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INSIDE THIS ISSUE | HUD Expands the Rights of Non-Borrowing Spouses
TH
New guidelines address the NBS issue. E
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REVERSE review JU LY 2015
For many reverse mortgage advisors, the work is more than a job—it’s a passionate mission to help seniors find financial security.
STEVE IRWIN SITS DOWN IN OUR HOT SEAT PG. 18
UNDERSTANDING REVERSE MORTGAGE LEADS PG. 20
THE LOAN OF LAST RESORT: RIP
PG. 27
HECM-TO-HECM REFINANCE GUIDELINES PG. 28
The Reverse Review July 2015
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2 | TRR
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*Since December 2011. Based on trailing 12 months’ endorsement volume. Source: Reverse Market Insight. For business and professional use only. Not for consumer distribution.
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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, NY and TX. 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 UFA 204 [Exp 7/2016] reversereview . com 8 TRR | 3
The Reverse Review July 2015
From the EDITOR RE
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A NOTE FROM JESSICA GUERIN
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New guidelines address the NBS issue.
TH
INSIDE THIS ISSUE | HUD Expands the Rights of Non-Borrowing Spouses
E
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THE
REVERSE review J U LY 2015
For this month’s cover story, we spoke with a number of HECM advisors working for different lenders around the country about the work they do.
For many reverse mortgage advisors, the work is more than a job—it’s a passionate mission to help seniors find financial security.
that the job of a reverse mortgage advisor is found this to be categorically untrue.
expressed for their work and the people they PG. 18
PG. 20
THE LOAN OF LAST RESORT: RIP
HECM-TO-HECM REFINANCE GUIDELINES PG. 28
Erik Richard EDITOR-IN-CHIEF
Jessica Guerin Traci Knight
the overwhelming compassion each person PG. 27
Reza Jahangiri
CREATIVE DIRECTOR
In our conversations, we were struck by
UNDERSTANDING REVERSE MORTGAGE LEADS
SENIOR PUBLISHER
PUBLISHER
While some outside the industry might assume similar to that of a traditional loan officer, we
STEVE IRWIN SITS DOWN IN OUR HOT SEAT
Meet the Team
strive to help. We heard about a weekend spent assisting a client with home repairs;
COPY EDITOR
Kersten Deck MARKETING DIRECTOR
about research done to find subsidies and relief
Alycia Greer
programs that would ease a client’s financial JULY 2015
COVER
We talk to HECM advisors about their love for the job.
burden; about late nights spent educating skeptical family members. Many talked of the lasting relationships they’ve built with clients who have now turned into lifelong friends.
Advertising Information phone : 630.207.3882 email : jessica@reversereview.com
These stories highlight the fact that the job of a reverse mortgage advisor involves much, much more than the basic completion of a financial transaction. It involves a relationship, one that begins with trust and is nurtured by empathy. It is deeply personal and fueled by a passionate dedication to the powerful solution a HECM can provide many seniors seeking financial security. As one advisor aptly put it, for many, it’s more than just a job—it’s a calling.
JESSICA GUERIN Connect with me about how you can participate. Reach me at jessica@reversereview.com
Printer The Ovid Bell Press
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 18 | Hot Seat
TRR 7.15
Steve Irwin
Executive vice president of NRMLA
20 | Originating
IN THIS ISSUE... 25 THERESA HARRIS Originating
Understanding Reverse Mortgage Leads Why they work and how to choose your lead company BILL BASKIN
22 | Originating
A Resource for Seniors HECM experts can offer seniors far more than access to their home equity.
27 MIKE GRULEY Originating
SUSAN A. POMFRET
28 | Underwriting 07 | Movers & Shakers
The latest developments in companies across the reverse space
09 | Readers Respond
The past few issues of TRR have inspired lots of conversation online. Read what your colleagues had to say.
11 | Industry News
Headlining stories of the past month REVERSE MORTGAGE DAILY
HECM-to-HECM Refinances
12 | Stats
May’s top lenders and HECM endorsement stats through April
An overview of current policies guiding this process BRITANY LUTH
REVERSE MARKET INSIGHT
31 | HMBS
14 | NRMLA News
Read about the association’s current initiatives. MARTY BELL AND DARRYL HICKS
Market Update Spreads tighten as prepayment speeds leave investors feeling uneasy.
38 JASON McNAMARA Last Word
DARREN STUMBERGER
17 | Roundup
A collection of recent facts and surveys affecting the reverse market
32 | Spotlight
HUD Expands the Rights of NonBorrowing Spouses New guidelines relieve concerns over the NBS issue.
FEATURE
34 | Feature The Life of a HECM LO For many reverse mortgage advisors, the work is more than a job—it’s a passionate mission to help seniors find financial security. JESSICA GUERIN
“Their work requires them to not only educate, but also to listen. They build a relationship with their clients—one that is deeply personal, shaped by empathy and rooted in trust. For many, being a reverse mortgage advisor is not a career; it’s a calling.
YO DO U CAN IT!
There’s no such thing as a stupid idea. REACH OUT TO US ABOUT WRITING FOR TRR. INFO@REVERSEREVIEW.COM reversereview . com
8 TRR | 5
The Reverse Review July 2015
contributors JOHN K. LUNDE
MARTY BELL
DARRYL HICKS
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.
Darryl Hicks serves as vice president of communications for NRMLA. Before joining the association in 1999, he spent three years writing for National Mortgage News, where he covered politics, regulatory changes impacting the financial services industry and niche mortgage products. At NRMLA, Hicks writes membership communications, contributes articles to Reverse Mortgage magazine, responds to questions from consumers, oversees the Certified Reverse Mortgage Professional program, and helps organize conferences and other events.
12 | Stats g
John K. Lunde
Marty Bell
Darryl Hicks
STEVE IRWIN
18 | Hot Seat g
Steve Irwin
Bill Baskin
Susan A. Pomfret
Steve Irwin is the executive vice president of NRMLA, where he provides oversight to the association’s initiatives to serve as an educational resource, policy advocate and public affairs center for consumers, lenders and related professionals. His background includes experience as a senior executive charged with strategic planning, organizational design, portfolio acquisition and risk management. Irwin earned a B.A. from Grinnell College and an MBA from the University of San Francisco.
Mike Gruley
Britany Luth 6 | TRR
BILL BASKIN
20 | Understanding Reverse Mortgage Leads g
Bill Baskin is the CEO of epath media. He has held executive positions at Go Apply, National Lead Service, Credit Management Solutions and autobytel.com.
14 | NRMLA News g
SUSAN A. POMFRET
22 | A Resource for Seniors g
Susan A. Pomfret is a HECM senior VP at The Federal Savings Bank. With more than 25 years of industry experience, she was one of the first to originate a HECM in Rhode Island under FHA’s pilot program in 1989. An ambassador for the Alzheimer’s Association’s Rhode Island chapter, Pomfret is a columnist for the Senior Digest newspaper and PrimeTime magazine, and has also cohosted the Senior Digest Radio Show.
THERESA HARRIS
MIKE GRULEY
BRITANY LUTH
Theresa Harris is a senior escrow officer and branch manager for the Escrow Company, where she specializes in reverse mortgages. Harris, who has 16 years of industry experience, has worked closely with many reverse mortgage brokers to the top lenders. 619.729.2135 TheEscrowCompany@cox.net
Mike Gruley is the director of reverse mortgage operations for 1st Reverse Mortgages. He has been in the mortgage industry nearly 30 years, and has spent 14 of those years as a reverse mortgage professional. Gruley founded 1st Reverse in 1991, and in 2010 it became the exclusive HECM retail division for Success Mortgage Partners, LLC, serving Michigan, Florida, Indiana, South Carolina, Illinois, North Carolina and Texas. 800.720.7003 mgruley@firstloans.net
Britany Luth is the vice president of operations for Urban Financial Group, Inc. based in Tulsa, Oklahoma. She oversees Urban’s wholesale operations and underwriting team and has Direct Endorsement underwriting authority. Prior to joining Urban more than seven years ago, Luth managed a nationwide title company. She obtained a B.S. in business management with a minor in marketing from Oklahoma State University.
25 | My Experience as a Non–Borrowing Spouse g
Theresa Harris
14 | NRMLA News g
27 | Loan of Last Resort: RIP g
28 | HECM-to-HECM Refinancesg
contributors DARREN STUMBERGER
JASON McNAMARA
Darren Stumberger is an executive VP at LiveWell Financial and a leading expert on reverse mortgage securitization. He has more than 15 years of experience in residential mortgage trading and securitization, and chairs the NRMLA HMBS Issuer Committee. Stumberger has worked in New York City as a mortgage trader and banker for some of the nation’s leading investment banking firms, including Goldman Sachs, Morgan Stanley and Bank of America Merrill Lynch.
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.
31 | Market Update g
Darren Stumberger
Jason McNamara
38 | Uber and Reverse Mortgages g
movers & shakers READ ABOUT THE LATEST DEVELOPMENTS IN COMPANIES ACROSS THE REVERSE SPACE.
