structured as closed-end credit, they would be subject to the CFPB’s new Ability to Repay and Qualified Mortgage rules, which adds additional complications if no monthly payments on the loan were required. Lenders would nonetheless have to demonstrate that the borrower has the ability to repay such non-reverse mortgage loans.


The Reverse Review September 2014

legal term, or the points and fees exceed 5 percent of the loan amount. Another question is whether a lender could require the borrower to make interest-only payments under a loan, in order to increase the amount of loan proceeds that can be advanced to the borrower under the loan. As outlined above, a reverse mortgage as defined under Regulation Z provides that the borrower is not required to make any repayment of principal or interest until there is a maturity event (or default). Requiring the borrower to make interest-only payments under a loan would cause the loan to fail the definition of a reverse mortgage as provided under Regulation Z, with similar consequences as those outlined above for second homes. As with HECMs, TALC (and other Regulation Z) disclosures must be provided to a borrower in connection with a reverse mortgage. However, a TALC disclosure is not required, and thus should not be used, with a loan that is not a reverse mortgage. State Law Issues - The Balkanized Landscape Approximately 33 states have laws on reverse mortgages. These laws can be broken down into those that have a comprehensive regulatory scheme for reverse mortgages, and those that only impose regulatory or lesser requirements. Those states with a comprehensive reverse mortgage regulatory scheme include states such as New York, North Carolina and Tennessee. In these three states, unless a lender is a federally chartered bank, it will need a separate entity-level approval to make reverse mortgages, in addition to its standard or general mortgage lending license issued by each of these states. In New York, a proprietary reverse mortgage lender must have a standby letter of credit to fund 12 months’ worth of loan production, or $3 million, whichever is greater, unless 28

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the lender has a Dun & Bradstreet rating of either 4A1 or 5A1 for three consecutive years. Proprietary reverse mortgage lenders also must maintain a minimum net worth of $10 million, or have a parent company with a net worth of $100 million with a written commitment to make $10 million available to the reverse mortgage lender subsidiary. These financial responsibility requirements do not apply to a proprietary reverse mortgage lender that only originates reverse mortgage loans when the proceeds are fully disbursed at closing. Washington has similar financial responsibility requirements for proprietary reverse mortgage lenders, with similar exemptions. In addition to entity-level approval, in order to make proprietary reverse mortgages in New York, there are detailed loan level requirements. In New York, there are so-called 280 and 280-a reverse mortgages (named for the code sections of the New York Real Property where the statutory requirements are published). In summary, a lender must make as many 280-a loans as it does 280 loans in New York, or demonstrate why it cannot or does not plan to do so. Section 280-a loans generally must have private mortgage insurance and carry escrow accounts for taxes and insurance. If mortgage insurance is not available, a lender must submit proof to the mortgage banking regulator to that effect. Trying to prove the nonexistence of private mortgage insurance is a little like trying to prove a negative, and some lenders have had trouble in the past obtaining approval to do business in New York due to an inability to satisfy New York’s Kafkaesque requests in this regard. In addition, in Massachusetts, a lender cannot offer a reverse mortgage program until it submits its program specifications and loan documents to the Massachusetts Division of Banks for approval. Approval can take several months, and a lender cannot offer a reverse mortgage program in

Massachusetts until the Massachusetts Division of Banks approves the program. The same holds true in Iowa. California has a separate chapter in its civil code that governs reverse mortgages. Among other things, these laws require special disclosures and limit items such as prepayment penalties and the “cross selling” of reverse mortgages with other financial services products (except for things such as title insurance). (Cross selling is also prohibited in a number of other states, including Arizona, Louisiana, Maryland, Minnesota, New Hampshire, Rhode Island and Washington.) California laws on reverse mortgages were recently amended to provide for a seven-day cooling-off period between counseling and the taking of an application, and the required disclosures have also been updated. Louisiana, Massachusetts and Minnesota also have seven -day cooling-off period that runs from the date a loan commitment is issued by the lender. Proprietary reverse mortgages are not allowed in Vermont, and are difficult to offer (and thus uncommon) in Tennessee. Some states have different borrower vacancy timing periods for a maturity event. Further, in Illinois and Oregon, lenders must disclose to the borrower that obtaining a reverse mortgage may affect the borrower’s eligibility to obtain a tax deferral programs in those states. In Arizona, a reverse mortgage must contain restrictions that ensure the borrower does not fund any unnecessary costs for obtaining the reverse mortgage, including costs of estate planning, financial advice or other related services. Louisiana also requires special disclosures for proprietary reverse mortgages. In Maryland, all reverse mortgages must meet the program requirements of the FHA-insured HECM program, except for the limit on origination fees,


