The Reverse Review June 2014

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REVERSE MORTGAGE MARKETING AT THE GROUND LEVEL PG. 24 DOCUMENTING YOUR FINANCIAL ASSESSMENT DETERMINATIONS PG. 30 +JASON McNAMARA SITS DOWN IN OUR HOT SEAT PG. 16

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THE

REVERSE june 2014

review

Reverse professionals pound the pavement, connecting with seniors in their communities to discuss the benefits of the loan.

Lighting your way in Reverse.

The Reverse Review June 2014

s s s s

Wholesale Lending Correspondent Lending Aggregation Partnering Retail Lending

Your complete reverse mortgage solution offering: • Market-leading prices • Multi-level partnering program • Advanced technology • Powerful, scalable secure market entry system

RMSNAV.com

• Unsurpassed levels of service

2

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For further information, contact: Ralph Rosynek 281-404-7970 Email: rrosynek@rmsnav.com

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 June 2014

From the Editor Feet-on-the-street originators work diligently to build meaningful

relationships with seniors and the

Senior Publisher

local communities, they seek to educate

Publisher

loans. These originators put in time

Editor-in-Chief

their homes and developing a personal

Creative Director

of duty for the typical mortgage loan

Copy Editor

consumers about reverse mortgage with their clients, often meeting in

connection that reaches beyond the call

In 1988, President

Reagan authorized FHA to issue reverse mortgages through the Home Equity

Conversion Mortgage Demonstration program. Since then, thousands of

originators have been hitting the streets, meeting locally with seniors in their

communities to talk about the benefits of the loan.

While new forms of origination have developed over the years with the

officer.

Reverse mortgage originating is

a business like any other, with an

Marketing Director alycia GREER

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

the work is deeply personal. For them,

Subscriptions email : information@reversereview.com

clientele, the goal is much broader and

the greatest reward isn’t closing a loan;

it’s helping seniors solve their problems.

Editor-in-Chief

{ Jessica Guerin }

Want to contribute to the conversation?

Contact jessica@reversereview.com.

Editorial Content email : 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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t ay ec st onn c

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.

Traci Knight

who often work very closely with their

But for feet-on-the-street originators,

prefer to make their living by meeting

Feedback

Jessica Guerin

Printer The Ovid Bell Press

dedicated reverse professionals who

This issue of TRR is dedicated to them.

Erik Richard

objective to make a sustainable living.

center operations, there are still many

old-school “feet on the street” approach.

Reza Jahangiri

Kersten deck

advent of Internet leads and call

with seniors face to face, embracing the

Meet the Team

professional partners who advise them.

Through active involvement in their

A note from jessica guerin

l

FACEBOOK AND LINKEDIN

Table of Contents

TRR 6.14

20 | Originating Integrity, the Hallmark of Our Work With honesty and veracity we can drive our product forward.

Bob Tranchell

In this issue...

23 Shelley Giordano Originating

24 | Marketing Reverse Mortgage Marketing at the Ground Level How getting involved in your community can better your business Patricia Whitlock

27 | Appraising The Absolute, the Relative and the UAD How to navigate subjective property details in an appraisal report

30 John Levonick Legal

Elizabeth Green Charles Gress

Marty Bell

A breakdown of HUD’s recent ruling on the rights of non-borrowing spouses

Read about the association’s current initiatives.

15 | Roundup

Reverse Mortgage Daily

A collection of recent facts and surveys affecting the reverse market

10 | Report

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

jessica guerin

RE V

E TH

E REVIEW THE VERS RE R

EV ER

ER

HE REVERSE REV IE W

REVERSE MORTGAGE MARKETING AT THE GROUND LEVEL PG. 24 DOCUMENTING YOUR FINANCIAL ASSESSMENT DETERMINATIONS PG. 30

HUD Rules on Non-Borrowing Spouses this issue

E

INSIDE

TH

+JASON McNAMARA SITS DOWN IN OUR HOT SEAT PG. 16

EVIEW THE REVE

RS E

W IE

WT VIE RE

Originators connect with seniors in their local communities.

SE

“They work with their feet on the street, their boots to the ground, pounding the pavement.

They eschew the modern call center model, the Internet lead search, the impersonal direct-mail approach. They are old-school reverse mortgage originators.

june 2014

cover RS

Reverse professionals pound the pavement, connecting with seniors in their communities to discuss the benefits of the loan.

@

Want the online version? reversereview.com/magazine

VE

34 | Feet on the Street

RE

FEATURE

Jason McNamara CEO of Celink

THE

Reverse Market Insight

Last Word

W

April’s Top Lenders and HECM endorsement stats through March

Ralph Rosynek

38 Austen Verst

EVIE

Headlining stories of the past month

32 | Spotlight HUD Addresses NonBorrowing Spouses

R SE

09 | Industry Update

12 | NRMLA News

ER EV

The latest developments in companies across the reverse space

R

08 | Movers and Shakers

THE

REVERSE JUNE 2014

review

Reverse professionals pound the pavement, connecting with seniors in their communities to discuss the benefits of the loan.

reversereview.com

8 TRR

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The Reverse Review June 2014

Contributors

John K. Lunde

Marty Bell

J ohn K . L unde

Ma rty B e ll

Ja s on McNamara

10 | Industry 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

12 | 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.

16 | Hot Seat g Jason McNamara is the chief executive officer of Celink, the nation’s largest reverse mortgage subservicer.

McNamara is also a principal at Peer Advisors, an investment group focused on the senior housing finance market, and he serves on the Board of Directors of the National Reverse Mortgage Lenders Association.

O t t o K umba r

B ob Tr an c h e ll

Sh e lle y Gio rdano

19 | Extreme Summit Update g Otto Kumbar is the CEO of Liberty Home Equity Solutions.

Kumbar, who worked previously as business leader for Liberty, has been in the mortgage industry since 2001, working as Genworth’s managing director for Latin America, CEO of Australia and managing director for mortgage insurance in Europe. Kumbar also worked for General Electric, where he held various positions in GE Plastics, Industrial Systems, Global Exchange Services and GE Mortgage Insurance. Kumbar attended Rensselaer Polytechnic Institute.

20 | Integrity, the Hallmark of Our Work g Bob Tranchell is the director of reverse mortgages for Total Mortgage Services LLC. Tranchell spent 18 years in the ministry, many of them overseas in developing nations, and has helped build orphanages and create programs serving orphans and seniors. He has a passion for his work because he has seen time and time again how home equity management allows his clients the quality of life, security and stability they deserve.

23 | The Hard Is What Makes It Great g Shelley Giordano is the director of business development at Security One Lending. She has served as a loan originator and sales leader in her 14-year HECM lending career. Giordano has spoken to audiences at the ABA, on CNN Financial, at the National Association for Home Builders and to numerous financial planning groups. She works with Women in Housing and Finance and was a panelist for the White House Conference on Aging in 2005.

Pat r i ci a W hi tloc k

Ch ar le s Gr e s s

El i z ab e th Green

24 | Reverse Mortgage Marketing at the Ground Level g Patricia Whitlock is a CRMP with GuardHill Financial in New York.

She served as a lieutenant in the U.S. Navy and taught English as a second language in Greece for 18 years. She serves on the board of directors of the Suffolk County Retired and Senior Volunteer Programs and is active in the Long Island Chapter of the National Aging in Place Council.

Earlier this year, she spoke at the American Conference Institute’s Summit on Reverse Mortgages in Dallas. She is fluent in Greek.

27 | The Absolute, the Relative and the UAD g Charles Gress is a senior review appraiser at Toledo-based Martin + Wood Appraisal Group LTD. With 17 years of experience in the appraisal industry, Gress is involved in the attraction, education and retention of appraisers, having trained more than 30 in his time.

Gress was the keynote moderator for the Collateral Risk network in 2011.

27 | The Absolute, the Relative and the UAD g Elizabeth Green is a principal consultant with rel-e-vant Solutions.

She is a strategist, solutions architect, speaker and valuation advocate. A recognized mortgage technology veteran in software product leadership for solutions in residential property valuation, loan origination, mortgage servicing and secondary marketing, Green is helping to foster a new level of understanding in property valuation and collateral risk assessment through the application of digital intelligence.

Jason McNamara

Otto Kumbar

Bob Tranchell

Shelley Giordano

Patricia Whitlock

Charles Gress

Elizabeth Green

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Contributors Megan Ha f e ns t ei n

Megan Hafenstein

John Levonick

Ralph Rosynek

29 | Title Tip: Understanding Easements g Megan Hafenstein is the assistant VP of sales at Premier Reverse Closings (PRC), a national reverse mortgage title and settlement company based in Rocklin, California. Hafenstein manages accounts in 22 states from the company’s headquarters and works closely with operations to ensure that clients’ files are closed accurately.

Prior to joining PRC six years ago, Hafenstein worked in the California Legislature after receiving her B.A. in political science from Cal Poly, San Luis Obispo.

Joh n Le von i c k 30 | Documenting Your Financial Assessment Determinations g John Levonick is the chief legal and compliance officer at Mortgage Cadence.

He is responsible for identifying and managing compliance risk. He has focused on working with creditors, servicers, secondary market participants and technology vendors in providing guidance on consumer finance laws. His experience in the mortgage lending industry has given him the ability to provide the guidance and direction necessary to navigate the challenges of a constantly changing regulatory environment.

Ralp h Ros y n e k 32 | HUD Addresses Non-Borrowing Spouses g Ralph Rosynek is a senior vice president and the director of marketing and communications at Reverse Mortgage Solutions, Inc. RMS is a multi-channel lender, premier HECM mortgage servicer, and historically the largest issuer of Ginnie Mae HMBS bonds. Rosynek holds HUD HECM Direct Endorsement credentials and has assisted HECM borrowers in many industry and corporate leadership roles for the past 15 years. rrosynek@rmsnav.com

Austen Verst

Be a part of the conversation.

-

Au s ten Verst 38 | Doing Right by Taking Your Time g As executive vice president of retail production at AAG, Austen Verst oversees all aspects of the lender’s retail origination channel.

Verst joined the company in 2007 and is the second-longest tenured employee. He has run numerous divisions within AAG, including sales, marketing, training, IT, customer service and business development.

Verst began his career as a financial analyst for a Fortune 500 tech company and has a degree in industrial engineering.

Do yo have wu it take hat s?

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

8 TRR

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The Reverse Review June 2014

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

Hav e a c o mpan y u p dat e y o u w ou ld lik e t o s e e p u b l i s h e d?

