RSE REVIEW THE RE EVE VE ER RS TH E
E REVERSE RE W TH VIE VIE W RE SE ER
W
Why I love being a reverse mortgage professional
INSIDE this issue
EW VI RE
REVERSE REVIEW THE TH ER
A CRASH COURSE IN CONVENTION NETWORKING PG. 24 LENDERS TURN TO SPECIALIZED APPRAISAL PLATFORMS PG. 27 + JOHN BUTTON SITS DOWN IN OUR HOT SEAT PG. 16
EV
THE
REVERSE review o ct ober 20 14
Percent change, year ago
The
See this chart S&P/Case-shiller home prices INDICES Pg.33
Gains in the housing market better position reverse mortgages as a retirement planning tool for today and tomorrow.
The Reverse Review October 2014
A teAm is behind every winner we Offer wholesale Lending, Correspondent Lending and Aggregation Partnering. • We help you serve your customers and earn more revenue • Your flexible partner, from originations, servicing, securitization, to REO asset management • Fastest closing loans in the industry • Market-leading pricing • Advanced, yet flexible technology • Continued education, training and marketing support
2 | TRR
become a Partner
888-864-3606 partners.rmsnav.com NMLS Unique Identifier: 107636
Where “above and beyond” is standard operating procedure At UFA, we go the distance for our wholesale partners and their customers. It’s why we’re the nation’s #1 wholesale reverse mortgage lender.*
Let us help you take your business to the next level. Call 855-77-URBAN
(855-778-7226) or visit UFAwholesale.com
Ask about our new jumbo option:
UFA141 [Exp 09/2015] * 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. reversereview . com
8 TRR | 3
The Reverse Review October 2014
From the Editor In this issue of TRR, we asked a dozen reverse professionals
working around the country why
they do what they do. Many cited
Senior Publisher
provide a sound solution to an
Publisher
among many of today’s retirees.
Editor-in-Chief
were when witnessing firsthand
Creative Director
life. Nearly all expressed a firm
ASSISTANT EDITOR
the HECM’s unique ability to
increasingly common concern
Several mentioned how moved they how a HECM changed a client’s
A note from jessica guerin
As we often point out in these pages, the business
belief in the product’s potential to help a sizable percentage of
the population find security in
their later years. While the job of a HECM professional can no doubt
of selling reverse mortgage loans is
be challenging, it is these weighty
need not only to understand the ins
business doing what they do.
unlike any other. HECM specialists
factors that keep many in the
and outs of a complicated financial product, but they must also keep
up with constant regulatory change. And because the clientele comprises seniors who are making life-
{ J essica G uerin } Editor-in-Chief
sensitive topic for many who have spent years working to pay off a
sensitivity and compassion.
Traci Knight Lauren Daniels Copy Editor
Kersten Deck Marketing Director
Alycia Greer Printer The Ovid Bell Press Advertising Information phone : 630.207.3882 email : jessica@reversereview.com
Read what your colleagues said about why they love their work on pg. 28. Visit reversereview.com to read more comments and add your own.
© 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 Review 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
d
sign up for the newsletter at reversereview.com
te
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.
Jessica Guerin
ay ec st onn c
Feedback
Erik Richard
Editorial Content email : jessica@reversereview.com
on the use of their home equity—a
must have an enormous amount of
Reza Jahangiri
Subscriptions email : information@reversereview.com
altering financial decisions based
mortgage—reverse professionals
Meet the Team
get the latest issue delivered directly to your inbox
find us on
facebook and linkedin
4 | TRR
table of contents 24
TRR 10.14 | Marketing
A Crash Course in Convention Networking Event marketing 101
IN THIS ISSUE... 23 Steve Sless Originating
Russell Trahan
28
| Spotlight
What I Love About Being a Reverse Mortgage Professional If you do what you love, you never work a day in your life. Lauren Daniels
15
August’s Top Lenders and HECM endorsement stats through July
E REVERSE RE W TH VIE VIE W RE SE T ER
Why I love being a reverse mortgage professional
16
INSIDE | Hot thisSeat issue
| Last Word
Reverse Mortgage: Product or Service? It’s the solutions we deliver that set us apart. Jason McNamara
E
John Button
27 joni pilgrim Appraising
REVERSE review
President of ReverseVision
Reverse Market Insight
20
12
OCTOBER 2014
| NRMLA News
Read about the association’s current initiatives. Marty Bell
The
| Originating
Navigating Around Counseling Steering Issues
HUD takes steering concerns very seriously. Here’s what you need to know to ensure compliance. Britany Luth
INSIDE this issue
E
PERCENT CHANGE, YEAR AGO
Why I love being a reverse mortgage professional
RSE REVIEW THE RE EVE VE RS
SEE THIS CHART S&P/CASE-SHILLER HOME PRICES INDICES PG.33
EVIEW THE REV ER SE R SE ER RE EV VI ER H
A CRASH COURSE IN CONVENTION NETWORKING PG. 24 LENDERS TURN TO SPECIALIZED APPRAISAL PLATFORMS PG. 27 + JOHN BUTTON SITS DOWN IN OUR HOT SEAT PG. 16
ER TH
“One thing is for certain: The housing market has been a roller coaster ride. Reverse mortgage professionals have been along for the trip, experiencing both the highs and the lows.
cover Rising home values are good news for the reverse mortgage industry.
EW
Lauren Daniels
october 2014
E REVERSE R W TH EV VIE IEW RE SE T ER
Gains in the housing market better position reverse mortgages as a retirement planning tool for today and tomorrow.
@ Want the online version? reversereview.com/magazine
THE
REVERSE review OCTOBER 2014
The
PERCENT CHANGE, YEAR AGO
| The Comeback
EV
30
REVERSE REVIEW THE TH ER
feature
EW VI RE
THE
| Stats
RSE REVIEW THE RE EVE VE ER RS TH
10
VIEW THE REV E RE ER RS SE VE RE RE VI HE
EW
Reverse Mortgage A CRASH COURSE IN CONVENTION NETWORKINGDaily PG. 24 LENDERS TURN TO SPECIALIZED APPRAISAL PLATFORMS PG. 27 + JOHN BUTTON SITS DOWN IN OUR HOT SEAT PG. 16
A collection of recent facts and surveys affecting the reverse market
EV
Headlining stories of the past month
34
| Roundup
REVERSE REVIEW THE TH ER
| Industry News
EW VI RE
09
23 ian sandler Originating
SEE THIS CHART S&P/CASE-SHILLER HOME PRICES INDICES PG.33
Gains in the housing market better position reverse mortgages as A RETIREMENT PLANNING TOOL for today and tomorrow.
Gains in the housing market better position reverse mortgages as A RETIREMENT PLANNING TOOL for today and tomorrow. reversereview . com
8 TRR | 5
The Reverse Review October 2014
contributors John K. Lunde
Marty Bell
John Button
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
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 award-winning documentary film The Boys of Summer and produced 15 Broadway shows (including Ragtime, Fosse and Dirty Rotten Scoundrels) that won 27 Tony Awards.
John Button is the president of ReverseVision. He has more than 16 years of experience in developing and managing mortgage technology products and businesses. Button has led companies to sustained growth and introduced numerous origination, servicing and analysis products in the mortgage and bank risk management areas. He has held multiple senior-level management roles in technology businesses and has taken part in company creation, executive consulting, mergers/acquisitions and product development in his 30-year-plus career in technology development.
Britany Luth
Steven Sless
Ian Sandler
Steven Sless is a licensed reverse mortgage specialist with more than 10 years of experience. Sless is passionate about helping seniors, their loved ones and their trusted advisors to understand how a reverse mortgage can be used to fund their longevity and plan for a comfortable, happy and robust retirement.
Ian Sandler is a branch manager and a licensed reverse mortgage loan originator. He has more than 16 years of experience in the mortgage industry in both retail sales and management, and has been originating reverse mortgages exclusively for the past six years.
Joni Pilgrim
Lauren Daniels
Joni Pilgrim is the co-founder and director of sales and marketing for Nationwide Appraisal Network, an award-winning appraisal management company located in Tampa, Florida.
Lauren Daniels is the assistant editor of The Reverse Review. An experienced writer and editor, her work has appeared on time. com and in Naples Illustrated. She recently earned her master’s degree in magazine publishing from Northwestern University and B.S. in sociology from Vassar College. Originally from Miami, she is passionate about travel and is continually on the hunt for the perfect iced coffee.
10 | Stats g
John K. Lunde
Marty Bell
John Button
Britany Luth
Steven Sless
Ian Sandler
20 | Navigating Around Counseling Steering Issues g Britany Luth is the vice president of operations for Urban Financial of America, based in Tulsa, Oklahoma. She oversees Urban’s wholesale operations and underwriting team and has Direct Endorsement underwriting authority. Prior to joining Urban more than seven years ago, Luth managed a nationwide title company. She obtained a B.S. in business management with a minor in marketing from Oklahoma State University.
