EW THE
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FA to impact counseling
VERSE R EV E RE
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INSIDE THIS ISSUE | HECM Counselors Grapple With New FA Requirements
E
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REVERSE review AP RIL 2015
TRR CELEBRATES SIX YEARS OF COVERAGE! PG. 12
RALPH ROSYNEK SITS DOWN IN OUR HOT SEAT.
PG. 18
WHY FINANCIAL ASSESSMENT WILL ESTABLISH A HEALTHIER BRAND PG. 21
HOW REVESE MORTGAGES CAN HELP SENIORS REGAIN CONTROL PG. 26
The Reverse Review April 2015
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*Since December 2011. Based on trailing 12 months’ endorsement volume. Source: Reverse Market Insight. UFA’s HomeSafe reverse mortgage is a proprietary product of Urban Financial of America, LLC, and is not affiliated with the Home Equity Conversion Mortgage (HECM) program. Currently available in AZ, CA, CO, CT, FL, HI, IL, NJ and TX. For business and professional use only. Not for consumer distribution. NMLS #2285 (www.nmlsconsumeraccess.org); Corporate Office: 8909 South Yale Avenue, Tulsa, OK 74137. Not all products and options are available in all states. Terms subject to change without notice. ©2015 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 UFA193 [Exp 03/2016]
The Reverse Review April 2015
From the EDITOR RE
V IE
E R EVE W TH RS
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VI
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A NOTE FROM JESSICA GUERIN
EV
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We talk to counselors
VERSE R EV E RE
INSIDE THIS ISSUE | HECM Counselors Grapple with New FA Requirements.
E
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THE
REVERSE review A PRI L 2015
This month marks TRR’s sixth year covering the
reverse mortgage industry. Throughout the years,
SENIOR PUBLISHER
volume rise and fall. We’ve discussed market
PUBLISHER
we’ve seen industry players come and go and
potential, outlined policy change, interviewed program officials, offered origination tips and
PG. 12
PG. 18
WHY FINANCIAL ASSESSMENT WILL ESTABLISH A HEALTHIER BRAND PG. 21
HOW REVESE MORTGAGES CAN HELP SENIORS REGAIN CONTROL PG. 26
Erik Richard EDITOR-IN-CHIEF
Jessica Guerin
Of course, none of this would be possible
CREATIVE DIRECTOR
been willing to put their ideas out there for RALPH ROSYNEK SITS DOWN IN OUR HOT SEAT
Reza Jahangiri
explored marketing ideas.
without our loyal and active readers who have
TRR CELEBRATES SIX YEARS OF COVERAGE!
Meet the Team
their colleagues’ consumption. They may write specifically about underwriting guidelines,
tech advancements or sales processes but, in
effect, they are also participating in a greater
Traci Knight
COPY EDITOR
Kersten Deck MARKETING DIRECTOR
Alycia Greer
conversation, a conversation about how we can
APRIL 2015
COVER
We take a look at the HECM market’s top five lenders.
work together to advance the HECM product and serve the thousands of seniors whose lives could be drastically altered by this unique product. While it may seem like we’ve covered it all when it comes to HECMs, there is so much more to say about this complex business. I’d like to
encourage you to participate. As the industry adjusts to policy change
and the baby boomer generation continues to age, there is great potential for the reverse mortgage. Share your thoughts about how we can help the HECM become a mainstream financial tool for America’s retirees.
Be a part of the discussion and become a part of the market’s evolution. Reach out to me about how you can contribute.
JESSICA GEURIN Connect with me about how you can participate. Reach me at jessica@reversereview.com
Printer The Ovid Bell Press Advertising Information phone : 630.207.3882 email : jessica@reversereview.com Subscriptions email : information@reversereview.com Editorial Content email : jessica@reversereview.com © 2015 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
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table of contents 22 | Originating
TRR 4.15
The Secret to Building a HighTrust Referral Network How to create partnerships that will take your business to the next level
IN THIS ISSUE... 26 FLORIAN STECIUCH Originating
DON GRAVES
24 | Originating
Filled to the Brim and About to Spill Over Why I’m choosing to approach the new reverse mortgage with optimism and enthusiasm COLLEEN MOORE
29 | Appraising
New Year, New Changes
09 | Industry News
Headlining stories of the past month
Recent Fannie Mae regulations are likely to impact HUD-related appraisal reports.
14 | NRMLA News
Read about the association’s current initiatives.
JOHN GOLDEN
REVERSE MORTGAGE DAILY
MARTY BELL
31 | Tech
10 | Stats
17 | Roundup
February Top Lenders and HECM endorsement stats through January REVERSE MARKET INSIGHT
12 | It’s Our Anniversary!
TRR celebrates six years of coverage in the reverse mortgage industry. Read a recap of the important issues we’ve covered this past year.
FEATURE
21 SCOTT NORMAN Originating
Extra Assurance
A collection of recent facts and surveys affecting the reverse market
Could video technology be leveraged to support a final-stage borrower check-up? SCOTT SAMBUCCI
18 | Hot Seat
38 JASON McNAMARA Last Word
32 | Spotlight
Ralph Rosynek Senior vice president at Money House U.S.
HECM Counselors Grapple With New FA Requirements The impact on counseling is uncertain as agencies explore how to properly and efficiently address Financial Assessment with their clients.
34 | Feature The HECM’s Top FIve How the industry’s top lenders have managed to thrive in a tough market JESSICA GUERIN
“The market has inarguably taken a hit in the last few years, but despite the slump, these companies have managed to stand apart from their competitors, achieving notable success in a tough environment. Since February 2014, the same lenders have ranked among the nation’s top five.
DO HAV YOU IT T E WH AKE AT S?
There’s no such thing as a stupid idea. What do you want us to write about? Tell us! INFO@REVERSEREVIEW.COM
reversereview . com
8 TRR | 5
The Reverse Review April 2015
contributors JOHN K. LUNDE
MARTY BELL
RALPH ROSYNEK
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.
Ralph Rosynek is the senior vice president of the Money House, Inc. – U.S. Division, responsible for sales and operations activities of the company’s HECM and forward mortgage national wholesale and correspondent business channels. Rosynek is a seasoned HECM DE underwriter and has written for The Reverse Review since the magazine’s launch as its underwriting expert. He has held many leadership roles in the reverse mortgage industry for the past 15 years. rrosynek@moneyhouseus.com
10 | Stats g
John K. Lunde
Marty Bell
Ralph Rosynek
SCOTT NORMAN
21 | Why I Can’t Wait for Financial Assessment g
Scott Norman
Don Graves
Colleen Moore
Scott Norman has led all five campaigns to amend the Texas Constitution to allow, expand and promote reverse mortgages. Since he founded the Texas Association of Reverse Mortgage Lenders in 1999, he has testified numerous times before the Texas Legislature and has worked with lawmakers in other states. Norman has also served as president of the Texas MBA and the Austin MBA. He is currently the national field retail vice president of Urban Financial of America.
FLORIAN STECIUCH Florian Steciuch
John Golden
Scott Sambucci 6 | TRR
26 | Taking Back Control g
Florian Steciuch has been in the mortgage business since 2004 and has been originating HECMs since 2007. He specializes in consulting with financial planners, elder law attorneys and estate planners, sharing valuable information on how home equity can be used in the retirement distribution phase. askflorian@outlook.com 219.789.0409
14 | NRMLA News g
DON GRAVES
23 | The Secret to Building a High-Trust Referral Network 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. JOHN GOLDEN
29 | New Year, New Changes g
John Golden is the national quality control manager for Landmark Network, Inc., an appraisal management company that services clients nationwide. Golden, a former certified residential and FHA appraiser, is currently on the HUD 203k consultant roster. He relies on a 13-year background in valuation and inspection in dealing with quality control matters. jgolden@landmarknetwork.com 888.272.1214 ext. 718
18 | Hot Seat g
COLLEEN MOORE
24 | Filled to the Brim and About to Spill Over g
Colleen Moore is the national reverse mortgage director for Golden Equity Mortgage, a company she owned before it merged into a division of Land Home Financial Services in 2013. Moore is a CRMP who has worked in both forward and reverse mortgages for more than 20 years. In the last decade, she has been focused on educating professionals about the power of HECMs.
SCOTT SAMBUCCI
31 | Extra Assurance g
Scott Sambucci is a VP of customer success and sales at Blend, a Silicon Valley software company focused on the residential mortgage industry. Previously, he was an executive at CoreLogic and the chief operating officer of Altos Research. Sambucci has authored several white papers and articles, and has been featured on CNBC, NPR, The Financial Times, The Wall Street Journal and HousingWire.
contributors JESSICA GUERIN
JASON McNAMARA
Jessica Guerin is the editor-in-chief of The Reverse Review. She has worked on the editorial teams of Chicago Home & Garden, Chicago magazine and Time Out Chicago. Prior to joining the magazine, Guerin managed the marketing efforts for a commodity brokerage firm in the Chicago Board of Trade. She has a master’s degree in magazine publishing from Northwestern University and a B.S. in journalism from Boston University.
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.
34 | The HECM’s Top Five g
Jessica Guerin
38 | If Change Is Good, We’re Doing Great g
Jason McNamara
movers & shakers READ ABOUT THE LATEST DEVELOPMENTS in companies across the reverse space.
HAVE A COMPANY UPDATE YOU WOULD LIKE TO SEE PUBLISHED?
ReverseVision Releases Screens Required for Financial Assessment HECM technology provider ReverseVision has released an update to its RV Exchange LOS that includes all of the critical screens and calculations required for Financial Assessment. “There are a series of new screens and features to collect FA-related data elements like borrower’s credit, credit accounts, income, asset dissipation and expenses,” says ReverseVision President and CEO John Button. In addition, a single new results screen brings all the data together for the underwriter to complete the assessment and calculate the life expectancy setaside. Updates to the administration and reporting components have also been made. ReverseVision will offer live training focused on the new FA features in RV Exchange.
Money House Hires Ralph Rosynek Industry veteran and TRR underwriting expert Ralph Rosynek has joined Money House as SVP head of U.S. wholesale and correspondent
email it to jessica@reversereview.com
lending. Rosynek served as national director of corporate marketing and communications for RMS from 2011 through 2014, working before then as SVP/production director of the lender’s national and correspondent wholesale channels. Prior to that, Rosynek served as president and CEO of First Reverse Financial Services. He has worked on both the forward and reverse mortgage sides, and has held volunteer leadership roles in trade associations for both.
Reverse Mortgage Funding Expands Operations to West Coast, Names Mark O’Neil National Sales Leader Reverse Mortgage Funding has opened a storefront sales office in Lincoln, California, a submarket of Sacramento. “We are excited to expand our operations to the West Coast, and look forward to leveraging our expertise and innovative products to help older homeowners live a more comfortable and secure retirement,” says RMF President David Peskin. RMF’s Western Regional Sales Leader, Eric Ellsworth,
will manage the California region and will be supported by a team of six talented sales professionals: Mary Alice Cardenas, William Smith, Robert France, David Stormont, Olaf Hanson and Hank Rhoads. RMF has also named Mark O’Neil national sales leader for its wholesale and correspondent division. O’Neil will be responsible for the company’s third-party origination sales channels.
