The Reverse Review June 2017

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INSIDE THIS ISSUE | ALL YOU NEED TO KNOW ABOUT JUMBO LOANS

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UNDERWRITING

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Mike Gruley Sits Down in Our Hot Seat

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REVERSE THE

From the Broker’s Perspective

The Homebuilder Strategy

Stories From the Servicing Home Front

The Reverse Review June 2017

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8 TRR | 3

The Reverse Review June 2017

From the editor Meet the Team SENIOR PUBLISHER

Reza Jahangiri PUBLISHER

Erik Richard EDITOR-IN-CHIEF

Jessica Guerin

CREATIVE DIRECTOR

Traci Knight

COPY EDITOR

Kersten Deck MARKETING DIRECTOR

Alycia Greer A NOTE FROM JESSICA GUERIN

© 2017 Reverse Publishing LLC All rights reserved.

Reproductions or distribution of any materials obtained in the publication without written permission is expressly prohibited.

The views, claims and opinions expressed in articles and advertisements herein are not necessarily those of The Reverse Review, its employees, agents or directors. This publication and any references to products or services are provided “as is” without any expressed or implied warranty or term of any kind. While effort is made to ensure accuracy in the content of the information presented herein, Reverse Publishing LLC is not responsible for any errors, misprints or misinformation. Any legal information contained herein is not to be construed as legal advice and is provided for entertainment or educational purposes only.

JUNE 2017

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KEEP IN TOUCH

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review

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GET UPDATES ON SPECIAL EDITION RELEASES.

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INSIDE THIS ISSUE | ALL YOU NEED TO KNOW ABOUT JUMBO LOANS

ON THE COVER

SIGN UP FOR THE E-NEWSLETTER AT REVERSEREVIEW.COM

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Jessica Guerin

Editorial Content email : jessica@reversereview.com

S E R EVI E W

At TRR, we believe that the HECM could help millions of Americans live a more comfortable retirement, and we are excited to embark on this new venture to help spread this important message.

Subscriptions email : information@reversereview.com

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Stay in touch with us as we navigate this new phase of the TRR brand. Check in at reversereview.com and subscribe to our e-newsletter to receive updates on special issue releases.

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

VI

In order to focus on this new venture, this will be the last printed issue of TRR in 2017. But the dedicated readership we’ve built over the years remains extremely important to us, and we want to continue to serve as your resource for all things

We also believe that the content we’ll be creating for those outside the space could be useful to you as you work to build professional partnerships and expand your client base. Our goal is to make these articles available to you as a resource to help you build your business.

Printer The Ovid Bell Press

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To do this, we intend to produce specialedition magazines for specific audiences, including Realtors, financial advisors, builders, forward mortgage professionals and consumers. Our goal in the coming year will be to create and distribute editions for professional partners and others so they can learn more about this important product.

HECM. We intend to provide you with exclusive, insightful industry coverage on reversereview.com, and to produce occasional issues as usual, just for HECM professionals.

HE

At The Reverse Review, we’ve worked hard to cover the reverse mortgage market for those who work in the field. Now, after seven years, we’ve decided to shift our focus to educate those who work outside the field, providing them with smart, relevant information about how a reverse mortgage could be used to buy a house, age in place or support a strategic retirement income plan.

Some industry players are getting creative to advance the market.

HO T S E AT

Mike Gruley sits down in our Hot Seat PG. 15

O R I G I N AT I N G

From the Broker’s Perspective PG. 16

O R I G I N AT I N G

The Homebuilder Strategy PG. 18

U N D E RW R I T I N G

Stories From the Servicing Home Front PG. 22

Feedback is very important to us here at The Reverse Review. Send us your thoughts on this issue or comment online to share your input.

table of contents 08 / STATS

20 / SERVICING

22 24

April top lenders and HECM endorsement stats through March

Stories From the Servicing Home Front

REVERSE MARKET INSIGHT

Why committed, compassionate HECM professionals are irreplaceable

10 / NRMLA NEWS

TRR 6/17

MARY KATHERINE QUASARANO

Read about the association’s current initiatives.

22 / TITLE TIP

Conservatorships 101

13 / ROUNDUP A collection of facts and surveys affecting the reverse market

15 / HOT SEAT

What to know about this courtappointed mandate MEGAN HAFENSTEIN

23 / RETIREMENT PLAN

Mike Gruley

Executive vice president of 1st Nations Reverse Mortgage

16 / ORIGINATING

Creating Your Personal Retirement Movie

How picturing your ideal retirement can direct you toward the right path DON GRAVES

How lenders and brokers can work together to improve the customer’s experience BETH PATERSON

18

The Jumbo Option This proprietary offering presents highnet-worth individuals an alternative means to access their equity.

KENT KOPEN

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Finding satisfaction in the job despite constant change

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30YOU / LAST WORD How to connect with this market to sell | ALL INSIDE THIS ISSUE NEED TO KNOW New Challenges, Same Rewards the H4P ABOUT JUMBO LOANS

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The Homebuilder Strategy

JULIE DIDYOUNG

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18 / ORIGINATING

24 / SPOTLIGHT

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From the Broker's Perspective

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27 / FEATURE

YOU CAN DO IT!

Industry Innovators These HECM advocates are finding creative new ways to advance the market.

JESSICA GUERIN

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

“Educating seniors and professional partners has been the focus for originators across the industry… To jumpstart this mission, some are getting creative, employing new and inventive ways to reach potential borrowers or increase efficiencies. reversereview . com

8 TRR | 5

The Reverse Review June 2017

6 | TRR

contributors

John K. Lunde

Mike Gruley

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

Mike Gruley is the EVP of Reverse Mortgage Lending for 1st Nations Reverse Mortgage, a division of Huron Valley Financial based in Ann Arbor, Michigan. He has been in the mortgage industry for 32 years and has spent the last 17 years as a reverse mortgage professional. Gruley is a CRMP and currently serves on NRMLA’s Board of Directors, PR Committee, and State and Local Issues Committee.

8 | Stats g

Megan Hafenstein

22 | Conservatorships 101 g Megan Hafenstein is the VP of Allegiant Reverse Services. She has been serving the reverse closing and mortgage industry since 2005 and oversees business development and client services, working as the liaison between ARS and clients to streamline processes.

She has been highlighted in multiple industry articles, been a key speaker at conferences, and has held numerous training sessions regarding reverse mortgage title and settlement solutions.

14 | Hot Seat g

Don Graves

23 | Creating Your Personal Retirement Movie g

Don Graves is a principal at the HECM Mortgage Advisors Group, an education and consulting practice devoted to honest and transparent dialogue.

Graves and his colleagues provide the institutional and advisor communities a trusted resource for accurate and current HECM information. Since 2000, Graves has assisted more than 2,300 retirees obtain a reverse mortgage.

He is a certified instructor with the Department of Banking and Insurance and the Real Estate Commission.

Beth Paterson

16 | From the Broker's Perspective g

Beth Paterson, CRMP, is EVP of Reverse Mortgages SIDAC, a Division of Greenleaf Financial, LLC. Specializing in reverse mortgages since 1999, Paterson has used her expertise to help seniors maintain their security, independence, dignity and control. In 2012, Minnesota's lieutenant governor appointed her to the advisory panel for the “Own Your Future� campaign, a public awareness effort that encourages Minnesotans to plan for their long-term care needs as they age.

Julie Didyoung

18 | The Homebuilder Strategy g

Julie Didyoung is a HECM for Purchase specialist (NMLS #485913) with Reverse Mortgage Funding LLC (RMF). She joined the reverse mortgage industry in 2007 while researching the program for a family member. Licensed in DE, MD, NJ and PA, she helps homebuyers navigate the sometimes difficult world of reverse mortgages.

She participated in an educational session for homebuilders at the 2017 International Builders Show. jdidyoung@reversefunding.com

717.951.0058

Kent Kopen

Marty Appel

Kent Kopen earned his Reverse Mortgage Specialist credential in March 2007 and the Certified Reverse Mortgage Professional designation in 2016. Kopen provides tools and strategies to professionals who offer financial advice to others.