HAVE A COMPANY UPDATE YOU WOULD LIKE TO SEE PUBLISHED? ReverseVision Announces Launch of RV Support Portal Reverse mortgage software company ReverseVision has released a new interface designed to improve support for its RV Exchange (RVX) platform. The new RV Support Portal will provide faster customer service responses, realtime status updates of support issues and an interactive self-help knowledge base. This continually evolving catalog offers solutions to common problems, product tips, software release notes, notices and online manuals. “Being able to access our knowledge base after business hours or check the status of an existing support ticket are just some of the benefits of the Support Portal,” says Support Manager Jason Price. “We are excited to be able to offer this service and are certain it will enhance workflow and assist in solving users’ issues in a timely manner.”
email it to jessica@reversereview.com
Reverse Funding Solutions Hires Pistone as President, Signs Consulting Deal with Giordano Reverse Funding Solutions (RFS), the HECM division of Synergy One Lending, has hired Alex Pistone as company president. Pistone served previously as senior vice president at Security One Lending/RMS, managing the company’s national retail sales team. “Alex has consistently demonstrated servant leadership throughout his career and he embodies our organizational core values,” says Synergy One Lending CEO Torrey Larsen. “I am very thankful for the commitment Alex has made to RFS and look forward to seeing him reach his potential as a leader of a large, national firm.” RFS has also signed a consulting deal with Shelley Giordano’s consulting firm, Longevity View, LLC. As part of the agreement, Giordano will provide comprehensive training, sales, coaching and mentoring services to support RFS originators. “Shelley has distinguished herself as the pre-eminent thought leader as it relates to equity wealth and other leading retirement topics,” says Larsen.
Fidelity Homestead Associates Receives BBB Accreditation Cleveland-based contractor management group Fidelity Homestead Associates (FHA) has been awarded accreditation status by the Better Business Bureau. “We are proud to be a BBB-accredited business,” says FHA President David A. Michael, Jr. “It signifies our commitment to customer service, reliability and trust. Our acknowledgment by the BBB aligns with and supports our efforts to provide superior service in the marketplace.” Fidelity Homestead Associates offers a wide variety of inspection, repair and renovation services for reverse mortgage lenders.
We want your company news! Be a part of our Movers & Shakers column, where you can read about the latest company initiatives, programs, hires, acquisitions and more. Send us your company’s press releases or email us news of your latest venture, and we’ll consider printing it in the next issue. Send your news to jessica@reversereview.com. reversereview . com
8 TRR | 7
The Reverse Review July 2015
Want the best Reverse Mortgage Leads?
Drink from the source. Generating over 100,000 Reverse Mortgage inquiries annually, EPath Digital is the direct source for leads. How do we do it? We utilize large nationwide media buys with web properties that enable us to engage the right 62+ homeowners. Also, we own and operate a content website and magazine targeted to the new 50+ consumer at NowItCounts.com. At EPath Digital we are continually testing and refining our marketing mix based on our clients’ quote and closed loan ratios to create the lowest cost per funded loan possible. Working alongside our clients has enabled us to grow together. Whether you are a top 10 lender, a single state broker, or somewhere in-between, we feel there is still considerable room for you to grow!
“
What our clients say: Reverse Mortgage Solutions has been using EPath Digital to generate leads for over three years and they have consistently produced while ramping up volume to meet the needs of our growing sales staff. They have always been open to make adjustments along the way to adapt to changes in the overall lending environment, and changes within our organization, which has helped us grow our relationship over time. I recommend EPath Digital to anyone looking for a marketing partner that delivers. Jamie A. Director of Retail Marketing Reverse Mortgage Solutions, Inc.
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EPath Digital has been delivering superior quality reverse Internet leads since mid 2014 to our company. We find that EPath Digital’s leads have very high conversions & they deliver the leads rapidly if your scaling to multiple head counts. Definitely worth giving them and your business a shot! Shay S. Owner SNNY LLC
EPath Digital reverse mortgage leads facts: Multiple verification tools to ensure that the information provided by the homeowner is valid. We generate our own leads – we do not purchase and resell from other sources. The EPath executive team are pioneers in the Internet Mortgage Lead space (dating way back to the 90s) and we understand what it takes to build a mutually successful long term partnership with our clients.
Call 800-695-3976
Visit us at: epathdigital.com 8 | TRR
®
feedback READERS
Recent issues of TRR have inspired lots of conversation on the Web. Here’s what our readers had to say:
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MARCH 2015
A Tool in the Elder Law Toolbox By Jessica Guerin
SEPTEMBER 2015
Field of Dreams By Jim Milano
“Mr. Milano, very well presented. One would think that just designing a product that could meet the needs of senior homeowners and then appeal to the investment community would be enough of a challenge, but to have to dream up a product that also meets all of the narrowly targeted compliance requirements of this metastasizing plethora of regulatory bureaucracies is almost too much!... Gramm-Leach-Bliley, Dodd Frank, CFPB, ECOA, RESPA, state’s Departments of Finance: Who’s on first?” - H ECM V ET
MARCH 2015
Why I Love My Job
By Laurie Denker MacNaughton
4“I love these pieces!” -GA RY MISCH
4 “If you were not writing reverse mortgage loans, you would be crafting fine stories. Thank you for this love story.” - ATA R E AG B A M U
Comment on our stories online for a chance to see your thoughts in print. Be a part of the conversation about how we can better serve our seniors!
SOMETHING ON YOUR MIND? Need to get something off your chest? Hate something we do? Love something we do? Letters to the editor may be emailed to JESSICA@REVERSEREVIEW.COM.
HECM Counselors Grapple With New FA Requirements
AND READ IT ALMOST ALWAYS COVER TO COVER, UP GREAT INFO AND ADVICE.” - S Y LV I A PA T T E R S O N
- L I Z C ICCON E
APRIL 2015
“I Y THE REVERSE REVIEW
ALWAYS PICKING
“I read The Reverse Review to stay in touch with the most current happenings in the reverse mortgage business from a ground-up perspective. I find many of the articles informative, encouraging and useful. Reverse mortgage specialists have faced many challenges in recent years. I am so appreciative for articles that are tools we can use to face the ever-changing landscape of our industry, and serve as an inspiration to keep us focused and ahead of the game… “A Tool in the Elder Law Toolbox” is a great read and quite insightful. It’s wonderful that The Reverse Review is able to shed light on our industry and does so by having the support of other industry experts, including NAELA.”
“The tone of the statements from counseling seem to be in line with what each of our responsibilities are. The one area that was disappointing to read was that there was no emphasis on the need to cover compensating factors and mitigating circumstances. It is here where a prepared borrower can potentially make a difference as to how much of the principal limit [they can] access… For awhile there will be a lot of confusion until an acceptable routine can be established.” -JAMES E. VEALE
reversereview . com
8 TRR | 9
The Reverse Review July 2015
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10 | TRR
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industry news
July Update 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 HUD EXPANDS OPTIONS 1. FOR REVERSE MORTGAGE NON-BORROWING SPOUSES Non-borrowing spouses of reverse mortgage borrowers will now have expanded opportunities to remain in their homes under FHA’s newly revised guidelines. Last year, FHA amended its HECM policies to allow lenders to defer foreclosure for certain eligible non-borrowing spouses for HECM case numbers assigned on or after August 4, 2014. Under the FHA’s revised policy, issued via Mortgagee Letter 2015-15, lenders will be allowed to offer similar treatment to these eligible non-borrowing spouses with HECM case numbers assigned before Aug. 4, 2014. Per the guidelines laid out in the mortgagee letter, lenders will also be allowed to proceed with submitting claims on HECMs with eligible surviving non-borrowing spouses and FHA case numbers assigned before Aug. 4, 2014, via several ways, including the utilization of MOE, or the Mortgagee Optional Election Assignment. By electing MOE, lenders can assign an eligible HECM to HUD despite the death of the last surviving borrower and regardless of the loan’s unpaid principal balance.
// June 12, 2015
2. REVERSE MORTGAGE SECURITIES ISSUANCE RALLIES TO 18-MONTH HIGH In May, HMBS issuance reached its largest monthly total in a year and a half, according to New View Advisors. During this month, issuers created $874
million in new pools, which New View notes is the largest HMBS issuance since November 2013. May’s tally is up from $798 million issued in April, and up from the $582 million issued in May 2014. Thus far this year, HMBS issuances is averaging just over $736 million per month, well above the $550 million monthly average in 2014. New View notes, however, that things may change as the effect of Financial Assessment sets in. “Given the lag between loan origination and securitization, it will take a few months before we know the full impact.”
// June 16, 2015
3. HUD MAKES MORE HEADWAY ON ELECTRONIC APPRAISALS FOR FHA LOANS As part of its ongoing effort to streamline appraisal submissions for forward and reverse mortgage lenders, HUD has released further details regarding its online appraisal delivery system. In March, the department announced the launch of its Electronic Appraisal Delivery (EAD), a Webbased system that will enable lenders or their third-party service providers to electronically transmit appraisal data and reports to FHA prior to loan endorsement. Lenders will be required to use the EAD portal to submit appraisal data to FHA for all case numbers assigned on or after June 27, 2016. In order to migrate to the portal before the mandatory use date, HUD says lenders must register for one of the available migration phases to be established by FHA, which will start every 30 days and be approximately 60 days in duration.
// June 18, 2015
4. REPORT: AGING-INPLACE OPTIONS NEEDED TO MEET U.S. SENIOR HOUSEHOLD “EXPLOSION” Senior households will see an “explosion” in the coming years, making the need for more aging-inplace options and policies greater than ever before, according to a recent report from the Urban Institute. By 2030, aging baby boomers will expand the number of senior households in the U.S. to 46 million. “The aging of the baby boomers means that senior housing issues are becoming much more pressing, just because of the sheer number of boomers,” the authors write. “In particular, a growing body of research shows the link between housing and health. Moving forward, policy should emphasize home modification so houses are safe, healthy and efficient for seniors to live in.”
// June 17, 2015
5. RMS CEO SCOTT CLARKE RETIRES Reverse Mortgage Solutions is undergoing a leadership change following the retirement of President and CEO D. Scott Clarke. Walter management will oversee RMS operations following his retirement. A company memo stated that Walter Investment Management Corp. executive Clarke, who has held his position since December 2013, “shared his intention to retire, effective immediately.” In May, Walter Investment reported quarterly reverse mortgage segment losses, but maintained a positive outlook on the business, which generated revenue of $43.9 million for the first quarter 2015—a 58 percent increase from the same period last year.