Urban Financial of America Names Scott Norman VP of Sales for Its Retail Field Channel Industry veteran and reverse mortgage advocate Scott Norman has joined Urban Financial of America as vice president of sales, overseeing nationwide production for the company’s growing field retail channel and reporting to Chief Sales Officer Sherry Apanay. A top-producing sales professional and active proponent for reverse mortgages, Norman led the original 1999 campaign to amend the Texas Constitution to allow the product to be offered in the state and founded the Texas Association of Reverse Mortgage Lenders. He later closed the very first reverse mortgage loan in Texas in 2000.

Norman entered the mortgage banking business in 1993 and became president of the Austin Mortgage Bankers Association in 2005, and president of the Texas Mortgage Bankers Association in 2010.

Most recently, he was vice president of Sente Mortgage’s reverse mortgage division in Austin. “Our core values are client focus, integrity, teamwork, innovation and respect for each individual and responsible citizenship, which we believe Scott exemplifies,” said UFA President Steve McClellan. “Scott’s advocacy for seniors is something we value greatly as well.”

ReverseVision Joins Mortgage Technology Magazine’s List of Top 50 Service Providers ReverseVision has been named one of Mortgage Technology magazine’s 2014 top 50 service providers. The annual list recognizes lenders “for their accomplishments in four criteria: continued advancement of technology and services, viable revenue model and value proposition, exceptional customer service and unique impact on the mortgage industry.” According to the magazine, 8

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Email it to Jessica@reversereview.com.

ReverseVision “has focused on expanding its product suite to include new loan officer productivity tools, EDM capabilities, and Web-based education and training to tools to complement its reverse mortgage LOS. Its core offering provides a centralized hub to pass loan files between originators, investors and other third parties.”

Generation Mortgage Company Employees Receive Recognition, Company Launches New Website Several Generation Mortgage Company employees have received impressive accolades throughout spring 2014. Loan officer Lisa Hamilton was featured in D Magazine’s annual list of Best Mortgage Professionals. Hamilton has spent more than 10 years working in the HECM industry and currently serves as part of GMC’s Texas sales team. Also, the Georgia CIO Leadership Association recently named GMC’s chief information officer, Walt Carter, a finalist for the 2014 Georgia CIO of the Year Awards in the Corporate category. GMC has also launched a brand-new version of its corporate website, generationmortgage. com. The site features a sleeker layout and incorporates the company’s nu62 software into the design and content.

Patrick Lambrecht Joins Reverse Mortgage Funding as Retail Operations Manager Reverse Mortgage Funding has hired Patrick Lambrecht as its retail operations leader. As such, Lambrecht will lead all retail operations for the company, with particular focus on the HECM for Purchase and private label channels, two key growth areas. Lambrecht, who worked previously as vice president for Security One Lending, will report to operations executive Michele Zachensky.

“Patrick is a great talent and we’re happy he is joining us,” said Zachensky. “He brings with him 20 years in the mortgage industry, with particular expertise in retail, operations and sales. He knows retail operations very well and will be a tremendous asset to us.”

360 Mortgage Group Launches Retail Branch Model, Hires Nancy Pedone to Lead Expansion 360 Mortgage Group, a privately owned mortgage banker with a primary focus on third-party origination, has expanded the production infrastructure of its reverse mortgage division by launching a retail branch model. This new branch is the reverse division’s third production channel for the HECM market and will supplement its wholesale and inside-direct sales channels. As a first step in its national expansion plans, the reverse division has opened its first branch in Dallas, Texas, and has additional retail branches pending in seven other states. 360 Mortgage Group has also named Nancy Pedone national reverse branch manager of its reverse division. In her new role, Pedone will focus on building a branch network throughout the country and hiring sales managers, branch managers, retail loan officers and operations professionals. “360 Mortgage Group is 100 percent committed to being a leader in the reverse mortgage market. We are making the needed investments—from production talent, operational support and geographic expansion—to have the right lending infrastructure in place to provide borrowers the best reverse mortgage solution,” said President Mark Greco.

Industry Update

June 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.HUD: Still Working on

1.President Nominates Texas

HUD is working on its proposed Financial Assessment guidelines for the reverse mortgage industry with an implementation date still pending, a department official said. Speaking before attendees of the NRMLA Western Regional conference in San Diego, Director of Single Family Program Development at HUD Karin Hill told lenders that the agency is making progress on Financial Assessment and expects to issue a mortgagee letter in early summer. “We will be issuing a new mortgagee letter,” Hill said. “Review the ML that was already published. The bulk of that ML is not going to be changing.”

Hill advised attendees to begin preparing.

“I wouldn’t wait until [the new mortgagee letter] comes out to start working on how that will affect your processes,” she said.

Hill said HUD is also working on additional reverse mortgage mortgagee letters, including updating its tax and insurance policy and expanding guidance for reverse mortgage loss mitigation, and is drafting a proposed rule to codify recent changes and proposing additional HECM origination and servicing policy.

Mayor as New HUD Secretary

Texas Mayor Julián Castro, 39, is poised to join the president’s Cabinet, replacing Shaun Donovan as HUD secretary. “As mayor [of San Antonio], Julián has been focused on revitalizing one of our most wonderful cities—planning thousands of housing units downtown, attracting hundreds of millions of dollars of investment,” President Obama said during his announcement of the nomination.

“He’s built relationships with mayors all across the country. He’s become a leader in housing and economic development.”

Donovan, 48, has served as HUD secretary since January 2009 and led the agency through the foreclosure crisis. The president has nominated him to be the next director of the Office of Management and Budget. //May 23, 2014

2.House Approves $45 Million in Housing Counseling Funds for 2015

Housing counseling programs would get $45 million in fiscal year 2015 under a spending bill passed by the House Appropriations Committee, the same amount pledged in 2014. While the appropriations committee was positive on housing counseling in general, it did not approve funding for a new pilot program, Homeowners Armed With Knowledge (HAWK), which would expand the use of housing counseling for FHA loans. The last time housing counseling funding was slashed altogether, causing many counseling organizations to scramble to secure funding and raise the cost of services, was in 2011. //May 22, 2014

Reverse Mortgage Financial Assessment

//May 11, 2014

4.Two States Revise, Ease LO Licensing Laws

Arizona and Virginia have recently passed laws modifying existing loan originator licensing and continuing education requirements and allowing for transitional LO licenses. A recent House bill in Arizona grants loan originators a license once they complete a 20-hour education course at some point during the three years immediately preceding their application.

This extends the previous two-year window applicants had to complete the course.

Virginia also has introduced new LO licensing legislation and recently passed a

new law authorizing the State Corporation Commission to issue transitional mortgage loan originator licenses. The new bill essentially allows pre-licensed individuals to conduct business as an LO for up to 120 days. During that timeframe, the individual can fulfill pre-licensing education and written test requirements and apply for a mortgage loan originator license. Research Arizona House Bill 2098 and Virginia Senate Bill 118 for more details on the new stipulations. //May 12, 2014

5.CFPB Hearing Takes on GOP Concerns

Accusations that the CFPB is secretive and requires additional oversight were at the heart of a Financial Institutions and Consumer Credit Subcommittee hearing that examined legislative proposals to address criticisms of the bureau. House Republicans are supporting 11 different bills that would change the way the CFPB conducts its business and oversight. “The CFPB has utilized a closed decision-making process, ignored or circumvented limits on its authority, and announced vague standards that provide no guidance for lawabiding companies,” said Andrew Pincus, partner in the law firm Mayer Brown LLP, on behalf of the U.S. Chamber of Commerce.

One of the proposed measures includes creating a devoted inspector general just for the CFPB. The bureau currently receives oversight from the Federal Reserve’s inspector general, but GOP lawmakers say the agency, which has 1,300 employees, requires its own watchdog. Another bill would require the CFPB to open some of its meetings to the public. //May 22, 2014

reversereview.com

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The Reverse Review June 2014

Report April 2014

Top Lenders Report

American Advisors Group

One Reverse Mortgage

Liberty Home Equity

Endorsement

Endorsement

Endorsement

12345 1194

409

Lender

10

337

Endorsements

Urban S1L / RMS Financial of Endorsement America 236

Endorsement

295

Lender

Endorsements

PROFICIO MORTGAGE VENTURES LLC

120

SUN AMERICAN MORTGAGE CO

11

GENERATION MORTGAGE COMPANY

96

GEORGETOWN MORTGAGE

11

LIVE WELL FINANCIAL INC

74

FULTON BANK

10

NET EQUITY FINANCIAL INC

56

ATLANTIC BAY MORTGAGE GROUP LLC

10

MCM HOLDINGS INC

48

CITY FIRST MTG SERVICES

10

ASSOCIATED MORTGAGE BANKERS INC

46

DIRECTORS FINANCIAL GROUP

10

CHERRY CREEK MORTGAGE CO INC

42

SENIOR MORTGAGE BANKERS INC

10

SUN WEST MORTGAGE CO INC

42

UNIVERSAL LENDING CORPORATION

9

UNITED NORTHERN MORTGAGE BANKERS 42

CHRISTENSEN FINANCIAL INC

9

PLAZA HOME MORTGAGE INC

31

CIRCLE MORTGAGE CORPORATION

8

FIRSTBANK

31

DOLLAR BANK FSB

8

GMFS LLC

30

GERSHMAN INVESTMENT CORP

8

M & T BANK

29

GREAT OAK LENDING

8

REVERSE MORTGAGE FUNDING LLC

29

LEADER ONE FINANCIAL

8

OPEN MORTGAGE LLC

27

STERLING SAVINGS BANK

8

MONEY HOUSE INC

27

PEOPLES HOME EQUITY INC

8

TOWNEBANK

26

MORTGAGE SERVICES III LLC

8

NORTH AMERICAN SAVINGS BANK

22

NATIONWIDE EQUITIES CORPORATION

21

ADVISORS MORTGAGE GROUP LLC

21

HIGH TECH LENDING INC

19

FIRSTAR BANK

18

UNITED SOUTHWEST MORTGAGE

17

AMERICAN PACIFIC MORTGAGE

16

MAVERICK FUNDING

14

MLD MORTGAGE

14

NATIONSTAR MORTGAGE LLC

14

MORTGAGESHOP LLC

14

AMERICAN NATIONWIDE MORTGAGE CO

13

HOMEOWNERS MORTGAGE ENTERPRISE

12

TOP FLITE FINANCIAL INC

12

PEOPLES BANK

11

SOUTHERN TRUST MORTGAGE LLC

11

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Reverse Market Insight - Logo PANTONE COLORS

October 9, 2009

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.