He earned a B.S. from the University of Colorado in architectural engineering and an MBA from USC. Kopen co-authored the book Borrow Smart Retire Rich in 2007. kent@thereverseadvisor.com 800.208.1252

Marty Appel is a HECM specialist with Retirement Funding Solutions. He has assisted countless older homeowners enhance their retirement years by helping them select the correct reverse mortgage program to meet their needs and goals. With his no-pressure, educational approach, Appel is an expert in helping his clients find the right solution for them. mappel@rfslends.com 510.701.2167

24 | The Jumbo Option g

Mary Katherine Quasarano

20 | Stories From the Servicing Home Front g

Mary Katherine Quasarano worked with Celink as an outside consultant until she was hired in January 2017 to oversee its learning and development efforts. She received her MA in human resource development, focusing on organizational development, in 2008.

As MK & Company, she transitioned from assisting clients with marketing and communication efforts to where her true passion lies: growing and developing people. marykatherine@celink.com

30 | New Challenges, Same Rewards g

reversereview . com

8 TRR | 7

The Reverse Review June 2017

stats April 2017 Top Lenders Report

12345 American Advisors Group

Liberty Home Equity

Finance of America Reverse

Reverse Mortgage Funding

One Reverse Mortgage

Endorsements

Endorsements

Endorsements

Endorsements

Endorsements

993

462

439

364

261

Lender Endorsements SYNERGY ONE LENDING INC

229

Lender Endorsements

18

RMS/SECURITY ONE LENDING

228

INTERCONTINENTAL CAPITAL GROUP

18

LIVE WELL FINANCIAL INC

133

TOTAL MEDIA MANAGEMENT LLC

14

HIGHTECHLENDING INC

122

SUN AMERICAN MORTGAGE

13

NATIONWIDE EQUITIES CORPORATION

96

HOMEOWNERS MORTGAGE ENTERPRISE

13

REVERSE MORTGAGESCOM INC

95

FRANKLIN FIRST FINANCIAL LTD

13

HOME POINT FINANCIAL CORPORATION

68

CALIBER HOME LOANS INC

13

THE FEDERAL SAVINGS BANK

63

UNIVERSAL LENDING CORPORATION

12

FIRSTBANK 61

PACIFIC RESIDENTIAL MORTGAGE LLC

11

LONGBRIDGE FINANCIAL LLC

55

DOLLAR BANK FSB

11

FAIRWAY INDEPENDENT MORTGAGE CORP

54

LAND-HOME FINANCIAL SERVICES

11

ALL REVERSE MORTGAGE INC

52

MORTGAGESHOP LLC

11

49

GERSHMAN INVESTMENT CORP

10

45

NOVA FINANCIAL & INVESTMENTS CORP

10

THE MONEY SOURCE INC RESOLUTE BANK

OPEN MORTGAGE LLC

MCM HOLDINGS INC

42

VIP MORTGAGE INC

9

CHERRY CREEK MORTGAGE CO INC

41

GEORGETOWN MORTGAGE

9

ADVISORS MORTGAGE GROUP LLC

39

HOMEBRIDGE FINANCIAL SERVICES INC

9

PLAZA HOME MORTGAGE INC

38

MORTGAGE BROKERS SERVICES

9

UNITED NORTHERN MORTGAGE BANKERS LTD 38

MOHAVE STATE BANK

9

QUONTIC BANK FSB

34

AMERICAN FINANCIAL NETWORK INC

9

AMERICAN PACIFIC MORTGAGE

32

AMERICAS MORTGAGE RESOURCE

8

BANC OF CALIFORNIA

28

MOUNTAIN AMERICA CREDIT UNION

8

SUN WEST MORTGAGE CO INC

27

US MORTGAGE CORPORATION

8

COMMUNITY FIRST NATIONAL BANK

24

RESIDENTIAL HOME FUNDING CORP

8

8

7

M & T BANK

24

SOUTHERN TRUST MORTGAGE LLC

MONEY HOUSE INC

21

UNITED MORTGAGE CORP

EVOLVE BANK & TRUST

20

SKYLINE FINANCIAL CORPORATION

BROKER SOLUTIONS INC

19

MANN MORTGAGE LLC

7

7

TOWNEBANK 19

ALPHA MORTGAGE CORPORATION

7

PEOPLES BANK

18

AMERICAN LIBERTY MORTGAGE INC

7

18

ATLANTIC BAY MORTGAGE GROUP LLC

7

BANK OF ENGLAND 8 | TRR

stats HECM Endorsement Stats Through March 2017 { FIGURE }

01

PURCHASE

$1,200

REFI STANDARD

$800 $600 $400 $200

3/1/17

2/1/17

1/1/17

12/1/16

02

11/1/16

9/1/16

{ FIGURE }

10/1/16

8/1/16

7/1/16

6/1/16

5/1/16

4/1/16

$0 3/1/16

DOLLARS IN MILLIONS

HECM ENDORSEMENT INITIAL PRINCIPAL LIMITS

$1,000

HECM ORIGINATORS (FHA & NON-FHA)

INDUSTRY SUMMARY

TRAILING TWELVE MONTH ENDORSEMENTS 5,000

3,000

4

2,465

-7.64%

1,775 -4.42%

4,240

Retail Endorsement Growth

5

2,034 -17.48%

1,605 -9.58%

3,639 -14.17%

6

2,190

7.67%

1,573 -1.99%

3,763

3.41%

7

2,033

-7.17%

1,497 -4.83%

3,530

-6.19%

8

2,440 20.02%

1,938 29.46%

4,378 24.02%

1,519 -21.62%

3,738 -14.62%

1,000 4 5 6 7 8 9 10 11 12 1 2 3 Wholesale *Numbers Represent Months

RETAIL UNITS CHG%

WHOLESALE UNITS CHG%

TOTAL UNITS CHG%

-6.32%

26.32%

9

2,219

-9.06%

10

2,159

-2.7%

1,753

15.4%

3,912

4.65%

11

2,067

-4.26%

1,817

3.65%

3,884

-0.72%

12

2,532

22.5%

2,124

16.9%

4,656 19.88%

Total Endorsement Growth

1

2,594

2.45%

1,984 -6.59%

4,578

-1.68%

2

2,356

-9.18%

3.98%

4,419

-3.47%

3

2,749 16.68%

Wholesale Endorsement Growth

2,000

Retail

MO.

16.68%

4,000

0

INDUSTRY SUMMARY

21.18%

* Figures Above Reflect Change from Prior Month

TOT

27,838

2,063

2,606 26.32%

22,254

5,355 21.18%

50,092

%%%%% LOOKING FOR MORE STATISTICS? Go to rmsinsight.net for all of the industry’s latest stats and rankings.

Brought to you by Reverse Market Insight reversereview . com

8 TRR | 9

The Reverse Review June 2017

nrmla news BROUGHT TO YOU BY NRMLA STAFF

Recap and Recordings: Reverse Mortgage Education Week With a mission of raising awareness and acceptance of reverse mortgage loans among related professionals and consumers, NRMLA’s second annual Reverse Mortgage Education Week was a success on every level.

Held April 24-28, NRMLA’s widely promoted webinar series attracted more than 1,300 registrants, including financial planners, in-home care professionals and executives, real estate agents, staff from social service agencies and local governments, and mortgage professionals.

Education Week introduced new audiences to a versatile financial tool that can help their clients pay for home care and modifications, buy a new home or buy out an ex-spouse, and generally support their desire to age in place. And because the webinars are recorded and posted to nrmlaonline.org, you can continue to share Education Week resources with the professionals in your network who want to learn more about reverse mortgages.

Save the Date: NRMLA’s Annual Meeting & Expo Join your colleagues at the historic Palace Hotel in San Francisco, November 13-15, for the largest annual gathering of reverse mortgage professionals, NRMLA’s Annual Meeting & Expo.

Hear from HECM subject matter experts. Get your CRMP continuing education credits.

Meet new professional contacts and network with friends and colleagues.

G E T M O R E I N F O R M AT I O N AT NRMLAONLINE.ORG.

10 | TRR

Combating Isolation and Loneliness The Senate Select Committee on Aging held a hearing on April 27 that examined the consequences of isolation and loneliness among America’s aging population and explored programs and resources for at-risk adults.

“The consequences of isolation and loneliness are severe: negative health outcomes, higher health care costs and even death. The root problem is one that we can solve by helping seniors keep connected with communities,” said Committee Chairwoman Senator Susan Collins (R-Maine). “Just as we did

when we made a national commitment to cut smoking rates in this country, we should explore approaches to reducing isolation and loneliness. Each has a real impact on the health and well-being of our seniors.”

Witnesses included a professor of psychology at Brigham Young University; a professor of social work and director of the Center on Aging at the University of Maine; and representatives from private sector organizations that assist the elderly. The Senate Special Committee on Aging does not write legislation, but it can offer policy recommendations.