// June 17, 2015 reversereview . com
8 TRR | 11
The Reverse Review July 2015
stats May 2015
Top Lenders Report
12345 American Advisors Group
One Reverse Mortgage
Liberty Home Equity
Endorsements
Endorsements
Endorsements
1,010
518
321
UFA
RMS/S1L
Endorsements
Endorsements
270
244
Lender Endorsements LIVE WELL FINANCIAL INC
173
Lender Endorsements
REVERSE MORTGAGE FUNDING LLC
165
SOUTHERN TRUST MORTGAGE LLC
PROFICIO MORTGAGE VENTURES LLC
110
TOWNEBANK 11
HOME POINT FINANCIAL CORPORATION
96
VIP MORTGAGE INC
11
UNITED NORTHERN MORTGAGE BANKERS LTD 74
ODYSSEY FUNDING LLC
11
HIGH TECH LENDING INC
66
NORTH AMERICAN SAVINGS BANK
10
SUN WEST MORTGAGE CO INC
63
LONGBRIDGE FINANCIAL LLC
10
OPEN MORTGAGE LLC
61
THE MONEY STORE
10
61
RESIDENTIAL HOME FUNDING CORP
10
FIRSTBANK 54
SENIOR MORTGAGE BANKERS INC
9
PLAZA HOME MORTGAGE INC
49
MANN MORTGAGE LLC
9
NATIONWIDE EQUITIES CORPORATION
43
LAND-HOME FINANCIAL SERVICES
8
CHERRY CREEK MORTGAGE CO INC
41
EVOLVE BANK & TRUST
8
ADVISORS MORTGAGE GROUP LLC
37
PACIFIC RESIDENTIAL MORTGAGE LLC
8
32
FRANKLIN FIRST FINANCIAL LTD
7
GMFS LLC 30
CONTOUR MORTGAGE CORPORATION
7
M & T BANK
25
MEADOWBROOK FINANCIAL MORTGAGE
7
SUN AMERICAN MORTGAGE CO
21
SUCCESS MORTGAGE PARTNERS INC
19
AMERICAN PACIFIC MORTGAGE
18
NET EQUITY FINANCIAL INC
UNITED SOUTHWEST MORTGAGE CORP
AMERICAN NATIONWIDE MORTGAGE COMPANY 17 MCM HOLDINGS INC
17
THE FEDERAL SAVINGS BANK
17
MONEY HOUSE INC
16
MORTGAGESHOP LLC 13 12
Brought to you by:
GEORGETOWN MORTGAGE 16 FIRSTAR BANK 16 FAIRWAY INDEPENDENT MORTGAGE CORP
15
BANK OF MAUMEE 15 BROKER SOLUTIONS INC
13
HOMEOWNERS MORTGAGE ENTERPRISE
13
12 | TRR
%%%%% LOOKING FOR MORE STATISTICS? Go to rmsinsight.net for all of the industry’s latest stats and rankings.
stats HECM Endorsement Stats Through April 2015 INDUSTRY SUMMARY
MO.
RETAIL
5
2,651 12.24%
Retail Endorsement Growth
6
2,413
-8.98%
7
2,319
-3.9%
8
1,944 -16.17%
1,306 -26.3%
3,250 -20.56%
TRAILING TWELVE MONTH ENDORSEMENTS 5,000
3,000
Wholesale Endorsement Growth
1.72%
2,000 1,000
Total Endorsement Growth
-3.06%
Wholesale *Numbers Represent Months
01
UNITS CHG%
1.99%
4,493
7.8%
1,747 -5.16%
4,160
-7.41%
1.43%
4,091
-1.66%
1,772
9
2,248 15.64%
1,514 15.93%
3,762 15.75%
2,773 23.35%
2,078 37.25%
4,851 28.95%
11
2,500
-9.84%
1,907 -8.23%
4,407
12
2,867 14.68%
1
2,874
2
2,557 -11.03%
3
2,772
8.41%
4
2,598
-6.28%
* Figures Above Reflect Change from Prior Month
TOT
0.24%
-9.15%
4,940 12.09%
8.7%
2,073
2,062 -0.53%
4,936
-0.08%
4.7%
4,716
-4.46%
1,862 -13.76%
4,634
-1.74%
1.72%
4,492
-3.06%
2,159 1,894
30,516
22,216
52,732
60% 50%
FIXED RATE PERCENTAGE
40% 30% 20%
4/1/15
3/1/15
2/1/15
1/1/15
12/1/14
8/1/14 8/1/14
11/1/14
7/1/14 7/1/14
10/1/14
6/1/14 6/1/14
9/1/14
5/1/14 5/1/14
3/1/14
2/1/14
1/1/14
10/1/13
9/1/13
4/1/14
02
4/1/14
ARM
{ FIGURE }
8/1/13
7/1/13
6/1/13
10% 4/1/13
HECM ENDORSEMENT TRENDS
UNITS CHG%
1,842
70%
{ FIGURE }
5/1/13
Retail
TOTAL
10
11/1/13
5 6 7 8 9 10 11 12 1 2 3 4
12/1/13
0
UNITS CHG%
-6.28%
4,000
WHOLESALE
FIXED
$1,200.0 $1,000.0
$400.0 $200.0
4/1/15
3/1/15
2/1/15
1/1/15
12/1/14
11/1/14
10/1/14
9/1/14
3/1/14
2/1/14
1/1/14
12/1/13
11/1/13
10/1/13
9/1/13
8/1/13
7/1/13
6/1/13
$0 5/1/13
IN THE MILLIONS
$600.0
4/1/13
HECM ENDORSEMENT
INITIAL PRINCIPAL LIMITS
$800.0
reversereview . com
8 TRR | 13
The Reverse Review July 2015
nrmla news On the Docket: NRMLA Pursues Addressing Issues Raised by CFPB
On Our Consumer Site NRMLA’s consumer site, reversemortgage.org, averaged 33,947 unique visits between January and May—a 20 percent rise from last year. Monthly site visits averaged 28,259 visits in 2014 and 19,561 visits in 2013. A record 36,249 unique visitors utilized the site in January. With all this traffic, you will want to make sure your complimentary lender listings are still current. If changes are necessary, please email them to Darryl Hicks at dhicks@dworbell.com.
In the wake of the CFPB press conference in June accusing reverse mortgage company advertising of being “misleading,” NRMLA has reached out to the bureau requesting to view the 97 ads shown to focus groups to help clarify and address the issues. NRMLA has also requested the ads under the Freedom of Information Act (FOIA), which allows members of the public to access information from the federal government. NRMLA has a long history of working with government agencies and the reverse mortgage industry to address issues and improve the HECM program. This includes working with HUD to encourage passage of the Reverse Mortgage Stabilization Act of 2013 to provide the agency with the authority to make changes to the HECM program that would secure borrowers and strengthen the Mutual Mortgage Insurance Fund. “When we work with the people who raise issues, we find together we can solve them,” says NRMLA President and CEO Peter Bell. Compliant and appropriate advertising has been a stipulation within NRMLA membership and the association has 14 | TRR
implemented an ongoing series of initiatives to try to assure adherence.
These include:
Thousands of unique visitors are still coming to NRMLA’s consumer site.
(1) T he requirement of signing a
Code of Ethics and Professional Responsibility to become a member and as a requirement for annual renewals
(2) A n Ethics Committee that reviews advertising of both member and non-member companies and pursues actions when they are noncompliant
(3) T he issuance of advisories to
members that re-emphasize the requisites of compliance
(4) A list of unethical advertising
practices that is both distributed to membership and posted on our websites
“The CFPB indicated that some of the ads were compliant from a legal and regulatory standpoint, yet they took issue with them nonetheless,” Bell says. “To be able to properly and promptly address this issue with the advertisers, we need a more detailed discussion with the CFPB staff.”
Follow NRMLA on Social Media If you want to receive breaking news on important industry and retirement issues, we encourage you to follow NRMLA on LinkedIn, Twitter and Facebook. Links to these social media resources can be found at the bottom of the homepage on nrmlaonline.org.
nrmla news who selected a fixed rate used 90 percent or more of their funds.
As an example, he used Fred and Mary, who are both 61. Their Social Security benefits at age 66 are $2,400 (Fred) and $1,200 (Mary). Fred’s life expectancy is 82 years and Mary’s is 86 years. Both claim benefits at age 62, leaving $185,000 in potential benefits on the table. The number increases to $300,000 if they both live to age 90.
Presentations by FHA Senior Policy Advisor Karin Hill and Social Security expert Russell Settle at NRMLA’s Western Regional Meeting in Huntington Beach in May included valuable information. Hill’s presentation focused on some early results of the changes to the HECM program over the past year and a half. Among them: INTEREST RATE TYPE: During the past two years, the percentage of HECM borrowers choosing a variable interest rate has risen from 39 to 82 percent.
by claiming benefits at the wrong time.
PAYMENT PLAN BREAKDOWNS: In FY 2015, 92 percent of HECM borrowers selected the line of credit option, a slight increase from 2014.
While many people cannot afford to delay claiming, a reverse mortgage may provide the financial resources needed to do just that. To avoid losing $180,000 to $300,000 in potential Social Security benefits, Fred and Mary should delay claiming until age 70. To finance an eight-year delay in receiving benefits, they need at least $15,000 a year ($120,000 total) to supplement their other retirement funds. A reverse mortgage for $120,000 or more could easily finance this delay, allowing Fred and Mary to greatly increase their overall Social Security benefits. To learn more, visit socialsecuritychoices. com or contact Settle at rsettle@ socialsecuritychoices.com.