legal the maximum claim amount or the requirement for mortgage insurance. In Arkansas, reverse mortgages are subject to that state’s high-cost home loan law (which has APR, points and fees triggers similar to federal HOEPA, discussed above) unless the loan is sold to Fannie Mae or insured by FHA within 60 days of origination. This may not be possible with proprietary reverse mortgages.

Counseling

I don’t often get reverse mortgage counseling,

legal

but when I do, I choose QuickCert. 888.383.8885

OPS@QUICKCERT.ORG Telephone counseling nationwide!

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spotlight

A HUD-Approved Housing Counseling Agency

reversereview.com

*

tech

With all of the changes that FHA has made to the HECM program over the past couple of years, it seems logical the interest and appetite for proprietary reverse mortgages will increase. There certainly seems to be interest from certain segments of the secondary market. Whether the reintroduction of proprietary reverse mortgages will be like Field of Dreams remains to be seen. In designing and reintroducing non-FHA insured reverse mortgages, lenders should be aware that although FHA rules do not apply to such loans, many laws and regulations at both the federal and state levels do apply. Such laws and regulations include Regulation Z, and state laws requiring approval either at the entity level or the reverse mortgage program level, as well as counseling requirements, and other regulations on terms and conditions of the loans and disclosure requirements. x

appraising

Approximately 25 states require counseling in connection with reverse mortgages, and many states require that the counselor be HUD-approved. Many states also require that the lender give the borrower a list of counselors to choose from (much like the FHA HECM program) and require counseling independence. This can be problematic for lenders that want to send their proprietary reverse mortgage applicants to a counselor that understands their particular proprietary loan program, or for those lenders that wish to pay for counseling.

Conclusion

originating

In Pennsylvania, among other guidelines, a lender should take steps to determine if an applicant has the ability to understand the transaction. A reverse mortgage loan should not be offered or made if it is concluded that the customer is unable to understand the transaction. And a lender should consider the appropriateness, and fully disclose the possible consequences, of a reverse mortgage loan for a non-borrowing spouse living in the mortgaged property.

Several states’ reverse mortgage laws provide that if the lender does not make advances to the borrower as specified under the loan documents, the lender may be subject to penalties, or the loan will be void, or the lender may not be able to collect interest, principal, or both. Such states include California, Nebraska, North Carolina, Texas and Tennessee.


The Reverse Review September 2014

spotlight article Risk Factors:

A Data-Driven Approach to Reducing Default By L au r e n D an i e l s

w

In month’sthis edition,

Steph uncov anie Moul t ers a poten on pre ti borro dictor of al wer d efaul t.

A

ssociate Professor Stephanie Moulton of the John Glenn School of Public Affairs at The Ohio State University wants to know why seniors make the financial decisions they do. Moulton is three years into a first of its kind multiphase study of thousands of seniors with the goal of understanding what over the cycle of a reverse mortgage. One of the first subjects the findings address is a serious concern for the industry as a whole: default. Moulton spoke to The Reverse Review about her findings, how a common number may be the best line of defense in lowering default rates and what issues she will tackle next.

The Reverse Review: Before we get into the specifics of the study, tell me what piqued your interest in reverse mortgages. What inspired you to study the product? Stephanie Moulton: Prior to going back to graduate school in the early 2000s, I worked for a nonprofit community housing organization. One of my favorite parts of the job was working with seniors who were considering reverse mortgages. I was one of the first certified reverse mortgage counselors. More than 10 years later, as a professor and researcher, I am excited to be able to engage in a different type of work that benefits this important population of seniors.