Open Mortgage Hires JoAnna Bignell Texas-based Open Mortgage has hired JoAnna Bignell to lead the company’s recruiting efforts in the reverse mortgage retail space. Bignell will work to bring in top-producing branches and help existing branches expand their teams. Bignell, who worked previously for Security One Lending, has more than 20 years of experience in recruiting.
reversereview . com
8 TRR | 7
The Reverse Review April 2015
2
PRODUCT SPOTLIGHT Reverse Market Insight Ups Its Retail Intel
THE DATA PROVIDER RELEASES NEW SOFTWARE THAT GIVES CLIENTS THE ABILITY TO DRILL DOWN ON HECM ACTIVITY IN REAL TIME. For reverse mortgage lenders with a directto-consumer focus, things just got a whole lot more interesting. Reverse Market Insight has released an enhanced version of its retail services software, one that gives users the ability to focus acutely on a target market. With RMI’s new software, users can access a greater wealth of information than ever before, drilling down by state, county or even ZIP code to view detailed HECM statistics in real time. The enhanced software offers innumerable users within a client’s company access to RMI’s scorecards, which are now accessible online via real-time software rather than static PDF. Now, your team of LOs can analyze scorecards at any time, instead of waiting for the release of a quarterly report, and With RMI’s new they can point and click software, users to explore various sets can access a of data in a specific area, greater wealth even viewing a heat map of information of a target location. than ever before,
drilling down by state, county or even ZIP code to view detailed HECM statistics in real time
Focusing on a particular territory, users can view geographically specific stats such as industry loan volume, top 10 lenders over a specific timeframe, the number of loans year-to-date, the number of ageeligible households, the percentage of those households that have taken a HECM loan, and average MCA. For further detail, a hyperlink to Zillow will open a new window. Users can also re-sort the data to personalize its focus. While most of the company’s actual data offering has not changed, RMI’s Jon McCue says it’s the usability and the format that makes this tool so essential for lenders looking to up their game. “The ability to drill down is what people are really finding extremely useful right now… We can look at things as macro- or as microscopic
8 | TRR
as our clients wish,” he says. “There’s a multitude of different ways lenders can use this—from advertising to recruiting to sales. Or, if you’re moving into a new state that you’re not very familiar with, this is a fantastic tool to give you everything you need to know from the top down.” McCue says software also gives users the ability to keep tabs on the competition. “You can see how many lenders are doing business in the same time frame in the same ZIP code. It can help you figure out who your main competition is. For marketing purposes, for sales purposes, you can now see what the competition is providing.”
RMI’s software is available for a 12-month subscription per state. VISIT RMINSIGHT.NET FOR INFORMATION ON PRODUCTS AND PRICING, and contact McCue for a free demo at jon.mccue@rminsight.net.
By using the software to analyze volume in a specific area, McCue says lenders can better target their marketing efforts. “It’s helpful if you want to do seminars, strategic mailings, local cable TV, or if you just want to make sure your people are working in the correct areas,” he says, “We’re using extremely geotargeted data to help make your marketing dollars work more effectively and efficiently.”
industry news
April Edition AN UPDATE OF THIS PAST MONTH’S BREAKING NEWS
The industry’s headlining stories at your fingertips UP-TO-THE-MINUTE NEWS? Visit reversemortgagedaily.com
NEWS DIRECT TO YOU: WANT EVEN MORE
HEADLINING NEWS REVERSE MORTGAGE 1. SECURITIES ISSUANCE UP 29% YEAR OVER YEAR HMBS issuance dropped slightly in February from its January high, but remained up 29 percent year over year, according to New View Advisors. HMBS issuers sold $635 million in new pools throughout the month of February, the third-highest total since December 2013. This marks the fifth-straight month that issuance has exceeded $600 million, a trend New View says it expects to continue due to low interest rates and the postponement of Financial Assessment
//March 24, 2015
2. WSJ: USE REVERSE MORTGAGE TO INCREASE AFTER-TAX WEALTH Using proceeds from a reverse mortgage could help retirees strategically maximize the after-tax value of their wealth, according to a recent column in The Wall Street Journal. Written by Bryn Mawr professor Wade Pfau, the column suggests that HECM proceeds can boost spending without increasing taxable income. Comparing the proceeds to those from a Roth IRA, Pfau writes, “Roth distributions can be useful to fill in income needs without entering into a higher tax bracket. Roth distributions do not count as part of taxable income, and they do not count on the income used to determine the taxability of Social Security benefits.”
//March 19, 2015
3. OBAMA CRACKS REVERSE MORTGAGE JOKE AT
5. BNY MELLON LAUNCHES REVERSE MORTGAGE
WASHINGTON PRESS DINNER
OPERATIONS
Speaking before attendees at the 2015 Gridiron Club Dinner in Washington, D.C., President Obama joked about a variety of topics in his remarks, including himself, fellow politicians and reverse mortgages. During the annual white-tie dinner, Obama joked that his tenure as president has aged him so much that he might be ready for a reverse mortgage. “Now, let’s face it, being president does age you. I mean, look at me,” Obama said. “I was hoping Fred Thompson would be the Republican speaker so I could buy a reverse mortgage.”
After announcing it was getting into the reverse mortgage business last year, Bank of New York Mellon has finally made a move into the market. Though the large bank and investment management advisor will not originate loans, the company will utilize its access to financial planners and other professionals to spread the word about using reverse mortgages in retirement plans. It will also purchase and securitize loans, and is now licensed to do so. “We have our license, we have our operation set up, and we are ready to purchase and securitize loans,” says Michael Gordon, head of retirement, insurance and strategic solutions; and CEO of Home Equity Retirement Solutions (HERS), the company’s reverse mortgage division. The company has compiled a team of reverse mortgage and finance professionals to lead the HERS division and has partnered with lender Longbridge Financial for originations.
//March 16, 2015
4. OCWEN UNLOADS BILLIONS OF MORTGAGE SERVICING Ocwen Financial Corporation is continuing to sell off its mortgage servicing portfolio. The former servicing giant and parent company of Liberty Home Equity Solutions announced plans to sell a $25 billion portfolio of mortgage servicing rights (MSRs) to a subsidiary of Nationstar. The sale includes a portfolio of about 142,000 loans owned by Freddie Mac and Fannie Mae, with a total principal balance of about $25 billion. Ocwen has been rapidly unloading its MSRs as of late. It recently sold a $45 billion portfolio of 277,000 Fannie Mae-owned loans to JPMorgan Chase & Co, and it announced plans to sell a $9.6 billion portfolio of MSRs to a subsidiary of Walter Investment Management Corp. In February, it sold a $9.8 billion portfolio to Nationstar, which consisted of approximately 81,000 Freddie Mac-owned performing loans.
//March 24, 2015
//March 4, 2015
6. GINNIE MAE LAUNCHES NEW ISSUER PERFORMANCE MEASUREMENT TOOL Ginnie Mae has launched a risk management tool that will allow issuers to measure their performance against both program standards and peers. Singlefamily, multifamily and HMBS issuers will have access to the tool, called the Issuer Operational Performance Profile (IOPP), which uses a scorecard approach to allow issuers to gauge their operational and default performance against their peers and Ginnie Mae program expectations. The initiative, Ginnie Mae President Ted Tozer says, lays the groundwork for enhanced knowledge and issuer-driven performance improvements.
//March 2, 2015 reversereview . com
8 TRR | 9
The Reverse Review April 2015
stats February 2015
Top Lenders Report
12345 American Advisors Group
One Reverse Mortgage
Endorsement
Endorsement
1,132
501
UFA
RMS/S1L
Endorsement
Endorsement
396
392
Liberty Home Equity
Endorsement
264
Lender Endorsements
Lender Endorsements
LIVE WELL FINANCIAL INC
REVERSE MORTGAGE FUNDING LLC
TOWNEBANK 13
177
150
SUN AMERICAN MORTGAGE CO
12
115
SOUTHERN TRUST MORTGAGE LLC
12
PROFICIO MORTGAGE VENTURES LLC
103
NORTH AMERICAN SAVINGS BANK
MAVERICK FUNDING CORP
11
11
11
UNITED NORTHERN MORTGAGE BANKERS LTD 80
VIP MORTGAGE INC
NET EQUITY FINANCIAL INC
78
FIRSTAR BANK
NATIONWIDE EQUITIES CORPORATION
74
BANK OF ENGLAND
HIGH TECH LENDING INC
63
DOLLAR BANK FSB
9
54
HOMEOWNERS MORTGAGE ENTERPRISE
9
52
GERSHMAN INVESTMENT CORP
9
9
CHERRY CREEK MORTGAGE CO INC OPEN MORTGAGE LLC
SUN WEST MORTGAGE CO INC
46
MOUNTAIN AMERICA CREDIT UNION
THE FEDERAL SAVINGS BANK
39
US MORTGAGE CORPORATION
10
9
8
8
PLAZA HOME MORTGAGE INC
37
MORTGAGESHOP LLC
ADVISORS MORTGAGE GROUP LLC
33
FULTON BANK
30
GUARANTEED RATE INC
8
FIRSTBANK 30
EVOLVE BANK & TRUST
8
PEOPLES BANK
ASPIRE FINANCIAL INC
8
AMERICAN PACIFIC MORTGAGE
30
UNITED SOUTHWEST MORTGAGE CORP
29
GMFS LLC
28
THE MONEY STORE M & T BANK
27
25
MCM HOLDINGS INC
23
TOP FLITE FINANCIAL INC
21
GENERATION MORTGAGE COMPANY
Brought to you by:
19
AMERICAN NATIONWIDE MORTGAGE COMPANY 17 BROKER SOLUTIONS INC
15
SUCCESS MORTGAGE PARTNERS INC
15
FRANKLIN FIRST FINANCIAL LTD
14
GEORGETOWN MORTGAGE
13
MONEY HOUSE INC
13
10 | TRR
%%%%% LOOKING FOR MORE STATISTICS? Go to rmsinsight.net for all of the industry’s latest stats and rankings.