INITIAL CASH DRAWS: In FY2015, twothirds of HECM borrowers with a variable interest rate have withdrawn 60 percent or less of the available loan proceeds at closing, while 88 percent of borrowers
NEWS FROM NRMLA
At Our Conferences: What You Missed at Our Western Regional
BROUGHT TO YOU BY MARTY BELL AND DARRYL HICKS
Maximizing Social Security Benefits Russell Settle, founding partner with SocSec Analytics, LLC, explained to conference attendees that individuals and couples lose substantial sums of money
In Publications: Borrower Snapshot
This week, NRMLA shared its first infographic on Facebook and Twitter. The eye-grabbing graphic quickly tells the story of reverse mortgages with statistics gathered from NRMLA’s New Snapshot of Borrowers.
In the Press: New NRMLA Blog Squad Ready to Spread the RM Gospel Online (From Jenny Werwa, NRMLA director, public relations)
Myths and falsehoods about the reverse mortgage abound on the Internet. Sometimes they appear in articles written for newspapers, magazines and blogs; other times the misinformation is propagated by readers who comment on those stories. The comment section presents an opportunity for NRMLA members to debunk these myths with facts, clarify misconceptions and direct readers to reversemortgage.org for more information about the product.
That’s why NRMLA is launching the Blog Squad, a team of members who can quickly post the facts about reverse mortgages in the comments section of online news stories. Together, the Blog Squad will promote the value, safety and borrower satisfaction of reverse mortgages online. If you’re online and see misguided comments about reverse mortgages, please email Jenny Werwa (jwerwa@dworbell. com), who can alert and activate the Blog Squad immediately.
reversereview . com
8 TRR | 15
The Reverse Review
PRC HAS BEEN
July 2015
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.
Experience | Excellence | Commitment | Pride 16 | TRR
TOLL FREE: (800) 542-4113 | www.PRClosings.com
roundup
THIS MONTH A LOOK AT THE NEWS AND STATS AFFECTING THE MARKET GET UP-TO-DATE retirement facts, home price stats, senior trends and HECM market developments in The Reverse Review’s monthly Roundup.
SE NI O R M A TTER S
ABOUT ONE-THIRD OF SENIORS LIVE IN OLDER HOMES THAT REQUIRE SUBSTANTIAL MAINTENANCE.
Nearly 30 percent of senior homeowners live in homes built before 1950, according to the National Association of Area Agencies on Aging, which adds that the maintenance required may present financial challenges. The study also revealed that at least one-third of older adults say they are not confident their current home will remain affordable
NEW HAMPSHIRE VERMONT MINNESOTA
{
{
as they age. “Older adults frequently find themselves living in homes that are too large, too remote, too inaccessible, or otherwise no longer suitable as their needs change,” the association says, adding that, “In some cases, aging-inplace home modifications can enable individuals to remain in their homes for many more years.”
H EALT H IEST ST AT ES FO R SENIO RS
THE UNITED HEALTH FOUNDATION RANKS HEALTHIEST STATES FOR SENIORS.
Foundation says community support is key to promoting health among seniors. No. 1 No. 2 No. 3
Vermont New Hampshire Minnesota
IN DUST RY E V ENT S TEXAS HOSTS ITS 15TH ANNUAL NATIONAL REVERSE MORTGAGE DAY.
On September 8-9 at the Driskill Hotel in Austin, Texas, professionals from around the country will gather to discuss the business of reverse mortgage lending. Learn more at texasmba.org/reverse_mortgage.
DIFFE R I N G O P INI ON S Appraisers’ home values lower than homeowners.
According to Quicken Loans’ national Home Price Perception Index, appraisers’ home price estimates are approximately 1.15 percent lower than homeowner estimates. This marks the first time in nearly two years that appraisal opinions are lower than homeowners’ by at least 1 percent.
NUMBER CRUNCH
70% The percentage of people over age 65 who will require some form of care or support services during their lifetime -Center for Medicare & Medicaid Services reversereview . com
8 TRR | 17
The Reverse Review July 2015
THE
REVERSE review
THE
JULY 2015
the best lesson I’ve ever learned was that one should always be available and well prepared.
Steve From his most memorable moment and his favorite vacation to his thoughts EXECUTIVE VICE PRESIDENT NRMLA 18 | TRR
about the reverse mortgage market, we get the facts from Steve Irwin, executive vice president of NRMLA.
personal >
overwhelmed with the choices I’ve created for myself.
Ten years from now my son, Ethan,
will be 21 and we can finally share that
>
bottle of 2003 Chateau Montelena
my life was when I married Geri in
cabernet (his birth-year vintage) that is
the Cratloe barn-church in the west of
patiently aging in my cellar, waiting for >
Something nobody knows about
occasionally pick a random set of
renowned venues such as The
correspondences between these two
Peppermint Lounge, The Palladium
founders and get a glimpse into the
and The World in New York City. I
struggles of this country’s early days—
promoted shows by The Ramones,
day.
Bunnymen, Beastie Boys, Sinead >
Lewis Hamilton. I’d love to try an F1
Barcelona in 2005. A perfect vacation
>
My first motorcycle was a 1968
Triumph Bonneville 650 T-120. Classic
>
course.
professionAl >
mortgage industry will be crowded
If I had three wishes they would
that will be amazingly creative.
the establishment of equal rights for
with awesome proprietary products
>
system’s dependence on “big money.”
had the chance to see, firsthand,
My favorite movie is The
mortgages have had on so many people’s lives. The relief that a reverse
package and opened my eyes to
mortgage has brought to hundreds
what great filmmaking could be. Blade
of thousands of borrowers is very real
Runner would be a close second and
and very powerful.
a film I still enjoy often. >
My favorite website is HUD.gov, the reverse mortgage sections.
My favorite time of the day is
summertime dusk, in my garden. >
Reverse mortgage professionals
can best support the public image of reverse mortgages by properly setting the customers’ expectations at every step of the process, from initial inquiry to final pay off. There
My iPod go-to is…There is so
should be clear, accurate and
constantly making new playlists. I
misunderstandings that have hounded
much exciting new music and I am do, however, find myself pulling up Miles Davis’ “Kind of Blue” when I get
t ion was My fav or ite vacain 2005. in Barcelona ion in a A per fect vacat y. per fect cit
the positive impacts that reverse
Conversation. It’s certainly a complete
>
I am optimistic about the reverse
mortgage industry because I have
all and to put an end to our political
>
Ten years from now the reverse
British iron and a real live wire.
be an end to senseless gun violence,
>
If I could trade places with
someone for a day, I would choose
My favorite vacation was in in a perfect city.
My first motorcycle was a 1968 Triumph Bonneville 650 T-120. Classic British iron and a real live wire.
struggles that often persist to this very
Squeeze, B.A.D, Iggy, Echo and The
>
My favorite nonfiction book is The Letters of Jefferson and Adams. I will
me is that I was a promoter with
O’Connor, and on and on…
fact
Ireland.
this occasion. >
The most memorable moment in
fun s
consistent communication so that the the industry for decades fade from public perception.
The most important influence technology will have on reverse mortgages is that it will redefine the basis of competition. reversereview . com
8 TRR | 19
The Reverse Review July 2015
ORIGINATING
RR
LEARN
RR
RR
Understanding Reverse Mortgage Leads By Bill Baskin
after reading only a few bullet points highlighting the benefits of a reverse mortgage, so they probably need a lot more education and a greater comfort level to make them ready to buy. Although I will cover “how to work leads” in another article, today I want to focus on why leads work and how to choose a lead company.
Why they work and how to choose your lead company When I first started generating and selling Internet leads in 1995, training sales teams to work them had an extra challenge we don’t have now: First we had to explain what the Internet was and then sell them a computer so they could work the leads! These days, our firm generates and delivers more than 10,000 exclusive reverse mortgage leads per month to a lender you may be working for or with. Since the ’90s, most people have used the Web to research products, review them and ultimately make a buying decision based on what they’ve read and learned. The Web is a double-edged sword in this regard, as there is as much misinformation as good information out there on reverse mortgages. The most important thing I’ve come to understand as a lead generator is that a reverse mortgage is not a commodity product that everyone understands. There are many misperceptions from consumers caused by the word “reverse.” Few people realize that it’s really just a traditional mortgage, but with more payment options and flexibility, as it can “pay” you (thus the “reverse”). How many other loans allow you to choose when and how you pay it back, or not pay it back at all, during your lifetime? I often hear 20 | TRR
that it’s expensive, and my response is, “Expensive compared with what other loan you don’t have to effectively pay back during your lifetime?” I fully believe in reverse mortgages and the incredible financial options they offer retirees, and it excites me to introduce so many consumers to this product. Using the proceeds of a reverse mortgage just to defer Social Security until 70 can increase a borrower’s benefits by 76 percent and prevent a borrower from draining their investments, which are also earning a return. Proceeds can be used to start a second career, buy a dream vacation home, downsize through a HECM for Purchase or simply help pay for the golden years. As a salesperson, it’s important to understand that your prospects may have applied for a quote
Having managed many sales teams myself, I can assure you that Internet leads have always performed to a level of acceptable return on investment (ROI) for your marketing dollar. That said, having had the privilege of working with tens of thousands of loan officers, brokers and major lenders, many salespeople still look at leads the wrong way. Salespeople focus on bad leads rather than the good ones, and that’s a big mistake! I’m here to tell you why. If I buy 100 leads, the performance waterfall I will be looking for is as follows: 0%
0%
0%
100%
50-60%+ contact rate
100%
15-30% application rate 2-8% fund rate
100%
What do these numbers tell us? The first thing we can surmise is that you may not have the opportunity to speak to up to 40 percent of the leads you buy. Using a trickle email campaign and continuing to make monthly calls as time goes on can move contact rates up to 80 percent,
ORIGINATING but it takes focus, intensity and a plan to do so. Sadly, most salespeople give up within a week or two. It’s OK though, as great ROI can still be achieved. Having an effective sales process is still important. With the people you do have an opportunity to speak with, take the time to sell yourself, sell your company, qualify the borrower (their needs, not their credit), and educate the prospect on the many ways to use a reverse mortgage and the financial benefits. This way, you can establish the product as a really flexible financial planning tool to supplement a borrower’s retirement.