3005C

Process Blk C

Report HECM Endorsement Stats Through March 2014 INDUSTRY SUMMARY

Trailing Twelve Month Endorsements

RETAIL

-9.79%

Wholesale Endorsement Growth

4,000

-11.36%

2,000

Total Endorsement Growth

-10.56%

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

*Figures above reflect change from prior month

Wholesale *Numbers represent months

UNITS

CHG%

UNITS

3,145

CHG%

TOTAL UNITS

CHG%

-5.21%

2,568

2.97%

5,713

-1.7%

May 2,823 -10.24%

2,498

-2.73%

5,321

-6.86%

Apr

Retail Endorsement Growth

6,000

WHOLESALE

Jun

3,002

6.34%

2,335

-6.53%

5,337

0.3%

Jul

3,232

7.66%

2,511

7.54%

5,743

7.61%

Aug 3,125

-3.31%

2,248 -10.47%

5,373

-6.44%

Sep 2,735 -12.48%

1,782 -20.73%

4,517 -15.93%

Oct

2,510

-8.23%

Nov

2,734

8.92%

Dec

2,594

-5.12%

Jan

2,789

7.52%

2,265 39.04%

5,054 19.68%

Feb

2,614

-6.27%

2,545 12.36%

5,159

Mar

2,358

-9.79%

2,256 -11.36%

4,614 -10.56%

TOT

1,676

4,186

-5.95%

1,629

33,661

-7.33%

4,685 11.92%

1,951 16.41%

4,223

-16.5%

26,264

-9.86% 2.08%

59,925

{ FIGURE } 70%

Fixed Rate Percentage

60% 50% 40% 30% 20% 3/1/14

2/1/14

1/1/14

12/1/13

10/1/13 9/1/13

11/1/13

9/1/13 8/1/13

8/1/13

7/1/13

6/1/13

5/1/13

3/1/13 1/1/13

4/1/13

2/1/13

1/1/13

10/1/12

9/1/12

8/1/12

7/1/12

Fixed

ARM

$1,200.0 $1000.0 $800.0 $600.0 $400.0 $200.0

2/1/14

1/1/14

12/1/13

11/1/13

10/1/13

7/1/13

6/1/13

5/1/13

4/1/13

3/1/13

2/1/13

11/1/12

10/1/12

9/1/12

8/1/12

7/1/12

6/1/12

5/1/12

4/1/12

$0 3/1/12

in the millions

initial principal limits

hecm endorsement

02

12/1/12

{ FIGURE }

6/1/12

5/1/12

4/1/12

10% 3/1/12

hecm endorsement trends

01

reversereview.com

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The Reverse Review June 2014

NRMLA News

On the Docket:

HUD Granting 60-Day NBS Foreclosure Extensions FHA mortgagees may request extensions on foreclosure initiation of up to 60 days when there is a surviving nonborrowing spouse living in the property, according to a Mortgagee Letter released by HUD. Announcement 2014-19, published April 21, says extensions will be granted on a case-by-case basis and may include loans where the mortgagee has already initiated foreclosure.

To request the extension, a mortgagee must: 3 Prepare a detailed extension request on company

letterhead 3 3 Obtain an authorized loan servicing manager’s

signature on the request 3 3 3 Upload the request in HERMIT to the Documents

tab; the servicer is to select the Extension document type The notice also advises servicers to track these extension requests in their proprietary HECM servicing systems in the event that HUD needs to reach out to the servicers to track the volume of these requests.

&

Read more about HUD’s NBS ruling in our Spotlight story on page 32.

California → Introduced by

Assemblyman Jose Medina, Assembly Bill 1700 would impose a seven-day cooling-off period after counseling during which time a lender could not take an application or assess any fees. It would also require a counselor and the prospective borrower to sign a worksheet that addresses and discloses certain issues that the borrower is advised to consider and discuss with the counselor.

12

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Connecticut → In its original

form, Senate Bill 226 would have required a non-borrowing spouse to offer his or her consent for the reverse mortgage transaction to proceed. A substitute version has since been filed, which establishes a task force to study the reverse mortgage industry with a special focus on consumer protections and federal and state court cases that directly impact the business.

Status: Pending in the Senate.

Another bill introduced in the Connecticut legislature is Senate Bill 5352, which would require reverse mortgage servicers to obtain a license from the Connecticut Banking Commissioner. Status: Pending in the Joint Committee on Banks.

GNMA Clarifies Eligibility Guidelines For HMBS Securities Ginnie Mae placed a temporary moratorium on the pooling of fixed-rate HECMs that allow homeowners to take future draws, either from a line of credit or monthly payments, until it and FHA have additional time to study these newer product variations.

A recent All Participant Memorandum said Ginnie Mae will cease guaranteeing HECM mortgage-backed securities containing fixed-rate HECMs, other than fixedrate HECMs with a single disbursement lump sum payment plan option, beginning June 1. The moratorium does not impact participations or future draws from loans that were securitized prior to the June 1 deadline, nor does the moratorium affect variable rate HECMs.

However, note that under Ginnie Mae guidelines, the first participation in a HECM loan is not eligible for pooling in the same month in which the loan is funded.

Thus, fixed-rate HECM loans originated without the single disbursement lump sum payment plan option will have to be closed on or before April 30, 2014, in order to be pooled and included in Ginnie Mae-guaranteed HMBS securities prior to June 1, 2014.

Ginnie Mae will also monitor issuers who retain fixed-rate HECM loans (other than fixed-rate HECMs with single disbursement lump sum payment plans) outside of HMBS pools because of the interest-rate risk such loans could pose and the potential impact on issuers’ capacity to meet their obligations administering other MBS pools.

However, Ginnie Mae left open the possibility that fixed-rate HECM loans with future draws may be allowed into HMBS pools at a later time after they have been thoroughly analyzed.

Illinois → Illinois House Bill 5331 would require persons exempted from the Illinois Predatory Lending Database Program, which includes reverse mortgage loan originators, to obtain a certificate of exemption that must be filed with the mortgage. Status: Passed the Illinois House of Representatives and is now pending in the Senate.

In the States

Rhode Island → House Bill 7648

would require reverse mortgage servicers to obtain a license from the Director of the Department of Business Regulation. Status: Committee on Corporations has recommended its passage, but no further action has been taken.

In the Press The following series of items gives you a sense of NRMLA’s warroom approach to press we feel is inaccurate or misinformed.

NY Times Article Causes Backlash One of the more controversial articles published this past month was Jessica Silver-Greenberg’s piece in the March 26 edition of The New York Times about the frustration of heirs whose parents got a reverse mortgage and the issues they encountered paying off the debt so they could keep the house.

The article, titled “Pitfalls of Reverse Mortgages May Pass to Borrower’s Heirs,” generated just under 630 comments, the vast majority of them critical of the reporting and the views expressed by the heirs.

Persons interviewed for the story, including Isabel Santos, whose mother, Yolanda, got a reverse mortgage in 2009 to pay for living and medical expenses, argue that they were never told by the lender that they could purchase their parent’s home for 95 percent of its appraised value.

Silver-Greenberg wrote, “Ms. Santos, 61, along with a growing number of baby boomers, is confronting a bitter inheritance: The same loans that were supposed to help their elderly parents stay in their houses are now pushing their children out.”

NRMLA member

NRMLA welcomes the following companies who recently joined the association.

NRMLA President & CEO Peter Bell explained that reverse mortgages are tightly regulated and that lenders strictly abide by the 95 percent rule.

Lenders must give heirs up to 30 days from when the loan becomes due to determine what they want to do with the property, and up to six months to arrange financing or sell the property, with possible extensions. If the heirs don’t meet these federally mandated deadlines, then lenders are obligated to initiate foreclosure.

There is no data, wrote SilverGreenberg, on how many heirs are facing foreclosure, but based on interviews with elder care advocates, housing counselors and heirs, she said it is a “growing problem already affecting an estimated tens of thousands of people. And it is one that threatens to ensnare future generations, as older Americans increasingly turn to their homes for cash.”

The conclusions perpetuated

by Silver-Greenberg led to an immediate response from NRMLA President & CEO Peter Bell. “The misleading rhetoric and the author’s unsubstantiated estimates on the scope of families in similar situations as those she wrote about were irresponsible at best. Important facts about repayment options that heirs of borrowers have are glossed over or simply omitted,” Bell wrote. “The handling of an estate is inherently difficult, both emotionally and logistically. But such inaccurate reporting only perpetuates misinformation about an important retirement financing tool for many

• Silver Lining Realty (Associate Member) Newport Beach, California

• Salem Five Mortgage Company, LLC (Lender) Plymouth, California

aging Americans.”

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

The Times did not publish Bell’s Letter to the Editor, but the newspaper did print a more balanced follow-up story (titled “Reverse Mortgage Realities”) on April 10 that uncovered a sense of entitlement felt by some heirs, who focused on their needs rather than their parents’ financial well-being.

Elder law and reverse mortgage experts, wrote author Lisa Provost, say they frequently encounter resistance from children less concerned about the terms of the loan than about losing their presumed inheritance.

“When the entire family is involved in the discussion about whether to take a reverse mortgage, sometimes the children understand their parents need the equity, while other times, they are openly opposed,” added James A. Robbins, an elder law attorney in New York. The duty of the lawyer representing the parents, he said, is to advise them as to what’s in their best interests, not the best interests of their children.

Once fully informed, the children may be more supportive of their parents’ decision. Another New York-based elder law attorney interviewed by Provost, Deborah Ball, tells of a wife and ailing husband who took out the largest reverse mortgage they could qualify for so they could renovate their home to accommodate a live-in caregiver. Their children had no objections at all. And “when the children are not a factor,” she said, “it’s a beautiful thing.”

• 360 Mortgage Group, LLC (Lender) Austin, Texas

• Starboard Financial Management LLC (Lender) Gilbert, Arizona reversereview.com

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NEWS FROM NRMLA

NRMLA News

The Reverse Review June 2014

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Roundup

Here is a look at the latest

news and stats

affecting the market.

t h is month

{

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

Senior Agenda

HE C M T r e n d s

Survey reveals older Americans plan to purchase homes down the road.

California is the No. 1 state for endorsements.

With a total of 1,911 endorsements so far in 2014, California’s numbers have jumped 44.7 percent.

50% of surveyed adults age 55 and older say they are looking to purchase a home in the future.

“For the first time in years, Americans have a growing sense of optimism that the housing market is improving, and that these positive changes may be sustainable. This favorable outlook is giving them the confidence to pursue more meaningful, big-picture life opportunities they may have otherwise put on hold.” –PulteGroup

M a r k e t U p d at e

More homeowners are expected to utilize home equity as interest rates rise.

“As house prices recover and interest rates rise, existing homeowners are gaining back equity in their homes that they can borrow against, and so are incented

to get home equity loans rather than to move or refinance…

This is good news for… mortgage lenders who focus on home equity lending as [they] will benefit from the resurgent consumer demand.” –CoreLogic’s MarketPulse

-Reverse Market Insight

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N u mb e r C r u n c h

The average age most Americans say they plan to retire -Gallup

M o n e y M att e rs

The CFPB says the number of seniors with mortgage debt is increasing.