stats HECM Endorsement Stats Through January 2015 INDUSTRY SUMMARY
TRAILING TWELVE MONTH ENDORSEMENTS
RETAIL UNITS CHG%
Retail Endorsement Growth
6,000
0.24%
4,000
Wholesale Endorsement Growth
-0.53%
2,000
Total Endorsement Growth
-0.08%
Wholesale *Numbers Represent Months
01
UNITS CHG%
-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
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%
8
1,944 -16.17%
1,306
-26.3%
3,250 -20.56%
9
2,248 15.64%
1,514 15.93%
3,762 15.75%
10
2,773 23.35%
2,078 37.25%
4,851 28.95%
11
2,500
-9.84%
1,907
-8.23%
12
2,867 14.68%
2,073
8.7%
1
2,874
* Figures Above Reflect Change from Prior Month
TOT
0.24%
-9.67%
4,407
-9.15%
4,940 12.09% 4,936
2,062 -0.53%
29,923
2.08%
22,908
-0.08%
52,831
60% 50%
FIXED RATE PERCENTAGE
40% 30% 20%
1/1/15
12/1/14
11/1/14
10/1/14
9/1/14
5/1/14 5/1/14
8/1/14
4/1/14 4/1/14
7/1/14
3/1/14 3/1/14
6/1/14
2/1/14 2/1/14
12/1/13
11/1/13
10/1/13
7/1/13
6/1/13
1/1/14
02
1/1/14
ARM
{ FIGURE }
5/1/13
4/1/13
3/1/13
10% 1/1/13
HECM ENDORSEMENT TRENDS
UNITS CHG%
2,614
70%
{ FIGURE }
2/1/13
Retail
TOTAL
2
8/1/13
2 3 4 5 6 7 8 9 10 11 12 1
9/1/13
0
WHOLESALE
FIXED
$1,200.0 $1,000.0
$400.0 $200.0
1/1/15
12/1/14
11/1/14
10/1/14
9/1/14
8/1/14
7/1/14
6/1/14
12/1/13
11/1/13
10/1/13
9/1/13
8/1/13
7/1/13
6/1/13
5/1/13
4/1/13
3/1/13
$0 2/1/13
IN THE MILLIONS
$600.0
1/1/13
HECM ENDORSEMENT
INITIAL PRINCIPAL LIMITS
$800.0
reversereview . com
8 TRR | 11
trr turns 6 The Reverse Review
2 2 2
April 2015
WE WOULD LIKE TO THANK our valued community of readers, writers and advertisers for helping to make this magazine the leading publication for reverse mortgage professionals. Our dedicated staff works hard every day to bring you valuable content, insight and news to keep you informed of the numerous issues that continue to affect this ever-changing industry. Without feedback and contributions from people like you, we would not be able to successfully accomplish this goal. Thanks for supporting us along the way! –-The TRR team
our year in review - Celebrating SIX years of coverage
The HECM Makes Headlines APRIL 2014
Reverse mortgages see an uptick in positive press as media outlets assess the program’s benefits in light of recent change. “Positive headlines are a major step in the right direction, but in order to create real change, professionals in the industry need to step up to ensure the conversation doesn’t die.”
HAPPY ANNIVERSARY!
What You Should Know About Reverse Mortgage Counseling M AY 201 4
How nonprofit agencies overcome limited funding, consumer confusion and frequent program changes to educate seniors about HECM loans “When borrowers are able to discuss the details of leveraging their home equity with an independent third party, they are better able to assess whether the loan is the right fit for them. Counseling ensures that borrowers who move forward with a HECM are fully educated about their rights and responsibilities, protecting not only the borrower, but also the lender.”
Feet on the Street
HECM Retrospective
Reverse professionals pound the pavement, connecting with seniors in their communities to discuss the benefits of the loan.
A look at the early years of the reverse mortgage program 25 years after it was launched to help America’s seniors access their home equity.
“They work with their feet on the street, their boots to the ground, pounding the pavement. They eschew the modern call center model, the Internet lead search, the impersonal direct-mail approach. They are oldschool reverse mortgage originators.”
“With so much change in the market as of late, professionals in the space spend a great deal of time discussing and debating the future of the reverse mortgage program. While it’s easy to get wrapped up in the drama of the moment, it might be worthwhile, on this notable anniversary, to take a step back to reflect on the past. Maybe, in order to assess what direction the program will take, it would be insightful to look at how far it has come.”
JUNE 2014
J U LY 2 0 1 4
“OUR INDUSTRY DOES SELL A PRODUCT, BUT IT’S THE SOLUTIONS WE DELIVER, AND THE PEOPLE TO WHOM WE DELIVER T 12 | TRR
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HOW TO ALLAY FEARS ABOUT THE USE OF HOME EQUITY PG. 20 TIP FOR UNDERWRITING PROPRIETARY LOANS PG. 27 + JOE KELLY SITS DOWN IN OUR HOT SEAT PG. 18
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Why I love being a reverse mortgage professional
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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
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REVERSE review NO VEM BER 2014
The
things WE’VE
PERCENT CHANGE, YEAR AGO
READ
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.
United States of HECM
AU GUS T 2 01 4
SE PTE M BE R 2014
The Comeback Vibrant Communities O C T O B ER 2 0 1 4
The second-largest generation in American history is approaching their later years on their own terms.
A closer look at reverse mortgage legislation, state by state
Gains in the housing market better position reverse mortgages as a retirement planning tool for today and tomorrow.
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The HECM’S Place in Elder Law
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New FHA guidelines tighten underwriting requirements for reverse mortgage loans. How will your business be affected?
Ted Tozer Ginnie Mae’s president talks about
his goals for the agency
the
FUTURE OF HECM-backed securities.
Financial Assessment Is Here
D E CEMBER 20 14 / JA N UARY 20 15 New FHA guidelines tighten underwriting requirements for reverse mortgage loans. How will your business be affected? “This last program change further solidifies the concept of a ‘new reverse mortgage,’... It’s a chance for lenders to revitalize the dialogue about HECMs and potentially expand the market.”
Ted Tozer
F E BRU A RY 2015 Ginnie Mae’s president talks about his goals for the agency and the future of HECM-backed securities “We’re getting to the point now where we’re seeing the HECM as really sustainable, and we’ve put the terms in place to make sure that it’s sustainable for FHA as well as for the borrower... The longterm perspective is pretty positive for HMBS.”
Kathleen Zadareky
M AR C H 2 0 1 5 HUD’s deputy assistant secretary of singlefamily housing talks about getting the HECM program back on track. “I think the key is making sure that whatever [the industry does] supports the sustainability of the product. We need successes. Seniors who are successful with their reverse mortgage programs will go a long way to build continued interest in it and driving others to seeing it.”
“We’ve had a great partnership [with] the industry as we’ve undertaken this work to put the program back on solid footing. We’ve asked a lot of them and they have been very responsive and very flexible, and I think… between the industry and the work we’ve done here at FHA, [we’ve made] sure that this program has a long-term trajectory.” –Kathleen Zadareky
“It will take tenacity, and almost unimaginable perseverance, to change how boomers and their advisors approach housing wealth. Yet HUD has given us a gift by encouraging American homeowners to use their home equity slowly, prudently and deliberately with very little upfront cost… The stakes are huge and the need is great.”
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WHY YOU SHOULD ENCOURAGE YOUR BORROWERS TO GET ONLINE PG. 23 A LOOK AT LENDER-PAID MORTGAGE FEES IN H4P TRANSACTIONS PG. 25 + TONY LOPES SITS DOWN IN OUR HOT SEAT PG. 16
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“A strong and viable reverse mortgage program tailored to meet the needs of older homebuyers is essential to a healthy housing finance system.”
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Highlights the HECM
The key to growth and stability is senior housing.
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Academic Research
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New Year, New HECM
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THE H4P POTENTIAL PG. 20 HOW TO BETTER CONNECT WITH SENIOR CLIENTS PG. 22 + KARIM HATATA SITS DOWN IN OUR HOT SEAT PG. 18
“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.”
ER
“Baby boomers are redefining retirement based on their numbers alone... Boomers are also the first generation to reach retirement following the seismic changes in how seniors plan and pay for their later years.”
“While 98 percent of the reverse mortgages issued in the United States are federally backed, more than half of the states in the U.S. have regulations that apply to reverse mortgages.”
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The Boomer Years
–Shelley Giordano
THANK
YOU
for being a part of the
conversation.
“Of course, the more things change, the more they stay the same. The program has been altered, but at the end of the day, the basic rules still apply. Lenders and counselors will, as always, need to connect with qualified borrowers interested in exploring the benefits of the program and teach them how a HECM can help them achieve their goals.” –Jeffrey S. Taylor
HEM, THAT SET US APART FROM ANY OTHER MORTGAGE OR FINANCIAL SERVICES BUSINESS.” –JASON McNAMARA reversereview . com
8 TRR | 13
The Reverse Review April 2015
nrmla news On the Docket: Reiterating “Freedom of Choice” Draw Options
CFPB Sues Reverse Lender for False Advertising The CFPB is taking legal action against a Maryland-based mortgage company for disseminating deceptive reverse mortgage advertising.
A new Ethics Advisory Opinion published by the Ethics Committee in February reminds industry participants that any requests for funds after the expiration of the first 12-month disbursement limit period should be at the sole discretion of the borrower. Ethics Advisory 2015-01: Freedom of Choice Remaining Draw Options After 12 Months/Ethical Obligations and Restrictions highlights two key points contained in Mortgagee Letter 2014-11:
(1) That mortgagees, whether through pricing options, marketing or advertising, may not “encourage” mortgagors to take any remaining funds after the 12-month period ends “whether they need it or not” (2) That mortgagors should determine at their own discretion and without “encouragement” from mortgagees, the “timing or amount” of such remaining draws The Ethics Committee refers to these two points as the mortgagor “Freedom of Choice” requirements.
Consumer Site Attracts Traffic A record 36,249 unique visitors came to NRMLA’s consumer site, reversemortgage.org, in January. Traffic remained strong in February with 32,990 unique visits. Thousands of
unique
visitors are still coming to NRMLA’s consumer site.
14 | TRR
The CFPB alleges that from November 2011 to December 2012, All Financial Services (AFS), which is not a member of NRMLA, used deceptive advertisements, including some that misrepresented the source of the advertisements as being, or affiliated with, a governmental entity. For example, one mailer sent to nearly 200,000 consumers advertising All Financial Services’ reverse mortgages had an eagle resembling the Great Seal of the United States. Furthermore, the header read, “GOVERNMENT LENDING DIVISION” and “Housing and Recovery Act of 2008 Eligibility Notice.” AFS also misrepresented that the HECM program was time-limited or had a deadline.
Western Regional Goes to Huntington Beach
Join us May 12-13 at the Hyatt Regency Huntington Beach, in Huntington Beach, California, as we review initial results of Financial Assessment and the changing market of reverse mortgage borrowers.
In the States
OREGON
ILLINOIS
BROUGHT TO YOU BY MARTY BELL: NATIONAL REVERSE MORTGAGE LENDERS ASSOCIATION
CONNECTICUT CALIFORNIA UTAH
Several bills have been introduced by state legislatures that impact reverse mortgage lenders. CALIFORNIA Keep Your Home California, a federally funded mortgage assistance program managed by the California Housing Finance Agency, announced a new effort to help low- and moderate-income homeowners avoid foreclosure on their reverse mortgages.Borrowers whose loans are in technical default because they are delinquent on their property taxes, homeowner’s insurance policies or condo fees, can qualify for as much as $25,000 in assistance. Keep Your Home California has reserved $25 million for the Reverse Mortgage Assistance Pilot Program and estimates about 1,400 homeowners could benefit from the program. Borrowers who need assistance should contact their reverse mortgage servicer to begin the application process. CONNECTICUT House Bill 5651 implements the recommendations of the Connecticut reverse mortgage task force, established last year pursuant to Connecticut Public Act 14-89, to protect elderly homeowners from financial harm and unfair and deceptive marketing of reverse mortgages. HB 5651 would create new counseling requirements, including new disclosures and a seven-day cooling-off period. ILLINOIS Senate Bill 1281 also provides a seven-day coolingoff period. Specifically, the bill provides that “[a] borrower shall not be bound for seven days after the borrower’s acceptance, in writing, of a lender’s written commitment to make a reverse mortgage loan and cannot be required to close or proceed with the loan during that time period. A
100 CRMPs NRMLA congratulates the following individuals for earning the Certified Reverse Mortgage Professional designation: • Tim Anderson, Responsible Reverse Mortgage, Inc. Fernandina Beach, Florida • Eric Christensen, Access Reverse Mortgage Corporation St. Petersburg, Florida • Mike Gruley, 1st Financial Reverse Mortgages Plymouth, Michigan • Pat Kubert, Reverse Mortgage Solutions Canton, Michigan
borrower may revoke his or her acceptance within this seven-day period.” SB 1281 also authorizes the Illinois Department on Aging to develop a statement regarding non-recourse reverse mortgage loans, including the potential benefits and risks associated, alternative options, and the availability of independent counseling services.