here is that on average, 95 percent of the leads you buy wind up in the trash for whatever reason (bad phone, changed my mind, equity, family, flakes, whatever). It doesn’t matter why, so don’t focus on it! Alternatively, if you focus on finding the three to eight loans in every 100 leads that will fund, you will see huge ROI relative to your marketing spend. A mentor of mine once told me, “Some will, some won’t, so what!” Focus like a laser on those who will, and forget all about those who won’t. Too many salespeople determine the lead source is “bad” after going through a handful of leads and finding a few of those 95 that end up in the trash, but they don’t take the time or have the mindset to find the five that are solid. Find the five good ones, because those will earn you a better car and a nicer house if that is your goal—and they are in that pool of 100 every time! n
ORIGINATING
QUESTIONS TO ASK YOUR LEAD PROVIDER
ALSO ASK about “repurposed” leads. These are leads where the borrower applied for a forward mortgage, did not meet the lending criteria, but happened to be over 62 and the data
At the end of the day, if you are buying from a reputable lead company and getting real-time traffic, you should experience a strong ROI if you hold your salespeople accountable for fast contact times and timely follow-up, send trickle emails as the process goes along, and be the expert. Have a solid understanding of the many uses and benefits of a reverse mortgage and be able to articulate this to your prospect. As we always say, the leads are as effective as you are!
reversereview . com
8 TRR | 21
SPOTLIGHT
have no control over how the leads are generated or how many times they may be distributed. Fraud is prevalent in the affiliate marketing space. The more hands a lead passes through, the more opportunity for less ethical marketers to resell them over and over.
was repurposed as a reverse mortgage lead. A lot of firms generating forward mortgage leads do this to squeeze more revenue from otherwise nonqualified leads. The original intent of the borrower was not to obtain a reverse mortgage, and they do not perform as well.
HMBS
This lead waterfall will yield three to eight loans from 100 leads. It performs like this for our advertisers month after month, year after year. Smaller shops with better controls and more focused people often perform even better. The deals won’t fall in your lap, however, and again, you must work them with focus and intensity until the buyer is ready to move forward, which could be months. The main takeaway
ASK IF the leads they sell are exclusive or nonexclusive. For nonexclusive, what is the maximum number of times they will be sold? The average for a nonexclusive lead is four to five times, so understand you will be competing with multiple lenders for the loan, some of whom may have better process or better programs, who may get in touch with the lead within five minutes of delivery. The first one to contact has the opportunity to take the borrower off the market, and seniors often get turned off when four to five lenders call several times per day. That’s one reason why some choose to purchase only exclusive, filtered leads.
UNDERWRITING
The goal during this phase is to discover and solve a borrower’s problem by using a reverse mortgage, whether they believe they actually have a problem or not. It’s your job to discuss their situation, goals and dreams and ferret out that problem. I’m confident they have one even if they have not yet recognized it—no one’s life is perfect. About 10-30 percent of people will need help getting their family’s buy-in, survive counseling and make It is important to buy only it to the funding finish line, from lead generators and but you need to both educate not lead aggregators to and set proper expectations get the best quality leads. along the way. Sending vetted, Lead generators buy trusted links to third-party media, should be able articles about the benefits of a to show you the landing reverse mortgage for borrowers pages where they generate to research helps tremendously. leads, and share their We publish nowitcounts.com, creative assets as part of which has great content in your diligence process. the money section on reverse Beware of any company mortgages. Ideally, you don’t that says this is want the borrower doing this “proprietary” and won’t research on their own, as there show you how they is too much misinformation and generate, as they are likely inaccurate information out there an aggregator. Do your about reverse mortgages. People diligence! Aggregators are lazy, so make it easy for buy their leads from them. Surprises or missed steps multiple sources and kill deals; we all know this.
The Reverse Review July 2015
ORIGINATING
A Resource for Seniors By Susan A. Pomfret
HECM experts can offer seniors far more than access to their home equity. I am sitting at a kitchen table educating Mary (82) about how a HECM may be benefit her. Once I start asking her questions about what struggles she is having, I was hit with a lot more than I thought— she’s not only having difficulty financially, but also emotionally. Are you prepared for this? You better be. As a HECM expert, you need to be sure you are an all-around resource for the seniors you meet. Mary began to tell me that when her husband passed away, learning to live on one Social Security check was frustrating. She soon realized what bills she needed to pay and what things she would have to do without. Obviously, as she aged, her health care costs increased and most of her money went toward that and her home. She said she was fine with that because she had no plans to leave the home that she had been in for more than 45 years. It’s where she raised her children and where her grandchildren and great-grandchildren now come and enjoy playing in the beautiful backyard. She started to tell me how, at times, she is lonely and sad, and that most of her lifelong friends have passed. I asked her if she gets involved in her local senior center and she said, “The people there
As a HECM expert, you need to be sure you are an all-around resource for the seniors you meet. are too old for me.” I responded, “That is why they need you! Have you ever considered volunteering? And it would be a good excuse to get out of the house a few hours a week.” I always carry around my state’s Department of Elderly Affairs Pocket Manual, so I was able to give her a contact to call. I also mentioned to her that we have a program called The Friendly Visitor that she may want to look into. I told her my mom was involved with this program and developed a lovely friendship with the woman who came to visit her each week. My good old pocket manual also had that information.
View our digital version...
Reverse Review articles (present and past) are available on our website. Access a wealth of content about the business of HECMs online. www.reversereview.com 22 | TRR
From there, she was telling me that this winter had been very difficult (those of us in New England can surely relate to that). She mentioned that she had to get oil so frequently that when it was delivered, she would tell them to just fill it halfway. I informed her about our state’s heating assistance program, which she was not aware of. And yes, you guessed it, I was able to give her the information from my pocket manual along with the number to Rhode Island Saving Energy (RISE), which will come to a senior’s home and perform a free energy-efficiency evaluation. They will even replace old light bulbs with energy-efficient ones for
ORIGINATING free, and possibly install a new, energyefficient refrigerator at low or no cost! As I continued to help Mary with some of her difficulties, I saw that her mood picked up and she was much more optimistic than when I first arrived. This is just one example of how I was resourceful to Mary beyond a HECM. I was able to address her issues right on the spot. Would a HECM solve some of these issues? Absolutely, but given that these programs are available to her, why wouldn’t I share my knowledge about them with her?
Sure, I helped her with her financial struggles by helping her obtain a HECM, but I also got her out of her isolation and gave her a new purpose. By the way, she told me she took advantage of the heating assistance program and RISE. Now that spring is finally here, she’s looking forward to purchasing a new swingset for her yard for the kids to enjoy.
Lastly, I am fortunate that my state has various senior nonprofit organizations, where I volunteer. Giving back is very important to me. It not only teaches me about what is available for my clients (things that aren’t in my pocket manual), but also allows me to build awareness about HECMs and show people that HECM professionals really do care about helping our seniors. n
Be a part of the conversation.
-
Share your ideas with your colleagues and be a part of the solution. Reach out to us at info@reversereview.com.
UNDERWRITING
Ironically, as I was writing this story, I received a call from a gentleman about his adult sister. She has severe disabilities, and between her mortgage and credit card debt, she is struggling each month. Unfortunately, she is only 56 years old, so I was not able to help with a HECM, but I was still able to be a resource to him by giving him
information on our local housing agency that may be able to refinance her into a very low interest rate, along with a debt counseling agency that can help negotiate with her creditors to reduce her interest rate and monthly payments, making things more manageable for her. So, I guess the lesson learned here is how truly important being a resource to people really is!
ORIGINATING
So let’s get back to the HECM. After identifying some other issues, Mary realized that the program would truly relieve some of her financial stress and she decided to move forward. A few months after closing, she called to thank me again for all my help. Best calls ever, right? As I told her before, it was my pleasure and I aim to be as resourceful as possible. She wanted me to know that she is volunteering at the senior center three hours a week and loves it. She has even met some new friends because of
it. She also signed up to be a Friendly Visitor and makes weekly visits to two senior ladies who are homebound, and she is grateful to be making a difference in their lives. By doing these two things, Mary thinks she is helping others, which she is. Just as importantly, she’s helping herself, without even realizing it.
HMBS
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8 TRR | 23
SPOTLIGHT
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The Reverse Review July 2015
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24 | TRR
ORIGINATING
My Experience as a Non-Borrowing Spouse By Theresa Harris
How new NBS rules impacted my reverse mortgage loan
So began my reverse mortgage process. We completed the required counseling session and I listened to our kind counselor telling me about a program I know like the back of my hand. I
Then we got the call from my reverse mortgage broker, asking if we were prepared to bring in money. He told us we needed a much larger sum to close the loan than we had budgeted for. I thought, “Wait, did I hear him correctly?” He told me we needed to bring more money to the table than I had previously thought based on my online calculations. He gently broke it to me that the new rules require lenders to calculate costs based on the age of the youngest person (me!), even if they are considered a non-borrowing spouse. Reality sank in. You’d think I would be mad at the system for letting me down, but I’m not. Change is always going to happen in this industry. As a seasoned escrow officer, I have seen it all—the good times and, now, the not so good times. Despite it all, reverse mortgages have stayed fast and true. The ways that they can help people have changed, but they can still help hundreds of thousands of Americans find financial security. It may not offer as much help as before to people like my husband and me, but we went for it anyways. In the end, it was still a smart choice for us that brought us great peace of mind. For that, I am grateful. n
“You’d think I would be mad at the system for letting me down, but I’m not. Change is always going to happen in this industry. As a seasoned escrow officer, I have seen it all—the good times and, now, the not so good times. Despite it all, reverse mortgages have stayed fast and true. The ways that they can help people have changed, but they can still help hundreds of thousands of Americans find financial security.” reversereview . com
8 TRR | 25
SPOTLIGHT
I ran some numbers in a HECM calculator online to see what we would have to bring in to make this happen. (Remember, I am an escrow officer, not a mortgage broker.) Our house was upside-down and we owed more than it was worth, so funds to close were a factor. The calculator spit out a pretty big number, but after a family discussion we agreed it would be better than paying a mortgage for 40 years. Plus, with the new NBS ruling, I would be protected if anything happened.