Russell Trahan Russell Trahan
Joni Pilgrim
Lauren Daniels 6 | TRR
24 | A Crash Course in Convention Marketing g Russell Trahan is the president of PR/PR, a boutique public relations agency specializing in positioning clients in front of their target audience in print and online. PR/PR represents experts of all kinds who are seeking national exposure for their business or organization. PR/PR will raise your business’ awareness in the eyes of your clients and customers. prpr.net mail@prpr.net
12 | NRMLA News g
23 | Reverse Mortgages Equal Peace of Mind g
27 | Lenders to Require Specialized Reverse Mortgage Appraisal Platformsg
16 | Hot Seat g
23 | Reverse Mortgages Equal Peace of Mind g
30 | The Comeback g
contributors Jason McNamara
34 | Reverse Mortgage: Product or Service? g
Jason McNamara
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.
Reverse mortgages can help dire senior housing situation Comments We Loved
?
pg.34
“Our industry does sell a product, but it’s the solutions we deliver, and the people to whom we deliver them, that set us apart from any other mortgage or financial services businesses.” —Jason McNamara
We asked. > You answered. pg. 28
read more on page PG.09
there is no such thing as a stupid idea. what do you want us to write about? tell us!
24
Heading to Miami for NRMLA’s national meeting? Learn how to get the most out of the experience.
info@reversereview.com ou t do y e wha v a h akes? it t
Why you love being a reverse mortgage professional.
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?
VISIT US
AT BOOTH #3 AT NRMLA IN MIAMI, NOV. 10-12
WE CAN LEAD THE WAY!
Title - Settlement - Valuations
800.877.7557 ext 1222 www.mtginfo.com reversereview . com
8 TRR | 7
The Reverse Review October 2014
You Deserve Life, , and ... Innovative Technology 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
8 | TRR
industry news
October Edition 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 1.
Senior Housing Situation Dire, but Reverse Mortgages Can Help Suggesting a looming crisis in senior housing, an increasing number of baby boomers are entering into retirement with mortgage debt, according to a recently released report from the Harvard Joint Center for Housing Studies and the AARP Foundation. Reverse mortgages may offer financial security for those who are eligible and in need. “Reverse mortgages can be particularly helpful to lower-income households holding most of their wealth in home equity,” the study says, noting that reverse mortgage income can support a variety of financial needs.
// September 3, 2014
2.
Lenders Sweeten the Pot for Jumbo Mortgages Looking to reap the profits of jumbo loans, lenders are skipping the secondary market and keeping the high-value loans on their books, according to the Wall Street Journal. Less than 3 percent of all jumbo mortgages originated in the first half of 2014 have been securitized, which is much less than the nearly 50 percent securitized in 2005. Despite the soft secondary market, lenders are enthusiastic. Cameron Findlay, chief economist for Discover Home Loans, tells the WSJ that lender excitement could lead to better terms for borrowers. By keeping the high-dollar loans in their portfolios, lenders may have more flexibility with qualification standards
than a government-backed traditional loan, leading to better terms on “downpayment minimums and debt-to-income ratio requirements,” the newspaper writes.
// September 11, 2014
3.
Live Well Acquires $531 Million Reverse Mortgage Portfolio, Adds NYC Trading Desk Live Well Financial has acquired a bulk portfolio of Ginnie Mae-guaranteed bonds from an unnamed seller, including HREMIC Securities comprising $531 million in notional balances. Following the announcement, which settled in late August, the company also said it hired a New York City-based group from Stifel Financial’s Home Equity Conversion Mortgage (HECM) trading desk to manage the newly acquired portfolio. The new team, led by Executive Vice President Darren Stumberger, who is joined by Senior Vice President Ernie Calabrese and Vice President Dan Foster, will be integral to increasing Live Well’s profitability and branding the franchise with the institutional investor base.
// September 9, 2014
4.
Reverse Mortgages Positioned for Comeback Signs are pointing to a strong comeback for reverse mortgages and the mainstream media continues to take notice. A recent Associated Press article published by ABC News cites an older population that wants to age in place and a recovering housing market among the factors contributing to the potential revival.
// September 15, 2014
5.
Ellington Financial Invests in Longbridge for Reverse Mortgage Growth Ellington Financial LLC, a Greenwich, Connecticut-based mortgage investor, committed a minority investment in the Mahwah, New Jersey-based Longbridge, a retail reverse mortgage loan originator. The details of the investment were not disclosed. Longbridge entered the reverse mortgage space in 2012 and was established by former New York Life employees. There are no planned changes for Longbridge’s senior management. The partnership precedes further growth for Longbridge. The company plans to expand its state licensing footprint in more than 40 states and build relationships with other firms in the retirement space in the coming months.
// September 11, 2014
6.
Maverick Funding Acquired by New Lender Home Point A new mortgage company, Home Point, has reportedly acquired Maverick Funding, the Parsipanny, N.J.-based lender that operates a growing reverse mortgage platform, for an undisclosed sum, Inside Mortgage Finance reports. Maverick, which has risen into the top 10 of reverse mortgage lenders by volume, closed 427 reverse loans year-to-date as of August, according to data compiled by Reverse Market Insight. For the same period in 2013, the company closed 627 reverse loans.
// September 11, 2014
reversereview . com
8 TRR | 9
The Reverse Review October 2014
stats August 2014
Top Lenders Report
12345 American Advisors Group
One Reverse Mortgage
Endorsement
Endorsement
779
392
RMS/S1L
UFA
Endorsement
Endorsement
326
220
Liberty Home Equity
Endorsement
166
Lender Endorsements
Lender Endorsements
PROFICIO MORTGAGE VENTURES
135
TOWNEBANK
LIVE WELL FINANCIAL INC
74
TOP FLITE FINANCIAL INC
8
REVERSE MORTGAGE FUNDING LLC
72
VANGUARD FUNDING LLC
8
GENERATION MORTGAGE COMPANY
64
YADKIN VALLEY BANK AND TRUST
8
NET EQUITY FINANCIAL INC
54
THE FEDERAL SAVINGS BANK
7
MAVERICK FUNDING CORP
53
EVOLVE BANK & TRUST
7
PLAZA HOME MORTGAGE INC
44
MORTGAGESHOP LLC
7
HIGH TECH LENDING INC
40
NORTH AMERICAN SAVINGS BANK
7
35
FLAHERTY FUNDING CORP
7
FIRSTBANK 32
GEORGETOWN MORTGAGE
6
SUN WEST MORTGAGE CO INC
31
GUARANTEED RATE INC
6
UNITED NORTHERN MB LTD
30
SUCCESS MORTGAGE PARTNERS INC 6
OPEN MORTGAGE LLC
22
SIMONICH CORPORATION
UNITED SOUTHWEST MORTGAGE
21
NEW AMERICAN MORTGAGE LLC
6
MCM HOLDINGS INC
21
PINNACLE CAPITAL MORTGAGE
5
MONEY HOUSE INC
19
GMFS LLC
17
PEOPLES BANK
17
CHERRY CREEK MORTGAGE CO INC
SENIOR MORTGAGE BANKERS INC
11
6
16
NATIONWIDE EQUITIES CORPORATION 16 M & T BANK
15
FIRSTAR BANK
15
ADVISORS MORTGAGE GROUP LLC
15
CHRISTENSEN FINANCIAL INC
14
SUN AMERICAN MORTGAGE
14
MLD MORTGAGE
12
MORTGAGE SERVICES III LLC
11
AMERICAN NATIONWIDE MORTGAGE 11 AMERICAN PACIFIC MORTGAGE
11
UNIVERSAL LENDING CORPORATION 11
10 | TRR
Brought to you by:
%%%%% looking for more statistics? Go to rmsinsight.net for all of the industry’s latest stats and rankings.