Seniors are facing more mortgage debt, less affordable housing and a greater risk of foreclosure, according to a report released by the CFPB. “A home can be a place of security for older Americans in their retirement years—a roof over their heads as well as a valuable asset. But as more seniors carry significant mortgages into retirement, they put themselves at risk of losing their nest eggs and their homes,” said CFPB Director Richard Cordray.

T DEB

Of the 41 million Americans age 65 and older, about 80 percent are homeowners.

The rate of homeownership has remained constant in the last decade, but the percentage of mortgage debt has increased.

The number of older homeowners carrying more mortgage debt into retirement has climbed from 22 percent in 2001 to 30 percent in 2011.

The median mortgage debt for seniors has increased by 82 percent between 2001 and 2011, from about $43,300 to $79,000. reversereview.com

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The Reverse Review June 2014

the

THE

REVERSE

hot

review

seat

june 2014

Jason

From his first job and his favorite website to his optimism about the future of celink

Chief Executive Officer

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the reverse mortgage market, we get the facts from Jason McNamara, chief executive officer of Celink.

P E R SO N A L > Ten

> Something

years from now I’ll still be younger

the personalized URL. Yes, the same

than Al Benedetti. Unfortunately, I’ll still be

personalized URL used by Facebook and

older than Ryan LaRose. >

many others to deliver personalized content

If I were a professional athlete, I would be a hockey player. I have played and coached ice hockey for more than 20

over the Web. >

day. It’s when I’m most productive. I think it

My first car was a 1978 GMC pickup. I bought it for $500. It was a little rusty but it had a good engine that sounded cool. I

is a farmer thing. >

craziest thing I’ve ever done

was talk Jim Mahoney out of using his

>

“So, you might have heard about a reverse

favorite website is wallstreetjournal.

com. > When

never felt before. > For

I was younger I wanted to be a

be a cowboy, like every other boy.

The worst purchase I’ve ever made was a gym membership in Southern worse if I did.

> The

best purchase I’ve ever made was

Celink, of course!

make them breakfast.

Professional

I can’t go without my wife, Melinda. She

> I

has been my best friend since childhood. > When

I was a kid, I told my dad I really

wanted a red car. He told me that if I worked hard enough, long enough, I could buy a car in whatever color I wanted. >

>

morning I tell my kids to have a

great day, and when I’m not traveling, I

>

success I have sacrificed many

great sportfishing days on the Pacific.

California—I felt bad if I didn’t use it and

mortgage banker. I’m kidding—I wanted to

> Every

The most memorable moment in my were born. It gave me purpose that I had

mortgage.” > My

I’ll never forget all the people who have helped me be successful in my career.

> My

celebrity crush is Carrie

Underwood—she likes hockey players. > My

a hockey player. I have played and coached ice hockey for more than 20 years.

life was when my son and my daughter

favorite movie is anything with Fred

Thompson, especially the one that starts,

If I were a professional athlete, I would be

Johnny Cash and Fleetwood Mac.

BlackBerry. > My

My iPod go-to varies from Rihanna to Jason Aldean, The Offspring, Linkin Park,

sold it two years later for $750. > The

My favorite time of the day is early morning, especially when it’s a beautiful

years. >

nobody knows about me

is that I have a United States patent for

first job was working on our family

am optimistic about the reverse

mortgage industry because it is a great

My first job was working on our family dairy farm in Wisconsin. My salary was exactly the same as it was for my first job in the reverse mortgage industry.

opportunity for the public and private sector to demonstrate how they can work together to solve a big problem and enable the pursuit of happiness. > I

entered this industry because I like to

solve complex problems and create new markets through innovation, marketing and partnerships. > The

most important influence

technology will have on reverse

dairy farm in Wisconsin. My salary was

mortgages is the education of our

exactly the same as it was for my first job in

potential customers and partners and the

the reverse mortgage industry.

reach of our market.

My iPod go-to varies from Rihanna to Jason Aldean, The Offspring, Linkin Park, Johnny Cash and Fleetwood Mac.

reversereview.com

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The Reverse Review

You Deserve Life, , and ... Innovative Technology

June 2014

When you partner with Liberty, you gain access to the information you need 24/7. We are consistently investing in technology to help you grow your business.

Discover Liberty’s Technology • User Friendly Portal for Loan Docs • Comprehensive Partner Website • Industry Updates & Product Alerts • Web-based Training & Marketing

Learn more, call 866.871.1353 www.LibertyHomeEquity.com/partner LenderSupport@LibertyHomeEquity.com

© 2014 Liberty Home Equity Solutions, Inc. 10951 White Rock Road, Suite 200, Rancho Cordova, CA 95670. NMLS # 3313 www.nmlsconsumeracces.org, (800) 218-1415. For a complete list of licenses, visit www.libertyhomeequity.com/licensesnmls

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news

update Extreme Summit Goes Live!

Ott o Ku m ba r

1

reversereview.com

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spotlight

4

While the media is up and running, we’ll have boots on the ground in all three towns, educating local

In the interim, if you live in Philadelphia, Denver or Seattle, you can help us by participating in sessions and webinars to help you prepare to deliver our message to your potential clients. Keep an eye on NRMLA’s Weekly Report for times and locations of these sessions. Even if you don’t live and work in these markets, familiarizing yourself with the information we are providing to the public will help you start spreading the message and laying the groundwork for our national effort. x

legal

3

All of the ads will direct interested consumers to the brand-new website newreversemortgtage. org, where visitors will find an explanation of how the reverse mortgage is now an even better product than before, as well as specific examples of how borrowers are utilizing it in their retirement plans to extend the life of their assets and be confident they can afford the balance of life. Some of this is explained by satisfied borrowers in video testimonials.

Based on these results, we’ll regroup in time for NRMLA’s Annual Meeting in November and make plans to expand this campaign into a nationwide educational effort to build volume in your market.

title tip

2

The commercial will be complemented by weekly halfpage print ads in the Philadelphia Inquirer, Denver Post and Seattle Times, featuring our same boomer. “Retire Smart,” the headline tells you. “Discover why more people are using the new reverse mortgage to help reach their retirement goals.”

5

To evaluate our progress, we’ll be surveying 250 local residents in each city, both before our campaign begins and at its conclusion, to determine how awareness and understanding of the new reverse mortgage have changed during our three months of testing.

appraising

Our television commercial, entitled “A Smart Choice,” will run for 13 weeks in each market. It’s not like any other reverse mortgage commercial you’ve seen. It doesn’t dwell on product details. Instead, it’s aspirational. In both 60- and 30-second versions, it follows the life journey of a male boomer and the smart choices he makes along the way— the right education, the right wife, the right home.

residents, community thought leaders (such as financial planners, gerontologists and academicians) and the local press about the value of a reverse mortgage as a retirement planning tool, and all the available research from distinguished institutions that provides evidence of the potential results.

marketing

So how did we get here? It took dedication and countless hours from a committee of marketing executives, the generous financial support of the six largest lenders, and the expertise of an advertising agency, a media buying firm, a research organization, the Extreme a fulfillment Summit is a company and a PR multiyear, firm. Now it’s time multimillionfor all the hard dollar work to finally educational pay off. Beginning effort to help the second more seniors week of June understand and continuing the benefits through Labor of a reverse Day, hundreds mortgage. of thousands of people within a 50-mile radius of these metropolitan areas will learn about the “new reverse mortgage.” They’ll discover how it may be a smart, safe

The message will be delivered via a diverse set of tools:

*

originating

Nineteen months after many of you gave your smart input in a packed room in San Antonio, we’re getting ready to launch an all-out educational blitz in the cities of Philadelphia, Denver and Seattle that’s designed to get consumers and the media to take a new look at the reverse mortgage.

Why? Because less than 1 percent of eligible consumers are taking advantage of this great product and most people don’t understand it, or have significant misperceptions about it. We’re planning to change all that with our campaign, “A Smart Choice,” which is going to start airing in June in three pilot markets.

way to fund retirement and learn how it may help them live the life they’ve earned.

update

H

old on to your hats. Here we go…

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The Reverse Review June 2014

REFLECT

originating Integrity, the Hallmark of Our Work Bob T ra n c h e ll

going to the source

I

love my job and I love the reverse mortgage product. I love sitting at the kitchen table with my clients, listening to their stories and watching their reaction when I show them what a reverse mortgage can do.

I have been in this industry for a decade, and I marvel at where we are today, compared with when I started. Today, we have myriad options that we can offer to our clients. Ten years ago we had only one question: “Do you want the monthly adjustable or the annual adjustable?” and to be honest, it wasn’t much of a question, since the annual offered comparatively little in terms of principal limit. No one ever took it.

Today, we can offer a monthly adjustable with varying margins and costs, an annual adjustable with lower caps, and a fixed rate that has great value in a purchase or when there is an extreme mandatory obligation.

We can help seniors out of foreclosure, swing their monthly “income” by thousands, help

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them buy a second home, or upsize or downsize to their dream home. A reverse can help them afford health care, longterm care insurance, or protect their heirs with life insurance; the options are endless. The caveat to all of this is there is a greater need for integrity than ever before. While I firmly believe that the vast majority in our industry work with a conviction of integrity, I want to remind all of us that what we are doing is a vital and life-enhancing task for our clients. We must constantly remind ourselves the senior’s needs come first. Integrity should be the hallmark of our work.

I believe there are two aspects of integrity that we need to diligently uphold. First, we must assert in all of our transactions a sense of personal integrity in gathering information and determining suitability. Second, we must have a desire to promote the integrity of our industry. This comes primarily through knowledge of our product and an intense

According to tranchell “While I firmly believe that the vast majority in our industry work with a conviction of integrity, I want to remind all of us that what we are doing is a vital and lifeenhancing task for our clients. We must constantly remind ourselves the senior’s needs come first.

Integrity should be the hallmark of our work.”

originating desire and ability to educate others.

These two aspects of integrity will allow our personal production to thrive and our industry to further its quest to educate those with limited knowledge of our product.

“It is important for me to be able to lay my head on my pillow at the end of the day and be able to say to myself, ‘I did some good today; there is a senior whose life is improved because of my service to them.’”

Personal Integrity

The greater challenge comes when I am not taking an application in person, something I try hard to avoid. I live on Cape Cod and am licensed in New Hampshire, Massachusetts, Rhode Island, Connecticut, New York, New Jersey and Georgia. With the exception of Georgia, I will drive to meet with clients whenever possible. When faceto-face sessions are not possible, I take the time to ask the same questions and be as diligent as I would be in person to discover what is really going on, assuring myself and my clients that this is the best product for their situation. Having this conversation over the phone poses a greater challenge, but it is worth the time and effort to confirm our personal integrity.