TRR: Tell me about the specifics of the study. SM: This study is the first of its kind. Back in 2012, there was a headline30

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making report that showed about 9.4 percent of reverse mortgage borrowers were in tactical default. We wanted to see what indicators might predict a borrower’s risk. The goal is a meaningful look at the long-term well-being and outcomes of seniors who receive reverse mortgage counseling. We’re following a pool of more than 30,000 seniors who received reverse mortgages between 2006 and 2011, before the current changes in withdrawal limits and the like went into effect. We wanted to not only look at how to predict who is most likely to default, but also at how we thought removing that segment of the population will affect projected loan volume. The concern is once restrictions are in place, there are people who will no longer qualify for a reverse mortgage. Seniors who may otherwise need the help of a reverse mortgage may be driven out of the program.


spotlight article

“This kind of research can help bring more confidence and understanding to the market. Seniors are going to need a way to access their home equity, particularly the baby boomers.” -Stephanie Moulton

TRR: What results have you uncovered so far?

TRR: What are your plans for the study moving forward? Are there other aspects of the program you’re examining?

* spotlight

SM: HUD’s Office of Policy Development and Research has been a strong supporter of our work, providing us with a grant that has allowed us to expand our analysis, and providing ongoing expertise and technical support with the HECM loan data. We have been able to share our findings with HUD staff, and hope that the

SM: As a researcher, I defer to the experts in the industry and at HUD regarding specific programmatic changes. But generally, I think changes that can help enhance the long-term viability of the product are important.

legal

SM: Income was not associated with increased default risk. Once you take

TRR: Are you hoping the results will influence HUD policy when it comes to the program?

TRR: Are there changes you’d like to see made to the HECM program?

tech

TRR: Any surprising findings?

SM: I think some of the descriptive statistics are actually the most interesting. The data allows us to provide a better picture of the credit profiles and demographics of seniors who seek reverse mortgages, and then to explore how characteristics at the time of origination are associated with long-term outcomes like property tax and insurance default. For example, a very small proportion of reverse mortgage borrowers have very low credit scores. The average score was 693 [editor’s note: the national average is 723]. Targeting some additional interventions to those with low credit scores, like tax and insurance set-asides, could have a substantial impact on reducing default.

appraising

That’s not to say that all seniors with previous credit issues should be denied access to reverse mortgages, but seniors with a history of delinquencies are more likely to struggle to pay their property tax and insurance. I think that if you fall below some certain credit score or if you have a history of missing property tax and insurance payments, lenders should advise and maybe even require borrowers to set aside funds to cover those costs. The goal of a reverse mortgage is to make sure seniors are able to maintain their home.

TRR: What do you think the industry can learn from the data you’ve collected?

I hope that this kind of research can help bring more confidence and understanding to the market. Seniors are going to need a way to access their home equity, particularly the baby boomers. If we can help shed some light on this and inform how the product is used, it may spark innovation.

originating

SM: Credit score is a pretty good indicator of borrower risk. At first we were hesitant—credit score is such an important part of the forward mortgage market and we weren’t sure it was the right measure for the population of older Americans. The findings show setting a threshold of 500 or lower (and 500 is a very low score), reduced default by 12 percent, and if you raise the threshold to 580, which is still pretty low, it reduces default by nearly 40 percent. Furthermore, the impact of the number of people removed from eligibility is low—not nearly the 20 percent of reverse mortgage seekers who are disqualified by the withdrawal limits.

into account credit score, income isn’t significant anymore.

information is helpful as they make policy decisions. We understand that research is only one part of important policy decisions, but we are optimistic that our analysis will be useful as part of the decision-making process.

SM: We have ongoing surveys in the field right now; in one we are segmenting our 30,000 respondents into three different groups: people who received the reverse mortgage, people who decided not to get a reverse mortgage, and individuals who got a reverse mortgage and terminated it while they are still living. We want to know what happened after they made their decisions and where they are now. We also have a lot more questions we want answers to: What motivated respondents to seek a reverse mortgage? What have they used the money for? All of this information will be coming out in the next three or four years. x reversereview.com

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The Reverse Review September 2014

f o s e t a t s united

HECM

iels

By Lauren Dan

A closer look at reverse mortgage legislation, state by state Illinois Reverse mortgages will be exempted from the Illinois High Cost Home Loan Act.