stats HECM Endorsement Stats Through July 2014 INDUSTRY SUMMARY
Trailing Twelve Month Endorsements
RETAIL UNITS CHG%
2,248 -10.47%
5,373
9
2,735 -12.48%
1,782 -20.73%
4,517 -15.93%
10
2,510
-8.23%
11
2,734
8.92%
12
2,594
-5.12%
1.43%
1
2,789
7.52%
2,265 39.04%
5,054 19.68%
2
2,614
-6.27%
2,545 12.36%
5,159
3
2,358
-9.79%
2,256 -11.36%
4,614 -10.56%
4
2,362
0.17%
1,806 -19.95%
4,168
Total Endorsement Growth
5
2,651 12.24%
1,842
1.99%
4,493
7.8%
6
2,413
-8.98%
1,747
-5.16%
4,160
-7.41%
7
2,319
-3.9%
1,772
1.43%
4,091
-1.66%
Wholesale Endorsement Growth
2,000
-1.66%
8 9 10 11 12 1 2 3 4 5 6 7 Wholesale *Numbers Represent Months
* Figures Above Reflect Change from Prior Month
4,223
-16.5%
1,629
-7.33%
4,685 11.92%
1,951 16.41%
31,204
TOT
4,186
-5.95%
1,676
-6.44%
23,519
-9.86% 2.08% -9.67%
54,723
70%
{ figure }
01
60% 50%
fixed rate percentage
40% 30% 20%
7/1/14
6/1/14
5/1/14
4/1/14
3/1/14
11/1/13 11/1/13
2/1/14
10/1/13 10/1/13
1/1/14
9/1/13 9/1/13
12/1/13
8/1/13 8/1/13
6/1/13
5/1/13
4/1/13
3/1/13
2/1/13
1/1/13
12/1/12
7/1/13
02
7/1/13
arm
{ figure }
11/1/12
10/1/12
9/1/12
8/1/12
10% 7/1/12
hecm endorsement trends
UNITS CHG%
-3.31%
-3.9%
Retail
UNITS CHG%
3,125
4,000
0
TOTAL
8
Retail Endorsement Growth
6,000
WHOLESALE
fixed
$1,200.0 $1,000.0
$600.0 $400.0 $200.0
7/1/14
6/1/14
5/1/14
4/1/14
3/1/14
2/1/14
1/1/14
12/1/13
6/1/13
5/1/13
4/1/13
3/1/13
2/1/13
1/1/13
12/1/12
11/1/12
10/1/12
9/1/12
8/1/12
$0 7/1/12
in the millions
hecm endorsement
initial principal limits
$800.0
reversereview . com
8 TRR | 11
The Reverse Review October 2014
nrmla news On the Docket
ICC Adopts Elder Abuse CE Requirement
Federal Court Rules in NBS Cases
NRMLA’s Independent Certification Committee, which administers the Certified Reverse Mortgage Professional program, has adopted a continuing education requirement for current Certified Reverse Mortgage Professionals to complete a minimum of one hour of elder abuse course work within three years of earning the designation.
The United States District Court for the District of Columbia issued a Memorandum Opinion on August 28, 2014, in the consolidated Bennett and Plunkett HECM non-borrower spouse (NBS) cases.
The court ruled that: 2 HUD’s Mortgagee Optional Election program is not arbitrary and capricious. The court noted that HUD planned eventually to apply this program to all nonborrowing spouses, as indicated in FHA Info #14-34. The court ordered summary judgment in favor of HUD on this point. 2 HUD’s failure to fully analyze the possibility of delaying foreclosure until a given HECM loan reaches 98 percent of its maximum value was arbitrary and capricious, and this portion of HUD’s decision was remanded to HUD for further consideration. 2 HUD cannot be compelled to take assignment of the four HECM loans represented in the lawsuit. 2 The plaintiffs’ motion for class certification was denied without prejudice. This overview is only a brief summary of fairly complex procedural legal issues and decisions as outlined in the court’s 32-page opinion that comes as part of litigation that spans several years. Moreover, the plaintiffs will have an opportunity to appeal the court’s summary judgment ruling. NRMLA will continue monitoring this matter and report on any new developments. Nonetheless, individual NRMLA members and their counsel should consider this latest opinion with care as they continue to originate and service HECM loans.
Report: U.S. Unprepared to Assist Aging Population, But Reverses Can Help While America struggles to meet the housing needs of its aging population, reverse mortgages remain a valuable source of funding for older Americans who have financial and other retirement needs, according to a new report published this week by the Harvard Joint Center for Housing Studies and AARP Foundation. Titled “Housing America’s Older Adults— Meeting the Needs of an Aging Population,” the report estimated the number of adults in the U.S. aged 50 and over will grow to 132 12 | TRR
Consumer Website Takes Another Leap It seems as if every month in this column we’ve been reporting a new record of visitors to NRMLA’s consumer website, reversemortgage. org, which includes our lender directory. Well, this month is no different.
Additional details will be published in the Candidate Handbook and Recertification Handbook, which are posted to nrmlaonline.org.
20%# In August, the visitors took another 20 percent leap: 39,600 people visited the site looking for information about reverse mortgages and lenders who can help them.
million by 2030, an increase of more than 70 percent since 2000. It also noted that housing that is affordable, physically accessible, welllocated, and coordinated with supports and services is already in short supply. The report concluded that high housing costs currently force a third of adults 50 and over— including 37 percent of those 80 and over—to pay more than 30 percent of their income for homes that may or may not fit their needs, forcing them to cut back on food, health care and, for those 50-64, retirement savings. States have implemented property tax relief as one possible solution to address housing cost challenges, while at the federal level,
Candidates pursuing future CRMP designation who successfully complete the elder abuse course as part of their application process, and then pass the exam, will not be required to retake the course during the three-year certification period.
Furthermore, NRMLA will be offering a course at the Annual Meeting & Expo, November 10-12, titled “Financial Safeguards for Older Adults,” which qualifies as an approved course under these new guidelines. All conference attendees are encouraged to attend the presentation, which has also been approved for one NMLS credit. To learn more about the CRMP designation, please visit @ nrmlaonline.org.
the report singled out HUD’s Home Equity Conversion Mortgage program. “Reverse mortgages can be particularly helpful to lower-income households holding most of their wealth in home equity,” said the report. “For example, reverse mortgages can
be used to convert a portion of housing wealth into an income stream to help cover property taxes and insurance payments, the costs of supportive care, and other living expenses. The ability to choose either a lump sum or a line of credit can assist homeowners in paying for one-time, big-ticket expenses, such as home modifications or improvements.”
nrmla news In the Press: NRMLA Publishes Pushback
WAshington Paper Cites RM Stabilization Act in Endorsing Heck
The letter, titled “Reverse mortgages help many seniors in retirement,” reads as follows:
An editorial published this week in The Olympian (Olympia, Washington) endorsed the re-election of Congressman Denny Heck (D-WA) in part because of his success at shepherding the Reverse Mortgage Stabilization Act through Congress and getting it signed into law last summer.
The Sandusky Register published a letter submitted by NRMLA President and CEO Peter Bell in response to one local attorney’s attempt to discredit the reverse mortgage program based on a single client’s experiences.
I was disappointed to read Dan McGookey’s recent column in the Sandusky Register on the subject of reverse mortgages. (“Avoid reverse mortgages: Alice’s story,” Register, Aug. 21, 2014). It’s important your readers understand that the piece is one attorney’s attempt at self-promotion, based on one family’s experience with a reverse mortgage. And while it may serve as an effective marketing tool for Mr. McGookey, it does a disservice to the many seniors who depend on reverse mortgages, as well as those who are considering this important financial tool. Reverse mortgages allow homeowners 62 and older to take out a government-insured loan based on the equity they have put into their home. They allow seniors to spend their later years in their own homes, while meeting their financial obligations, and not burdening their loved ones. Like a traditional mortgage, reverse mortgages can be complex. Unlike other financial products, however, all potential reverse mortgage borrowers must meet with a certified counselor to ensure that they understand the terms before they move forward. In the event that borrowers find themselves in a situation where they are unable to meet the terms of their loan, the best thing to do is to contact the loan’s servicer so that they can work with the lender to develop a solution. The reverse mortgage industry has worked for years to improve the product and tighten federal rules surrounding them. We have made great progress, and the majority of today’s borrowers report satisfaction with the product. They might be surprised to see Mr. McGookey’s reckless characterization of reverse mortgages, but it would be even more unfortunate if potential borrowers shied away from the product based on his sweeping, yet false conclusions.
Association Business: Credits and Birdies
“For a freshman in Congress, Heck has had a surprising impact,” said the paper. “It’s rare that congressional rookies are the prime sponsors of legislation, and even rarer for a new member of the U.S. House minority to have a bill passed. But Heck accomplished this with the Reverse Mortgage Stabilization Act.”
news from nrmla
Brought to you by marty bell: national reverse mortgage lenders association
The editorial goes on to say, “The bill, signed by President Obama a year ago, required the Federal Housing Administration to make reforms to stabilize its reverse mortgage program so that elderly people with a legitimate need can continue to benefit.” Congressman Heck co-sponsored the Reverse Mortgage Stabilization Act with Rep. Michael Fitzpatrick (R-PA), who is also running for another term.
What’s new at this year’s NRMLA Annual Meeting & Expo? Credits and birdies. In addition to all the other benefits of attending the largest annual gathering of reverse mortgage professionals, this year, for the first time, you can accumulate all eight of your required NMLS continuing education credits. And, in addition to our popular networking events, join your colleagues for a beautiful round of golf at the Miami Beach Golf Club on Wednesday afternoon, November 12. You can get a lot of business done over the course of 18 holes.
To join us November 10-12 at Loews Miami Beach Hotel, register at nrmlaonline.org. reversereview . com
8 TRR | 13
The Reverse Review October 2014
14 | TRR
roundup Here is a look at the
NEWS AND STATS
affecting the market.