*

originating

marketing appraising

It is important for me to be able to lay my head on my pillow at the end of the day and be able to say to myself, “I did some good today; there is a senior whose life is improved because of my service to them.” I am not unique; I know many who share this mindset. Our industry and the seniors we serve are better off because of it. Integrity truly must be the hallmark of our work. x

title tip legal spotlight

One of the things I love most about my business is the discovery stage. FINRA describes it as “reasonable diligence,” but I just love to hear senior clients tell me about their lives and show me their homes. Their sense of pride helps me connect with them as they point out the various things they love about their homes. At the same time, I need to make sure they are being honest with me about their challenges and financial picture. Some feel a sense of embarrassment about needing a reverse. It is my job to get the walls to come down so they share freely their joy, pain and desires.

it helps me understand the pain they feel with regard to their situation. Overall, I try to build a relationship with my clients so that I can be assured that the product is the right choice for them. I often find that the relationship comes with thank-you notes, Christmas cards and referrals.

update

We are in a service industry; we are helping seniors achieve financial goals. Many of them come to us because they are in trouble and as such are desperate to solve a problem. As professionals, we must always ask the question of suitability: Does our product meet the need in the best way possible and am I thinking in the long term to make sure the solution lasts? For many seniors, a reverse mortgage may be their last option, and we always need to consider this before our own compensation. It has been my experience through the years that any loan turned down because of a suitability concern brings two to three loans from other sources. Call it karma; you are far better off walking away from a loan that does not make sense than confirming an incorrect direction. FINRA gives a good rule for us to live by: “An originator must have a reasonable basis to believe that a recommended transaction, product or strategy is suitable for the customer, based on the information obtained through the reasonable diligence of the originator to ascertain the customer’s financial information.”

The idea is that we spend the time and ask the questions needed to make sure we have a full picture before making any recommendations.

I make it my goal to be willing to ask the questions that give me insight and yet might cause me to question the move.

I try to do it in an unthreatening conversation that gains the information needed to assess the value of a reverse for any situation. My conversation encourages clients to relax, trust me and be comfortable sharing what they may find embarrassing. I find it important to reassure them that they are not unique and that many are in identical situations. Using phrases like “what many of my clients have experienced…” and “I just did a loan where…” allows the client to maintain their dignity and be more willing to share their concerns. I always ask what other solutions they have tried and how that worked out for them. It helps me to see how diligent the senior has been in seeking out solutions, and reversereview.com

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The Reverse Review June 2014

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originating

The Hard Is What Makes It Great Sh e ll e y G io rd a no

Y

The resulting loan structure is not so easy to explain to the client or even the professional referral partner. So once again, the challenge to change is ours and ours alone. The stakes are huge and the need is great. Many retirees need accurate information now to be in the best position to protect their retirement needs.

There’s no point in whining about how hard it is. Just get out there and play ball. x reversereview.com

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spotlight

Scholars have discovered that housing wealth is another source of retirement income and that it may play a significant role in portfolio survival. Builders have found that whole new markets can be served if the HECM is part of the financing.

Bankers are learning that a traditional HELOC cannot compare to a HECM LOC in durability, dependability and consumer protections. Planners are

It will take tenacity, and almost unimaginable perseverance, to change how boomers and their advisors approach housing wealth. Yet HUD has given us a gift by encouraging American homeowners to use their home equity slowly, prudently and deliberately with very little upfront cost.

legal

Objectively, however, we are in a better position than ever before. HUD continues to thwart the rogues in our business who do not act in the client’s best interest. Equity stripping is on the wane. The MMI Fund is rebounding and so are home values.

title tip

Think about the 162 regular season

We know that, theoretically, our potential is massive. That keeps many of us in the game. Yet again and again, we move forward just to be slammed backward by yet another ill-informed article. And each loan is so precious, so hard to come by, that we are often unsure that reverse mortgage lending can provide a living, much less a career.

So maybe we are only at game 30 out of 162. Yet, if we continue to collectively police the rascals and do what we do best, we can make it to the World Series. Imagine a market where the homeowner expects to use his accumulated housing wealth to smooth out the volatility facing him in retirement. How different our lives would be!

appraising

All of us have felt the sting of rejection made all the more painful by how unjust it is. When I get a chance to talk about reverse lending in general, I mention how generous and patient our sales force is. Home visits (many of them) and endless reassuring phone calls with children, ministers, neighbors and even hairdressers/ advisors are part of the job. I cannot think of another industry where the salesperson is so devoted to the client’s welfare and so willing to work months to put the client at ease.

Isn’t baseball a perfect metaphor for our industry? We can all look back at small victories followed by heartbreaking setbacks. And it sure ain’t easy.

*

seeing that a growing LOC can hedge against interest-rate risk and housing value declines. The income gap in Social Security deferral years can be met by the HECM, as can long-term care needs.

marketing

How many times in our careers have we felt that HECM lending is just too hard? Every time a reporter takes a shortcut, does no independent research and just prints the same old saws? Every time a neighbor or friend recoils when you tell them you sell reverse mortgages? Every time the principal limit is reduced? Every time a referral partner slams the door on a discussion about how housing wealth can help his affluent clientele stay solvent throughout a retirement of 30 years or more?

The baseball season is the essence of hard. Small victories must be the catalyst for sticking with it while the number of games mounts slowly, inexorably. Setbacks cannot torpedo the fact that 162 games have to be played.

originating

Dugan is aghast. “It is supposed to be hard!” he exclaims. He reminds her that if it were easy, everybody would be doing it. And finally, Dugan proclaims in utter frustration, it is specifically the hard that makes baseball great.

games a ballplayer endures. In most places, it starts out in cold weather and progresses to blazing hot games, week after week, month after month.

update

ou might remember Coach Jimmy Dugan, played by Tom Hanks in the movie A League of Their Own. When his star player tries to sneak away to avoid playing in the World Series, Dugan intervenes.

As he questions her, she reveals that her rationale for throwing in the towel is that baseball “is just too hard.”

The Reverse Review June 2014

ENGAGE

marketing Reverse Mortgage Marketing at the Ground Level Patr i c i a W h i tloc k

from a reverse mortgage; this despite FINRA no longer describing reverse mortgages as a “loan of last resort.”

O

riginators will agree that marketing reverse mortgages is a challenge. Statistics tell us that the product, for which 13 percent of the population qualifies, has only about 2 percent market penetration.

That’s millions of dollars worth of equity just waiting to be mortgaged.

Ever since the first baby boomers turned 62 in 2008, we have heard the figures on how many Americans were reaching retirement age: 10,000 per day, by most counts. So why is this product so hard to sell when it is so beneficial? It comes down to education rather than conventional selling. And the people we need to educate aren’t just the qualified borrowers; it is their children and other trusted advisors.

Negative connotations linger from the early days of equity sharing. Before the FHA took on HECMs in the late ’80s, the bank really did own your house.

Facts continue to be misrepresented in the news every day. Numerous accountants and financial planners tell their clients to stay far, far away

My very first employer in the reverse mortgage industry was passionate about the benefits these loans could bring to those who needed them the most. He had been in the real estate business for decades and had just opened a mortgage brokerage in an adjacent office building when a good friend’s mother died in a nursing home. The friend was convinced that the move from familiar surroundings into institutional care had hastened her death. If she had just had a little money to enable her to stay, she would have lived a longer, fuller life in her own home.

At around the same time, my boss read an article in the Wall Street Journal about reverse mortgages, a little-known and poorly understood concept that was just beginning to gain popularity. Though too late to help his friend’s mother, he realized the need and the potential benefits for senior homeowners. He flew to Atlanta to meet with the staff at Financial

“Ever since the first baby boomers turned 62 in 2008, we have heard the figures on how many Americans were reaching retirement age: 10,000 per day, by most counts. So why is this product so hard to sell when it is so beneficial? It comes down to education rather than conventional selling. And the people we need to educate aren’t just the qualified borrowers; it is their children and other trusted advisors.”

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Freedom, then the No. 1 lender, to learn more.

Nearly 10 years ago I was recruited to join his mortgage firm along with a handful of other loan originators.

Some were drawn from the mortgage world and some (like me), were from various professions that he foresaw would succeed. An experienced businessman, he of course saw the earning potential, but it was his belief in the benefits of the product that convinced me to join the team.

I learned everything I could.

Marketing was expensive and frustratingly ineffective. It was the standard fare: lunch seminars for seniors, newspaper ads, purchase of pre-qualified leads, postcards, radio ads, senior expos. These work to a certain extent, but it wasn’t until my second or third year in the business that I discovered what I’ll call an “indirect” or “warm” referral.

Our firm ran ads on a local AM radio station’s oldies show. The host of the show invited me to be interviewed on-air. I would prepare a list of reverse mortgage questions that I’d be asked and would answer, and the host, Jack Ellsworth, would tell listeners, “Just call Pat; she’ll tell you everything you need to know.”

And call they did. This type of marketing establishes a company or individual LO as the expert. Personal referrals from previous clients are uncommon. Reverse mortgage borrowers tend not to tell their friends that they even have the loan. A conventional mortgage is a fact of life, while there is still a stigma attached

marketing to a reverse loan, thought of as a loan of last resort for the impoverished, taken by a member of a debt-phobic generation. An “indirect” reverse mortgage referral is more likely to come from a person (likely an attorney or CPA) considered to be an expert in his field and given to an expert in another.

Reverse mortgage clients want to be confident they can trust you— one unintentional error could spoil your chances of earning that trust.

Be genuine and reasonable in lead follow-up. Marketing in the reverse world is more about developing trust than selling a product. If you are perceived to be less than honest or too aggressive, you may lose an opportunity to help someone access this potentially life-changing loan. x

originating

*

marketing appraising

Instead of the usual mortgage marketing, or in addition to it, spend more time and energy on educating yourself on all the technical aspects,

Sales and marketing techniques are quite different from those in use in the forward mortgage world. The nature of the reverse mortgage client is totally different and therefore they must be handled differently. Reverse mortgage candidates are, on the whole, a cautious, even suspicious,

group. Earning their trust is one part instinct and two parts patience, and it is critical for success. While senior borrowers may be uninformed or misinformed about some financial matters, they are not gullible and are not easily fooled or bullied. Aggressive marketing and impatience are met with added caution. They are looking for a professional they can trust, but can be equally suspicious of an overly friendly loan originator who tries too hard.

title tip legal

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

spotlight

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update

The most effective referral is what I’ll call a “direct” or “hot” referral, where the source brings his client or friend to you directly with the instructions to “do a reverse mortgage with Pat.” You have already proved yourself to be proficient and fair with other clients and you are expected to do the same again. The key, I have found, is twofold, requiring you to know your product and always do the right thing.