View the webcast at aging.senate.gov.

Omnibus Funding Bill Extends HECM Insuring Authority President Donald Trump signed a $1.07 trillion omnibus spending bill on May 4 that funds the federal government through September 30 and authorizes FHA to continue insuring HECMs. The U.S. House of Representatives approved the spending bill by a vote of 309-118, while the Senate voted 79-18 in favor of passage, before it was sent to the president’s desk.

Age Out Loud: Older Americans Month 2017

This theme shines a light on many important trends. More than ever before, older Americans are working longer, trying new things and engaging in their communities. They’re taking charge, striving for wellness, focusing on independence and advocating for themselves and others.

What it means to age has changed, and OAM 2017 is a perfect opportunity to recognize and

Each May, the Administration for Community Living (ACL) leads our nation’s celebration of Older Americans Month (OAM).

ACL designed the 2017 OAM theme, Age Out Loud, to give aging a new voice—one that reflects what today’s older adults have to say.

CRMP COMMITTEE

LAUNCHED

On

celebrate what getting older looks like today.

You can help celebrate Older Americans Month in your community, or with your clients, by downloading and sharing resources and materials from oam.acl.gov.

April 17 NRMLA’s newest committee, the CRMP Committee, had its first meeting, which was attended by more than 100 Certified Reverse Mortgage Professionals. A working group was formed to develop a mission and vision, while much of the 60-minute call was spent sharing ideas and developing a list of initiatives to focus on for the balance of the year.

nrmla news Reverse Mortgages in the News 2 In a leadup to its 2017 Retirement Income Summit held in Chicago, April 30May 1, InvestmentNews interviewed nationally recognized retirement experts Wade Pfau and Jamie Hopkins of the American College of Financial Services about the role of reverse mortgages and home equity when devising a retirement strategy. “There are a number of ways that advisers and consumers can use home equity and reverse mortgages in strategic ways,” said Hopkins during a video segment titled, “Reverse Mortgages: Are They Right for Your Clients?” “One of them is a bridge for Social Security, where you set up a reverse mortgage for that gap between the ages of 62 and 70 to generate funds to meet your needs and defer going on Social Security."

Pfau and Hopkins were joined by San Franciscobased tax attorney Barry Sacks for a discussion about strategic uses of reverse mortgages and home equity during the summit.

2 Oversimplified, a “deed in lieu” is exactly how it sounds—it is a deed in lieu (instead) of a foreclosure.

“You give the title back to the lender. In some cases, and depending on the facts, you will not have to pay anything,” wrote Washington, D.C.-based attorney and syndicated housing columnist Benny Kass in his response to a question submitted by a daughter who is trying to pay off her mother’s reverse mortgage and doesn’t want to incur more costs while the servicer takes

possession. Kass, who consulted with NRMLA Executive Vice President Steve Irwin for his article, “What's the Difference Between Foreclosure and ‘Deed in Lieu’?,” advised the daughter to continue paying property taxes and insurance on her mother’s home until the reverse mortgage is paid off.

2 With more baby boomers moving into retirement every day, the wealth locked up in their homes seems ripe for the picking. And a relatively new way to put that wealth to work—the standby reverse mortgage strategy—is garnering increasing attention, according to Rachel Sheedy, Editor of Kiplinger’s Retirement Report. In her article, “How Retirees Can Use Their Home's Wealth as an Emergency Fund,” Sheedy wrote the “standby (line of credit) strategy puts to use some of the reverse mortgage’s quirky features to provide a flexible pot of money to help manage cash flow.”

Experts applaud the way a standby reverse mortgage strategy can provide retirees the flexibility to handle emergency costs.

“The concept is to use it judiciously,” she quoted NRMLA President Peter Bell.

2 “In years past, many financial advisers discouraged older homeowners from taking out reverse mortgages, because the industry was

rife with unscrupulous types,” wrote Next Avenue Managing Editor Richard Eisenberg in his article for forbes.com (and later republished in MarketWatch) titled, “The Answers to Common Reverse Mortgage Questions.” These days, wrote Eisenberg, advisers often recommend reverse mortgages for older Americans with home equity who are looking to supplement their retirement income, largely because the mortgages and lenders are better regulated.

Eisenberg summarized his Q&A session with NRMLA President & CEO Peter Bell, Certified Reverse Mortgage Professionals Lance Canada and Phil Stevenson, and servicer Tera Guy during a webinar for consumers commemorating Reverse Mortgage Education Week. He included links to the webinar recording, NRMLA’s consumer guides and Reverse Mortgage Calculator. Next Avenue, public television's website for Americans aged 50-plus, has served more than 40 million people on its site over the past five years and millions more through its platforms and partnerships.

Thank you FOR JOINING NRMLA WELCOMES OUR NEWEST MEMBERS 4 American Senior Lending Delray Beach, Florida 4 America's Mortgage Resource Metairie, Louisiana 4 Berkshire Bank Tewksbury, Massachusetts 4 Financial Asset Services, Inc. Irvine, California 4 Peoples Home Equity, Inc. Alcoa, Tennessee

NRMLA Consumer Site Gets Facelift Finding a reverse mortgage lender or Certified Reverse Mortgage Professional—and accessing NRMLA’s consumer guides, loan calculator and other reverse mortgage information—just got easier.

Visit NRMLA’s consumer website, reversemortgage.org, to view the new home page, which includes more infographics to help guide consumers who want information about reverse mortgages.

Reversemortgage.org attracts 30,000 unique visitors every month, so don’t forget to check that your lender listings are correct.

NEED TO MAKE A

CHANGE?

Contact Darryl Hickcs DHICKS@DWORBELL.COM reversereview . com

8 TRR | 11

The Reverse Review June 2017

Meet AAG’s expert Lender Support Team Everyday loan submission guidance for ALL our valued partners

Karen ahan McClen Support Sr. Lender Specialist

ination e in loan orig c n e ri e p x e 22 years

Our Focus is Your Borrower AAG’s Lender Support is a specialized team of industry experts dedicated to our wholesale partners who will guide you through the submission process.

866-964-1109 aag.com/wholesale

They receive over 100 calls per day – a clear sign that they are helping our valued partners close more loans. Call today and let us know how we can support you!

American Advisors Group, NMLS #9392, headquartered at 3800 W. Chapman Ave., 3rd & 7th floors, Orange, CA 92868. For industry professionals only | TRR –12not intended for distribution to the general public. This material is not from HUD or the FHA and was not approved by HUD or a government agency.

License information can be viewed on: http://www.nmlsconsumeraccess.org www.nmlsconsumeraccess.org or http://www.aag.com/disclosure.

MONEY MATTERS

THIS MONTH

The average monthly Social Security retirement benefit is $1,315.

A LOOK AT THE NEWS AND STATS AFFECTING THE MARKET

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

THE SENIOR AGENDA

A new survey breaks down popular retirement destinations by region.

NUMBER CRUNCH 81% Americans do not know how much money they’ll need in retirement.

Merrill Lynch

QUOTED & NOTED

THE COST OF RETIREMENT A retirement confidence survey asks seniors how much they think they'll need to live comfortably in retirement.

21%

15%

27%

13%

22%

UNDER $250,000

$250,000 $499,999

$500,000 $999,999

$1,000,000 $1,499,999

$1,500,000 MORE

"As the government continues to strengthen the rules and regulations for reverse mortgages and new research continues to pave the way with an agnostic view of their role, reverse mortgages may become much more common in the coming years."

-Wade Pfau, Forbes magazine reversereview . com

8 TRR | 13

The Reverse Review June 2017

14 | TRR

MIKE GRULEY

From his favorite TV shows and the best purchase he's ever made to his thoughts about the reverse mortgage market, we get the facts from Mike Gruley, EVP of 1st Nations Reverse Mortgage.

Executive Vice President

I CAN'T GO WITHOUT MUSIC.

>

Ten years from now, I would like to be

>

The best purchase I've ever made was a

>

Something nobody knows about me is I

>

My favorite book is With the Old Breed, by

>

My favorite vacation is anywhere with my

>

The biggest challenge in the reverse

wife, two daughters and son-in-law.

mortgage industry is getting people past the

>

If I were a professional athlete, I would be

product.

>

My first car was a 1976 Oldsmobile Cutlass

>

>

teaching my grandkids how to golf.

used to play in billiard tournaments.

a PGA golfer.