Texas Last state to legalize HECM for Purchase 32

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Florida Largest percentage of population over 65 (17.8 percent)


A

t the moment,

the only constant in the reverse mortgage industry is change. Recent reforms to the FHA-backed HECM product, including principal and withdrawal limits, and protections surrounding non-borrowing spouses, have made it less of a need-based product of last resort and more of a retirement planning tool. These changes mainly apply on the federal level, but what about at the state level? While 98 percent of the reverse mortgages issued in the United States are federally backed, more than half of the states in the U.S. have regulations that apply to reverse mortgages. The past few months saw legislation in both California and Massachusetts, and NRMLA is watching more than 30 pieces of pending legislation in 12 states.

California

The Golden State

August brought the approval of Assembly Bill 1700 (AB 1700) by the California State Senate. Sponsored by California Assemblyman Jose Medina, the bill, first introduced in February, mandates a seven-day waiting period from the date of loan counseling to the date lenders may take an application or assess any fees. AB 1700 is very similar to a previous bill introduced by Medina in February 2013, which also required the waiting period, along with a required “suitability checklist” for reverse mortgage borrowers. A few months later, after meeting with NRMLA members, Medina took that version out of consideration.

NRMLA expressed concerns about the extra stress the checklist and waiting period would add to the lending process. The recently approved AB 1700 also requires lenders to provide a worksheet that addresses issues borrowers are advised to discuss with their counselor. The completed worksheet will need to be signed by both parties before a lender can move forward with an application. Jim Milano, partner at the law firm of Weiner Brodsky Kider, notes that the worksheet, once created, will be slow to reflect further expected revisions to the FHA HECM program, such as Financial Assessment. The requirements introduced by the bill and the existing law are redundant. Currently, law prohibits a lender from taking an application before providing a specified disclosure notice and written checklist to the potential borrower. The new bill replaces the written checklist requirement with the amended worksheet. Before completing an application for a reverse mortgage, California lenders will also be required to provide borrowers with a listing of no fewer than 10 HUDapproved counseling agencies. Milano also notes the marketing, origination and processing timeline for a reverse mortgage can already be a very long process. Once a senior decides to proceed with a reverse mortgage, after what can be a lengthy decision process, seniors may be eager to access the equity in their homes, and the seven-day cooling-off period will cause additional delays. The cooling-off period could also be considered superfluous in light of Regulation Z: The federal Truth in Lending Act already includes the Right of Rescission, the opportunity to cancel 8

LLINOIS The Illinois legislature passed a bill in January 2013 implementing a one-year delay until changes to the federal Home Ownership and Equity Protection Act (HOEPA)—with which the High Risk Home Loan Act is closely aligned—take effect. Reverse mortgages will be exempted from the Illinois High Cost Home Loan Act beginning in January 2014.

? What’s next? The bounce back in HECM endorsements is closely tied to the overall nationwide housing recovery. Some markets are bouncing back faster than others.

States With Highest Volume of HECM Loans (January – May 2014) California

3,999 loans Texas

1,695 loans Florida

1,668 loans New York

1,464 loans Pennsylvania

1,036 loans New Jersey

832 loans Virginia

725 loans Arizona

696 loans North Carolina

620 loans Illinois

616 loans Lowest Volume States: Vermont, Wyoming, Arkansas, South reversereview .com 8Dakota TRR | 33 Dakota and North


The Reverse Review September 2014

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HECM Facts by State Pennsylvania Philadelphia is the top performing metro area nationwide.

17.8%

#1

California

Florida

The No. 1 state in loan dollars, California

The Sunshine State has the largest percentage

has the greatest MCA dollars and the

of 65-plus residents at 17.8 percent.

largest population of residents over 65.

10 North Dakota There were 10 HECM loans endorsed year-to-date in this state, making it the lowest-producing state in the nation.