THIS MONTH
{
GET UP-TO-DATE retirement facts, home price stats, senior trends and HECM market developments in The Reverse Review’s monthly Roundup.
money matters
Number Crunch today’s trends
FastestGrowing Cities
Living on Less
Many recent retirees receive less than two-thirds of the income they received during their working years, reports a national study from T. Rowe Price. The 2,500 survey respondents reported income between $25,000 and $100,000, of which Social Security is the single largest source. Despite lowering their living standards, the majority is satisfied with their current situation. Eighty-five percent of retirees agreed with the statement “I don’t need to spend as much as I did before I retired to be satisfied.” Researchers point out it is important to note the survey only included recent retirees who may face more intense economic pressure as savings deplete over the next several years.
New Releases
Read This
Using Your House for Income in Retirement, a new e-book from the Center for Retirement Research at Boston College, says seniors
seeking to use their home equity as a retirement tool have two options: downsizing or a reverse mortgage. Housing is one of the largest expenses for seniors, using 30 percent of the income of retired households. The book suggests a reverse mortgage could help reduce expenses and free up needed cash flow. An example estimates a senior age 65 who owns a $250,000 house, with
a reverse mortgage, will add approximately $8,600 to their income. The Center for Retirement Research encourages prospective borrowers to examine all options, concluding, “Your house has many uses. It’s your home. It’s wealth you can use as a reverse or bequest. And it’s a potential source of income. How you use it depends on what you need and value.”
Seeking affordable housing, the middle class is leaving cosmopolitan coastal cities such as New York City and Los Angeles for quickly growing, land-locked cities including El Paso, Texas; Columbus, Ohio; and Oklahoma City. The New York Times notes, “Rising rents and the difficulty of securing a mortgage on the coasts have proved a boon to inland cities that offer the middle class a firmer footing and an easier life.” Citing Census data, the newspaper notes that housingmotivated moves of 500 miles or more are up from 8 percent in 2007 to 18 percent this year.
Assistance Needed
Nearly 3 million older Americans received assistance with three or more self-care activities in settings other than nursing homes. –The Milbank Quarterly
Senior Sentiment
Health Woes
According to a joint study by Merrill Lynch and Age Wave, health care costs during retirement are the greatest worry of Americans age 50plus. Forty-one percent feared the inability to afford health care costs more than outliving their savings. Lack of information is a major roadblock to addressing questions of health care and retirement. Pre-retirees and retirees described the information available to them as confusing, frustrating and overwhelming. Despite the negative impressions, nearly all of those surveyed cited maintaining their health and feeling prepared to handle health concerns as essential. Eighty-one percent cited staying healthy as a requirement of retirement. reversereview . com
8 TRR | 15
The Reverse Review October 2014
THE
THE
REVERSE review
october 2014
John From his favorite vacation and his first job to his thoughts about the future of the
reverse vision President 16 | TRR
reverse mortgage market, we get the personal and professional facts from John Button, president of ReverseVision, in this month’s edition of The Hot Seat.
personal >
>
was that patience and persistence is
Something nobody knows about
the best formula for success.
me is that I have been inside the space shuttle Endeavour many times. >
>
>
My first car was a 1966 Pontiac
car. >
My most embarrassing moment
>
>
floor needed serious cleaning.
Bridge railing over the New York Hudson River—in the dark.
the Lunar Module on July 20, 1969.
professionAl >
focus on the opportunity ahead of us and not on the way things used to be.
Theodore Roosevelt.
>
My favorite movie is On Any
>
the reverse mortgage industry is
When I was younger I wanted to
market opportunity.
the surprisingly small volume given the
>
When I was a kid Matchbox cars I’ll never forget meeting Carl Sagan
to grow a market. >
when he presented to our high school
My first job was repairing bicycles.
>
My parents taught me how to build a house.
>
My favorite time of the day is before 6 a.m.
Industry growth is dependent upon effective and efficient marketing
physics class. >
I entered this industry because of the fulfillment that comes with helping
sold for 49 cents. >
My favorite movie is On Any Sunday.
The most fascinating thing about
Sunday.
be an astronaut. >
The future of reverse mortgages is exceedingly bright, so long as we
If I could meet anyone, past or present, it would be President
>
If I could time travel, I would be in
The craziest thing I’ve ever done was walk the 984-foot Dunn Memorial
>
If I could trade places with Stephen Hawking.
flying in a small, two-seat classic
>
My favorite book is Jonathan
someone for a day, I would choose
was experiencing motion sickness aircraft—my “friend’s” seat and the
Something nobody knows about me is that I have been inside the space shuttle Endeavour many times.
Livingston Seagull by Richard Bach.
Bonneville station wagon. >
The worst purchase I’ve ever made was a 1984 Plymouth Horizon
If I were a professional athlete, I would be a MotoGP motorcycle racer.
>
s t c a f
married.
backpacking for 10 days in Philmont
>
The most memorable moment in
fun
my life was when my daughter was
My favorite vacation was spent Scout Ranch.
The best lesson I’ve ever learned
and sales tools that sharpen and broadcast our message. >
The most important influence technology will have on reverse mortgages is increasing the effectiveness in helping borrowers understand their opportunity.
The most important influence technology will have on reverse mortgages is increasing the effectiveness in helping borrowers understand their opportunity. reversereview . com
8 TRR | 17
The Reverse Review October 2014
FINANCIAL LIABILITY SET-ASIDES
LOSS DRAFT
COMPLEXITY
ERRORS! GNMA REPORTING
REGULATORY CHANGES
SERVICING PLATFORM
OCCUPANCY
REPAIRS
18 | TRR
CHANGING DEMO
ELDERLY NEEDS
DEFAULT
FRAUD PREVENTION
NEW TALENT
PRODUCT CHANGES
TRAINING
LACK OF EXPERTISE
REPUTATION
ISSUES WITH COMPLIANCE
HUD RULES
Bypass the pitfalls. Rely on the most experienced team, completely dedicated to reverse mortgage servicing. Find out more at avoidthemaze.com Or contact us at (866) 654-0020 reversereview . com
8 TRR | 19
The Reverse Review October 2014
RR
originating
advance
RR
RR
Navigating Around Counseling Steering Issues By Britany Luth
T
here’s a lot to be cognizant of with HECM counseling these days. There are states that require face-to-face counseling, state agency approvals, timing requirements, etc. But one of the most important aspects of HECM counseling is HUD’s rule that the borrower may not be steered to any particular agency. HUD requires the borrower be provided a list of the eight national agencies and no fewer than five local agencies, including one within driving distance of the borrower’s home, to make their counselor selection. California requires the list of local housing counseling agencies include no fewer than 10 agencies. Also, in recent years, HUD has updated FHA Connection (FHAC) to require all counseling agents provided to the borrower be logged and tracked in FHAC within 24 hours of the case number assignment. It’s safe to say that HUD takes counseling steering very seriously. Steering Per HUD guidelines, originators cannot steer or direct a client to any specific counseling agency, whether it appears on the counseling agency list or not, using any method of
20 | TRR
communication. Originators are also prohibited from contacting the counseling agent before, during or after the counseling session has been performed. Borrowers who have already counseled prior to contacting the originator or lender do not have to be provided a counseling list. Telling a borrower any specifics about a certain agent that may influence their counseling selection is considered by HUD to be steering. For example: * Verbal or written direction informing a borrower of any of the following:
» Which agency will allow certain
payment types, such as at closing versus upfront payment
» Which agency provides the fastest turn times or weekend scheduling
» Which agency provides counseling in a certain language
* Providing “additional lists” that offer other agents to choose from and do not comply with the HUD counseling list requirement * Starring, circling or otherwise emphasizing any particular agent on the counseling list * Including a certain agent’s brochure or other material with the counseling list These things should be avoided at all costs in order to properly allow the borrower to select their counseling
agency on their own, without influencing their decision. Challenges This is challenging in cases where the borrower needs specific accommodations from the counseling agent, such as counseling in a specific language or counseling for hearingimpaired borrowers. In those cases, you must be careful not to direct the borrower to an agency, even if you are attempting to assist them in locating a counselor who meets their needs. Potential borrowers with language needs can search HUD’s site for a counselor near them who provides counseling in a particular language. Potential borrowers with hearing disabilities may locate HECM counselors who will counsel them via text telephone (TTY) or Telecommunications Device for the Deaf (TDD) services by contacting the Federal Relay Service’s toll-free number (800.877.8339) to access HUD’s automated Housing Counseling Agency list. Most of the national agencies can accommodate these services. Borrowers may also be directed to call 800.569.4287 for the Housing Counseling Agency nearest to them. Compliance Lenders must comply with HUD anti-steering rules set forth in HUD Handbook 7610.1 and Mortgagee Letter 2010-37. These materials specifically state: “The lender may not steer, direct, recommend or otherwise encourage a client to seek the services of any one particular counselor or counseling agency. Lenders are required to give every client a list of HECM counseling providers
originating “The surest way to ensure that you are not putting yourself in a ‘counselor steering situation’ would be to present a list of agencies in alphabetical order: the eight national agencies and the five local agencies with nothing more than the name and telephone number [of each agency].” —John Olmstead, Office of Housing Counseling, HUD
that includes the national intermediaries providing telephone counseling and five agencies in the local area and/ or state of the client with at least one of the local agencies located within a reasonable driving distance for face-toface counseling.”