Give each client the best information and ultimately the best deal possible.

as well as the benefits and pitfalls.

Educate other professionals in the same way. I was a teacher before I became an LO, and that experience is invaluable. Like any good teacher, I keep my curriculum current and tailor it to the level of my class. Attend conferences, seminars and every webinar offered. Join groups that share information. This can be networking with a chamber of commerce—joining is not enough. Be active within the chamber and your local community, and the respect you earn there will carry over to your professional world.

Become The Trusted Expert. Many LOs are making good progress in educating financial planners as the use of reverse mortgage funds shifts.

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The Reverse Review June 2014

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DISCUSS

appraising The Absolute, the Relative and the UAD Eliz ab e t h G re en a nd C ha r l es G r e s s

S

Liz4Keeping track of facts previously reported about properties allows the appraiser to focus on analyzing the impact of those facts on the market.

Charlie4And providing commentary to support the case for adjustments and extraordinary assumptions is key.

Disclose, disclose, disclose. If you feel like you’ve written enough, pick up your pen and write a little bit more.

legal spotlight

Charlie4That’s correct. Adjustments provide for how a comparable property is aligned to the subject property. So at that point in the process, the condition rating of a comparable property can be adjusted to align with the subject property. However, “A card laid is a card played,” meaning that once the appraiser has reported facts about a property,

* *

title tip

Liz4So, appraisers should make their fact assessments in accordance with UAD definitions for UAD assignments.

This step in the appraisal process has never been about reporting facts relative to the market; that’s what adjustments in the comparison process are for.

Charlie4One way to prevent such mistakes is a photographic memory!

However, if you don’t have one of those, leverage the tools in your software to keep track of details about the properties you have appraised or used as comparable properties.

appraising

“Details about a property that are subjective, such as condition, become more reliable when a consistent definition for rating those details is used by all. When the appraiser reports the condition of a property, it is recorded fact and is therefore absolute.”

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Charlie4From my perspective as an appraiser, the UAD has solved the problem of variations in value among appraisers (who can rate the property as Average ++, Average/Good or Average --). Let’s face it: There were a lot of shenanigans and inconsistent reporting techniques being deployed in the condition line and in several other segments of GSE appraisal forms.

Liz4It’s important for the appraiser to realize that GSEs have a record of every report submitted to the portal. They also monitor reports to ensure that appraisers do not report different ratings in different reports on the same property, as they might do when using it as a comparable.

originating

So one might ask, “Well, what is the problem?” To explore this topic further, I spoke with Charlie Gress, chief residential appraiser at Martin + Wood Appraisal.

they must remain the same. Only until a new transaction on the property takes place can the facts be potentially reset, if needed.

update

tandardized definitions for rating condition and quality in real estate are not a new concept. But this time around, the condition and quality rating codes defined in the Uniform Appraisal Dataset (UAD) for Fannie Mae and Freddie Mac have exposed some practices in the field with regard to how comparable sales are being measured and reported. Details about a property that are subjective, such as condition, become more reliable when a consistent definition for rating those details is used by all. When the appraiser reports the condition of a property, it is recorded fact and is therefore absolute. Conversely, the opinion of value concluded by the appraiser is relative.

Liz4Using standardized definitions assists appraisers and users of appraisal services in communications, but we still need proper appraisal reporting with commentary.

Charlie4Most definitely.

Liz4Thank you for your time, Charlie! x

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The Reverse Review June 2014

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learn

title tip 8

fencing that would hinder access.

Understanding Easements

Megan Hafenstein

appraising

It is important not to assume that because an easement is not currently being used, that it will never be used. As long as an easement is part of a deed there’s always a possibility that the individual who benefits from it will decide to enforce it.

marketing

Maintenance of the property is the responsibility of the landowner. If the holder of the easement or right-ofway causes any damage, they must restore the property or pay damages.

Structures owned by the holder of the easement are not the responsibility of the landowner. It is possible that an easement or right-of-way will affect the value of property. Most restrictions on property use are based on either access or safety. Some

originating

Easements and right-ofways are usually registered on the title to the property.

They “run with the land” and are automatically transferred from one owner to another as the land is sold. Easements remain on the title until the holder of the easement discharges their rights from the certificate of title.

An argument for removal must be based upon proof that the easement is no longer needed. The landowner who grants an easement usually cannot build structures within an easement area or use

update

An easement or right-ofway is an agreement that vies an individual, company or municipality the right to use a landowner’s property in some way. An easement is for a stated purpose, while a right-of-way grants rights to travel across a property. While granting rights, both have the effect of partially restricting an owner’s use of those portions of land affected.

of the restrictions may be negotiable, while others may be specified by government regulation and are non-negotiable.

Restrictions may affect a significantly larger portion of the property than the area defined in the easement or the right-ofway agreement.

title tip

* *

legal spotlight

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The Reverse Review June 2014

PREPARE

legal

Documenting Your Financial Assessment Determinations Joh n L e v o n ic k

I

love acronyms and, as a selfproclaimed mortgage compliance nerd, I strive to use as many acronyms in my day as I can. The year 2014 has been good to me, with many new mortgage compliance acronyms to choose from.

In January came Ability to Repay (ATR) and, not to be outdone, the reverse mortgage industry will soon have its own acronym to reflect its amorphous credit determination process. In mortgagee letters 2013-27 and 2013-28, and amended by 2013-45, HUD issued guidance on HECM mortgagees regarding Financial Assessment requirements and funding requirements for the payment of property charges (“Financial Assessment Requirements”). This basically dictates that, among other things, the lender must assess and validate that the HECM borrower has the Capacity or Willingness to Meet Their Financial Obligations (CoWTMTFO)—namely, to pay taxes, insurance and other property charges.

While we all understand these requirements are subject to revision prior to the establishment of an effective date, let’s take a look at some of the possibly overlooked concerns and implications of the Financial Assessment requirements as mortgagee letters 2013-27 and 2013-28 define them.

With this new power to make the determination of capacity or willingness comes great responsibility, as the obligation is on lenders to not only make this CoWTMTFO determination without violating Fair Lending laws, but to support it conclusively with documentation that is accurate and adequate as it applies to all of the borrowers’ income and assets (and those of non-borrowing spouses in community property states), as well as all outstanding debt obligations in 30

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their entirety. Since reverse lenders have had exposure to traditional conventional mortgage lending credit models, this new requirement, at least on its face, should not be a real shock to the system. A closer look, however, indicates that there are some potential problems.

The two mortgagee letters 2013-27 and 2013-28 lay out requirements for the lender to be able to: n o . 1 Systemically and uniformly capture and analyze the relevant borrower income and asset data n o . 2 Assess if the borrower has a satisfactory credit history by demonstrating that the borrower has had no property tax arrearages in the 24 months prior to the date of the initial loan application

n o . 3 Ensure that all property charges are current at application n o . 4 Verify that homeowner’s insurance has been in place for a minimum of 90 days prior to the date of initial loan application n o . 5 Validate that the borrower has a satisfactory payment history on revolving credit, installment accounts and mortgages

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spotlight

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title tip

reversereview.com

appraising

By now, lenders are well aware of the insufficiency of Fannie Mae Form 1009, Residential Loan Application for Reverse Mortgages, as it applies to the need to collect

This section, effectively, is an affidavit that the borrower is attesting to the comprehensiveness and accuracy of the information given to the lender as part of the application process.

Why does this matter?

Well, this is the section that will be relied upon when the lender, or creditor of record, receives a repurchase demand notice from the investor because the taxes and/or insurance have not been paid, and

Welcome to the world of repurchase demands. The FHA will look to protect the integrity of the Mutual Mortgage Insurance Fund, so lenders can plan on put-back claims due to FHA denials of coverage claims. While reverse lenders would do well to rely upon the guidance provided in specific sections of HUD Handbook 4155.1 (Mortgage Credit Analysis for Mortgage Insurance on One- to FourUnit Mortgage Loans) for documenting and verifying credit history, income, assets and obligations, and for information on documentation standards, there is much to be learned from the conventional lending side of the business. Fair lending and fraud concerns pose significant risk that drive specific processes and controls. Conventional lenders have learned the hard way that these practices may be the best foundation for reverse mortgages and other products going forward. x

marketing

Financial Assessment Factors: Getting to Know the HECM Hybrid 1009

Part VII is the section of the 1009 that many lenders have not had to understand fully due to its seeming irrelevance to reverse mortgages.

The 1009 Part VII “Acknowledgement and Agreement” is effectively the same language that is contained in Section IX of the 1003. This has been the basis on which many conventional lenders have relied in seeking redress from borrowers that lied or “made material misrepresentations with regard to the income, assets and debt obligations… that the lender detrimentally relied upon in making of the subject loan.”

the investor deems the lender’s WTP analysis to be insufficient. There may, in fact, be a question as to the accuracy of the information relied upon by the lender in making the WTP analysis.

originating

- John Levonick

When the determination of history, experience, capacity and willingness is combined with the comprehensive credit analysis and supported with documentation reflecting the acceptable residual income calculation, you have clear and unequivocal proof that the borrower has the personal ability to meet the requirements of CoWTMTFO... or do you?

information on income, expenses, assets and liabilities in the application process. A quick and easy solution is to port the Form 1003 Universal Residential Loan Application Part VI into the 1009 to create a hybrid custom Residential Loan Application for Reverse Mortgages 1009 (“HECM Hybrid 1009”).

This seems simple enough, but there is more to the 1009 now.

update

“Welcome to the world of repurchase demands. The FHA will look to protect the integrity of the Mutual Mortgage Insurance Fund, so lenders can plan on put-back claims due to FHA denials of coverage claims. While reverse lenders would do well to rely upon the guidance provided in specific sections of HUD Handbook 4155.1 (Mortgage Credit Analysis for Mortgage Insurance on One- to Four-Unit Mortgage Loans) for documenting and verifying credit history, income, assets and obligations, and for information on documentation standards, there is much to be learned from the conventional lending side of the business.”

These requirements seem straightforward enough.

The next step would be to look at, and attest to, the fact that the borrower has a history of, direct experience with, and the capacity and willingness to pay property taxes and hazard and flood insurance. If there is no provable history or experience, a sufficient set-aside is required. The potential problems arise with the terms “capacity” and “willingness” to pay.

How does the lender structure this analysis and price for risk? This must be done in a way that ensures that the lender’s pricing, products, process and determinations— which may be based on and subject to disparate treatment—cannot, in fact, have a disparate impact on the borrower.

The Reverse Review June 2014

spotlight article

HUD Addresses Non-Borrowing Spouses

by Ral p h Ro s yn e k

w

In month’stehis dition,

we recen assess HUD ’s t borro ruling on n wing spous ones.