Knowing that we would soon be relieved of a significant financial burden, those seven days where some of the happiest of my life (and, bonus, we closed just before the implementation of Financial Assessment).
HMBS
Fast-forward to the year 2015 and the implementation of Mortgagee Letter 2014-07, and we now have new rules that ensure that non-borrowing spouses like myself will be protected. To say I was super-excited would be an understatement. I called a wonderful loan officer with whom I have been doing business for 10 years and said, “I’m ready! Let’s get this done.”
even had to restrain myself from correcting a few small errors she made. (Afterward, my husband complimented my listening skills.) We then waited the required seven days in California.
UNDERWRITING
Nearly 13 years later, I consider myself one of the best HECM-specializing escrow officers. I stay up-to-date on all policy changes and attend NRMLA meetings so that I can serve my lenders and mortgage brokers better. I have always believed it is a great program that can help many seniors, and I also thought that someday I would have a reverse mortgage. But the one thing that I knew could potentially stop me was the non-borrowing spouse rule. I did not want to lose the rights to my home if my husband, who is 12 years older than me, passed away and I didn’t have the funds to repay the loan.
ORIGINATING
Reverse mortgages have been a part of my career since 2002, when I started working in escrow. I was given an escrow file for a HECM loan, and being unaware of that term, I thought it was a standard HELOC. Boy, was I wrong! Thankfully, I had a wonderful loan processor who took my hand and walked me through the process.
The Reverse Review July 2015
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ORIGINATING
Loan of Last Resort: RIP By Mike Gruley
Why reverse mortgages are a preventive medicine
In 1979, when my grandpa was 72, he finally had to see the doctor. He passed away approximately 48 hours later.
Still, some experts continued to say that reverse mortgages were loans of last resort, and they pointed to the fact that most of the folks who took them in the past were in a dire situation, so therefore the loan must be for those types of people. The thought was, “Don’t take a reverse mortgage. It is the beginning of the end.”
People who make the general statement that reverse mortgages are only loans of last resort are either ignoring the facts or refusing to accept them. Their views are most likely based on misinformation and irrational fear, as were my grandpa’s.
Sound familiar? As a result, many people did not even consider a reverse mortgage, and they avoided addressing their financial challenges until they eventually found
REVERSE REVIEW READERS HELP THOUSANDS OF SENIORS FIND FINANCIAL SECURITY. LET’S TALK ABOUT HOW WE CAN HELP THOUSANDS MORE.
As a nation, we’ve learned that seeing the doctor helps us live healthier, happier and longer. We now know this, and we accept it. We must see the reverse mortgage the same way, as a preventive tool that can create financial health, happiness and longevity.
I hope every time you hear someone say, “Reverse mortgages are a loan of last resort,” you will think of my grandpa. He was a good man, but he died too soon because he didn’t understand that the thing he was most afraid of was the very thing that could have saved his life. n
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SPOTLIGHT
In those days, a trip to the doctor meant a bill that had to be paid out of the already thin monthly budget, which meant that doctor’s visits were reserved for those rare events when someone was seriously injured or when a medical condition reached an unbearable state. Preventive medicine was not an accepted concept at that time—at least not for low- or middle-class folks. When they were sick, they just toughed it out and hoped it would be OK.
We’ve seen this same behavior in relation to reverse mortgages. In the early years, because consumers did not understand reverse mortgages and were mostly afraid of them, only those who were financially desperate had enough courage to give them a try. Over the years, however, educated consumers started to see the strategic benefits of reverse mortgages as a viable retirement planning tool.
HMBS
My grandpa was born in 1907. Armed with a sixth-grade education, he married my grandma and together they raised three children in a very modest home in Detroit. He worked most of his life in skilled trades, and for a while, during the war, he worked in a factory. Back in those days, there were no unions, no paid sick days and no health benefits.
With the implementation of Financial Assessment—the industry’s version of preventive medicine—reverse mortgages are now a way to help people plan their futures and actually prevent financial disaster rather than contribute to it.
UNDERWRITING
It wasn’t until many years later that I understood what he meant, or more accurately, why he felt this way.
This happened to friends, relatives and neighbors so frequently that it was no wonder people saw the doctor as an option of last resort. In fact, their behavior perpetuated this mindset. As more people postponed doctor’s visits, more died; and as more people died, the more others postponed.
themselves in a bad spot. It was only then that they looked into the loan. But by then, for some, it was too late and the situation was too far gone for the loan to be helpful. For others, the loan was only a temporary fix that did not provide a long-term solution; it only postponed the financial malaise.
ORIGINATING
When I was a kid, my grandpa used to refer to doctors as “croakers.” I once asked him why. He replied in his usual matter-offact way: “Because when you go to them, they croak you.” I still wasn’t sure what he meant, but I didn’t inquire further. My grandpa wasn’t the kind of guy who liked to be peppered with a lot of questions, especially when they challenged his way of thinking.
This way of thinking meant many from that era avoided the doctor until it was too late. By the time they sought help, their illnesses were too advanced for any type of medical intervention. Hence the comment about doctors being “croakers.”
The Reverse Review July 2015
UNDERWRITING
REVIEW
HECM-to-HECM Refinances By Britany Luth
guidance in Ethics Opinion 2010-1, if the borrower’s accrual rate (interest rate plus the ongoing mortgage insurance premium rate) is remaining the same or decreasing, the refi factor can be based on the closing costs minus any credits. However, if the borrower’s accrual rate is increasing, the closing cost credit will not be included in the calculation. Bona Fide Advantages There are numerous potential advantages for a borrower to consider refinancing, among them: 3 Adding a spouse or family member who resides in the property to the loan
An overview of current policies guiding this process With all of the recent program changes, the practice of refinancing borrowers with an existing HECM into a new HECM is becoming increasingly common. Many borrowers, including borrowers who just closed a HECM within the last few years, have advantageous reasons to refinance, which could include: 1. The stabilization or increase of housing prices in their area 2. The introduction of annual, adjustable-rate mortgages with a lower rate cap 3. Increases to PLFs 4. New protections for non-borrowing spouses The Refinance Benefit Factor The most common reason to refinance is to obtain access to additional funds that are not available through the current HECM loan. In order to determine the benefit to the borrower and to determine if counseling can be waived, FHA and NRMLA have published a refinance benefit factor (“refi factor”) calculation. The refi factor should be five times the cost of the loan or greater. 28 | TRR
This calculation takes the increase in principal limit divided by the loan closing costs. For example: A borrower’s existing principal limit is $125,000, and their principal limit for the new HECM would be $140,000. Closing costs are estimated at $5,500. $140,000 - $125,000 = $15,000 $15,000 / $5,500 = a refi factor of 2.72 This borrower’s refi factor is less than five times the cost of the loan. The originator or lender may credit additional closing costs in order to increase the factor (if certain other criteria are met), or the borrower may demonstrate a bona fide advantage for refinancing despite the lower benefit. Accrual Rates and Closing Cost Credits In some cases, crediting back some of the borrower’s closing costs can increase the refi factor above the threshold. According to NRMLA
3 Refinancing to add protections for an eligible non-borrowing spouse who resides in the property 3 Obtaining access to funds needed for a financial emergency 3 Lowering an interest rate or interestrate cap combined with other benefits, such as additional loan proceeds The loan originator should clearly explain that the borrower must understand and consider all factors that are part of the refinance. For example, if the borrower is refinancing to get a lower interest rate or interest-rate cap, they should consider whether the amount of closing costs they will pay in order to get the lower rate will offset any benefit of the lower rate over the long term. Waiving Counseling Some borrowers who have a prior HECM and were counseled by an FHA-approved counselor have the option to waive the session. However, there are FHA and state requirements surrounding the ability to waive counseling.
UNDERWRITING
Timelines
FHA requires that: 1. T he borrower signs the AntiChurning Disclosure. 2. T he borrower’s current HECM loan was closed within five years of the new HECM loan. 3. T he borrower’s benefit for refinancing into a new loan is at least five times the cost of the refinance.
lump-sum (SD) HECMs are fixed-rate, full-draw HECMs. NRMLA Ethics Advisory Opinion 2013-04 states that any refinance of an SD loan into another HECM product must occur at least 12 months after the original loan closing.
NON-SINGLE DISBURSEMENT, LUMP-SUM HECMS NRMLA Ethics
Advisory Opinion 2010-01 is still in effect for all other HECM-to-HECM refinances. These refinances must occur at least six months after the original loan closing.