For that reason, lenders must review any direct or indirect steering concerns and appropriately address them. Lenders may request additional information from the borrower if the borrower is counseled by an agency that does not appear on the list they
were provided. Or, lenders may investigate if it appears that one particular counseling agency is used more frequently than normal by an originator. Overall, it is best for all parties involved that the borrower receives a counseling session from an agency that they select, with no influence to choose a particular agency. When a borrower receives counseling from a disinterested third party, they are more informed on all of their available options and can make the best decision for their circumstances. n
Visit HUD’s website to view these helpful references.
HUD Handbook 7610.1, Paragraph 4-11 portal.hud.gov/hudportal/HUD?src=/ program_offices/administration/hudclips/handbooks/hsgh/7610.1
A BETTER CHOICE!
Our dedicated team of professionals has the experience and knowledge to smoothly close reverse transactions. Through years of experience, FNC has gained valuable knowledge by building strong relationships with reverse mortgage lenders and brokers, as well as the borrowers we service. We firmly believe that our clients deserve the best treatment, and that is why FNC is where reverse mortgages take center stage.
240-864-4844
fnctitle.com reversereview . com
8 TRR | 21
spotlight
A nationwide title and settlement company servicing the reverse mortgage industry.
apprasing
Mortgagee Letter 2010-37 portal.hud.gov/hudportal/documents/huddoc?id=10-37ml.pdf
marketing
HUD HECM Lender/Counselor Conflict of Interest Notice portal.hud.gov/hudportal/documents/huddoc?id=ocb_ls020213.pdf
originating
If a lender fails to adhere to these requirements, they may be referred to the Mortgagee Review Board for sanctions, which could include civil money penalties, suspension and withdrawal of approval to participate in FHA programs.
Additionally, lenders with knowledge that any of the restricted activities are being performed must report the behavior to the Office of Housing Counseling via their email address, housing. counseling@hud.gov.
The Reverse Review October 2014
nu62 IS MAKING HEADLINES. ®
“... nu62®... shows how to use home equity strategically to meet long-term financial goals .” – NEW YORK TIMES 1
“Generation’s nu62.com allows advisors to run different scenarios to determine what each decision could mean to a borrower .” – FINANCIAL ADVISOR MAGAZINE 2
nu62® demonstrates the strategic value of conversion mortgages, and it’s got the media talking. To read more articles about nu62® and to learn more, please contact
us at 1.800.697.7503 or visit us at www.nu62.com/rr2.
1 2
Lisa Prevost, “Retiring on the House,” The New York Times, February 16, 2014 Karen Demasters, “Advisors Need Reverse Mortgage Knowledge, Says Lender,” Financial Advisor Magazine, April 23, 2014
©2014 Generation Mortgage Company. NMLS ID #1319, www.nmlsconsumeraccess.org. All rights reserved. nu62® is a registered trademark of Generation Mortgage Company. For state(s) licensing,
restrictions visit www.generationmortgage.com/statelegalese and www.nu62.com. nu62® is not yet registered as a trade name in the following states: Alaska, Arizona, Illinois, and Massachusetts. 22 |and TRR
originating
Reverse Mortgages Equal Peace of Mind By Steven Sless and Ian Sandler
W
There are a couple of key points that we hope everyone who reads this article will take away. Everyone looks at peace of mind differently. What happiness, contentment, satisfaction
Stay Connected
f facebook.com/reversemortgageseminars reversereview . com
8 TRR | 23
spotlight
The idea that a reverse mortgage is ultimately peace of mind was never more relevant than it was just a few weeks ago. We met with a senior couple who had recently attended one of our reverse mortgage seminars to complete their application for a HECM loan. While speaking with them on their patio, sipping coffee and getting to know them better, the wife turned to us and said, “Wow.
apprasing
Peace of mind may also be associated with happiness, contentment, comfort, calmness, pleasure, satisfaction and serenity. Think about any client you have originated a reverse mortgage for and why they chose to enter into the program. Did they wish to have more comfort in retirement? Were they searching for a sense of contentment and happiness that was not achievable on their fixed income? Were they looking to eliminate the stress and anxiety created by a rise in their cost of living and a stagnant Social Security income? If so, what they were really looking for is peace of mind.
and serenity means to one homeowner, might mean something different to another. First, take the time to listen to them and find out what brings them peace of mind. Second, it’s important for reverse specialists to build relationships and learn their borrowers’ concerns and goals. Once those goals are established, show them how a reverse mortgage may be used to accomplish them. All too often, loan originators get caught up in rates, fees, margins and lingo that will intimidate and confuse most clients. While it is imperative to discuss all options and terms with your client, you should first start by discussing what means the most to them. What are their goals? Not just their financial goals, but what would they like to accomplish and achieve? What are their concerns? Most of all, how is their quality of life? The third and last point is about being passionate. Passion is something that you cannot fake. You either have it or you don’t. If you are truly passionate, then these steps will come naturally. Discuss your clients’ family, grandkids, life concerns, and especially their goals. Be inspired by your clients and their stories. Discuss what brings them peace of mind, then work with them to customize a plan using a reverse mortgage to achieve those goals. n
marketing
What is a reverse mortgage, really? The answer: A reverse mortgage is peace of mind, plain and simple.
This means we might actually lie down at night with peace of mind again.” In speaking with them more and, most importantly, listening to them, we discovered that they both had been in and out of multiple doctors’ offices due to sleep apnea brought on from the stress of the combination of losing a portion of their retirement account and the husband’s pension a few years ago. Luckily, they were still in a position where they were getting by and could probably fund their lives for about 10 more years. What they weren’t sure of is what would happen when that money ran out. This was one of those situations where the passion for what we do really took over. As we sat on their patio, discussing how a reverse mortgage could bring them the peace of mind they so yearned for and fund their longevity past the 10-year point, they both looked at each other and tears streamed down their faces. It was hard for us to hold back our emotions as we witnessed the relief and jubilation our clients felt. Sharing these types of moments with our clients and knowing that we can offer a product that can truly impact their quality of life is what provides us with passion and love for what we do. How many careers are there where you can really say that you change people’s lives, allow them to recapture their dreams and provide them peace of mind?
originating
hat is a reverse mortgage? The answer to this commonly asked question might be different than you would think. Well, in our opinion, that is. A reverse mortgage, as most of you are well aware, may be used to help fund a senior homeowner’s longevity, eliminate their mortgage payment and provide additional retirement income. As loan originators and reverse mortgage specialists, we’re sure this comes as no surprise to any of you, yet the question remains:
The Reverse Review October 2014
RR
marketing
Develop
RR
RR
A Crash Course in Convention Networking By Russell Trahan
dressing and acting as you would on the convention floor, and ensuring your conduct and attire remain professional—because you don’t know who is who. Meetings have been scheduled in the airport Starbucks line, so while the inclination may be to travel in a relaxed fashion in comfortable attire, most working professionals will tell you they would trade a few unpleasant hours for a newly minted contract.
I
ndustry-specific conferences and conventions are a hallmark in business networking. As an attendee or a sponsored vendor, you will be inundated with a who’s who in your field—from the headlining heavyweights delivering keynotes and breakout sessions to the newcomers looking to create a name and garner beneficial connections. The chaos of the convention floor can prove a sensory overload for the experienced and first-timers alike. For that reason, before you pack your bags for NRMLA’s national meeting next month, you need a crash course in Event networking 101 to maximize your potential for expanded company visibility and name recognition. It’s one thing to work a room at a small industry function, but it’s another animal entirely when working the convention or conference floor, surrounded by hundreds of like-minded individuals. There are numerous avenues to consider when preparing to attend, but there are a few staples to put into action to certify that your experience is a valuable one and you come home with a lengthened client list or a number of helpful connections.