T

he non-borrowing spouses of HECM borrowers will soon receive recognition of their legal and relationship status, according to a mortgagee letter recently issued by HUD. The mortgagee letter is the result of many months of pressure on HUD by consumer and industry groups to address what constitutes the fair treatment of non-borrowing spouses who occupy the residence of HECM borrowers upon their death.

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that, as of April 16, 2014, the granting of requests for extensions from HECM mortgagees of up to 60 days to meet foreclosure timeframes for reverse mortgage loans was reasonable and the only relief currently available for these transactions.

So, is the non-borrowing spouse a homeowner or not? Interestingly, based on HUD’s acknowledgement that there are two interpretations of the HECM statute, this question remains unclear. One interpretation supports homeownership rights, while the other does not.

The 60-day extension will be granted to mortgagees who request an extension on the initiation of foreclosure proceedings when all of the criteria listed below are met:

“FHA continues to believe that its original interpretation gives full force and effect to the intent of the statute. Nevertheless, recent events have advanced another possible interpretation of Subsection 255(j).

This alternative interpretation would extend the mortgage insurance eligibility requirements concerning the safeguard to the mortgagor and any non-borrowing spouse of the mortgagor, at the time of origination.”

Effective with new case file requests on August 4, 2014, the letter mandates that a non-borrowing spouse can remain in the residence providing they pass an annual certification showing their continued support of the representations and warrants made by their spouse at the loan’s closing.

* The property is the primary residence of a surviving spouse who was married to the borrower at the time the mortgage was endorsed for insurance.

Unfortunately, though, the mortgagee letter does little for the non-borrowing spouses of living borrowers in existing HECM transactions. HUD has determined

* The HECM has become due and payable solely because of the death of the HECM borrower.

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* The non-borrowing spouse was not listed as a borrower on the mortgage.

* The property securing the HECM has not been sold to a third party.

To provide for non-borrowing spouse recognition and rights, HUD requires that they be identified through data collection and listed as a party to the transaction at the time of application.

The calculation of proceeds available once the non-borrowing spouse is

spotlight article

“So, is the non-borrowing spouse a homeowner or not? Interestingly, based on HUD’s acknowledgement that there are two interpretations of the HECM statute, this question remains unclear. One interpretation supports homeownership rights, while the other does not.”

-Ralph Rosynek

* Loan document updates

The definition continues, “Should a non-borrowing spouse fail to meet any of the qualifying attributes, or should any of the requirements for

In the event the last surviving mortgagor predeceases a nonborrowing spouse, the due and payable status will be deferred for as long as a non-borrowing spouse continues to meet all the qualifying attributes stated above. In addition, the non-borrowing spouse must satisfy and continue to satisfy the following: * Establish legal ownership or other ongoing legal right (e.g., executed lease, court order, etc.) to remain in the property within 90 days of the death of the HECM mortgagor

As the number of eligible borrowers continues to grow with the aging of the baby boomer generation, recognition of the non-borrowing spouse at the time of application becomes critical to preserving their ability to remain in the home.

Additionally, non-borrowing spouses must recognize and acknowledge the process of securing their future in the home through attestation and verification requirements, as failure to fully comply and maintain eligibility could result in eviction. x

*

spotlight

Key to the continuing occupancy of the home after the death of the primary borrower is the definition of the deferral period, which guides the parties through the process. The deferral period is defined as “the period of time following the death of the last surviving mortgagor during which the due and payable status of a HECM is further deferred based on the continued satisfaction of the requirements for a non-borrowing spouse under this ML and all other FHA requirements.”

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* Adjustments in the proceeds calculation via revised PLF tables

* Have occupied and continue to occupy the property, securing the HECM as the principal residence of the non-borrowing spouse

title tip

* Continuing occupancy verification and documented compliance with occupancy requirements

* Have been properly disclosed to the mortgagee at origination and specifically named as a nonborrowing spouse in the loan documents

This Mortgagee Letter impacts several different aspects of a HECM origination that involves a nonborrowing spouse. Pre-qualification activities and data/document collection will be enhanced.

Processing and underwriting activities will require additional detail and verification. Loan documents will need to be altered to reflect the acknowledgement of representations and warrants required of the nonborrowing spouse. Counseling and technology platforms will need upgrading. And lastly, servicers will need to increase occupancy verification procedures and guidelines.

appraising

* Guideline redefinition

* Have been the spouse of a HECM mortgagor at the time of loan closing and have remained the spouse of such HECM mortgagor for the duration of the HECM mortgagor’s lifetime

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* Additional documentation

In order for the deferral period to apply to a non-borrowing spouse, the non-borrowing spouse must:

It is important to note that the nonborrowing spouse, having satisfied the terms and conditions of the deferral period, is not entitled to any remaining proceeds that may have been unused at the time of the borrower’s death. Also, noncompliance with the terms of the deferral period would ultimately result in foreclosure and eviction.

originating

HUD has specified that a nonborrowing spouse can remain in the home if the following is completed:

deferral cease to be met, the deferral period of the due and payable status shall cease and the HECM will become immediately due and payable as a result of the death of the last surviving mortgagor.”

* Ensure that the HECM does not become eligible to be called due and payable for any other reason

update

identified will be based upon a new principal limit factor to be published soon. According to the department, “Mortgagees will be required to use factor tables based on the age of the youngest mortgagor or nonborrowing spouse, if applicable. HUD is developing new factor tables and will release them through mortgagee letter prior to the effective date of this Mortgagee Letter.”

in the loan documents continue to be satisfied after the death of the mortgagor

* Ensure all other obligations of the HECM mortgagor contained reversereview.com

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The Reverse Review June 2014

Jessica Guerin

Reverse professionals pound the pavement, connecting with seniors in their communities to discuss the benefits of the loan. hey work with their feet on the street, their boots to the ground, pounding the pavement. They eschew the modern call center model, the Internet lead search, the impersonal direct-mail approach.

They are old-school reverse mortgage originators.

Actively engaging seniors in their local communities, these originators prefer to sit down to discuss the loan face to face at the kitchen table. They build their books of business by connecting with people in person, cultivating strong referral bases through years of 34

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hard-earned trust.

Feet-on-the-street originators have been helping seniors with reverse mortgage loans since the program’s inception. Although other sales models have developed over the years, thousands of professionals nationwide continue to embrace this traditional approach and many have found notable success with this method.

The HECM program has undergone substantial change in the last several years and the market environment has been rocky for many as they work to reconcile their business models with shifts in the regulatory landscape. But for those working out in the field, the day-to-day business of selling HECM

loans remains largely consistent. For these originators, the mission is simply to get out and talk to as many seniors as possible who might benefit from the loan, educating them and working together to determine if a reverse mortgage could be the solution to their problems.

Spreading the Word Feet-on-the-street originators work hard to educate people about reverse mortgages in their communities— visiting senior centers, attending open houses, meeting with financial advisors and connecting with local attorneys.

Jon Maiolatesi of 1st Financial Reverse Mortgages in Michigan has been originating HECM loans for 11 years.

He says he’s tried multiple avenues in the span of his career to connect with potential clients. “I’ve done a little bit of everything, from direct marketing to just walking and talking,” Maiolatesi says. “What seems to be working the most these days is just getting out and talking with people in the community, whether it’s with financial advisors or other people who influence our seniors.”

Monte Rose of HighTechLending has been working in the industry for 23 years. He says he focuses on developing relationships with professionals who work with seniors rather than the seniors themselves. “I don’t try to connect with seniors at all; I try to connect with the people who connect with seniors,” Rose says. “My referral sources are primarily Realtors, elder law professionals and escrow companies.”

Don Graves, who has been originating loans for 14 years in the greater Philadelphia area, says he grew his customer base through a radio show he did about reverse mortgage loans.

For four years, Graves offered advice about the loan to listeners in four states. “I developed a lot of name recognition through that,” he says.

However they gather business, most feet-on-the-streeters will agree that at the end of the day, it’s all about referrals. Maiolatesi says most of his business comes from “warm referrals.”

“For example, a financial planner [whom a client] has known for years will say, ‘Jon’s a good guy. I’ve known him for years and you can trust him.’”

Graves says he has helped 2,300 clients take reverse mortgages in the span of his career, but has talked with thousands more who decided the loan wasn’t the right fit for them. He says he typically begins a conversation with a potential borrower by pointing out this fact. “I’ll say, ‘What that tells us is that, while a reverse mortgage is good for many people, we know it’s not always the right thing. I’d like to ask you a few questions, listen to your answers, briefly explain the program, and together you and I can determine what the most appropriate next steps will be.’”

Graves says his business is also based on referrals and that the model thrives on accountability. “If I mess this up, your attorney will never send me business again. So, I’ve got to be accountable. That’s how it works.”

The Value of Referrals

Graves also says originators need to be careful in how they approach potential referral partners. “If I’m going in there with my hand out, like, ‘Gimme, gimme,’ they’re going to see through that. You’ve got to be building some synergy. I ask, ‘How can I serve your business? What can I do to help you? This HECM may be a resource for you,’” he says. “You’ve got to be willing to serve your partners.”

1.

However

they gather business, most feet-on-the-streeters will agree that at the end of the day,

it’s all about referrals.

Colleen Moore of Golden Equity Mortgage in San Diego agrees. “You have to be willing to offer them information,” says Moore, whose business is also built on a strong referral base. “You don’t walk in with your hand out and say, ‘Give me leads.’ You walk in and say, ‘I’d like to share with you some information, give you some education that may in fact be useful for you to expand your business.’ If you use that approach, everything changes. Now they want to talk to you.”

Moore says she advises her team to attend open houses and talk to Realtors, and she stresses the importance of broaching the conversation from the Realtor’s perspective. “I’ll say, ‘Have you ever had somebody who was turned down for a loan because they couldn’t income quality? Have you ever had somebody who was turned down for a loan because of poor credit? ... Well, that’s why this is an important tool!”

She adds that if you offer potential referral partners information useful 8

According to Maiolatesi

“A lot of what I do isn’t necessarily selling. A lot of it is just explaining how a reverse mortgage works and seeing what they need it for. I’m always asking what is the reason that they’re looking into a reverse mortgage rather than going right into a sales pitch. It’s important to try to figure out what exactly the consumer’s need is before we go any further.”

“When you’re a feet-on-the-street originator, you need to be diagnostic. You need to say, ‘OK, tell me where you’re trying to go and I’ll think of some of the best ways to get you there.’ You want to find out what they are trying to accomplish and if you can meet those needs, you don’t have to sell them. They’re going to want what you have to offer because you’re solving their problem.”

According to Moore

2.