E.B. Sledge.

irrational negative emotions they feel about the

>

Sierra.

I am optimistic about the reverse

mortgage industry because the product

serves a vital purpose to so many people, and the need will only increase over time.

The craziest thing I’ve ever done was… I invoke my Fifth Amendment right.

>

Before I entered the reverse mortgage

>

The most important thing financial

My favorite movie is Saving Private Ryan. >

I never miss an episode of

Seinfeld or Curb Your Enthusiasm.

> W hen

Every morning I walk with my wife.

wedding ring 32 years ago.

I was younger I wanted to

industry I had brown hair.

advisors can learn about reverse

mortgages is that they are not loans of last resort.

be an astronaut. (I still do.)

> I 'll

never forget...yes I will. I have

a terrible memory.

>

> I f

My first job was at a swimming pool store (best job ever).

I had three wishes they would be

world peace, no more poverty or disease, and all financial advisors understand reverse mortgages.

>

My parents taught me to find my passions

>

My favorite time of day is sunset.

>

My iPod go-to is Jamie Cullum or Sinatra.

>

I always say “thank you” to veterans.

WHAT MIKE THINKS

and never give up.

I entered this industry because it makes a difference to older Americans, their families and the communities in which they live. reversereview . com

8 TRR | 15

The Reverse Review June 2017

Originating

WORK TOGETHER

From the Broker's Perspective

By Beth Paterson

How lenders and brokers can work together to improve the customer’s experience professionals.

Some decide quickly while others can take years to make a decision to proceed. At that point they are generally anxious to get to closing.

An independent broker originator specializing in reverse mortgages is generally the only face the customer sees from the lender segment of the industry. But everyone

involved in the origination of reverse mortgages impacts the customer’s experience.

As experienced, knowledgeable and conscientious broker originators, we try to understand what it’s like for the lender’s staff in all departments.

In return, the lender’s staff needs to understand the customer experience from our view in order to work toward providing the best customer experience possible. To help others involved in the process, I’ve compiled information detailing the broker’s perspective, including some challenges we frequently face as we work to bring a loan to close.

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Taking an Application This is a time-consuming process. During the initial consultation conversation with a prospect, we discuss their situation and whether they will even qualify, i.e., factors needed to meet FA, their goals and needs. Once it is determined that there isn’t a blatant red flag, we meet with them for an informational meeting face to face, which takes an hour or two (plus the commute). Another face-to-face meeting happens at application to explain what they are signing.

During these discussions, we outline the details of the reverse mortgage, providing the facts, terms and benefits as well as risks. We often have to overcome the “reverse mortgages are bad” myths and assure them that this is a legitimate product offered by

Gathering and entering all of the necessary application information in the lender’s system software and then printing and organizing a complete and compliant application package consumes significant time.

We often find ourselves apologizing for borrowers having to sign so many application documents, many of which are duplicates.

Consolidating the disclosures would make it feel less overwhelming mentally as well as physically. The applicants are usually at their highest level of customer satisfaction during the application interview, but this starts to decline when they begin to slog through the massive number of documents that must be signed in the application package. It can frighten them into thinking that they are making a mistake.

The issues below can be very frustrating to borrowers and can make originators and lenders

look incompetent, building mistrust and negativity about reverse mortgages.

Time Frame When we submit a file to underwriting, we review the information and try to be sure to include everything on the checklist. We give the applicants our best estimate as to how much longer the process will take based on information from the lenders.

Setting realistic expectations with borrowers is huge. We’re often told underwriting will take between 24 and 48 hours, but this doesn’t include the day it may take to get to underwriting.

We find that many junior underwriters don’t understand the program sufficiently and ask for things that aren’t necessary, further delaying the file from getting to a senior underwriter.

It’s important to be realistic and accurate so we can schedule the closing date. The schedules of the closers and the notaries can fill up weeks in advance—as can borrowers’ and our own.

Documentation Roadblocks We do our best to gather all needed documentation before sending a file to underwriting.

Sometimes, brokers encounter frustrating situations that can downgrade the customer’s experience.

Originating Here are some examples of the frustrations brokers often encounter: l The lender’s staff overlooks documents, claiming they are missing files that were already submitted. l Appraisers feel the underwriter is questioning their work in cases with appraisal conditions, and this may lead to frustration that can delay their submission of changes.

l Underwriters continue to ask for documentation when what was provided is all that is available and provides a clear paper trail.

l We gather and submit conditions quickly, but the lender has not completed the conditions they need to complete, delaying the clear to close. l Some final conditions are easily verified but may take a couple of days to obtain. In the essence of time, why can’t these be funding conditions rather than conditions that must be addressed prior to close?

l As brokers, we generally attend closings, even though they are sometimes a two- to three-hour drive away. The documents are needed in time for the title company to finalize the documents, print and sometimes drive to the borrower’s home.

When there are delays, it’s embarrassing to the industry as well as inconsiderate and disrespectful to all involved in the transaction.

In Conclusion Despite our efforts to run interference for our borrowers and make the process as simple and fast as possible, many are left with a very negative view of the experience after the loan’s close. This negativity spreads quickly and feed’s the public’s mistrust of reverse mortgages.

l Recognize that all borrowers do not have easy access to email, transportation, UPS/FedEx, or a notary. Some live in rural areas, making it difficult for us to obtain documentation easily. Look for alternative or creative solutions.

l To expedite funding in a HECM for Purchase transaction, review only five to six key documents.

Some lenders are already doing this successfully.

When the process is dragged out, some borrowers get angered or offended and back out, while some get exasperated or discouraged and switch to “Option B” (sell the home or get a HELOC even though it isn’t the best solution). Sometimes those who qualified under FA run out of funds and

have delinquencies that force them into a LESA. As brokers, we are the lender’s customer, and our goal is to make things better for the borrower.

We choose our wholesale lenders according to who provides quality customer service, making our job easier and getting us to funding in the most

Because the customer has a choice, we must be the better choice.

Because the customer has sensibilities, we must be considerate.

Because the customer has urgency, we must be quick.

professional manner. It’s imperative the brokers and lenders try to understand each other’s perspectives as we work together to help a borrower close a loan. For the sake of the industry, providing the best customer experience possible must become a top objective for all who work in the reverse mortgage field. n

Because the customer is unique, we must be flexible.

Because the customer has high expectations, we must excel.

Because the customer has influence, we have the hope of more customers.

Because of the customer, we exist!

reversereview . com

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SPOTLIGHT

l Approval of Title, AMCs, etc. – Check for title and AMC approval when a file is first submitted so the appropriate forms can be completed while in underwriting.

l Explain why certain documentation is needed. If brokers know and understand why underwriters are asking for things, it is easier to communicate with borrowers and explain HUD’s requirements early on.

Because the customer has a need, we have a job to do.

RETIREMENT

l Inform brokers of new disclosures and document requests so that we are able to explain them to the borrowers rather than blindly asking them to sign.

Because the Customer

TITLE TIP

Here are some things that a lender’s staff can do to help create a smoother transaction:

Following is a poem I found on a restaurant placemat during a NRMLA conference years ago. I believe it best summarizes the importance of creating an exceptional customer experience.

SERVICING

l The document is not what was expected (e.g., they expected a wire but received a check).

l Additional conditions are requested from closing or funding that have already been submitted and approved by underwriting.

Besides the frustration, it is timeconsuming to have to locate and resubmit the documents. Why don’t these departments have the underwriting file on hand with all the documents that have been submitted and approved?

ORIGINATING

l A failure to spell out conditions specifying what the underwriter is looking for leaves us questioning what was missed or the requested paperwork is needed.

l The lender’s staff requests documentation because they say it’s a HUD requirement, but this is untrue because other lenders approve.

BECAUSE OF THE CUSTOMER

The Reverse Review June 2017

Originating

The Homebuilder Strategy

By Julie Didyoung

How to connect with this market to sell the H4P

"The biggest value a HECM lender can bring to a builder is creating homebuyers."

With so many people in or approaching retirement who are looking to buy a rightsized home,

move closer to family or relocate for other reasons, there’s a big market opportunity with the Home Equity for Purchase product. One key avenue into that market is through developing relationships with new homebuilders.

This past January, I attended the International Builders' Show’s H4P session in Orlando and was encouraged to find that builders are more aware and interested in the H4P program and the growing market opportunity among older homebuyers.