2016 Massachusetts A bill requiring face-to-face counseling has been delayed in this state until 2016.

$230k Illinois

Reverse mortgages will be exempted from the Illinois High Cost Home Loan Act.

Texas

The loan star state is the last state to legalize HECM for Purchase loans.

Rhode Island

Pending House Bill 7648 requires reverse mortgage servicers to obtain a license from the Director of the Department of Business Regulation.

Vermont The average sales price of a home in Vermont is $230,000.

10

top

Arizona

This is the latest state to join the list of the top ten with the highest HECM volume.

reversereview.com

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Connecticut Legislators in this state are establishing a task force to study the reverse mortgage industry. 8

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The Reverse Review September 2014

Top 10 States

With the Greatest Populations

Over 65

California

4,392,708

Illinois

1,600,863

Florida

3,418,697

Ohio

1,586,981

New York

2,651,655

Michigan

1,334,491

Texas

2,587,383

New Jersey

1,231,585

Pennsylvania

1,956,235

N. Carolina

1,161,164

the loan without penalty, within three business days of the closing date. While both Houses have passed AB 1700, there is no official word on when Governor Jerry Brown plans to sign the bill into law.

Massachusetts

Face-to-Face

ARIZONA By volume of HECM endorsements, Arizona made major gains year over year, jumping six places in 2014 to place within the top 10 reverse mortgage producers. So-called “sand states” like California, Nevada, Arizona and Florida are consistently strong performers.

36

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A condition requiring faceto-face loan counseling for low-income seniors has been pending in the Massachusetts legislature for nearly four years. Since 2010, members of the reverse mortgage industry have worked toward delaying the start of the in-person counseling, succeeding in 2010 and in 2012. In August, Governor Deval Patrick signed an economic development bill that delays the start of of the face-to-face counseling requirement again, until 2016. For some, the delay is a success. Mandating in-person counseling creates challenges for seniors without reliable access to transportation and generates stress for the limited number of counselors expected to cover the entire state. John Lunde, founder and president of Reverse Market Insight, says if the bill is signed into law, the reverse market business in Massachusetts may become increasingly focused on urban areas. “Will counselors be expected to drive hundreds of miles to access seniors in remote and rural areas?” Lunde asks. There simply are not enough counselors at the moment to meet demand. The majority of counseling organizations

operating within Massachusetts are nonprofit and less able to add additional staff to provide adequate coverage for the state’s seniors. Forcing face-to-face counseling will significantly affect the ability of the industry to meet the state’s requirements while servicing seniors seeking reverse mortgages.

Pennsylvania Land of Opportunity?

According to 2010 Census data (the most recent available), Pennsylvania ranks fifth in the United States for number of residents over 65. If calculated by percentage of population aged 65-plus, Pennsylvania ranks fourth; older Americans make up 15.5 percent of the state. Florida has the greatest proportion of people who are at least 65 (17.3 percent), followed by West Virginia (16 percent), Maine (15.9 percent), Pennsylvania and Iowa (14.9 percent). Pennsylvania and Florida are the only states to rank in the top five in both number of seniors and seniors as a percentage of population. Demographic projections predict Pennsylvania will remain in the top five through 2030, as the last of the baby boomers reach retirement age. “Pennsylvania is usually the one that surprises people most when we rank the largest reverse mortgage markets by loan count, and it’s top five in terms of the number of age-eligible households,” Lunde says.


NEW YORK

State-level laws governing reverse A pending bill would subject FHA-insured mortgages are loans to New York state laws and regulations. part of the state Previously, federally insured loans were exempt constitution. Texas was also from the state’s regulations. Additionally, the the last state to bill would repeal an existing property law allow reverse authorizing reverse mortgages for seniors age mortgages for 70 and older. purchase. For Purchase loans were allowed in November 2013, with the first loans closing earlier Late Start, Fast Growth this year. The market for HECM for Purchase loans will grow thanks to The reverse mortgage a boom in homebuilding in three of industry in Texas may have the state’s largest metropolitan areas. gotten a late start, but it A study by real estate website Trulia was quick to make up for the delay. found Houston, Austin and Dallas The Lone Star State was last to allow among the top 10 of cities experiencing reverse mortgages, beginning just 14 a building boom. Houston took fourth years ago in 2000. In its first 10 years of place with a 61 percent increase in reverse mortgages, Texas homeowners homebuilding permits issued in 2014. accessed more than $5 billion. Texas is Austin ranked No. 7 with a nearly 40 now the second-largest market for the percent increase and Dallas was close product, not too far behind California.