OREGON House Bill 2532 would require a lender, agent or affiliate of a lender, when distributing an advertisement or communication intended as an inducement to apply for or enter into a reverse mortgage, to provide the following information in a clear and conspicuous typeface: 1) at the conclusion of the reverse mortgage contract, the borrower may need to sell or transfer the property to pay back the reverse mortgage; 2) the lender will charge certain fees which are added to the loan balance; 3) the loan balance grows over time and the lender charges interest on the outstanding loan balance; 4) the borrower retains title to the property, but must pay property taxes, insurance, maintenance and related taxes. Failure to do so may cause the loan to be called due and payable immediately; and 5) interest paid on a reverse mortgage is not tax deductible until the borrower pays off all or a portion of the reverse mortgage. UTAH Senate Bill 120 would enact the Utah Reverse Mortgage Act. The bill defines a reverse mortgage, requires disclosures, limits fees, requires independent counseling, requires a seven-day cooling off period between the borrower’s written acceptance of the lender’s written commitment and the closing of the loan, and places requirements on the foreclosure of a reverse mortgage. There are limited exceptions from some of the bill’s requirements on disclosures, counseling and fees for FHA-insured HECM loans. Status: Passed the Senate and introduced in the House.
• Tim Linger, 1-866-REVERSE Mortgage Orlando, Florida • Jonathan Michael Maiolatesi, 1st Financial Reverse Mortgages Plymouth, Michigan • Malcolm S. Tennant, Access Reverse Mortgage Corporation St. Petersburg, Florida • Parker Turk, Sun American Mortgage Company Mesa, Arizona • Roberto Crespo, PS Financial Services Coral Gables, Florida • Pamela Tennant, Access Reverse Mortgage St. Petersburg, Florida
Just Joined
NEWS FROM NRMLA
nrmla news
NRMLA member
NRMLA welcomes the following new members: • Consumer Education Services, Inc. Raleigh, North Carolina (Counseling agency) • ENG Lending Denver, Colorado (Lender) • Emery Financial Newport Beach, California (Lender) • Foster Pepper PLLC Seattle, Washington (Law firm) • Springwater Capital Heber City, Utah (Lender)
4 One hundred and one individuals have earned the CRMP designation since mid-2010 and every one of them is prominently listed on the NRMLA consumer website, REVERSEMORTGAGE.ORG. reversereview . com
8 TRR | 15
Look Who’s Back in Wholesale!
The Reverse Review April 2015
RFS
Retirement Funding Solutions
F u n d i n g A m e r i c a’s R e t i r e m e n t
tm
www.rfslends.com
877-721-3847
16 | TRR
#nofilter #integrity #loyalty #diligence #compassion
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.
NUMBER CRUNCH
THE SENIOR AGENDA
MONEY MATTERS
Americans are short-sighted about their finances.
The Milken Institute releases “Best Cities for Successful Aging.” Top-ranked cities had lively
communities, opportunities for intellectual and physical activities, quality health care services and solid transportation. Above is a map
of senior-friendly cities nationwide.
VISIT
successfulaging.milkeninstitute.org
to take advantage of the map’s interactive capabilities.
“One of the greatest challenges facing retirees, particularly in today’s low-interest rate environment, is generating sufficient income for everyday living expenses. And for the 41% of Americans aged 55 to 64 with no retirement savings, their home may become their most effective way to fund retirement. The combination of those two trends makes reverse mortgages so appealing to so many people.” -Forbes.com IN THE MEDIA
RETIREMENT FACTS
THE AVERAGE RETIREMENT AGE has increased slightly in
the last 10 years.
64 FOR MEN
62 FOR WOMEN
A study by the Center for Retirement Research at Boston College found that a household’s financial satisfaction is “intensely presentminded.” Relaying on data from a FINRA study of more than 25,000 adults, the study found that Americans are mostly concerned about day-to-day financial issues, as human nature would suggest, thinking only marginally about distant financial issues. The study concludes that “households, by themselves, cannot be expected to devote much effort to addressing longterm saving goals. These results suggest a need to reduce reliance on individual decision-making by making it both easy and automatic for individuals to save.”
More than 7 in 10 Americans age 65 and older have fully paid off their mortgages. -Merrill Lynch/Age Wave Retirement Study
ON CAPITOL HILL
Five ways the National Council on Aging says Congress can help seniors: ONE Protect and assist low-income Medicare beneficiaries
TWO Renew the Older Americans Act (OAA) and the Elder Justice Act (EJA) THREE Restore investments in aging services FOUR Protect and
strengthen long-term home care under Medicaid
FIVE Improve access
to elder falls prevention and chronic disease selfmanagement programs
Learn more at
ncoa.org. reversereview . com
8 TRR | 17
The Reverse Review April 2015
THE
REVERSE review
THE
AP RIL 2015
I entered this industry because I had to say “no” or “I am sorry” to too many seniors when I was younger. I wondered what I would do in a similar situation.
Ralph From his favorite vacation and his worst purchase to his thoughts about the MONEY HOUSE U.S. Senior Vice President 18 | TRR
future of the reverse mortgage market, we get the facts from Ralph Rosynek, senior vice president of Money House’s U.S. division.
personal >
some reason. I still wonder what that was all about!
Ten years from now I will still be attending NRMLA, still an active
>
member of the industry and still in
Well, I have feared the day I thought
denial I am a senior. >
I would have to explain sacrificing time with my wife and children, as
My favorite vacation was (and
the kids are now grown and we
continues to be) on a quiet lake in
have been married 31 years. Much
Michigan at my lake house with family. >
to my surprise, they have said it is
My first car was a go-to college car:
my commitment to hard work with
Wildcat 450 engine.
respect me for—go figure!
restaurant.
When I was a kid I never thought
professionAl >
objections will now be clarified even
parents. I also never thought that I
further and give way to a more
wouldn’t have my dad around to help
acceptable and “right fit” product to
me make those “big boy” decisions life
assist a very wide range of borrowers.
throws at you.
formative years for many of us… >
I am looking forward to both the challenge and opportunity.
I’ll never forget those early Financial Freedom days. Those were the
>
My parents taught me how to love,
challenged in the forward market and
between want and need.
my focus to make a difference.
looking for an opportunity to recharge
I’ve never had so many hugs, kisses
>
developing positive messages and
working with HECM borrowers.
came from my daughter, a little later in life. As a fashion designer, she
taught me how to edit—not only my baggy T-shirts and jeans, but also to edit many areas of my life. I guess I shouldn’t complain as I continue to make those Sallie Mae payments. >
The worst purchase I’ve ever made was… With three small kids, I had
to buy an Indy pace car Corvette, for
Industry growth is dependent upon new interest in reverse mortgages by
borrowers as I have experienced when
The best lesson I’ve ever learned
My first car was a go-to college car: a 1964 yellow Buick Electra with a Wildcat 450 engine.
a continuing industry effort to open
and handshakes from my forward
>
Before I entered the reverse
mortgage industry I was no longer
how to help others, and the difference
>
The future of reverse mortgages is very positive. Many of the past
about facing the same fears as my
>
When I was younger I wanted to be a chef and own a spectacular restaurant.
When I was younger I wanted to be a chef and own a spectacular
>
fact
measurable results that they most
a 1964 yellow Buick Electra with a
>
For success I have sacrificed…
fun s
reaching out to underserved markets. >
The ideal characteristics of leaders in the industry are those that arise
from the need to promote and develop new leaders and set an example of professionalism in serving the needs of this developing population of borrowers.
The future of reverse mortgages is very positive. Many of the past objections will now be clarified even further and give way to a more acceptable and “right fit” product to assist a very wide range of borrowers. I am looking forward to both the challenge and opportunity. reversereview . com
8 TRR | 19
The Reverse Review April 2015
20 | TRR
ORIGINATING
RR
EMBRACE
RR
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Why I Can’t Wait for Financial Assessment By Scott Norman
have already been asking many of the same questions FA seeks to answer. Those loan officers for whom “get a reverse mortgage” was the right answer for all borrowers, without concern for the individual borrower’s financial situation, will see a direct impact on their business. FA will raise the caliber of reverse loan officers as a whole.
ACCORDING TO SCOTT
In the long run, FA will benefit all of us by ensuring that borrowers who would benefit from downsizing or considering alternate housing situations do so, instead of taking on a liability they cannot sustain. In addition to protecting borrowers, FA will level the playing field for responsible loan officers. Those who have always tried to help the borrower make the best decision for their situation
“IN THE LONG RUN, FA will benefit all of us by ensuring that borrowers who would benefit from downsizing or considering alternate housing situations do so, instead of taking on a liability they cannot sustain.”
The reverse mortgage industry, led by NRMLA, has faithfully worked to resolve issues during turbulent times in our product’s history. They don’t get a fraction of the credit they deserve and that is a disappointment. With the country aging every day, the potential reverse mortgage market is bigger today than it was yesterday, and it will continue to grow. Those of us who truly believe in this industry will continue to thrive, without question. In the coming years, I suggest we work with HUD to tweak new underwriting models and strive to be the best professionals in this industry. If this market is going to take off the way it really should, the next 12 months will be critical. n reversereview . com
8 TRR | 21
SPOTLIGHT
According to many news outlets, delinquencies of taxes and insurance have been a topic of conversation over the last number of years. With FA almost
in play, I see this as a significant fix for T&I anxieties. Although the current adjustments implemented through FA may not be the exact solution I would have formalized, I applaud HUD for its robust efforts in this endeavor.
TECH
I believe reactions and responses to the new guidelines have been unreasonably negative. The anticipation during this lengthy waiting period has left people with a lot of time to analyze all the ways that FA will hurt their business. The conversations within the industry have festered, leaving many in an atmosphere of glumness. If the timeline had been quicker, chances are the industry would have faced it head on like we have every other change. We would have adjusted our approach and moved forward in a more constructive manner.
APPRAISING
Financial Assessment will soon be here in full force. No doubt, it’s a big hurdle for the industry, but it’s certainly not draconian, as I’ve heard numerous people say over the last few months. Will FA negatively impact our industry in the long run? No, I don’t believe so.