24 | TRR
Exhibit A The Convention Begins Before Takeoff No one likes plane flights. There are few things more uncomfortable than a cramped cabin, yearning for an extra inch of legroom, breathing recycled air for an inordinate amount of time. With discomfort on the horizon for a span of several hours, there is a tendency to double-down on the comfort one can control, which usually involves dress and demeanor. There’s no doubt that a loose-fitting outfit and an earlymorning mimosa (or two) takes away some of the irritations of travel, but if you’re heading to the airport in shorts and a T-shirt with a head full of bubbly, you’re already starting your convention experience incorrectly. The movie cliché involving a manic driver late to a meeting, weaving in and out of traffic, directing choice gestures at other drivers, just to arrive on time and realize the guy he cut off is the same guy to whom he’s delivering a sales presentation is exaggerated, but true. When you’re making your way through the airport, the convention is already underway. Every interaction should be treated as potential business, and this means
For many companies, a large portion of their annual budget—as well as their time—is dedicated to their annual conference or convention. While investing in a sponsorship that involves a booth setup in the exhibit area can prove costly, it can also prove lucrative when the convention floor closes. A booth gives your company a physical presence throughout the convention, and exponentially increases your visibility. Instead of conversations and business card exchanges, you have an area replete with banners, boards detailing your products or services, and of course, your carefully chosen convention representatives. Curiosity will often bring attendees to your booth to see what you’re all about, and as such, you should guarantee that it is managed by your savviest customer service staff. Arrive early each day to make sure everything is in working order by the time the convention opens. Create a schedule with time blocks that correspond with the daily sessions so you can plan oneon-one meetings with any potential clients away from the hustle and bustle of the booth.
marketing Augment Your Experience: Deliver a Workshop A superb way to create some buzz around the convention is to deliver a presentation or workshop. One great aspect of these events is that there is constantly something going on, from quick informational sessions to multihour seminars—and often, organizers are looking for individuals to fill out their extensive schedules.
platform as an in-person sales pitch and your efforts will go unnoticed. The Convention Is Over, but Networking Has Just Begun You return home exhausted from multiple days of nonstop presentations, long hours working the booth in the exhibit area and networking with your colleagues—but your work has only just begun.
NRMLA’s national meetings are a great way to network with your colleagues and better your business. The potential to craft longstanding relationships is boundless and will boost your standing as a company or individual. Networking is a cornerstone of business, and a NRMLA conference is the premier medium to make the most of your efforts. n
apprasing
I don’t often get reverse mortgage counseling,
spotlight
but when I do, I choose QuickCert. A HUD-Approved Housing Counseling Agency
888.383.8885
OPS@QUICKCERT.ORG Telephone counseling nationwide!
reversereview . com
marketing
Follow-up seems like a simple concept, but it’s astounding how many professionals believe their face-to-face efforts will be enough to immediately lead to a windfall of new business. Your mindset upon returning home should be one of “they met me, and they met my competition.” Separate
yourself from the pack. Email your new contacts and convey how much you appreciated their time during such a busy event, and offer dates and times to continue your conversation. Twiddling your thumbs and waiting for the phone to ring often results in a net-zero gain—proactivity is the key to new clientele.
originating
If this opportunity is available, it should be considered a must. Attendees can read about your expertise or services, but there is no better way to get your ideas to stick than to deliver a presentation. These workshops should be formatted as content-driven and informational, not as an in-person advertorial. Pique your audience’s interest by offering a solution to their problems or an approach to make their lives easier and your skills will prove impactful and potentially profitable. Use your
“Email your new contacts and convey how much you appreciated their time during such a busy event, and offer dates and times to continue your conversation. Twiddling your thumbs and waiting for the phone to ring often results in a net-zero gain—proactivity is the key to new clientele.”
8 TRR | 25
The Reverse Review October 2014
“
“ >> Nationwide title and settlement experts 26 | TRR
Beware of imposters. PRC has been the first in reverse 15 years running. With our experience and knowledge, you can rely on us to be the partner you can count on for Title and Settlement. There is a difference! Don’t be fooled by imposters--stick with the company that has the best closing track record in the industry.
TOLL-FREE: 800.542.4113
|
www.PRClosings.com
appraising
RR
adapt
RR
RR
Lenders to Require Specialized Reverse Mortgage Appraisal Platforms By Joni Pilgrim
years or even decades ago, they find the housing market more than a bit mysterious. For them, the process is unquestionably confusing and very different than when they last shopped for a mortgage.
To be sure, specialized panels are a startling development, one that represents one of the best—albeit indirect—results of the imposition of new regulations. It’s an opportunity for appraisers and AMCs to do more sophisticated work and earn larger fees than in years past. It will become an industry standard, but only if AMCs select appraisers who demonstrate a
To support reverse mortgage specialists, forward-looking AMCs will create innovative support teams and deploy intuitive technology that automates the appraisal process and improves quality control. To attain those goals, some will restructure their firms, but many others will lack the vision to replace legacy platforms with systems that have been customized, or better yet, that have been developed to meet the requirements of the emerging specialist landscape. The results will likely be fewer AMCs, but those that remain will deliver more accurate, higher-quality appraisals than ever before. n reversereview . com
8 TRR | 27
spotlight
Specialty panels require AMCs to identify appraisers who have experience and a track record working with reverse mortgages to ensure that specialists—ones who know the business exceptionally well and have the ability to provide excellent customer service to homeowners— perform the valuations. Because homeowners who purchase a reverse mortgage are elderly, and many were last in the mortgage market
From my perspective, specialization of reverse mortgages and other sophisticated, esoteric mortgages types was virtually inevitable once the mortgage industry had time to mull over the lessons learned from the real estate bubble and the effect of new CFPB regulations that govern lenders, AMCs and appraisers.
apprasing
But the biggest benefactors will be appraisers who will be paid more than in the past—and far more than generalists. AMCs that focus on developing specialty panels gain as well because their services are of a higher quality and can justify larger fees. There could emerge a two-tier marketplace, one in which AMCs that deliver specialty panels are paid better than appraisers who don’t.
That’s why appraisers who serve these consumers will need the ability to provide accurate valuations, communicate well and provide unparalleled customer service. The AMC will select specialists that have these traits in addition to their appraisal acumen because if they don’t, lenders will continue to experience service-related complaints from dissatisfied consumers.
The new business model is refreshing: AMCs will gather information on appraisers’ backgrounds, experience, and the type and quantity of appraisals they have completed. Those who have completed a sufficient number of reverse mortgage appraisals will be deemed an expert and added to the specialty panel. As in most businesses, specialists bring a level of demonstrated expertise that few of their peers can match, as well as the ability to deliver the most accurate appraisals possible.
marketing
The quality of valuations will improve because the best and most experienced appraisers will be assigned to handle those loan files. Improved quality means lenders will have more confidence entering into reverse mortgage transactions because they will know the valuations are accurate.
To illustrate the point, consider the degree to which standards for accuracy and professionalism have risen because appraisers have the independence they need to determine the valuation of a residential property. They no longer worry that an appraisal is too low for the transaction to go through, and as a result, they will no longer receive business from an AMC or a lender. Instead, the focus is on accuracy, knowing the local market, adding value and working with the most skilled professionals possible.
originating
A
n increasing number of lenders are requiring appraisal management companies to offer specialized reverse mortgage appraiser panels. It’s a trend from which all parties to the transaction— lenders, appraisers, AMCs and especially borrowers—stand to benefit.
To help allay their fears, borrowers go through a counseling process via an impartial third party. The aim is to ensure that borrowers understand the reverse mortgage product. While meeting with a counselor is required, it’s not sufficient. Experienced appraisers know that they need to be courteous, take their time answering questions, and act with empathy and compassion toward these borrowers.
superior skill set.
The Reverse Review October 2014
spotlight
What I Love About Being a Reverse Mortgage Professional m o nt
h’
RR
ition
What does working in the reverse mortgage industry mean to you?
ed
w
is th
s
in
b y Lauren D aniels
10 / 2014
I
t’s a common saying: If you do what you love, you never work a day in your life. But no one ever talks about what happens if the job you chose is constantly changing. We asked pros from around the country why they’ve stuck with the industry and what they enjoy most about their work.
uBrian Cook
mortgage advisor & reverse mortgage specialist, Alpine Mortgage Planning
I believe in the product and what it can do for those in or preparing for retirement. I take great pride in being an expert and resource for those in need of correct information, including other mortgage and senior advisors. And not many jobs allow you to make a living by helping to change people’s lives. I recently had the pleasure of assisting an elderly gentleman whose desire was to live out his remaining days in his home. When I sat down with his caregiver and children, he began to cry as I assured him that was possible. His daughter said, “Those are tears of joy.” Not one of us in the room had a dry eye. That is why I love and stay in this industry.
To read answers from Kristen Sieffert, Harlan Accola and other industry professionals, visit us at reversereview.com
uMichael J. Weltman
assistant vice president/ area sales manager, Urban Financial of America
The clients are the greatest generation, those who built America and transformed it into the place we know and love. Serving this group is the highest calling I could imagine, helping to provide retirement solutions for them to make life and retirement easier. When I was in real estate—selling and building homes—giving buyers the keys to their new home was the greatest feeling I had ever had. Reverse allows me to help folks stay in their homes, buy homes, relocate, downsize, age in place, renovate,
want to see more articles like this?