Based on my own experience as an H4P specialist, loan officers who wish to work with homebuilders as a core part of their sales strategy need to be prepared to wear many hats.

Creating Homebuyers

SOMETHING ON YOUR MIND? Need to get something off your chest? Hate something we do?

Love something we do? Letters to the editor may be emailed to JESSICA@REVERSEREVIEW.COM. 18 | TRR

For a traditional mortgage lender to be valuable to a builder, they need to be available when needed. They also need to have exceptional customer service, as getting loan applications through to the closing in a smooth and timely manner is imperative. The biggest value a HECM lender can bring to a builder is creating homebuyers.

The H4P program, when promoted properly, helps convert prospects into buyers. And eventually, as more and

more older Americans discover the program, it will create a whole new market of buyers. Much of this market will comprise people who wish to move into a new home that’s right for them—such as one that has newer amenities, is low-maintenance or offers one-floor living—but they worry that if they buy a home using their cash or a traditional mortgage, it could jeopardize their financial future. An H4P loan can make it easier for them to purchase that new home and obtain the lifestyle and financial security they’re looking for in retirement.

If a builder rep introduces the HECM concept to a prospect and they are excited by what they learn, it’s advantageous for you to reach out to the prospect as soon as possible and teach them about the H4P while they’re eager to learn more. Once a HECM homebuyer goes under contract, hold the buyer’s hands during the lengthy homebuilding process. After the early excitement wears off, there is a lot of time for homebuyers to second-guess their decision to buy the home and how to pay for it. So it’s important to keep in touch, even when there is not a specific reason to do so.

Building Strong Relationships For an H4P lender, it isn’t enough to get a loan application through the pipeline to closing without any hiccups. While doing that is very important to retaining a homebuilder relationship, it’s only one of the responsibilities you’ll need to manage.

The following is a list of industry professionals and key influencers you must work with and educate in order to properly do your job and become a valuable partner to a builder— long before you actually have a loan application to start processing.

Originating The Builder’s Marketing Team Teach them to effectively market the H4P in collaboration with a licensed originator who can educate and work closely with their prospects.

Construction Managers Teach them about the CO processing time and what’s required in the process.

Financial Planners Settlement Coordinators Teach them about the required timing and paperwork—especially the timing related to Certificate of Occupancy (CO) issuance.

Offer to speak to the potential homebuyer’s trusted advisor and explain the benefits of financing with an H4P.

The Builder’s Preferred Title and Settlement Company

As more homebuyers, key influencers and industry professionals become aware and educated about the H4P, we may see this product play a much greater role in the HECM marketplace in the near future. Pursuing H4P business with new construction builders is timeconsuming, and after you’ve done the work, there is a long delay before you see any commission. However, if you commit to it, this part of the business is very lucrative and personally rewarding. I feel immense satisfaction when I help my customers achieve a better retirement lifestyle than they thought was possible.

Better yet, they’re doing it in a financially responsible way. n This material has not been reviewed, approved or issued by HUD, FHA or any government agency. The company is not affiliated with or acting on behalf of or at the direction of HUD/ FHA or any other government agency.

Reverse Mortgage Funding is licensed the New Jersey Department of Banking & Insurance.

RETIREMENT

Let us help you grow your business n

n n

Training, tools and strategies to help you flourish Innovative pricing and product options A seasoned support team Advanced technology to help you spring ahead of the competition. Learn how at go.reversefunding.com/advantage

SPOTLIGHT

n

For more information, call 877.820.5314 This material has not been reviewed, approved or issued by HUD, FHA or any government agency. The company is not affiliated with or acting on behalf of or at the direction of HUD/FHA or any other government agency.

NOT FOR CONSUMER USE ©2017 Reverse Mortgage Funding LLC, 1455 Broad Street, 2nd Floor, Bloomfield, NJ 07003, 1-888-494-0882. Company NMLS ID: #1019941 (www.nmlsconsumeraccess.org). Arizona Mortgage Banker License #0927682; Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act; Loans made or arranged pursuant to a California Finance Lenders Law; Georgia Mortgage Lender Licensee #36793; Illinois Residential Mortgage Licensee; Massachusetts Mortgage Lender License #ML1019941; Licensed by the New Jersey Department of Banking & Insurance; Rhode Island Licensed Lender; Texas Mortgage Banker Registration in-state branch address 6044 Gateway East, Suite 236, El Paso, TX 79905. Not intended for Hawaii and New York consumers.

Not all products and options are available in all states. Terms subject to change without notice. Certain conditions and fees apply. This is not a loan commitment. All loans subject to approval. L954-Exp042018

reversereview . com

TITLE TIP

© 2017 Reverse Mortgage Funding LLC, 1455 Broad St., 2nd Floor, Bloomfield, NJ 07003, 1-888-494-0882. Company NMLS ID # 1019941. www.nmlsconsumeraccess.org. Not all products and options are available in all states. Terms subject to change without notice.

Certain conditions and fees apply. This is not a loan commitment. All loans subject to approval. L974-Exp042018

SERVICING

Teach them about the unique features of the HECM loan closing, title requirements and timing.

Teach them how to best position the H4P purchase option. For example, they might position their pitch: “Are you considering purchasing with cash, a conventional mortgage or a Home Equity Conversion Mortgage that has a flexible repayment feature?”

In Summary

ORIGINATING

New Home Sales Consultants

The key is to switch up your marketing efforts, take advantage of the educational tools your training and marketing teams provide, and build strong relationships with these industry professionals and key influencers. By educating them on the opportunities of the H4P product, you may be able to reach more customers.

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The Reverse Review June 2017

Servicing

SHARE

Stories From the Servicing Home Front

By Mary Katherine Quasarano

Why committed, compassionate HECM professionals are irreplaceable I refer to Seth Godin as my “secular guru.” He’s been a fearless adventurer in the

efforts to marry technology and marketing and his pioneer book, Permission Marketing, introduced the world to the power of effective email marketing. His thinking and prolific writings have revolutionized the way we communicate and do business. I came across the following in one of his recent blog posts:

Q A AND

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The question each of us has to ask is simple (but difficult): What can I become quite good at that's really difficult for a computer to do one day soon? How can I become so resilient, so human and such a linchpin that shifts in technology won't be able to catch up?

It was always important, but now it's urgent.

From where I sit within the world of reverse mortgage subservicing, these words hit me to the core. After all, no one wants to speak with customer service people or agents anymore, right? We want electronic access to our records and prefer to figure things out for ourselves. I no longer have a favorite bank teller, bank or credit card paper statements, and I initiate and resolve most (if not all) of my financial questions and concerns online. I haven’t been inside a physical bank to make a deposit or apply for a loan for longer than I care to recall.

With the looming threat of technological obsolescence, where does our sustained passion for the HECM product and its consumer come from? How is it sustained through the ongoing assaults of negative press and perceptions, technological advancements and often overreaching

regulatory entities? It comes from the power of the stories we share. Here are a few from the servicing side that affirm that technology will never eliminate the opportunity for human connection and service to others this industry provides.

A borrower care representative shares the heartwarming story of a couple who obtained a reverse mortgage, in their own words, “in case of an emergency.” Within a month of closing, the wife called to verify and request funds. Her husband had been diagnosed with cancer and become very ill.

Chemotherapy had weakened his immune system and his wife described him as “in the grasp of the Grim Reaper.” She went on, shedding tears throughout the telling, to share that had it not been for their reverse mortgage they wouldn’t have been able to pay for his chemotherapy or in-home care, and that had it not been for this assistance, she doubts her husband would still be with her today.

Servicing Another borrower shared that having a reverse mortgage saved their home. This borrower quit her job to take care of her husband during cancer treatment. They had no income for more than six months, and the line-of-credit funds from their reverse mortgage allowed them to continue to pay their bills during this time. Her husband finished his treatment and she was able to go back to work part time so they had funds available to draw if they needed to do so in the future.

The reverse mortgage product has given homeowners the opportunity to manage unexpected expenses at the very worst of times. One particular caller’s voice carried a world of hurt. Shortly after “How can I help you, sir?” he began to sob. Without hesitation the borrower care representative asked him to share his concern. He was mourning the loss of his young daughter and was in need of funds to ensure that his daughter had a “proper burial worthy of an angel.” A week or so later, he reached out again to the representative who had assisted him with a message of gratitude that she cherishes to this day. Reverse mortgages provide homeowners with financial freedom.

Compassionate reverse mortgage servicing connects them to the heart of our industry.