A reverse mortgage is a great creation that has been seriously misunderstood and misrepresented. We have all read how the media sensationalizes any negative aspect of a “reverse mortgage gone wrong” simply because they have deemed it newsworthy without any facts. What about the hundreds of thousands of reverse mortgages that have positively changed people’s lives? That story is rarely told.
ORIGINATING
FHA’s new rules will improve the product’s reputation and establish a healthier brand.
I truly see this as a benefit to careerminded originators. This newly defined reverse mortgage is more professional, and will not disproportionately affect people in it for the long run, even if the short run will be challenging. I believe that improving the reputation of this product, while establishing a healthier industry brand, is a worthy result of FA.
The Reverse Review April 2015
ORIGINATING
The Secret to Building a High-Trust Referral Network By Don Graves
Friends * In Facebook language, these can be folks from the old neighborhood—a second-grade classmate, your old soccer teammate, etc. In business terms, they are people you met at an event, people who came to a seminar or were introduced to you through a colleague or client. That’s the starting point—they’re friends on a casual level, nothing more. Since I use email as a primary communication tool, my “tell-tell” sign for identifying a “friend” is that they don’t mark my emails as spam! It’s funny, but it is true, and important for many reasons.
How to create partnerships that will take your business to the next level In today’s origination environment, what is the fastest way to go from an average producer to an exceptional producer? I’m talking about someone who is doing one or two loans a month and would like to see that number move to three, four or five loans per month while cultivating a growing list of referral partners. Wouldn’t you like to hear your phone ring every day from a qualified person who needs a reverse mortgage? So what kind of strategy can make your phone ring? It is simply building a hightrust referral network. I have worked hard to employ this strategy since I began in this industry 15 years ago, and it has helped me assist more than 2,300 people obtain a reverse mortgage. It seems like yesterday, but it was in 1999. I was sitting at my desk as CEO for Habitat for Humanity’s Urban Philadelphia division when I first learned about the power of HECMs. My sister called me and said, “Little brother, I have a business opportunity for you!” That’s how it all began. I had never been in 100-percentcommission, sink-or-swim, do-or-die sales before. So naturally, I wondered, how can I make this work? I did some research and learned that if I wanted to create long-term success in a sales setting, I needed to build a network. As 22 | TRR
Todd Duncan states in his book High Trust Selling, “Long-term sales success happens when high trust exists—when you are a trustworthy salesperson running a trustworthy sales business, and when it’s clear to your [partners] that you are a person of integrity who will not only do what you say, but also has the means to deliver.” What is a high-trust network? A high-trust network grows from mutually beneficial and generous partnerships between individuals who actively work to help each other’s businesses. Let’s use Facebook as a metaphor. Typically, when you join Facebook, the first thing you do is invite people to be part of your network. These people fall into three categories: friends, fans and what I call fanatics, or family. Here is what these groups represent when it comes to building a high-trust referral network:
Fans * The key here is to take your relationship with friends to the next level—make them fans. In Facebook terms, these are the people who “like” your post or an event or campaign you’re associated with. They have gone past casual and have given some indication of warmth and connectivity. The business “tell-tell” sign for this group is they actually read my emails. Fanatics/Family * You know this
group! They are the sports fans who can’t stop talking about their team (even in the off-season). They have the gear and they give you gifts with the team’s logo. They are fanatics! In Facebook terms, they mention you in their posts or share photos that include you. In business terms, these folks trust you, they respect you and appreciate the work that you do, and they can’t keep their mouths closed. When someone mentions your type of business, they mention you. The “tell-tell” sign here is that they forward your emails. This is the group that becomes your network. We all know that people do business with those they know, like and trust. For high-trust partnerships, this is essential. So how do you cultivate your existing relationships, encouraging friends to become fans, and turning those fans into fanatics?
ORIGINATING
7
STEPS to Help You Build a High-Trust Referral Network
2. SET AN APPOINTMENT.
} This is an obvious but often overlooked starting place. This is where paralysis, overexamination and inertia often set in. “Where do I start?” says the originator, “How do I get going?” The good news is that you don’t need to cold call. You simply need to ask someone who knows, likes and trusts you if they would be willing to introduce you to someone they care about who could benefit from your knowledge. Period! Everyone should have at least a few people to help them start out. Here is my short list:
} Now this seems obvious, but it is often ignored. Once a person introduces you or gives you permission to call their contact (an introduction is so much better), connect with them for a short and simple conversation and then set a time to meet. The meeting should be in person, if possible. Don’t try to do much on the first call except set an appointment.
3 My own personal advisors 3M y clients’ advisors (their attorneys, accountants, financial planners) 3M y Facebook and LinkedIn contacts (people I actually know) 3A dvisors and professionals who I had already served in some capacity
3. MAKE A LASTING IMPRESSION.
5. DEVELOP A BASIC/SUSTAINABLE FOLLOW-UP SYSTEM.
This is really simple, but often disregarded. Email is quick, but a handwritten note in blue ink will set you apart from the crowd. I have gotten more response from this one thing than anything else I have done.
} Here is a major place of defeat for many sales agents: not having a CRM
}
in place. The key is to develop a system that works for you. Most producers I know don’t use a CRM. When I started in 2000, the first thing my sister told me to do was to purchase a CRM called ACT! I had no idea what it was or how to use it, but she said it was indispensable to growing my business, and it was. Today I have 15,444 contacts divided into 109 groups and 457 subgroups. My referral sources are grouped by industry (attorneys, accountants) and by the type of relationship (A/B are high trust, C/D are developing or emerging). Because I have a system, I can create a contact and set up an auto-reminder to do something with them every 30, 90 or 180 days. I don’t have to think; I plug it into the system, “set it and forget it.” So whether it’s ACT! or Salesforce or Goldmine or Zoho or something else your company provides, building a high-trust network requires a simple system to be in place in order for you to maximize the opportunities.
6. STAY TOP-OF-MIND.
7. ASK FOR AN INTRODUCTION.
} Has someone ever asked you if you knew a painter or plumber or a place that frames art, and you couldn’t think of someone? This happens all the time. Let’s stay top-of-mind with our partners so that they don’t forget when our services are needed. There are four simple ways to do this: Send a simple email, make a phone call at least twice a month, visit in person or write a handwritten note. However you choose to do it, just make sure you’re keeping in touch.
} Now we end where we began. And if we have done the other steps correctly, a person will introduce us upon our asking and it won’t be a stretch for them to do so, because they have experienced world-class professionalism. reversereview . com
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SPOTLIGHT
4. SEND A HANDWRITTEN NOTE.
TECH
a few ways my program was uniquely tailored to solve some of their problems. I understood the words of their industry (options, upgrades, revenue, margin and profit-plus). At the end of the meeting, I was asked to work with all 18 of the company’s new construction communities; 250 new homes are to be built and nearly half of them appear HECM eligible. Listening makes a lasting impression.
APPRAISING
} This is where hard work, practice, skill and luck come into play. You have approximately 90 seconds to make your first impression and then you are awarded bonus time in three- to fiveminute increments (kind of like a game show). Therefore, your first few moments should be scripted and practiced to engage your new partner. Today, I met
with the sales and marketing manager for a large builder. I was introduced a few weeks ago through a Realtor whom I had successfully served (I helped him earn commission on an extra $114,000!). I knew I had a limited amount of time to make an impression. What I have discovered is the greatest impact we can make is to learn the skills of listening and asking thought-provoking questions. After I listened, I shared just
ORIGINATING
1. GET AN INTRODUCTION.
The Reverse Review April 2015
ORIGINATING
Filled to the Brim and About to Spill Over By Colleen Moore
view it as a deal killer, then I believe you will miss the point. I admit that the difficulty in launching FA is the extensive documentation required. Part of the wonder of a HECM has been the ease for the borrower. But I believe we can still maintain a piece of that wonder, and at some point down the road, perhaps FHA will look at simplifying the documentation involved. Providing basic income and asset information makes sense, and our process as lenders to evaluate a client’s situation is critical, but some of the “drill-down” documents could be a hardship for our borrowers. It is our job to help them through this as best we can.
Why I’m choosing to approach the new reverse mortgage with optimism and enthusiasm What a roller coaster ride! If you are one of those originators who is running and screaming into the night because of all the changes we have endured, take a breath! I think we were all relieved to have a short reprieve in the launch of Financial Assessment. FHA announced the delay and most reverse professionals across the industry breathed a collective sigh of relief. I think it was critical for all of us to use that time as an opportunity to learn the new requirements and get a grip on the changes that had already been implemented.
While some may complain about the implementation of Financial Assessment, I appreciate that it forces lenders and originators to really determine if a reverse mortgage is the best solution for the client. It can help protect them from themselves or others in their lives. I would love to challenge the industry to actually embrace the assessment process and use it as a tool to enhance your client’s loan experience. If you only
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That said, FA is now a reality and it needs to be embraced. If mastered properly, it can be another way to set yourself apart from other originators. If you see this as an opportunity, you can enjoy tremendous success. I have always been inspired by this motto, and it seems to apply in the reverse business now more than ever: “If it’s too tough for you, then it is perfect for me.” Our industry has carried the burden of a negative reputation and the horror stories of clients wronged for too long. This is our moment! FA can help the industry gain the public’s trust. Perhaps now consumers will see the value of the HECM and understand that we are doing what is absolutely best for our clients.
ORIGINATING Where There Is Challenge, There Is Opportunity
Allow yourself to really ponder the line-
Would you have preferred to keep things the old way? Most of you would probably say yes, but we have a choice in how we approach the new reverse mortgage. Will the changes cripple you or encourage you to work even harder to connect with consumers about this great product? Is your glass half empty or half full? Mine is filled to the brim and about to spill over. n
Be a part of the conversation.
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Share your ideas with your colleagues and be a part of the solution. Reach out to us at info@reversereview.com.
APPRAISING
Our industry is evolving. We have all believed in the great potential of the product we sell; soon, the public will
Allow yourself the luxury of falling in love with our product. Remind yourself that the true benefits of the product are completely untouched by FA. How many people would be thrilled to have a choice when it comes to their home loan? With a HECM, your borrower can choose to make a payment, not make a payment and change the terms of their loan at any time without a refinance. Wouldn’t anyone welcome that flexibility in their own home loan?
of-credit growth feature and compare that with conventional lines of credit. I know that in my history of property ownership, I have had credit lines canceled, frozen, fully amortized and pretty much disappear. That feature alone should give you the weaponry to approach any professional with your product. Understand every aspect of what you have in your hands and you will become a force to be reckoned with.
ORIGINATING
With FA in place, we can approach financial advisors, estate attorneys and CPAs with authority. This will become a loan that borrowers will want to qualify for. Higher-net-worth clients will like that a HECM is not just a product for those in dire straits. We all love helping needs-based borrowers, and FA will not exclude them entirely—many will still be able to utilize the product, even if a set-aside is required. FA will simply identify which borrowers would only postpone inevitable foreclosure if they were to take a HECM. I don’t believe that it will eliminate a substantial number of borrowers. In fact, I think it will propel the program in the long term by paving the way for other borrowers, those who are willing to strategically leverage this product and can see the value offered by this “new” reverse mortgage.
see it too. The ability to introduce the HECM as a new reverse mortgage is incredible. It provides us with a tremendous opportunity to restart the conversation. In recent years, program changes have been cloaked by negative press. But now, with policy change nearly complete, the program’s overhaul will give the HECM a chance to come out of the background and emerge as a phenomenal tool for people over the age of 62. And with the astronomical number of baby boomers, there is no shortage of potential.