See them at reversereview.com.
remodel… whatever they want! It’s the most gratifying job someone in finance could ever have. Even after 25 years, we are just getting started. Reverse mortgages are the future of retirement planning and solutions. It’s the fourth leg of the retirement stool. Elder law attorneys, wealth managers, CPAs and CFPs will all be turning to reverse mortgage professionals for advice to assist their clients and I can’t wait. I want to continue to help and teach and educate till everyone knows what a powerful tool reverse mortgages are. The future of reverse is very bright. We should be very excited and passionate to be able to be part of this process.
uAtare E. Agbamu CEO, ThinkReverse LLC
Changes and challenges are common to all human activities, and they offer opportunities for growth, so I welcome them. The changes and challenges that have come to reverse mortgages have made both the product and the industry stronger and better. Looking forward, the demographic arithmetic is unassailable and compelling. Second, the product is rock-solid as a complementary tool for 21st-century retirement finance. Lastly, it can only get better. For reverse mortgages, the best is yet to come. 28 | TRR
spotlight
uJoshua Shein executive vice president, Reverse Mortgage Network
uAlissa Prieto
western regional account manager, Reverse Mortgage Funding LLC
uColleen Moore
national director of the reverse mortgage division, Golden Equity Mortgage, reverse division of Land Home Financial Services
marketing
I have stuck with this industry because I love being able to make a difference for people. Being in the forward market for more than 15 years, I enjoyed teaching my clients as well as providing mortgages; that is the side of the business I have always enjoyed. I taught real estate investing and was attracted to the “art of the deal” opportunities. Now, in the reverse world, I get to solve problems and help clients and professionals find ways to become and stay financially solvent. I love thinking out of the box! Give me a challenge or a problem and let me solve it... that is the joy in this business for me! I feel very positive about our industry. We are finally poking our head out of the decades of bad press!
originating apprasing
uKimberly Smith senior vice president, wholesale lending, American Advisors Group
When you look back, yes, there have been challenges, and there has also been tremendous progress. For example, 10 years ago there was only one margin available and no viable fixed-rate option, and there was no back-end premium to speak of. Today, while the guidelines have changed, all of that change is working toward a vision to create a sustainable program to help seniors for many years to come. Ultimately, I am here because I believe in the product, the need for an additional financial solution for older Americans, and I really enjoy all of the wonderful relationships and friendships I’ve cultivated. In short, the reverse mortgage product meets a growing need in our society. The number of individuals turning 62 each day is increasing and with the current economy and fewer people saving enough for retirement, this product will be a key tool in the current as well as the future’s retiree’s financial plan. I know it is part of mine!
uDon Graves principal, HECM Advisors Group
The focus of my 15 years in this business has been squarely upon education. I love talking to advisors, retirees, bankers, financial planners, attorneys and so on, and seeing their expressions when they discover that the HECM is not a program of last resort, but actually an integral part of any overall retirement plan. The program, despite its challenges, is built upon a solid principle: The strategic and prudent use of housing wealth will create a better retirement for most Americans. That’s rock-solid and 100 percent true. Baby boomers will live longer; they have not saved enough; and they are highly indebted. These facts will be driving factors in this program for the next 20 to 30 years. This industry has always been good, and now it is moving toward being great. reversereview . com
8 TRR | 29
spotlight
Nothing is constant, so any business is bound to change, just maybe not as frequently as the reverse mortgage world. It is all about perspective. We could complain all day long about how different the reverse mortgage program is today compared to five years ago, but the HECM product is significantly better than it was 10 years ago! I grew up in the reverse mortgage industry and I have developed long-lasting relationships all over the country that I never want to give up. I really enjoy the people in the reverse mortgage space and all of these changes and challenges have only brought us closer together. We are still a small industry and I am grateful for the talented people who have spent a lot of energy making the reverse mortgage industry a better place. People are excited again due to the recent program changes. In my opinion, this is one of the high points of the reverse mortgage industry and I am going to enjoy it while it lasts because we all know that nothing lasts forever in the reverse world.
There is truly no other product like the HECM available to seniors. It’s life-changing for the consumer. I have stuck with this industry because, despite all of the changes and challenges, we truly make a difference in people’s lives. Every day is different: the loans, the borrowers, the changes. There are so many unique situations and stories. Every day, we find ourselves challenged and learning how we can help someone and change their situation. In this business, the days, weeks and months fly by so quickly—there is truly nothing like it. We are at such a monumental time for our industry and for the 62-and-over population. The need for our product—for a solution to age in place—is needed now more than ever. The growth of the older American population will ensure tremendous growth for our entire industry in the coming years. HUD has finally finished its changes and modifications for the product and we now have a clean path to move ahead with the product for years to come!
The Reverse Review October 2014
The
Percent change, year ago
By Lauren Daniels
30 | TRR
Gains in the housing market better position reverse mortgages as a retirement planning tool for today and tomorrow.
One thing is for certain over the past several years: The U.S. housing market has been a roller coaster ride. Reverse mortgage professionals have been along for the trip, experiencing both the highs and lows. The breakneck pace of rising demand and home prices that marked the early aughts collapsed in the middle of the decade, decimating home values and deepening the recession. Recovery has been slow-going. But recent indicators are positive. Home prices have seen several months of upward gains and new-home sales and housing starts are improving—great news for both seniors and the reverse mortgage industry.
Slow and Steady While the exact beginning of the boom years is debated, the far-reaching fallout of the collapse is irrefutable. In just a few years—from roughly 2005 to 2009— more than a decade’s worth of housing market growth evaporated. Prior to this point, residential construction had enjoyed 14 years of growth. Housing demand kept pace, more than doubling from 1991 to 2005. Home prices, as measured by the Case-Shiller real price index, also jumped from 1996 to 2006, with the majority of that growth (67.5 percent) occurring between 2002 and 2006 before tumbling. The rise and rapid fall of home prices is unprecedented in America’s history. The reverse product took a double hit as home values sank and PLF limits decreased. The recovery from those losses has not been as swift. The market has been making its climb toward stability, in fits and starts, for more than five years. For the 12 months ending June 2014, home prices across the nation increased 8.1 percent, according to the S&P/ Case-Schiller Home Price Index. While posting a smaller gain than expected, the increase pushed home values to rates not seen since the spring of 2005, a sign of a stabilizing housing market and a recovery that is here to stay. “All else being equal, more equity should equate to more loans,” says Michael McCully, partner at New View Advisors. “In reality, it is important to analyze state, county and city data to better understand whether home
values in areas where HECMs tend to be originated are rising at the same rate as the general United States.” Chicago is an example of a positive recovery both for home values and HECM endorsements: The city saw a 6.6 percent increase in home values year-over-year according to the CaseShiller index. Chicago also ranks third in the number HECM endorsements to date, an upturn of 4.4 percent from 2013 according to Reverse Market Insight. The increase in home prices translates into usable equity for America’s seniors. The latest report from NRMLA/ RiskSpan Reverse Mortgage Market Index (RMMI) found the aggregate value of senior housing increased by $84.1 billion in the final quarter of 2013, resulting in $3.54 trillion dollars of equity.
Great Gains Home value increases year-over-year Las Vegas
Dallas
15.2%
8.0%
San Francisco
Denver
12.9%
7.7%
Miami
Boston
11.5%
7.0%
Los Angeles
Phoenix
10.5%
6.9%
Detroit
Minneapolis
10.3%
6.7%
San Diego
Chicago
10.2%
6.6%
Portland
Washington, D.C.
9.2%
5.3%
Tampa
New York
9.1%
4.3%
Atlanta
Charlotte
8.6%
3.8%
Seattle
Cleveland
8.6%
0.8%
Debt Crisis More important than the recovery in the surrounding area, existing mortgage debt may be the deciding factor in seniors’ ability to take advantage of the appreciation in home values. Unlike their parents, who came of age during the Depression and were taught to pay off mortgage debt, baby boomers are more comfortable with debt and will most likely enter retirement with outstanding loans. According to a study by the Federal Reserve, in 2010 (the latest numbers available), almost one-third of retired households had housing debt, with the average retired household owing $61,000—more than triple the amount owed by retirees in 1989. “A compensating fact is that many of the borrowers interested in the HECM product already have a lien against their property; this offsets some of the gains in volume home price appreciation would otherwise generate,” McCully says. For some, increased home values could be the deciding factor in qualifying for a reverse mortgage. Imagine the following situation: One year ago, a senior is interested in the program, but doesn’t qualify because of the ratio of the forward debt owed to the potential proceeds of the reverse. Over the next 12 months, the home appreciates 8 percent (the national average). It’s possible that the increase in equity, 8
*Source: S&P/Case-Shiller Home Price Indices August 2014 reversereview . com 8 TRR | 31
GEANEL A N P
The Reverse Review
LANDSCAPE
October 2014
MAR OWN
U YO
TM
APPRAISAL MANAGEMENT AT YOUR FINGERTIPS
Landmark Network introduces LandscapeTM, the only appraisal management cloudware you need to manage your appraisal process. Bringing you the industry knowledge and expertise of a veteran AMC, LandscapeTM allows you to take full control, while keeping you compliant with industry standards and regulations.
NO COST
FULL SERVICE AMC
MAINTAIN YOUR
Landscape™ is cloud based, so
BACKBONE
VENDOR PANEL
there is no software to install and
Take advantage of Landmark
Keep up with your existing
FEATURES account set-up takes minutes.