Whether it’s the borrower’s first HECM or they are refinancing an existing HECM, the reasons for refinancing and the benefit to the borrower should be carefully considered. The originator should describe all of the available products to the borrower and help them choose a product that will best meet their needs. The originator should also clearly describe all of the benefits and any factors that will offset those benefits to the borrower. It is important to note that all borrowers, even borrowers refinancing an existing HECM, will be subject to the new Financial Assessment rules if their case number was assigned on or after April 27, 2015. n
UNDERWRITING
Additionally, if the borrower does meet the FHA and state requirements at origination, they must make sure the requirements still hold up at closing. Commonly, the borrower will meet the
SINGLE DISBURSEMENT, LUMPSUM HECMS Single disbursement,
Things to Remember
ORIGINATING
If all of these criteria are met, additional state requirements must be considered. Certain states require that the borrower receive counseling, regardless of whether FHA terms allow them to waive the session. Check with your compliance department to ensure the states you do business in allow borrowers who are refinancing to forgo counseling.
In addition to other guidance, NRMLA has published required timelines to wait before refinancing an existing HECM loan. These have been put into place to minimize the impact on the secondary market due to early prepayments and encourage borrowers and loan originators to consider all HECM products available, selecting a product that is most viable in the long term.
five times benefit ratio at application, but at the time of closing (due to changes in appraised value, fees, etc.), the benefit has dropped below five times. In that case, any fees for services provided prior to closing may have to be reimbursed or credited back to the borrower.
HMBS SPOTLIGHT
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The Reverse Review July 2015
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HMBS
RR
EXAMINE
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Market Update By Darren Stumberger
“Speeds for the window of originations have created prepays/refis like no other time in HECM history. This refinancing pattern has caused massive pain for both HMBS and IO investors.”
ORIGINATING UNDERWRITING
Spreads tighten as prepayment speeds leave investors feeling uneasy.
Bank appetite for the parpriced floaters has remained firm during the course of 2015. Usually, bank buying is concentrated in the first half
of the year and we’ll see if 2015 is any different. With regard to fixed-rate HMBS, spreads have been steady at 40 to swaps. Prices have fluctuated between $112 and $115 based on the current level of interest rates (and they have been volatile in Q2). Banks have also been buying stripped-down passthroughs in the 60-70 swaps context for a low premium. There have been several billion of secondary HMBS and HREMIC classes trading in Q2 at well-supported levels. There’s also been an influx of dealers into the sector with Barclays, Credit Suisse and the Royal
Bank of Canada all actively participating across primary and secondary flows. Prepayments have been quite the thorn in 2015’s side as two isolated occurrences have led to accelerated speeds and have left many market participants feeling uneasy. The 2013 PLF HECM 60 vintage was and continues to be churned in high volumes by loan officers and brokers. Speeds for the window of originations have created prepays/refis like no other time in HECM history. This refinancing pattern has caused massive pain for both HMBS and IO investors. The other dynamic that has
caused elevated prepay activity and led to losses across the board for dealers and investors is early partial prepayments, where loan officers and brokers tell the consumer they will waive closing costs if the borrower draws more on their loan to maximize their gain on sale premium. They then tell the consumer they can pay it back in a month or two to create the loan-to-value ratio they initially wanted. The hope is the GNMA issuers are all enforcing premium recapture language in their Mortgage Loan Purchase Agreements. n
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SPOTLIGHT
Annual Libor production is closing in on 90 percent of all adjustable-rate production, which is a complete 180-degree turn from 2014’s statistic, especially as it relates to 1-month Libor margin originations. That being said, new 1-month Libor indexed paper and seasoned Libor tails trading in the 30s DM are being stripped to par and moving in the high 40s/low 50s DM and mid- to high- 30s DM, respectively.
HMBS
HMBS spreads have been grinding tighter in early June amid a steady interest rate selloff. Annual LIBOR HMBS is trading in the mid-teens DM (discount margin) with a $112 price and a 2.7 percent yield. Almost 100 percent of this production is being sold in HREMIC form with par-priced floaters moving in the high 50s DM.
The Reverse Review July 2015
SPOTLIGHT
HUD Expands the Rights of Non-Borrowing Spouses IS TH
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NEW GUIDELINES RELIEVE CONCERNS OVER THE NBS ISSUE.
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A
fter much discussion among industry participants and policy shapers, HUD has released a new mortgagee letter intended to address a long-standing issue with the rights of the non-borrowing spouses of HECM borrowers. Now, more
non-borrowing spouses will have the opportunity to remain in their homes upon the passing of their spouse without the threat of foreclosure. The new guidelines are an expansion of a previous mandate made in January, in which HUD granted lenders the ability to defer foreclosure for non-borrowing spouses who meet certain eligibility requirements for case numbers that were assigned on or after August 4, 2014. Under the new policy, released June 12 in Mortgagee Letter 2015-15, HUD has expanded these eligibility requirements to include loans with case numbers assigned before August 4, 2014, effectively allowing a larger number of non-borrowing spouses to remain in their homes. The guidelines dictate that lenders can now assign a loan to HUD upon the death of the last surviving borrower, whereas before, the loan would not have been assignable based solely on the borrower’s death. This “Mortgage Optional Election Assignment,” known as MOE, will allow lenders to prevent the foreclosure of properties occupied by the surviving spouse of a HECM borrower, enabling them to stay in the home. By utilizing 32 | TRR
MOE, lenders can assign a HECM to HUD despite the loan’s unpaid principal balance. Alternatively, the guidelines state that lenders can also allow a claim payment following the sale of the property by heirs or by the estate, or they can foreclose according to the terms of the loan and file an insurance claim with FHA. HUD outlines several conditions that would allow a nonborrowing spouse to remain in their home following the death of the borrower:
4 The loan must be assigned an FHA case number before August 4, 2014. 4 The non-borrowing spouse must: - Be current with all HUD-defined property charges - Maintain the property under the terms and conditions of the HECM and follow HUD’s guidelines for minimum property standards - Have been legally married to the borrower at the time of the loan’s closing (Specifics have also been detailed for same-sex couples in situations where legal marriage was not permitted by state statute at the time.)
SPOTLIGHT HUD had outlined MOE in a previous mortgagee letter, but then revoked the guidelines in May, saying it needed to review whether it could make this option available without requiring a factor test or principal limit test in addition to eligibility guidelines. In ML 2015-15, HUD wrote that it will uphold the previous MOE policy with the addition of new requirements and conditions.
HUD’s latest move has met the approval of industry leaders. According to TRR’s longtime underwriting expert Ralph Rosynek, the mandate is a step in the right direction, one that will hopefully help solve a problem that has plagued the industry for years.
According to Reverse Mortgage Daily, several consumer advocate groups— including the National Consumer Law Center, the Elder Abuse Program and
the Institute on Aging—also commended the new policy. A joint statement released by these groups and several others called the policy “welcome news” and “a huge relief for homeowners who are facing sale dates.” The statement urged servicers to implement MOE, which it referred to as a “commonsense solution” that will keep surviving spouses in their homes. n
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Industry members working in all aspects of the HECM loan process are encouraged to download and review both mortgagee letters for more specific information relating to HECM non-borrowing spouses. portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hecmml reversereview . com
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SPOTLIGHT
NRMLA President Peter Bell also expressed his support. “As the national voice of the reverse mortgage industry, NRMLA appreciates today’s guidance from HUD that resolves longstanding
concerns about the responsible treatment of non-borrowing spouses,” Bell said in a statement following the letter’s release. “This issue has perplexed homeowners, lenders, and housing counselors for years and it is a relief to have clarity.”
HMBS
“The recognition of the needs and concerns of nonborrowing spouses going forward, as well as for those HECM loans originated in the past, represents a significant, positive impact to the growing acceptance of the HECM program as a viable resource for even greater numbers of homeowners,” Rosynek says.
Allows lenders to prevent the foreclosure of properties occupied by the surviving spouse of a HECM borrower, enabling spouses to stay in the home despite the loan’s unpaid principal balance.
UNDERWRITING
It’s important to note that counseling and mandatory pre-application conversations are key to assuring a borrowing couple of the loan’s requirements when it comes to non-borrowing spouses. During this time,
MORTGAGE OPTIONAL ELECTION ASSIGNMENT
ORIGINATING
HUD has been working to address the controversy over the rights of non-borrowing spouses for some time. In April of last year, it released ML 2014-07 to outline the rights, obligations and requirements that would allow surviving spouses to remain in their homes once their borrowing spouses have passed. The rules, however, applied only to case file numbers issued subsequent to August 4, 2014.
MOE:
non-borrowing spouses must be formally identified, participate in counseling and partake in pre-qualification and application activities. They must also complete certain disclosures and documents acknowledging their understanding of the loan’s commitment.
The Reverse Review July 2015
For many reverse mortgage advisors, the work is more than a job—it’s a passionate mission to help seniors find financial security. By Jessica Guerin
Some call it a passion. Some call it a mission. Some even call it a ministry. However they describe it, it’s clear that those who work as reverse mortgage advisors feel deeply committed to the work they do. To capture a glimpse into the life of a HECM loan officer, we spoke with advisors nationwide, from Seattle to Indiana to Georgia, about their work. While many mentioned the challenges of the job—like trouble connecting with potential clients and overcoming negative misconceptions—most focused on the rewards of their work, namely the tremendous relief they have had the opportunity to provide. Unlike those who work in other sectors of the financial services industry, the reverse mortgage advisor does much more than complete a loan transaction. Their work requires them to not only educate, but to listen. They build a relationship with their clients—one that is deeply personal, shaped by empathy
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and rooted in trust. For many, being a reverse mortgage advisor is not a career; it’s a calling.