Texas

Reverse Review readers help thousands of seniors find financial security.

behind at No. 8 with a 36 percent increase. All three cities also enjoyed large growth in asking prices: 10.4 percent, 12.3 percent and 7.6 percent respectively. The Lone Star State’s late entrance into the reverse market began 143 years ago, according to Scott Norman, vice president of sales at Urban Financial of America and an expert in the Texas market, who completed the state’s first reverse mortgage in 2000. The restrictions on mortgage borrowing date back to the first days of Texas’ statehood in 1845, when the constitution banned home loans entirely. It wasn’t until the late 1990s that home equity loans became legal. “The uniquely protective home equity laws of Texas are embedded in the constitution; any attempt to amend it is not looked upon with open arms,” Norman says. “It’s a demanding undertaking that literally takes years to prepare for.” x

THE

REVERSE review

Get involved.

Let’s talk

info@reversereview.com

about how

we can help thousands more.

visit us online at reversereview.com your monthly publication for reverse mortgage news

reversereview.com

8 TRR

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The Reverse Review September 2014

EXAMINE

last word The Benefit of Collaboration By Ed O’Connor

Want to comment on this article? Comment online at reversereview.com.

T

he reverse mortgage industry began as a cottage industry, but in the last decade, we have seen a number of companies enter the space. When more people get involved, word spreads about the value of the product. Mortgage professionals recognize that the HECM is a great product and has the power to continue to help thousands of retirees find financial security. So what can help this industry grow despite the current volume downturn? Collaboration. Equal partners working together toward a common goal. People sharing their ideas and offering suggestions about how we can solve our customers’ problems. Before I had the ability to lend nationwide, I spoke with interested borrowers in different parts of the country. Even though I was not licensed to originate their loan, I still talked with them about who in their area could help seniors explore their options further. Even now, in my conversations with a potential borrower, I sometimes determine that another originator may

38

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be able to offer help on a different level. That effort has helped me forge good friendships and solid business partners, and it has also opened up new ideas and opportunities as my partners and I work together to assist a customer. The underlying message here is that we should help each other, because in doing so we not only serve the best interests of the senior, we also help elevate the industry through an exchange of ideas and information. The benefits of positive collaboration extend beyond our dealings with customers. It is also essential to maintain this sense of partnership in our dealings with industry colleagues. With the advent and proliferation of social media, it has become much easier for reverse professionals to share ideas and information with each other. Whether it’s through articles or comments on LinkedIn, Reverse Mortgage Daily or reversereview.com, people share their ideas about the business of selling HECM loans. These posts are a great source of information,

“So what can help this industry grow despite the current volume downturn? Collaboration. Equal partners working together toward a common goal. People sharing their ideas and offering suggestions about how we can solve our customers’ problems.”

but keep in mind that the author is entitled to their opinion. Take it in stride, inform them if the facts are off, but avoid slamming the writer with harsh rhetoric when you do not agree. This does no one any good. Keep it positive. The point is to participate in a positive forum that allows for the exchange of ideas and information that can help all of us better our business. The Extreme Summit is a great example of industry collaboration. I have heard from several people that they do not think this campaign will help the “little guys,” but I think this view is wrong.

The effort, funded by six major lenders, is spreading positive information to boost the public’s perception of the product. Those involved are also adamant that others in the space get involved. This can only benefit the entire industry as a whole. You serve a negative purpose if you bash the industry; help and get involved. Participate in a positive, constructive conversation about how we can work together to expand this market, for I truly believe that it is through collaboration that we shall succeed. x


reversereview.com

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The Reverse Review September 2014

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