Network’s expertise as an AMC to
individual appraiser and AMC
Transaction fees can optionally be
build your appraisal panel, or get
relationships to ensure appraisal
paid directly by your vendor to
help completing difficult files.
turn time and quality continuity.
eliminate your cost.
Schedule your demo today and see how LandscapeTM can go to work for you.
888.840.1600 landmarknetwork.com
32 | TRR
“For every 1 percent increase in home values, we should see an increase in the percentage of people qualifying for loans.” — David Peskin
combined with the additional 12 mortgage payments, would allow this borrower to now qualify for a HECM loan. “For every 1 percent increase in home values, we should see an increase in the percentage of people qualifying for loans,” adds David Peskin, president of Reverse Mortgage Funding. Interest rates will also exert pressure on the reverse market. The current bargain-basement rates can’t continue forever, and economists and analysts expect rates to rise as soon as early 2015. Higher interest rates potentially limit proceeds for borrowers. As rates increase, PLFs drop, sometimes sharply. Borrowers who don’t receive sufficient proceeds may be locked out of the option of a reverse mortgage.
s&p/Case-shiller home price indices
average $1,200. The improvements are needed, the Harvard/AARP study notes, only 46 percent of homes owned by seniors 50 or older with difficulties climbing stairs currently have no-step entryways.
Supply and Demand
America’s next housing crisis could be one of quantity, not value. The majority of older Americans want to age in place, yet their homes are not in a condition to allow them to do so. A recent study by the Harvard Joint Center for Retirement Studies and the AARP Foundation found a lack of housing that is “physically accessible, well-located, and coordinated with supports and services” for seniors. The need for accessible features—wider doorways, ramps, specialty handles and faucets, and more—can add up quickly. An August 2014 article from MarketWatch estimated the cost of retrofitting the average home with features that minimize diminished mobility and other age-related issues can easily top $70,000. Adding an inhome elevator can cost up to $20,000; smaller improvements such as ramps
U.S. National
There is also a lot of opportunity in HECM for Purchase. Relatively new to the market, using the equity in a senior’s current home toward the next home removes the worry of having the available cash to pay for principal and interest payments. The popularity of H4P will grow as builders and real estate agents see the ability of the program to generate new potential buyers for both existing and new homes. Allowing seniors to consider additional options in terms of price range and homes with accessible features. “The Purchase program gives seniors a house they’ll be excited to spend the rest of their lives in and doesn’t limit them to downsizing,” Peskin says. n
10-city composite
20-city composite
24%
*Source: S&P/Case-Shiller Home Price Indices August 2014
20% 16%
4% 0% -4% -8% -12% -16% -20%
reversereview . com
4 201
2 201
0 201
8 200
6 200
2 200
0 200
8 199
6 199
4 199
2 199
199
0
-24% 8
Home prices are nearing levels unseen since 2007. After gaining, losing and gaining again, the market may finally be showing signs of stabilizing. Not all markets have rebounded equally. Homes in the Sun Belt cities (Las Vegas, Phoenix, Miami and Tampa) all remain 30 percent (or more) below their peak prices.
8%
198
The Housing Market’s Wild Ride
percent change, year ago
12%
8 TRR | 33
The Reverse Review October 2014
RR
last word
examine
RR
RR
Reverse Mortgage: Product or Service? By Jason McNamara
I
n September, I was honored to speak at the Texas Reverse Mortgage Day event hosted by the Texas Mortgage Bankers Association. Congratulations to Scott Norman and all the event sponsors and speakers for delivering an informative and entertaining day that was very well-attended. While my presentation focused on key servicing issues currently facing our industry, I seized the opportunity to ask the attendees whether our industry is selling a product or a service. I ask you to ponder the same question. I was on the outside looking in on the reverse mortgage industry for five years prior to Peer Advisors acquiring Celink in February 2014. Over those years, I witnessed the industry navigate its way through various program changes and product design modifications. We are transitioning from a standalone, needs-based product to one that is a component of a sound retirement plan and meant for a new type of borrower. This is not a simple task. To be successful, we must not only think differently, we must in fact be different—different products, different partners, different platforms and a different approach. Our opportunity is to evolve from something people need to something people love. This makes me wonder if we put too much emphasis on the HECM product itself and not enough emphasis on the service and resulting benefits we provide our borrowers. I’m fortunate to receive real stories from Celink’s Borrower Care department every day. A story from our tax and insurance team was brought to my attention recently. Tax and insurance defaults have given the industry a black eye, especially
34 | TRR
with the media, so I found this particular story very encouraging.
Our industry does sell a product, but it’s the solutions we deliver, and the people to whom we deliver them, that set us apart from any other mortgage or financial services business.
One of our client’s borrowers was in foreclosure for T&I default. He was angry about the greatly depreciated value of his home from the appraisal ordered while he was in foreclosure. After several conversations, our representative persuaded him that the appraisal was not the issue he needed to focus on—the foreclosure was. He was very difficult to get through to, but she eventually got him to focus on the real problem: how he got into foreclosure and how we might help him get out. This borrower had his reverse mortgage for a few years without a default until his homeowner’s insurance was canceled due to a damaged shed on his property. He wasn’t able to find voluntary coverage or repair the damage in a timely manner. The representative recalled him being very consistent each time they spoke, and especially remembers hearing the desperation in his voice as he expressed how he had planned to be able to take care of his kids and now he could barely provide the essentials for them due to several unforeseen circumstances. Every story is different, but this borrower had once been quite successful and had waited until he was older to settle down and have children so he could care for them properly. He ended up injuring his back and losing his business. He has school-age children who both have learning disabilities and his wife is also disabled. The reverse mortgage had originally saved him from losing his home, but now that he was in default and in foreclosure, he was not sure what to do.
Our representative reviewed his budget as part of the process to get him on a repayment plan. It was extremely tight because he did not have much disposable income. She referred him to HUD counseling, but he didn’t want to work with them. He was adamant there was no help “out there” for him. But our representative undertook online searches for help in his area. She uncovered local resources that reduced some of his expenses and found a local church that provided clothing and school supplies for his children. She got his budget to a place where we could get him into a repayment plan sufficient to get him out of foreclosure. Through her efforts and persistence, the due and payable notice and foreclosure were rescinded. If you asked this borrower if a reverse mortgage is a product or service, how would he answer? Servicers are on the customer satisfaction front line. Servicing operation centers solve multiple issues every minute of every workday. They manage line-of-credit requests, file claims to HUD, oversee repairs, verify occupancy, process prepayments, foreclosures, and due and payables, and manage T&I defaults. Our call center can receive more than 50,000 borrower care calls in a single month. There are approximately 600,000 active reverse mortgages in the market. Servicing reverse mortgages is not like servicing forward mortgages. Our industry does sell a product, but it’s the solutions we deliver, and the people to whom we deliver them, that set us apart from any other mortgage or financial services business. n
N E I V D O N E I S! ¡B SEE YOU AT THE
NRMLA ANNUAL MEETING & EXPO NOV 10 - 12
HOLESALE W H IT W T N E M T O IN MAKE YOUR APP RE: TO F IN D O U T M O e a nd m o re .
b o rr o w in g S p o us no N , nt e m ss e ss A n, Fi na nc ia l A A G 'S Ju m b o Lo a KIMBERLY SMITH, T C TA N O C ur yo elevate out how we can LESALE LENDING HO W Miami and find F in O P LA M SV NR at Meet our team | ksmith@aag.com 79 24 9. : th 75 wi 6. ss 91 ne si bu t rvice and suppor Best in class se rtise Marketing expe d simple approvals tion with quick an ra eg Turn-key int ds d brand industry’s best lea d and recognize Access to the d the most truste an r de lea try us e ind Partner with th
AAGWHOLESALE.COM 8 TRR | 35
reversereview . com
Look what people are saying about...
The Reverse Review October 2014
“It’s not easy to create a course that covers all the necessary details and aspects of this unique product but RVU has succeeded. I highly recommend this course.”
“It’s interactive, easy to use and informative. The Reverse Mortgage Essentials (RME) course is worth it for anyone who is just starting out or for a seasoned veteran.” —Ann-Marie Cutcher, Office and Grants Manager Credit Card Management Services, Inc. dba Debthelper.com
—Beth Paterson, Executive Vice President Reverse Mortgages SIDAC, a Division of Greenleaf Financial
“RVU is a fantastic tool for reverse mortgage professionals. It tackles the challenges being experienced throughout the industry and provides the education needed to accelerate your business.”
“Whether you’re a new or an experienced LO, RVU helps you stay on top of the constant industry changes. Plus, you can earn CRMP credits with a company trusted to have upto-date and accurate information.” —Randy Davis, AVP Residential Lending Dollar Bank, F.S.B.
—Jeffrey Taylor, CMB Founder of Wendover Consulting, Inc.
“RV University is the most user-friendly, proactive training system for people in the reverse mortgage space.” —Bob Shields, Columbia Branch Manager The Money Source
www.reversevision.com/RVU | university@reversevision.com | 919.834.0070
36 | TRR