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The Reverse Review June 2014

According to Graves

3.

“The value of the kitchen table is that you’ve developed a solid relationship with Mr. and Mrs. Jones. You stand to gain much, much more in terms of that person introducing you to friends if you’ve sat with them, if you’ve engaged them at a deeper level and asked meaningful, thoughtprovoking questions, if you’ve listened to their answers and built something that’s going to make sense for them.”

to their business, they’ll be much more willing to listen. “Every single time, they’ll take the education. You create the education and you create the relationship.”

“I tell every one of my originators, ‘Don’t be afraid to ask questions and educate,’” Moore says. “We’ve got to break the mold of the old reverse mortgage originator taking calls from the call center and doing the deal. Those are all pretty much needs-based clients.

We have got to expand out with the new program.”

Moore says learning to connect with referral partners is essential to finding success as a feet-on-the-street originator.

“If you want to do a huge business that will stand through every kind of market, then build your referral base.

When you get your first referral from a Realtor, a financial advisor or an estate attorney, you’ll say, ‘Man, I never want to go back!’ Because you don’t have the six-month or one-year process. They come in knowing this is what they’re supposed to do, and you do it,” she says. “If you want to be a feet-on-thestreet originator, you’ve got to learn that side of the business.”

Educate, Don’t Sell Many in the industry also say that a good originator knows that it’s not about selling the product; it’s about educating the client. If a HECM is the right fit for the senior, the product will sell itself.

Maiolatesi says he always approaches clients in this way. “A lot of what I do isn’t necessarily selling. A lot of it is just explaining how a reverse mortgage works and seeing what they need it for.

I’m always asking what is the reason that they’re looking into a reverse mortgage rather than going right into a sales pitch,” he says. “It’s important to try to figure out what exactly the consumer’s need is before we go any further. Sometimes they may not even need it. There are a lot of people I talk to and it’s just not the right product for them and we stop it right there.”

Moore says understanding the senior’s needs is key. “When you’re a feet-onthe-street originator, you need to be

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diagnostic. You need to say, ‘OK, tell me where you’re trying to go and I’ll think of some of the best ways to get you there,’” she says. “You want to find out what they are trying to accomplish and if you can meet those needs, you don’t have to sell them. They’re going to want what you have to offer because you’re solving their problem.”

“My belief is that one of the best ways to get business is to educate,” Moore says.

“Don’t sell people; educate them.”

Building Trust Face to Face A huge advantage to doing business in your local community is getting to meet with potential clients face to face. By sitting down and discussing the loan in person, many originators say they can get a better understanding of their clients’ needs and can build a deeper, stronger relationship, dispelling any sense of mistrust.

Maiolatesi says he meets most of his clients in person and that it’s much easier to quell suspicions that way.

“After meeting you face to face, they realize that you’re OK, you do know what you’re talking about, you’re real and you’re passionate about what you do. It’s amazing how [their impression] will switch, and I just don’t think you get the same reaction over the phone or by mail or through the Internet….

Nothing works better than a face-toface conversation with prospective borrowers, financial planners, Realtors or any other possible source of business.”

Maiolatesi also says it’s easier to read clients when you’re sitting across the table from them. “A lot of times they may have questions but don’t speak up.

You may have to look at their faces or read their gestures to know that they may not understand something you’ve explained.”

Graves says originators have a better chance of developing a referral-worthy connection when they can meet with a client in person. “The value of the kitchen table is that you’ve developed a solid relationship with Mr. and Mrs. Jones,” he says. “You stand to gain much, much more in terms of that person introducing you to friends

if you’ve sat with them, if you’ve engaged them at a deeper level and asked meaningful, thought-provoking questions, if you’ve listened to their answers and built something that’s going to make sense for them.”

Moore says sitting down with clients in their homes and talking with them face to face keeps originators connected to the product and the deeply personal implications it has for many clients. Being in their homes allows you to see firsthand how much they stand to benefit from a HECM. “It keeps you involved in the real beauty of this product,” she says, adding that this is especially true for clients who are experiencing hardship.

“The needs-based client is an amazing [heartfelt] transaction. It feels great when you’re helping someone who is really struggling.”

Another benefit to meeting in the client’s home is the ability to let other family members sit in on the conversation. “A good portion of our clients bring their children with them, and it might be because I often ask them to,” Maiolatesi says. “I will typically ask the borrower if they have a family member who they’d like to have there or a child who is going to be involved in the process to some degree. I always invite more people to sit down at the education [stage], because the more people I can talk to, the fewer questions that they may have [for the borrower]… If the children aren’t there and the parents are trying to explain it to them after the fact, there might be something lost in translation. Whereas if we’re all sitting there right in front of each other, we can all make sure that everybody understands everything that’s going on with the loan.”

A Challenge With Great Reward While there are many seasoned professionals out there who have found great success originating loans on the street, this sales model is not for everyone. Most will agree that approaching business in this way requires a certain type of personality.

“You have to enjoy people,” Graves says, adding that the job is

multifaceted. “I’ve always thought the originator wears three hats: you’re part banker, you’re part social worker and you’re part educator… You’re educating and you’re listening to their stories and then you’re doing the numbers.”

Graves says the job is unique in this sense and requires a good deal of patience. “It’s a slow place, there can be a long turnaround.” To know if this type of work is right for you, Graves says you need to look inward. “You need to determine what your sales DNA is.”

Rose agrees that patience is part of the job. “You have to have staying power.

You have to be able to afford to invest in the relationship before it bears fruit, meaning that you have to have enough money to wait it out. You have to be the kind of person who nurtures the relationship by adding value to the referral source’s business.”

Moore says it takes a certain kind of person to find success in this line of work. “It does require a specific social style,” she says. “You have to have capacity to really understand the loan and not be so shy that you’re afraid to talk to people.”

Moore also says these kinds of originators need to be skilled at overcoming people’s skepticism. When people scoff at the product or question its integrity, she says it’s important to respond in a relatable way, broaching it from the skeptic’s perspective. “The minute you climb on that side of the fence with them, they drop it down.

Don’t get defensive. Don’t try to defend the product, don’t do it. Climb on their side of the fence and they’re going to be more willing to listen to what is real.”

Those who have found success in this business model will say that if you can rise to the challenge, the payoff is great.

“It is the best way to insulate yourself from any corporate noise that might arise,” Rose says. “You’re building a foundation that will feed you business.”

Graves echoes this sentiment. “You’re building high-trust, deep, intimate, real relationships. That’s going to be dependable and that’s also going to be portable.” Graves has worked for many companies in his 14 years in the industry, including Financial Freedom and MetLife. When these companies shut down their reverse channels, he was able to move on successfully with his book of business in tact.

Finding Success In order to succeed in this business model, seasoned originators say reverse professionals need to continue to educate themselves about the product and be willing to work hard.

“Learn the product in and out. Read everything, learn everything, educate,” Moore says. “And get mentored.

I think mentoring by a seasoned originator is huge and I teach it and preach it. It’s a big deal.”

Maiolatesi says one tip for success is being diligent about communicating.

“I would tell any loan officer to make sure that you are making new contacts and following up with old ones every day. In the reverse mortgage industry, if you are out of sight, you are out of mind.”

Rose agrees. “You have to call on more people than anybody wants to admit you have to call on to get a real class-A source. So the obstacle is persistence on the salesperson’s part. You have to stay after it. You have to maintain contact so that you’re more top of mind than not… The salespeople who are active will make it, even if they’re not all that skilled yet,” he says. “You have to lay bricks every single day.”

It’s also helpful to be optimistic.

Despite recent program changes, this is a great product that can help lots of people. Believing in that message and sharing it with potential clients will help propel your business. As Moore says, “I’m a glass-is-half-full person. I think if you’re feet-on-the-street, you’d better be. If you’re not excited about your product, no one will be.” x

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The Reverse Review June 2014

last word Doing Right by Taking Your Time

RETHINK

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Au s t e n V e rs t

B

ob walks into a Chevrolet dealership to purchase a car for his family of five. The salesman pleasantly greets him and asks him to take a seat. The salesman proceeds to ask Bob a couple of questions about his credit and income to see how much he can qualify for.

Five minutes later, Bob is shown the brand-new SS Corvette on the showroom floor.

Sue calls a Realtor about purchasing a new home. Over the phone, the Realtor immediately asks how much Sue makes, her debts and pulls her credit. After three minutes on the phone, the Realtor says, “Great, you qualify for a million-dollar house,” and sends information on 10 expensive homes.

Both of these stories illustrate a significant lack of both salesmanship and true understanding of a customer’s needs. Yet we as originators follow this same path many times and don’t see an issue with it. By slowing down and taking time to talk with the borrower, you can accomplish three things. First, you can feel comfortable that you are placing the borrower in a better situation than they were in prior to a reverse mortgage. By jumping into a sales pitch within three minutes of speaking, how can you be sure that the reverse mortgage is the right solution for the borrower? Second, you will have a better understanding of which HECM product will be the right fit.

Fixed or adjustable? Partial or full MIP? And lastly, the borrower will be more confident that they are making the right choice. They will not have

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second thoughts about selling the home or consider refinancing with a forward mortgage, moving in with the kids or getting a job. If the borrower believes the loan will provide a better situation, it will lessen the chances of fallout after the “yes.”

The need to take your time with a customer is universal, no matter what product you’re selling. A good car salesman will tell you that taking your time with a customer is essential. I spoke with one who told me that his goals are to learn more about their current situation, gain insight into their motivation and needs, and ask if there are any other decision makers.

I also spoke with a successful Realtor who emphasized the importance of educating the client about the market and learning about their motivation and needs. The same principals apply to selling reverse mortgage loans.

I have worked with close to a thousand reverse mortgage salespeople in my career and I still struggle to understand why we think pitching the interest rate, fees and qualification amount within the first five minutes of our conversation with the borrower is the right and ethical thing to do. I am currently working with my grandmother and her lawyer to understand if a reverse mortgage is the right choice for her. She has

money in the bank currently earning 1.05 percent and we are discussing a reverse mortgage with an APR of more than 7 percent. If I were to shove her into a reverse mortgage just because she qualified, I may be putting her in a worse-off situation. Conversely, if she was cash-flow negative every month, only had a limited savings account and did not realize she was headed for disaster, by shortcutting the process, I may not have helped her realize what her future was going to be like and she may have balked at the reverse mortgage, keeping her on that path to disaster.

Being a salesperson is not a bad thing.

Good salespeople make sure their customers are purchasing the right product for them. And along the way, they end up selling more because they help the customer feel confident in their choice. So take your time to talk at length with a potential client. Get to know them and their situation so that you can decide together if this loan is a good fit for them. x

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8 TRR | 39 reversereview com

The Reverse Review June 2014

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