TECH SPOTLIGHT
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The Reverse Review April 2015
ORIGINATING
Taking Back Control By Florian Steciuch
LIQUIDITY This aspect is rather obvious (to us, at least). We take an asset (the home), which is illiquid and has zero ROI, and turn it into an asset that provides tax-free liquidity. We do this through the options available with the HECM: term or perpetuity payments or a growing line of credit.
USE The second component is use. Can the retiree use the tax-free proceeds for what they need, when they need it? They simply need to determine how they want to receive the funds.
How to help potential clients see that a reverse mortgage can help them take charge of their future One of the more difficult times of my adult life was when my father-inlaw was diagnosed with Parkinson’s disease. I witnessed the anxiety and uncertainty it generated. I remember the stress and “lively” discussions my wife and I shared during the final months of his illness before his passing in 2009. What struck me hardest was how suddenly he lost control. We had to step in, taking charge and making decisions for him. It started with when and where he could drive, then what he could eat, and finally where he would live his final days. I thought about how scary it is to go from being in total control to being totally dependent on someone else. Thankfully, he was prepared financially, and my wife and I were able to provide the care he needed and deserved. I share this because I believe, as reverse mortgage professionals, we need to understand this important part of aging. A financial planner and good friend of mine says retirees need LUC : liquidity, use and control. That is exactly what we can provide with a reverse mortgage.
DID YOU KNOW? 26 | TRR
1. Almost 75% of single Social Security recipients aged 65-plus depend on Social Security for all or most of their monthly income. -ncoa.org
2. The average older adult receiving Supplemental Security income gets just $425 each month. -Social Security Administration
CONTROL The most important component is control. Have you ever had a client say no to your well-prepared proposal? We all have. When you dig a bit deeper into the reason behind the no, what do you hear? Of course, some will complain about the fees, the potential loss of equity, etc. But here is what I learned over the years: The no is their way of controlling a portion of their life. It is important to understand where they are coming from. Gathering financial information is sensitive, of course, but asking what the past several years were like can be even more sensitive. Do they have an adult child that has been making most of the decisions for them? That’s a loss of control. Has their
3. One-third of senior households have no money left over each month or are in debt after meeting essential expenses. -Institute on Assets and Social Policy
ORIGINATING “I recently consulted with a client who was brutally candid with me. He told me he was saying no simply because he could. I was taken aback for a minute, but replied with a warm smile and affirmed that it is important for him to have the ability to say no. I did not contest it. But I did share how saying no to a HECM could result in the loss of control in other areas of his life.”
That is why I stress the importance of understanding the retiree and their need for control. You can ask questions to help them see how a reverse mortgage can provide the right answers. Ask them to share how they see their retirement. Does it line up with what they dreamed about 20, 30 or even 40 years ago? Follow up by asking how different their retirement would be if they had the funds they needed. Here is where you can shine. Take a look at the numbers. Discuss current and future expenses. Draw the contrast between not having and having. Encourage them to imagine how different their life could be. Look, our clients have a lifetime of
So, when you hear “no,” don’t flinch; smile. Understand where it’s coming from and show how you can help. You can provide something that could potentially change your client’s life. n
APPRAISING
Now, don’t fret, this is not a deadend for you. Rather, it is an incredible opportunity to educate the potential client and put them in a financial position that gives them back some control. I often say that when you run out of money, you run out of options. Another way of saying that is when you run out of money, you lose control— control of where you can eat, what you
eat, where you live and even the quality of care you will receive.
ORIGINATING
doctor put them on a restrictive diet? That’s another loss of control. Have they recently cut back on expenses—going out to eat, cable TV, vacation—because their finances have changed? That is another loss of control. So, when you finally get in front of them and make the case for a reverse mortgage, they exercise one of the last forms of control they have: the ability to say no.
experience. We need to respect that. They also need our help, and we need to embrace that opportunity. I recently consulted with a client who was brutally candid with me. He told me he was saying no simply because he could. I was taken aback for a minute, but replied with a warm smile and affirmed that it is important for him to have the ability to say no. I did not contest it. But I did share how saying no to a HECM could result in the loss of control in other areas of his life. In this case, it was home health care costs. If he refused to access his home equity, ultimately the choice of where he will live will be forced upon him by his children, or worse, by his possible decline in health. When I said I wanted to provide him a way to have more control over his life, he began to listen and ultimately decided to proceed with the process.
TECH
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SPOTLIGHT
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The Reverse Review April 2015
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landmarknetwork.com
APPRAISING
LEARN
New Year, New Changes By John Golden
Recent Fannie Mae regulations are likely to impact HUD-related appraisal reports.
Finally, Fannie Mae’s most significant appraisal-related modification was made in February with the rollout of its Collateral Underwriter (CU) tool. CU provides automated appraisal-risk
“Fannie Mae’s most significant appraisal-related modification was made in February with the rollout of its Collateral Underwriter (CU) tool. CU provides automated appraisal-risk assessment to support the proactive management of appraisal quality.”
CU also generates alternative comparable data from its database and assesses individual line adjustments applied on the appraisal report against adjustments that were applied by peer appraisers in that specific market. While CU is not specifically associated with HUD-related reports, it will most likely modify the writing style of most appraisers as they attempt to be more substantive in their commentary about comparable sales, quality and condition ratings, and carefully weigh the adjustments applied to comparables. As such, I would expect to see a more robust writing style in future HUDrelated appraisal reports. n reversereview . com
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SPOTLIGHT
Fannie Mae’s second modification at the end of last year is related to solar panels. New guidelines now restrict an appraiser’s ability to give solar panels value consideration when the equipment is not owned by the borrower. In the event that the equipment is covered by a solar lease or power purchase agreement, value consideration restrictions apply. While HUD has not released its own restrictions regarding solar panels, it is highly likely that appraisers will apply similar consideration on HUD-related reports.
assessment to support the proactive management of appraisal quality. It leverages extensive amounts of property data, market sale data, and key appraisal report components collected through efficiencies associated with UAD standardization and UCDP appraisal report collection. It provides various flags, messages and an overall appraisal risk score as part of current UCDP reporting processes.
TECH
The Uniform Collateral Data Portal (UCDP) process allows for an in-depth analysis of trends associated with these thresholds. It was found that more than 94 percent of the comparable sales utilized on appraisal reports fell below these thresholds, raising concerns that applied adjustments were inaccurate, and that some adjustments may be artificially low and not necessarily a true reflection of market reaction. The premise is that the removal of these thresholds will allow appraisers the freedom to focus on and apply truly appropriate market-based adjustments. HUD has not announced
any modification to its guidelines requiring the same 15 percent net and 25 percent gross adjustment thresholds; they are still applicable on HUD-related appraisal reports—for now.
APPRAISING
Just before the new year, Fannie Mae made two significant modifications to report requirements. The first is the elimination of the 15 percent net and 25 percent gross adjustment thresholds related to comparable sales provided in the Sales Comparison Approach on the appraisal report. This change comes after analytical efficiencies were realized as a result of the Uniform Appraisal Dataset (UAD) standardization and Uniform Collateral.
ORIGINATING
It has been said that progress is impossible without change. If that is true, the appraisal industry should be cruising at optimal speed on the road of progress. Fannie Mae has made several modifications to appraisal report requirements over the past three months, and appraisers have been struggling to adjust as they attempt to maintain a universal code of standards. While many of the new regulations are not HUD-mandated, they will likely have an impact on HECM appraisal documents as might they change how appraisers approach specific situations in the future.
The Reverse Review April 2015
How can AAG help you? As the nation’s No. 1 reverse mortgage lender, AAG provides services and solutions designed to help brokers, bankers and community lenders. We offer the tools you need to introduce the reverse mortgage as a smart retirement planning product to your senior clients. With turn-key marketing, operations support, product and sales training, and access to the industry’s best leads, AAG has the resources you need to grow your business. To see how AAG can help you visit us today at aagwholesale.com.
Contact us to learn more:
t: 866-964-1290 w: aagwholesale.com 30 | TRR
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RETHINK
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Extra Assurance By Scott Sambucci
prior to closing—a last-minute recap of sorts that reviews the obligations of the loan? There are about 5,000 HECM loans originated per month, or about 250 loans per day. Could the industry find a way to support a mandatory video review with each new borrower just before they reach the closing table?
When I said I’d call back, she replied, “Call back any time. We’re available 24/7.” This is a free service paid for by the U.S. Department of Treasury, available 24 hours a day, seven days a week. It was that easy to get a trained counselor on the phone.
Finally, by requiring this video at the end of the origination process, lenders are then given an incentive to appropriately educate borrowers during the origination proceedings, else risk extending the time-to-close or even losing a potential borrower. In the best case for the industry, a segment of wouldbe borrowers might disqualify themselves by failing this final test. Would that be such a bad thing for everyone?
n
This got me thinking: Should this phone call be required as part of the final steps of the HECM origination process? Or better yet, what if the industry employed technology to create a mandatory video that borrowers must view in the final stages reversereview . com
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SPOTLIGHT
This week, I called a housing counseling service provided by the CFPB housing counselor hotline. I told the agent that I was doing some research for my parents, who were considering a reverse mortgage. She said that with them on the line, she could transfer me to a housing counselor to review the details of a reverse mortgage and to determine if the loan would be a sound financial decision for their circumstances.
From a regulatory and compliance standpoint, this process could relieve lenders from many of the burdens that require them to prove borrower disclosure and education about terms, fees, and outcomes.
TECH
According to the CFPB’s January report, “Consumers’ Mortgage Shopping Experience,” about 77 percent of borrowers only applied to one lender. With increasing pressure on HECM lenders, originators need to prove proper disclosure and borrower education or risk scrutiny from regulators.
APPRAISING
Could video technology be leveraged to support a final-stage borrower check-up?
Tracking the viewing of these videos is a well-established technology built into any modern software platform. By deploying this technology for borrower education, monitoring clicks would provide verification to the lender that the borrower has been given a final opportunity to confirm their agreement with the terms of the loan. This would also provide visibility and analytics to oversight bodies as they could review data on borrower responses. It might create a red-flag system, drawing attention to lenders that are pushing their borrowers through the process.
ORIGINATING
Ideally, the videos would be produced and hosted by HUD and the CFPB to ensure objectivity and uniformity. The content would review the potential pitfalls, challenges and obligations of loan, with several versions created to specifically address different types of HECMs (i.e., tenure, term, line of credit). An electronic questionnaire would automatically cue upon the video’s completion, prompting borrowers to respond to a series of important questions about the loan’s terms. A system could be set in place that would pause the process and flag the originator if a borrower failed to respond accurately to the post-video questionnaire. Originators would be alerted when their borrower has successfully completed this mandatory step, allowing an automatic release of disclosure documents for review and signature.