Comfort: Every committed, caring professional on the origination and servicing side of our business has become “so resilient, so human and such a linchpin” that shifts in technology cannot catch or keep up with them.

It was always important, but now it's urgent.

Special thanks to each of the borrower care specialists who shared their stories. Nothing can, or ever will, take the place of your hard/heart work. n

TITLE TIP

The question each of us has to ask is simple (but difficult): What can I become quite good at that's really difficult for a computer

Caution: It’s not an unlikely proposition that technology platforms and processes will come forward within the next five years that will eliminate jobs on the origination and servicing side of our business.

SERVICING

As the boomer borrower continues to trickle into the reverse mortgage market, Godin’s words offer both caution and comfort.

to do one day soon? How can I become so resilient, so human and such a linchpin that shifts in technology won't be able to catch up?

ORIGINATING

The death of a spouse at any time is painful beyond measure. In later life, it can feel emotionally catastrophic. Many callers share that without their reverse mortgage they would have no idea how they would have been able to stay in the home where so many cherished memories had been made, from raising children to having coffee together in the morning. After a spouse dies, the home becomes a real source of comfort for the remaining spouse, where they still feel close to their lost loved one and safe. Their reverse mortgage provides a safety net from the deep emotional fall that the death of a spouse precipitates. Many times borrower care representatives hear these words: “I have

no idea where I would be without my reverse mortgage. This is my home. I have nowhere else to go.”

RETIREMENT SPOTLIGHT

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The Reverse Review June 2017

Title Tip

LEARN

Conservatorships 101

By Megan Hafenstein

What to know about this court-appointed mandate

to applicable parties, a court hearing, and entry by the court of an order of conservatorship.

The conservator will be required to provide an inventory of the ward’s assets and report the assets to the court. When the ward has assets that must be maintained, the conservator may obtain authority from the court to manage and control the ward’s assets.

A conservatorship is a court-approved and court-supervised legal relationship between a

competent adult (known as a conservator or guardian) and an adult who needs assistance in decision-making. The person who needs assistance is referred to as a “ward” in legal documents.

An individual with intellectual or developmental disabilities MAY NEED A CONSERVATOR IF: ONE

e does not understand H how to manage finances.

TWO

He needs medical care or other services that will not be provided unless there is a clear understanding about the person’s legal capacity to consent.

THREE

He is making decisions that greatly endanger himself or others.

FOUR

He has not executed a Durable Power of Attorney that allows others to act on his behalf.

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"Each state has its own legal procedures or processes in determining the need for a conservatorship. There is no uniform national conservatorship law."

Conservatorship is sometimes described as conservator of the person or conservator of the estate.

In conservatorship of the person, the individual needs a conservator to decide personal issues. These decisions may include where to live, consent for medical treatment, work and travel issues.

A conservator of the estate usually has power over the individual’s finances, including

income or assets, not the individual’s personal matters.

The conservatorship is based on the person’s inability to manage assets or property.

Each state has its own legal procedures or processes in determining the need for a conservatorship. There is no uniform national conservatorship law. The process will generally include filing a petition with the appropriate court, review of the petition by the court, notice

A conservator may file a petition to mortgage the ward’s real estate and provide the court with the reasons for the mortgage. After appropriate notice and hearings, the court may enter an order authorizing the conservator to mortgage the real estate owned by the ward and described in the petition. If granted, the order will provide that the conservator has the authority to execute any necessary mortgage documents on the ward’s behalf.

If a conservator is appointed, a copy of the court order must be provided to the title company.

Careful attention should be paid to the contents of the order, as the title company will rely on the terms of the order to approve the real estate transaction. The title company will generally require a certified copy of the court order and will record the certified copy as an exhibit to any mortgage(s). n

Retirement Income Planning Creating Your Personal Retirement Movie How picturing your ideal retirement can direct you toward the right path

By Don Graves, RICP®

Someone once asked me, “Don, what does your retirement movie look like?”

It’s important for everyone to dream about their retirement, even though it may be decades away. A recent study by the Center for Financial Insight surveyed pre-retirees with investable assets of $100,000, uncovering four distinct kinds of retirees. Helping your clients determine what kind of retiree they are likely to be will aid your mission to nail down a realistic time frame.

20%

RAT RACERS

20%

SECOND CAREERISTS

20%

RETIREMENT

40% DREAMERS

CALCULATORS

For example, instead of saying “travel,” have them verbalize particulars so that it sounds more like “trips to the beach” or “taking the camper to different locations with our senior group three or four times a year.” Instead of “stay involved in my community,” encourage them to be more detailed, like “volunteer with at-risk middle schoolers.” The more descriptive their dream, the more tangible their retirement vision can be.

Dreamers have plans to completely leave the workforce to pursue lifelong dreams (40 percent)

Unexpected Detours

Rat Racers plan to work for their employers well into their golden years (20 percent)

Sometimes our client’s retirement movie is already in production.

Maybe they are experiencing a budget shortfall or have had to deal with unexpected circumstances. They may have to delete some scenes and add new ones that are less entertaining. They envisioned a drama, romance or comedy, but unexpected storylines involving a prolonged sickness or financial loss have

As HECM specialists, we can help our clients by encouraging them to visualize their ideal retirement. We can help them to imagine the time frame in which their movie will begin. Once we know what type of movie our client intends to create, then we can begin a dialogue about financing that film with dollars and cents. n

SPOTLIGHT

Have your client write down their objectives or verbalize the major scenes in their ideal retirement film. Have them list the most important goals first. Initially, don't have them focus on budget. Focus on ideas, dreams and “movie scenes.” Encourage them to be as specific as they can.

Titanic director James Cameron wrote his first 80-page draft of the movie Avatar in 1994. He had a dream of what it could be and began to imagine it. But the technology he needed to create it would not be reality for another decade. Although it was clear in his mind, it took 15 years before it came to fruition in 2009.

TITLE TIP

Your clients probably have some idea of how they’d like to spend retirement, but we want them to have clarity. This is not only important to them, it is critically significant to those who serve as advisers to retirees. The clearer they are about what they envision, the greater your ability to match your services with their desires or recuse yourself because you don’t truly offer the resources they need.

Identifying the Time Frame

SERVICING

Recently, I asked Bill and Linda the same question. “What does your retirement movie look like?” They are still working but thinking now about early retirement. Comparable to many of their peers, they started late in saving and are not sure if they will have enough. Presently, as they begin to ponder their next life phase more seriously, it is important that they understand one very powerful concept: They are the producers of their own retirement movie.

turned their movie into a thriller or even a horror film. Our role requires us to listen with empathy and help them find their way to a happy ending.

ORIGINATING

I had no idea. I never really thought about it. Movies employ scripts and staging, themes and action. Was my retirement going to be a race against time, traveling miles across the globe to see things I’d never seen? Or was it to stay put and enjoy my family and all the routines I had established over the years? The thought challenged me.

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

Calculators intend to delay retirement to become more financially secure (20 percent) Second Careerists want to transition from their current positions to a dream job (20 percent)

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The Reverse Review June 2017

Spotlight IN THIS MONTH’S EDITION

A LOOK AT THE JUMBO REVERSE MORTGAGE

The Jumbo Option RR This proprietary offering presents high-networth individuals an alternative means to access their equity. By Kent Kopen

june

2017

WANT TO SEE MORE ARTICLES LIKE THIS?

See them at reversereview.com.

umbo reverse mortgages are designed for homeowners who want to borrow more than the FHA maximum amount or for situations in which the borrower would not qualify under FHA’s HECM rules.

J

Today, there are two types of reverse mortgages available: FHA-insured Home Equity Conversion Mortgages, and the newest iteration of a proprietary reverse mortgage frequently referred to as a 24 | TRR

jumbo reverse mortgage.

Jumbo reverses were prevalent 10 years ago, but they largely disappeared with the demise of the assetbacked securities market in 2008.

Most prospective borrowers believe they can borrow about half or more of the value of their home. The purpose of this article is to clear up one of the biggest consumer misconceptions: how much (or how little) a homeowner can borrow with a reverse mortgage if their home is worth more than $600,000.

It invariably takes a bit of conversation to explain how

the maximum loan amount (also known as a principal limit) is calculated. Principal limits are the product of MCA (value) times a principal limit factor (PLF), which is based on the youngest borrower’s age. PLFs are just numbers published in a table by HUD.

Loan amount = MCA x PLF Value is more complicated than homeowners realize.