The Reverse Review April 2015
SPOTLIGHT
HECM Counselors Grapple With New FA Requirements IS TH
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WE TALK TO COUNSELORS ABOUT THE IMPACT OF FA.
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WANT TO SEE MORE ARTICLES LIKE THIS?
See them at reversereview.com.
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s the industry prepares for the implementation of Financial Assessment, most counseling agencies have seen a significant increase in the number of HECM sessions. While a
spike in calls is common after the announcement of pending policy change, things may not return to normal as HUD’s FA guidelines are sure to impact HECM counselors in more ways than one. While HUD has released a webinar for counselors, many say they are hoping to receive more specific direction as to how deep they should delve into numbers with potential reverse mortgage borrowers. “I have been talking with other agents, we are all communicating, trying to get a clear position from HUD on exactly what they expect us to do, because the last webinar was a lot about numbers 32 | TRR
and calculations,” says Claudia Fehribach of debthelper.com. “They [seem to be saying], ‘Let’s try to do this, let’s work and see how it’s going to go,’ and we’re trying to avoid that.” Tony Lopes of Cambridge Credit Counseling agrees that there has been little direction for counselors thus far. He says, based on the information released by HUD to date, his staff will likely take a high-level approach, relying mostly on lenders to get into the specifics. “It seems we’re just supposed to educate on how it would work, what factors [lenders] look at, info the lender would need, and then cover life expectancy set-asides,” says Lopes. “Based on how the protocol is written right now, I’m looking at everything as broad strokes and specific questions are going to fall back to the lender.” In terms of how much time the extra information will add to a session, Lopes says it’s still
hard to tell. “I don’t see it taking a ton of time if it’s done in a broad manner, but I could see questions arising from the clients themselves,” he says, adding that it’s hard to know exactly how things will change until reverse mortgage software provider Ibis releases a new version of its Reverse Mortgage Analysis (RMA) calculator for counselors. “A lot of it depends on this calculator,” he says. “If the calculator spits out that you need a set-aside, I don’t know how in-depth HUD will want the counselor to go through that… There’s not a whole lot of guidance on counseling from HUD, so we’re just going to need to take some time to see how it plays out.”
most counselors will see the time they spend with clients increase. “I expect to see some added time, but I’m not sure how much it will be. That’s a tough discussion; each one of us is going to answer that differently.” Kautz says that he already does a thorough budget analysis with clients during his sessions, which take up to 100-120 minutes, so he doesn’t expect new FA guidelines to change his process too drastically. “I’m not expecting all that much of a change for me personally,” he says. “I think it’s going to dovetail into a lot of what I’m already doing.”
Still, there is little doubt for most counselors that sessions will lengthen because they are required to include more information.
Fehribach says she expects her sessions, which range from 55 to 75 minutes, to increase by as much as 30 minutes. She says that while the extra time may be a burden for her agency, she worries more about the impact it could have on her senior clients.
Frank Kautz of Community Service Network says he thinks
“One thing that I don’t know if people realize—but we do
SPOTLIGHT because we talk to seniors all day long—is that it can be very hard for them to spend one hour on the phone with us,” she says. “So I think having the time increase is going to create difficulties for some of them.” Lopes agrees that the added information may be a burden on senior clients, and says that it may impact the entire loan process. “One way Financial Assessment might affect originations is borrower fatigue. It’s going to make it a longer process, and I think you’re going to have some seniors who can’t stick with the process, because it’s just so tedious,” he says.
While counselors may struggle to figure out how to properly and efficiently address FA with their clients, some say they are used to policy change and their work will continue just as before. “It is what it is,” Fehribach says. “We have to work as best we can to make sure we deliver the information in the best way possible so the client can make an informed decision.” n
The Senate allotted $47 million in appropriations for housing counseling in 2015. A portion of the funds will be designated for reverse mortgage counseling. Housing counseling is believed to have a notable impact. A study released by NeighborWorks revealed that homeowners have saved tens of millions of dollars under the National Foreclosure Mitigation Counseling program. reversereview . com
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SPOTLIGHT
“IT SEEMS WE’RE JUST SUPPOSED TO EDUCATE on how it would work, what factors [lenders] look at, info the lender would need, and then cover life expectancy set-asides... Based on how the protocol is written right now, I’m looking at everything as broad strokes and specific questions are going to fall back to the lender.”
Kautz says he thinks the industry needs to stop relying on HUD to fill the funding gap. “I would like to see lenders come together to support counseling… Let them put out a couple grants,” he says. “I don’t see a reason why some of these larger lenders can’t figure out a way to share some of the money coming in to make sure that counseling is something that is adequately funded.”
TECH
Kautz agrees. “In the end, as far as the money goes, we’re going to see another raise in the fees, because HUD only gives us so much money,” he
TONY LOPES
Lopes says FA could prove especially challenging for agencies that roll their fees into closing costs. “It’s safe to say there’s going to be more people who won’t qualify for a HECM… Depending on whom you ask, 10 to 15 percent of [potential borrowers] won’t close on the loan. In turn, there will be less revenue coming in the door for the agency,” he says. “It’s going to vary. Some groups have grant funding that will cover that, other groups may have different policies on how they collect fees, but just in general, we know fewer loans are going to close, which in theory means less revenue for the counseling agencies.”
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“We do have grants, but they’re not so big, they can’t cover the difference,” says Fehribach, adding that the cost of counseling may have to increase. “It’s probably going to have to come to that, because if I have a counselor doing five to six counselings a day, they are going to be able to do maybe four now, and that’s going to affect our budget considerably.”
“IT IS WHAT IT IS. We have to work as best we can to make sure we deliver the information in the best way possible so the client can make an informed decision.”
says. “One way or another, borrowers are going to shoulder the cost. I always say, ‘Bankers are nice people, but they don’t give things away.’”
ORIGINATING
Many are also concerned that, because housing counseling agencies are a business like any other, an increase in session length will cut down on the number of seniors the agency can assist—and therefore the money they bring in. This could potentially create a financial burden on agencies, many of which are nonprofit and most of which receive a portion of their funding from government grants.
CLAUDIA FEHRIBACH
The Reverse Review April 2015
he reverse mortgage industry is relatively small, comprising roughly 230 lenders, with a sizable number issuing only one to two loans per month. But at the top of the list sits a handful of lenders hitting much larger numbers—200, 500 or even 1,000-plus loans every month. The market has inarguably taken a hit in the last few years, but despite the slump, these companies have managed to stand apart from their competitors, achieving notable success in a tough environment. Since February 2014, the same lenders have ranked among the nation’s top five. So we decided to take a look at the HECM’s top five—their sales strategies, training tactics, marketing agendas and general philosophies—to delve deeper into how and why these lenders have been able to succeed in the face of so much change and adversity.
Sales Strategies Sure, the HECM is a government-insured financial product designed for a protected class. But it’s still a product, one that needs to be sold. The manner in which lenders approach the sales process is perhaps the most important measure of their success. In speaking with leaders at each of the top five, we found that while their sales strategies differed, their focus was largely the same: educating the client above all else. When looking at the past year’s top lenders, AAG is a noticeable standout, sometimes reaching a loan volume that is double that of its closest competitor. According to Paul Fiore, AAG’s senior VP of retail lending, the company’s success is a result of its stellar sales force. “When people wonder how we’ve been able to do this, at the end of the day, it’s about the salespeople. They have to have a buy-in to the philosophy that’s taught,” he says. “When we’ve hired people here and they’ve been successful here, it’s because they truly believe they’re doing good for the senior, and they really want to help.”
By Jessica Guerin
Fiore says AAG defies people’s assumptions about what a call center is all about. “The stereotype is: ‘Get somebody on the phone, try to get them to say “yes” as quickly as you can, get out the application and try to close the loan,’ and that’s the farthest thing from what we do. We have a consultative approach to our sale,” he says. “We try to understand what a borrower’s current situation is, how a reverse mortgage may potentially benefit that situation... We try to show them that a reverse mortgage is something that’s going to last them 10, 15, 20 years—it’s not a loan to take today just to refinance six months or 12 months down the road. It’s a loan that should last you for years to come, and that’s really the approach we take. It’s a softer approach, it’s a consultative approach, one that provides a lot of value to the client, which keeps them engaged with us when they could potentially call other people.” Otto Kumbar, CEO of Liberty Home Equity Solutions, says his sales team also focuses on education. “While most seniors may be aware of reverse mortgages, they have a lot of questions and
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even misconceptions about the product. Our sales approach targets education first. We provide extensive training to our advisors to ensure that they are equipped to provide the unbiased information that customers need before discussing product options,” he says. “We also believe it is important to have a consistent customer experience at every step of the loan process. We provide scripts, tools and coaching to help advisors consistently deliver a superior customer experience and improve their sales results.” One Reverse Mortgage CEO Gregg Smith says his company’s sales model contributes to its ability to successfully cater to clients while staying on top of program change. “We are a national consumer-direct Web center. All of our loan originators are located under the same roof,” he says. “I think that’s what makes us successful—it allows us to refine our process daily, because we run a complex business. So that means that not only do you have changes to the program, but you also have everchanging compliance, federal and state changes, and you have different messages in terms of marketing… We feel very good about the fact that we’re all working off the same platform and we’re all working with the same training tools. It’s a complex space, and the changes seem to come fast and furious. You need to have the ability to work with those changes on the fly and stay true to the client at all times.”
Training Tactics Because the current environment is one of constant change, it’s essential that HECM lenders continue to educate and train staff on new regulations, product developments and more effective ways to provide quality customer service. For the top five, efficient and effective training is a key focus. At Urban Financial of America, President Steve McClellan says the staff’s continued education is crucial. “We have a full-time training department and in addition to that we use an outside service that provides online training. Every Urban associate teammate, including myself, is required to take a certain amount of training every year.”
Fiore says AAG hosts general training sessions twice a week in its centralized call center in Orange, California, in addition to Web and in-person sessions for its satellite locations. “Sometimes we discuss policy change, sometimes it’s sales process, sometimes it’s just industry things that are going on. Every Tuesday and Thursday we do training and it’s very interactive. It’s consistent; the training doesn’t just happen when there are changes coming,” he says. “It’s the foundation of what we do and has been since we started.” Kumbar also says his company provides ongoing education for its staff. “We have a deep commitment to providing training for our employees and our business partners. Every Liberty employee goes through training that helps them understand our brand, processes and product. We also believe in delivering ongoing training to support personal and professional development of our employees on a monthly basis.”
Marketing Agendas Another key ingredient to a lender’s success is its marketing strategy. With the passage of the Reverse Mortgage Stabilization Act of 2013, the HECM product evolved as new regulations were designed to make it less of a needs-based product and more of a strategic financial planning tool. This change has required lenders to connect with a different kind of audience in order to sell the product. The top five have each taken their own approach in an attempt to reach a new consumer base. Fiore says AAG has been testing new messaging in various mediums in target
ACCORDING TO PAUL
“When people wonder how we’ve been able to do this, at the end of the day, it’s about the salespeople... When we’ve hired people here and they’ve been successful here, it’s because they truly believe they’re doing good for the senior, and they really want to help.”
ACCORDING TO OTTO
“We believe that connecting with baby boomers is critical to the future growth of our industry, so over the last year we have been expanding our messaging and [generating] creative ideas to reach this segment. We’ve also launched several products that have lower origination fees in an effort to target customers shopping for traditional home equity loans or refinancing.”
markets. “We take risks within certain markets to see how the response rates would be,” he says. “For example, we created a campaign that’s designed to speak to the caregiver market and explain to them how a reverse mortgage will benefit not only the senior, but also the caregiver. We’ve tested that successfully in certain markets. We’ve tried a couple of different things on the Web, which speaks to different types of reasons why people would take a reverse mortgage.” But the messaging of the company’s national television campaigns hasn’t strayed too far from its core. “That’s really a driver for us and the biggest kind of media we do,” says Fiore. “We’ve been staying true to our message, but with certain variations that allow us to test [different markets].” Kumbar says Liberty has also been testing new strategies. “We believe that connecting with baby boomers is critical to the future growth of our industry, so over the last year we have been expanding our messaging and [generating] creative ideas to reach this segment,” he says. “We’ve also launched several products that have lower origination fees in an effort to target customers shopping for traditional home equity loans or refinancing. For these customers, we focus on the flexibility and security that a reverse mortgage provides compared with traditional loans. So far, our results have been very positive and we’ve been able to grow in the segment.” 8 reversereview . com
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WE KNOCK OUT THE
The Reverse Review April 2015
COMPETITION
Experience | Excellence | Commitment | Pride
PRC has been FIRST IN REVERSE 15 years running. We are proud to be the first national title and Settlement Company to specialize in reverse mortgages. Our dedicated team of professionals offers the experience and knowledge to smoothly close reverse transactions—correctly. Having closed more than 150,000 reverse mortgage loans, PRC understands the importance of comprehending all HUD and lender guidelines.
TOLL FREE: (800) 542-4113 | www.PRClosings.com 36 | TRR
ACCORDING TO GREGG
“For us, it’s about our culture, it’s about our team and it’s about our process— that’s the real difference maker. So, culturally, who are you as a company? We are exclusively, 100 percent focused on the client, and everything we do every day is about how we can improve the process for our client.”
Sharon Robbins, SVP and chief marketing officer at Reverse Mortgage Solutions/ Security One Lending, says it will take time for the industry to reposition the product as a financial tool. “Historically, the product was delivered to a needs-based customer, but now we spend a lot of time talking about using the product as a financial tool for retirement planning as well,” she says. “Unfortunately, that concept hasn’t gained a lot of traction, but we think it will start gaining traction one loan at a time, by having credible players in the industry.”
Robbins says RMS/S1L is working to develop multiple channels in order to expand its customer base. “We are looking at a variety of new ways to originate different borrowers. We have a variety of channels, including programs for financial advisors, Realtors, builders and programs for a strong network of business partners. We have HECM for Purchase programs,” she says. “We also have a task force looking at opportunities to develop new proprietary products. We think that is the opportunity that is laid out in front of us. How we harvest that opportunity is going to take some fairly sophisticated programs and marketing, and a differentiated value proposition.” Smith acknowledges that increasing the product’s historically low penetration rate is a problem that has plagued the industry for years, and one that will take a great deal of innovation to solve. “That’s a challenge that we’ve had for many years: expanding the audience. We focus on that every day.”
Corporate Ethos Each lender in the top five has its own particular philosophy that serves as the driving force behind its sales efforts.
For RMS/S1L, Robbins says this ethos is multifaceted. “[It is] based upon our commitment to our customers, our employees and our shareholders, as well as a focus on our core values that are built around integrity, performance, being customer-centric, challenging the status quo, educating our borrowers and being accountable.” Fiore says AAG’s philosophy centers on building a relationship with its clients. “We try to truly understand what their situation looks like, visualize how these people live and, more importantly, visualize how they’d like to live. So that’s not really a numbers conversation, that’s a quality-of-life conversation. That’s a quality-of-retirement conversation. Our philosophy is to go deeper, and to involve every single person you can who is a part of the decision-making process, so there are no surprises along with way.” At ORM, the focus is also on the client, with customer service a top priority. “For us, it’s about our culture, it’s about our team and it’s about our process— that’s the real difference maker. So, culturally, who are you as a company? We are exclusively, 100 percent focused on the client, and everything we do every day is about how we can improve the process for our client,” Smith says, adding that it’s also about motivating your team. “Do you have the team, do you have the necessary folks? Do you have your leaders? Do you have an environment where those leaders and your team members feel empowered to continue to grow and be part of the client focus? We take that seriously every single day.” As for Urban, McClellan says employee integrity is key. “We have two rules in our company that we apply in every situation: Do the right thing, and if you forget what to do, remember the first rule,” he says. “We evaluate our employees on client focus, integrity, teamwork, innovation, respect for each individual and responsible citizenship. And we believe that if we do that, we can be successful in the marketplace, whether it’s in our retail, our wholesale or our correspondent channels. That’s what epitomizes the Urban approach.”
The Big Paves the Way for the Small
These lenders are leading the charge. Smaller players could not only learn from their successes, but also stand to benefit from them. Their efforts to spread a positive, consistent, nationwide message about the product could help others working in the space by alleviating the misperceptions that have hindered sales. So what can smaller players in the business learn from the HECM’s top five? According to Smith, market participants should learn to roll with the punches. “Anyone who has been in this environment for the last five minutes or 10 years has to be prepared to evolve and change their business, because we seem to have one to three changes per year that we have to deal with. If your business isn’t able to evolve, then you’re going to have a hard time being successful in this space.” Fiore says participants need to remain positive in the wake of program changes that may exclude some potential borrowers from accessing the loan. “For those in the industry who are worried about Financial Assessment, my advice would be to hang in, because there are so many other seniors who could benefit from this great product,” he says. “I think there’s still a tremendous amount of upside for everyone in the industry.” For Kumbar, success for lenders big and small relies on industry-wide collaboration. As head of the Extreme Summit campaign, a national P.R. effort designed to revamp the product’s image, Kumbar stresses the importance of getting involved in the conversation about how we can work together to advance the HECM. “In order for our industry to grow to its full potential, we believe that it is critical for lenders to work collaboratively to improve the product perception and to build awareness for reverse mortgages beyond the needs-based customer segment. Everyone in the industry should be thinking about how to double or triple our education efforts,” he says. “We can all work together through NRMLA to support broader public awareness and the acceptance of reverse mortgages.” n reversereview . com
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The Reverse Review April 2015
LAST WORD
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ASSESS
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If Change Is Good, We’re Doing Great By Jason McNamara
It’s been an eventful year, but the industry has proved its determination and resilience. It will be a time period we will talk about for years: a most critical and exhausting series of events that started in August 2013 with the Reverse Mortgage Stabilization Act and appears to be coming to some sort of conclusion with the implementation of Financial Assessment. Of course, there were events that led up to the policy changes. And of course, changes will continue, but Financial Assessment marks the end of a very turbulent but important era for our industry. Look at some of what WE as an industry accomplished during this relatively short time period: . Elimination of HECM Standard and Saver products . Modification of PLF tables (again) . Introduction of new MIP design based on draw amount . Establishment of limited initial draws . Introduction of a new lump-sum payment option . New non-borrowing spouse policies . Financial Assessment And WE accomplished all of this while dealing with new federal and state legislation and regulation, new advertising rules, changes in leadership at HUD and changes in the GNMA program—all while originating and servicing loans, our day jobs. As a servicer, we have never made a larger investment in people, processes and our platform as we have in the past 18 months. Creating accurate specs from evolving requirements and upgrading our platform to execute all of the new enhancements was the first step. The second step was training everyone and putting new procedures and people in 38 | TRR
place to manage it all. As an example, this is what happens for servicers every time a new HUD mortgagee letter comes out: ANALYSIS Once an ML is released, our analysts work with our operations team to understand the implications for our system and often seek clarification from HUD. BOARDING CHANGES Servicing clients must be notified of the new data to be collected. PLATFORM INTERFACE AND LOGIC CHANGES Most MLs require extensive changes to the system logic and interface. The new certification letter process is particularly taxing as all third-party vendors must be engaged. Typically, new regulations have tight implementation deadlines, which delays other projects. TESTING Extensive quality checks and test scripts must be created and User Acceptance Testing performed. IMPLEMENTATION There is the typical break-in period where process is refined and code changed as users learn what is needed to support the new requirements. Are we all feeling a little fatigued? Yes. But is it worth it? You bet it is. Remember, all these changes have been set into place to create a sustainable HECM program. The alternative to embracing change doesn’t have a happy ending. So what about our ending? It’s easy to be a cynic after years of declining volume and
all these program issues. Are we all working on borrowed time? Nope. Here’s why. The last 18 months have tested many aspects of our business model and have provided answers to some frequently debated issues: . Congress believes our product and service are important. . Our critical partners—FHA, HUD and GNMA—are willing to make the changes necessary to sustain the program. . NRMLA is an outstanding trade association that will keep us relevant. . Our industry has strong leaders and great companies that will forgo the competitive nature of business to rally together to share ideas, resources and funds to protect our borrowers and enhance our value proposition to the market. We are not only going to survive, we are going to grow again. Why? Because we are helping solve a big social problem. As government cuts increase, society is going to need industry to step in and fill the void. Industries that can successfully align their value proposition to global societal issues will thrive. As reverse mortgage business leaders, we realize that we have cumulative impact, and over the past 18 months we have proven that we can come together and provide cumulative solutions. We are allies, not competitors. And that is how we will do our part in helping solve our nation’s retirement crisis. n
The value of A STRONG ALLY:
INSIGHT.
In reverse mortgage servicing, you need to know what’s happening today—and tomorrow. Which is why you can rely on Celink to provide the insights you need on regulatory changes, HUD requirements, and GNMA processes. We’re here to help you chart a successful course into the future of reverse mortgages, so you can concentrate on origination—and trust us to ensure your superior service and peace of mind.
For more information, please contact Katie Kirkham, Director of Client Relations at (844) 228-2101.
celink.com | (844) 228-2101 reversereview . com
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Financial Assessment happens at ReverseVision. And continues to get even better. The Reverse Review April 2015
FA Benefits in RV Exchange Today: n
Lower risks and speed turnaround with step-by-step guides to meet HUD guidelines.
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Best possible results with unparalleled precision from account level borrower information.
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Consistent user experience with shared data across all roles reducing borrower changes and avoiding lender rework.
FA Benefits Coming Soon: n
Speed back office turn time and reduces errors with automatic population of data from the borrower’s credit report.
Higher closing percentages driven by enhanced tools enabling Loan Officers to generate more accurate and trustworthy quotes. n
Clear and consistent internal process execution realized through enterprise level customization and configuration tools. n
Free, live RV Exchange training now includes FA.
CONNECTING THE REVERSE MORTGAGE INDUSTRY SINCE 2007.
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WWW.REVERSEVISION.COM | CONNECT@REVERSEVISION.COM | 858-433-4970