They often think it’s what their house would sell for today. HUD, however, uses a proxy for value known as a maximum claim amount (MCA).

MCA is the lesser of: 3 Appraised value 3 National Lending Limit (NLL), recently increased to $636,150 3 Purchase price (if loan is to buy the house)

Trying to explain all this to a homeowner usually results in their eyes glazing over. It gets even more confusing when their home is worth more than the National Lending Limit because any value over $636,150 does not count.

Spotlight Thus, an $800,000 house has the same MCA as a $636,150 house, because it’s the lesser of the appraised value or NLL. Since NLL is capped at $636,150, which is less than $800,000, the MCA is $636,150.

A $600,000 house

For years after the recession, seniors with more expensive homes had no choice other than an FHA HECM. If they owned a $2 million home, and they were 62, they could borrow about $328,000.

ORIGINATING

a $900,000 house

SERVICING

They were never happy when they heard that. They expected to be able to borrow about half of the value of their house. Those who were mathematically inclined would note that they were being offered less than 17 percent of what their house was worth.

RETIREMENT

a $1.2 million house

SPOTLIGHT

First, even with a “jumbo” reverse, borrowers cannot get as much as they’re expecting or want. The average 62-year-old homeowner with a house worth $900,000 thinks they can borrow at least $450,000—about half—but they can’t.

TITLE TIP

A few lenders recognized this gap and have reintroduced a proprietary home equity conversion mortgage, usually under their own trade name.

There are only a few lenders offering jumbo reverses, and their guidelines frequently change, but we’ll cover some of the highlights below.

To the right are three charts, differing by house value, that show how much a homeowner can access with an FHA-insured HECM (green line) and a proprietary jumbo reverse (blue line). The left-hand side of each chart shows the borrowing limit if the youngest borrower is 62. The right-hand side shows the maximum loan amount if the youngest borrower is 90.

The first chart shows a $600,000 house, the next a $900,000 house, and the third a $1.2 million house.

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The Reverse Review June 2017

Spotlight The jumbo reverse mortgage is a particularly good topic for those looking to build relationships with financial advisors, because advisors tend to work with higher-net-worth clients, who obviously have more expensive homes.

Interesting observations 3 The principal limits for the FHA loan on the $600,000 and $900,000 houses are very similar.

3 Jumbo reverse principal limits are low, especially at values under $1 million.

3 On a $900,000 house, a borrower can get more on an FHA loan than with a jumbo, even though the FHA loan capped the house’s value at $636,150.

3 The principal limit graph for jumbo reverse mortgages is not a smooth line.

Two reasons jumbo loan amounts are smaller: ONE The secondary market is not very liquid; there are few market makers.

TWO They don’t have government insurance.

FHA mortgage insurance, among other things, protects banks if the loan balance exceeds the value of the house at the end. Jumbo reverse lenders don’t have that protection, so they’re more conservative in how much they’ll lend.

The takeaway is this: Jumbo reverse mortgages are attractive when house values are greater than $1.2 million and borrowers are over 70.

The following are a few other highlights of proprietary reverse mortgages. Realize that different lenders have different guidelines and they change all the time.

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3T hey are currently available in 14 states: Arizona, California, Colorado, Connecticut, Florida, Hawaii, Illinois, New Jersey, Oregon, Pennsylvania, Rhode Island, South Carolina, Texas and Virginia.

First, many condo owners would like to get a reverse mortgage, but their condo project is not FHA-approved. With a jumbo reverse, that’s OK. The condo must, however, be warrantable by FNMA. Warrantability is only granted if:

3B orrowers must own the home for 12 months.

3 The project (including all common areas) is fully completed and the common areas are insured.

3B orrowers can own up to four other financed properties.

3T he house cannot be listed for sale in the previous six months.

3P roperties valued up to $6 million.

3F ixed rate only.

3A ny proceeds not drawn at closing cannot be taken later.

3R esidual income must be 1.75 times the primary residence and revolving/ installment debt.

3T here are stricter credit guidelines, requiring essentially 24 months of perfect credit.

3B rokers cannot pay or credit any fees.

3C losing costs may be paid by the seller, unlike current FHA rules.

3J umbos can be taken on nonFHA-approved condos worth over $500,000.

3T here is no 60 percent limit in year one; the full amount can be taken at closing.

Those last two points are important.

3 The homeowner association is controlled by unit owners (not the developer or builder).

50%

3 50 percent or more of the units are owneroccupied.

3N o one person owns more than 10 percent of the units.

Second, recent changes have limited the amount reverse mortgage borrowers can take out at closing. This is referred to as the 60 percent rule. Jumbos do not follow this rule. This nuance requires thought when a jumbo offers a smaller principal limit than its FHA counterpart, but it offers more cash at closing because it is not subject to 60 percent of the principal limit being available in year one.

There may be instances where the cash at closing amount is the most important consideration.

The jumbo reverse mortgage is a particularly good topic for those looking to build relationships with financial advisors, because advisors tend to work with higher-net-worth clients, who obviously have more expensive homes.

Also, most advisors don’t realize there is a jumbo option. n

By Jessica Guerin

While the reverse mortgage has been available to consumers for nearly 30 years, it has been slow to catch on. The product has long been plagued by misconception, challenging those who work in the field to combat the myths and educate consumers about the pivotal role this financial product can play in retirement.

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The Reverse Review June 2017

Since the Great Recession it has become increasingly obvious that a sizable portion of the nation’s aging population could find tremendous benefit in a loan that allows access to home equity. Numerous retirement experts and high-profile finance pros have publicly discussed the advantages of the loan. Still, consumers are largely uninformed about how a HECM can help.

Educating seniors and professional partners has been the focus for originators across the industry. But for many, progress has been slow. To jumpstart this mission, some are getting creative, employing new and inventive ways to reach potential borrowers or increase efficiencies. We reached out to a handful of these innovators to talk about what they are doing to advance the market. Our hope is that their determination and creativity will inspire others in the space to think outside the box.

WHO: Reverse Mortgage Funding LLC (RMF) WHAT: Helping platform users navigate FA with a loan qualification function RMF is using technology to make the originator’s work easier. The lender’s proprietary loan origination system, Tango Reverse, is set to release a new loan qualification (LQ) feature intended to help users better navigate FA requirements.

“LQ is designed to make it easier for originators to close more loans by providing them with the power to instantly do a preliminary assessment of a customer’s eligibility to qualify for the reverse mortgage they have in mind,” says RMF President David Peskin.

The LQ feature works by generating rules and conditions based on the characteristics of a loan scenario. Once the LO enters data into the system, the platform relays compensating factors that might help the loan qualify. Peskin says the new feature, which he calls the first of its kind in the industry, will significantly help reduce loan cycle times.

“Innovation is fundamental to our mission of helping older Americans achieve greater financial flexibility and peace of mind, and we are confident that LQ is a game-changer in regard to helping reduce uncertainty, facilitating a more expedient process from the very beginning and enhancing the end user experience,” Peskin says.

The LQ feature was recently rolled out to RMF’s retail staff and will be available on Tango Reverse to approved brokers and agents later this year.

WHO: ReverseVision WHAT: Teaching a HECM sales strategy to traditional lenders As part of its mission to expand the reverse mortgage market, software provider ReverseVision has launched a program designed to engage traditional mortgage lenders about the benefits of a HECM. The initiative is built around the concept of Generational Lending, a term trademarked by ReverseVision that frames the HECM as a logical next step for older consumers. In the cycle of one’s lending life, according to the concept, a typical consumer will seek a traditional mortgage as a first-time homebuyer. Later, they may relocate or refinance as their needs change or family grows. Finally, as they age, they may consider a HECM as a means to support their retirement and a desire to age in place, or utilize a 28 | TRR

HECM for Purchase to move to a more suitable home.

Wendy Peel, VP of sales and marketing, says the Generation Lending strategy is designed to position the HECM as a natural step for consumers. “What we want to do is normalize the HECM program,” she says.

“We’re putting training programs around forward sales people to help them start selling this way.”

Once lenders commit to offering HECMs to clients, their staff undergoes special training to learn more about the loan through RV University.

Peel says it’s a great way for traditional lenders to engage their older customers. “Lenders spend all this time and money bringing people into their lending family, but a time when the customer probably could use a loan the most, they don’t offer a product they can use.”

ReverseVision’s sales program explains to lenders that including a HECM in their suite of products could help them replace shrinking re-fi volume, assist their customers with retirement, provide an alternative to a HELOC and build a pipeline using the Generational Lending strategy.

“We’re having a ton of success; there are lightbulb moments going on,” Peel says. “This year alone, we’ve closed 12 top-50 traditional lenders that are directly

licensed, who are now coming into the space.”

Peel says the ultimate goal is to see the market grow. “The more lenders that offer HECMs, the more people we have in the market; the more the industry grows, the more investors will actually come into the market. We all know we need more investors in the market, and the only way to do that is to start getting some of these larger lenders super engaged.”

A Home Equity Conversion Mortgage (HECM) for purchase loan can improve your retirement cash flow, conserve your assets and possibly even increase your savings by using less cash to buy.

HECM

A simple guide to HECM loans for purchase

WHO: Curt Larson, Alliance Home Loans WHAT: Generating partnerships with builders to promote the H4P Curt Larson is spreading the word about the HECM for Purchase one major builder at a time. Working with Alliance Home Loans in Phoenix, Arizona, Larson turned his focus to the builder community about three years ago, pursuing large developers of active adult communities in the West and

WHO: Finance of America Reverse WHAT: Helping financial advisors understand reverse mortgages At the start of 2017, Finance of America Reverse (FAR) launched an initiative designed to educate financial advisors about the role a reverse mortgage can play in a comprehensive retirement plan.

Led by Stephen Resch, FAR’s VP of retirement strategies and a certified financial advisor himself, the program aims to teach compliance departments about the product’s safeguards and educate originators on how to better understand the needs of the advisor community.

Resch’s team hosts live presentations for advisors, wealth managers and CPAs nearly every week with the idea that a face-to-face interaction fosters a connection that is much

Southwest. He now works with five different builders, three of which have multiple communities in several states.

Larson says succeeding in this mission requires one to know how to speak to builders, and that the best way to get a builder’s attention is to bring them business. Once he is able to secure an H4P buyer, he uses that success story to pique the interest of both buyers and builders, eventually creating a testimonial marketing strategy that he presents to developers as proof of what he can bring to the table.

Once he makes a deal with a builder, Larson works to connect with their sales staff.

“I train them how to get the conversation started, and also how not to go into the program in depth. We create scripts for them.” Larson says properly educating the sales staff is essential. “We’ve had a lot of success when I’m able to deal

with the salespeople directly and teach them how to broach the subject.”

Larson also stresses the importance of providing professionally produced, sleek brochures for the sales staff to share with prospects. “It’s something they can hand to potential buyers that helps explain HECM for Purchases, or they can share a PDF,” he says. “Smart-looking collateral has a lot to do with the success of this.”

Larson says there are clear advantages for builders who present the H4P to interested buyers. “It gives them a competitive advantage over the subdivision down the road. All of these active adult communities are extremely competitive,” he says. “The HECM for Purchase also allows people to buy more house than they originally expected.

Builders and buyers really like that.”

stronger than what one might glean from a webinar.

As FAR’s in-house financial advisor, Resch also teaches an on-site workshop for advisors in which he illustrates how a HECM can be used in wealth management strategies. The class is CFP-approved for continuing education.

Part of the program also involves education for originators. Resch’s team teaches HECM specialists how to build effective relationships with advisors, discussing marketing campaigns that can help spur interest among advisers and strategies to maintain the relationship once established.

“Reverse mortgages are no

WHO: Joe Conrad, Skyline Home Loans WHAT: Helping Realtors sell homes with the H4P Joe Conrad and his wife were printing door-hanger collateral about the H4P for local Realtors when a lightbulb moment occurred.

“It became obvious that the H4P is a great farming tool for Realtors. We could provide real value to them by explaining the different options made available by a reverse mortgage.

They’d have a better shot at getting listings in the future,” he says. “But I realized that to get to Realtors, I needed to get them more than just a door hanger.”

Conrad’s realization led to the development of the Silver Circle Network, a comprehensive guide and catalogue of resources for Realtors looking to generate business using the H4P. The program, in the final stages of development, is set to be released by Skyline Home Loans this summer and includes direct mail materials, co-branded websites, scripts and seminars designed to help Realtors connect with senior clients about buying or refinancing using an H4P. The program will be for sale for loan officers and Realtors who want to leverage the H4P to generate business. Realtors who are interested will meet with a reverse specialist from Skyline to establish a strategy and undergo webinar training to educate them about the loan.

Realtors can also buy in at different levels, depending on how many resources they’d like to access, with different packages available.

longer a product of last resort and can provide much-needed flexibility in retirement,” Resch says. “We want to educate the financial adviser community about how they can add another tool to their toolkit. The more we can raise awareness of this tool, the more we can contribute to growing our industry.”

Conrad says be believes Realtors will find great value in the Silver Circle Network’s resources. “The direct mail resources in particular will generate listings,” he says. “To be able to get listings for a Realtor is a very compelling value proposition. At the end of the day, I want Realtors to get buyers and sellers from this and to incorporate it into their strategy.” reversereview . com

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The Reverse Review June 2017

Last Word

CONSIDER

New Challenges, Same Rewards

By Marty Appel

Finding satisfaction in the job despite constant change

I have been originating HECMs for more than 16 years and have seen many changes. I know

that changes are and will be standard procedure for as long as we are in the business. But one thing that will never change is the satisfaction I feel when I close a loan and see my client’s happiness over their newfound security.

Some of my clients do not have a mortgage and have not had one for many years. Others have a mortgage but it is so old they forgot about the rigors of the process. Add the dimension of CFPB oversight and the result has been some confusion and frustration. So, at the first “kitchen table” discussion I have with my clients, I go over the requirements for Financial Assessment, which can be closely compared to the process of a forward mortgage. This 30 | TRR

takes a considerable amount of time. I find having the initial discussion when I am making my presentation and proposal makes the application process much smoother. I at least get on the table what I would expect of them to make the process smoother.

originator. I try to put my clients at ease because the process can seem daunting with all of the documentation. I take whatever time is necessary to assure them that this loan will bring them the peace of mind that comes with financial security.

"One thing that will never change is the satisfaction I feel when I close a loan and see my client’s happiness over their newfound security."

Financial Assessment has been very positive for some of my clients. By accepting a full LESA that will pay taxes and insurance for as long as they have the HECM, they get a sense of security that their bills will be paid.

Patience can be a virtue when you are a HECM loan

I am proud to say that my open-communication approach makes my clients confident that the process will be a smooth one. Visits with a new client seem to take longer and there are more of them than before in order to gather the documentation required to meet FHA underwriting conditions.

Many do not have computers

or scanners to send documents, so that means another trip to collect the paperwork I need.

I have worked to fine-tune my process to increase efficiencies and to make my client comfortable and informed as we move toward closing. I also love when a client from many years ago calls to ask a question. I just received a call from a couple I helped 10 years ago. They wanted to meet and discuss their situation, and I was glad they thought of reaching out to me. I make a point to send a “thinking of you” card to maintain these lines of communication. As a HECM originator, I serve as a guide and an advocate for clients new and old, working every day to accomplish this mission with integrity, loyalty, diligence and compassion. n

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The Reverse Review June 2017

The Training You Need to Succeed Powered by ReverseVision

RV University (RVU) is perfect for banks, forward originators, brokers, and new hires at existing reverse mortgage firms looking for quality reverse mortgage education and training.

Whether you wish to originate reverse mortgages, or wish to manage loan originators that sell the HECM products, this program will accelerate the process and ensure you hit the ground running.

LIVE 3-DAY TRAINING • Day 1: Multiple training modules around loan structure, regulatory guidelines, and more to establish foundation.

• Day 2: Hands-on practical origination scenarios using live technology to best originate reverse mortgages. Topics include proposals, disclosures and more.

• Day 3: Focuses on loan sales process. Learn compliant methods for describing loan product to clients, discover methods to apply the loan to a range of borrower scenarios and cultivate referral sources.

HURRY! SPACE IS LIMITED! Live 3-day training summer classes are filling up fast.

July 11, 12 & 13 August 15, 16 & 17 Reserve your seat online today for the best independent reverse mortgage and software education class.

Go to rvu.reversevision.com for details.

Visit RVU Today for More Information.

Live and online education and training for the mortgage professional.

rvu.reversevision.com

CONNECTING THE REVERSE MORTGAGE INDUSTRY SINCE 2007.

Reverse Loans | One Platform | All Connected rvu.reversevision.com 32 | TRR