A DAY IN THE LIFE A large part of a HECM advisor’s job is to network. Whether it’s over the phone, at an event, on the Internet or in a business meeting, the goal is to educate potential clients and professional partners about the power of the HECM. Beth Paterson, who heads Greenleaf Financial’s Minnesota division, says she spends much of her time pushing out content to build her client base. “I do a lot of networking and marketing with other professionals and referral partners,” says Paterson, who writes a blog, posts frequently on LinkedIn and hosts a local TV show. “I just try to get the word out about reverse mortgages and the facts.” Brian Cook, who works for Alpine Mortgage outside Seattle, says he
typically works the phones in the morning and then heads out in the afternoon to meet with contacts. “One of my big focuses has always been senior networking groups,” he says. “That’s a great way to generate business.” Cook, who has been in the industry for 15 years, says he spends much of his time connecting with referral partners. “I work with estate planners, financial planners and, more and more, health care specialists,” he says. “Most of my leads come from word of mouth.” Reverse Mortgage Funding’s Greg McDermott says he also generates most of his business from referral partners. “I work by referral from mortgage bankers who don’t offer reverse, Realtors and financial planners,” says McDermott, who is based in Pennsylvania and has been originating HECMs for 10 years. “First thing in the morning I do email catchup, postings, blogging and social media, and in the afternoon I try to get out and visit.”
LEARNING TO TEACH For many in the reverse industry, their career is a second act. Several of those we spoke with say they left other professions to try their hand at reverse mortgages. Janice Cohen, a New Jersey-based advisor with Security One Lending, worked as a cantor in a synagogue for 25 years before entering the reverse space 10 years ago. Cohen says the learning curve for her was steep at first. “I came from a very different background. I had no sales experience and the only thing I knew about mortgages was that I had one,” she says. “In my first year, I just about covered my draw, but in my second year, I think I made three times that. It grew very, very, very quickly.” Last year, Cohen, who purchases her leads, was the No. 2 top-selling loan officer for S1L. She does all of her business over the phone and she says in past years she has closed more than 100 loans. “I have found that working with my borrowers is very similar to teaching an adult education class or conducting an adult choir,” she says. “It requires the same type of patience and finesse.” AAG’s Joseph Kurelic worked as a Realtor selling properties in a senior community before he left the business to originate HECMs in 2009. “I was working for a builder when the HECM for Purchase was introduced, and nobody understood how
it worked,” Kurelic says of his motivation to change careers. Now, he says the vast majority of his loans are Purchase transactions, and that he works mostly with Realtors and builders to connect with clients. “To be a good originator in the reverse market, you’ve got to be able to communicate,” Kurelic says. “You must be a teacher and not just someone out there to sell the loan. You’ve got to teach people how it works, the philosophy behind it, and explain it to them so they understand it.” Pamela Kirkpatrick, who works for Urban Financial of America, worked in the nonprofit sector before entering the business 16 years ago. “I think it’s similar in the sense that it’s an ethical mission to provide something. In our case, it’s financial independence.” Kirkpatrick focuses on connecting with financial planners and attorneys. She also says communication is key. “You’ve got to learn the language of different professions,” she says. “We have an accepted jargon in our individual industries, and a lot of times we think that we’re communicating, but we’re not… We need to make sure that the message we’re trying to communicate has actually been received, understood and digested.”
GREG McDERMOTT
“On my website, I call myself a HECM evangelist. That’s really what I have to do, be out there preaching the good news. I find it a blessing to be able to do the work. I’ve made a lot more money in corporate sales, but this is by far the most rewarding work I’ve done.”
BETH PATERSON
“It’s meeting people and touching their lives and hearing their
A PERSONAL APPROACH
stories. I’m creative, I’m a
Like any salesperson, most advisors have their own philosophies when it comes to approaching a potential client. 8
this as a job—it’s a career, it’s
problem solver. I don’t look at a life… I love the work that I do and using my skills and talents to make a difference in the lives of others.”
FLORIAN STECIUCH
“Demystifying the reverse mortgage for financial planners is probably my No. 1 challenge. They will say, ‘My clients don’t need any money.’ I say, ‘Well, they don’t need any money now.’ Or they just refuse to learn; they just don’t want to know about it.” reversereview . com
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Cohen says her method is conversational and relaxed. “I don’t try to get them to commit to the program immediately,” she says. “I consider myself to be very soft-touch in terms of my sales style. I’m a teller, not a seller. The vast majority of the time, that works really well for me.” Cook says he tries to learn as much as he can about the client in their initial conversation. “My approach is to just find out as much as I can about them— not only their current situation, but their background and what kind of person they are,” he says. “That can help your sales approach. A guy who used to be an accountant is different from a widow of a construction worker… You don’t want to go too much into finances, numbers, costs and rates too early on; that’s just a [portion] of what you’re actually offering. The No. 1 thing is figuring out why. It allows you to determine what direction you’re going to take.” McDermott agrees that at first, it’s more important to listen than to speak. “It’s always better to be asking questions, so I know whether they understand it or not. I like to say I use my ears and mouth proportionately.” Florian Steciuch, who works for Retirement Funding Solutions from his home base in Indiana, says he finds it important to be reassuring. “Some of them feel guilty or embarrassed, and I just remind them that this is all about their quality of life,” he says. “They’re not doing anything wrong, and they certainly shouldn’t be ashamed to say that they need some kind of financial help in the later stages of life.”
WORKING THROUGH THE CHALLENGES As with any job, the business of originating HECM loans comes with its challenges. For many, the public’s general misconceptions about the product is a persistent roadblock. Paterson says this is a major hurdle. “The biggest challenge is getting the client to make that phone call and not pay attention to the neighbor or the friend who says, ‘Oh, reverse mortgages are bad.’ It’s overcoming that
negative image.” Steciuch says he finds confusion about the loan among financial planners to be the most challenging. “Demystifying the reverse mortgage for financial planners is probably my No. 1 challenge. They will say, ‘My clients don’t need any money.’ I say, ‘Well, they don’t need any money now.’ Or they just refuse to learn; they just don’t want to know about it.” Cohen says the process can be long and taxing. “I think there is a lot of burnout in this field, because it can be very stressful. It’s a very, very long sales process. When you first talk with someone, they’re not going to do an application for eight weeks, on average. You’re in constant contact with them. There’s a lot of hand-holding. You’re sitting down at the table with them and their family members, and then you’re demonized by someone in the family who heard from somebody’s hairdresser that this is a bad thing and that their house will be taken away. I have to fight that every day. I can’t tell you how many times I’ve said to a borrower, ‘I’m not harming people here. I have two children who have to look up to me. I have to do the right thing.’”
FINDING FULFILLMENT While the work can be tough at times, the reward can be tremendous. “The greatest rewards of my job are when clients call me, when it’s someone I did a loan for many, many moons ago,” Kirkpatrick says. “Or when somebody passes and their children call me and tell me how this changed their life so much for the better. I really believe that if we do our job well, which I always try to do, we are providing people with options that they might not otherwise have had.” For Paterson, building new relationships brings a sense of joy to her work. “It’s meeting people and touching their lives and hearing their stories,” she says. “I’m creative, I’m a problem solver. I don’t look at this as a job—it’s a career, it’s a life… I love the work that I do and using my skills and talents to make a difference in the lives of others.”
Cohen says seeing her clients’ relief is her reward. “Hands-down the most rewarding aspect of my job is when a person calls me to say that since he’s closed on his reverse mortgage, he’s had his first good night’s sleep in two years. For me, it’s all about the sleep.” Steciuch echoes Cohen’s sentiments. “You hear people say things like, ‘Now I can sleep, now I can stop crying,’” he says. “Just seeing the relief in people, knowing they have security, that’s a good feeling.”
A CALLING AND A PASSION HECM advisors often build meaningful, personal relationships with their clients, and they feel passionate about the work they do, aware of the relief their services can provide. “I look at this as my ministry,” Paterson says. “I’m helping and making a difference in people’s lives. It’s not a church ministry, but it is a ministry, and I have a strong faith.” Paterson’s dedication is clear. She meets with every client in person, doing whatever it takes to ensure their comfort. “I do all of my applications face to face,” she says. “We go to all the closings, even in blizzards. We once picked up a closing agent and drove five hours in the middle of a blizzard to close. I think the hand-holding is of the utmost importance.” McDermott makes a similar connection. “On my website, I call myself a HECM evangelist. That’s really what I have to do, be out there preaching the good news,” he says. “I find it a blessing to be able to do the work. I’ve made a lot more money in corporate sales, but this is by far the most rewarding work I’ve done.” Kirkpatrick says the work of a HECM advisor is more than just a job. “It’s more of a calling, a passion, like social work would be,” she says. “I find that reverse mortgage loan officers are some of the most ethical, socially caring people that I’ve ever had the pleasure to work with.” n
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The Reverse Review July 2015
LAST WORD
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Uber and Reverse Mortgages By Jason McNamara
Can the transportation company’s creative business model offer lessons for those looking to address the retirement crisis? We know that eight out of 10 seniors would prefer to retire in their home, but enabling older adults to age in place requires more than a reverse mortgage. Seniors must have access to all the support services they need to accomplish this goal. The United States Government Accountability Office (GAO) recently recommended that a cross-agency, federal strategy— probably led by the Administration on Aging (AoA)—is needed to help ensure efficient and effective use of federal resources for the delivery of Home and Community-Based Services (HCBS). (To view the analysis, visit gao.gov/products/GAO-15-190.) Five federal agencies within four departments currently fund HCBS that support seniors’ ability to live independently in their own homes.
The Older Americans Act (OAA) of 1965 was the first federal initative designed to address retirement issues. The OAA was passed as part of Lyndon Johnson’s “Great Society” reforms that promised to eliminate poverty and racial injustice, while providing new jobs and affordable health care for all. Sound familiar? Why am I talking about a 50-year-old act? Because that structure is still the cornerstone of all federal HCBS systems that support older adults in 2015. I think that spells opportunity for progress. The GAO stated that seven out of 10 Americans 65 and older will need longterm care services at some point in their lives for a period of at least three years. Twenty percent of those will need help for five years or more. Of course, as the senior 38 | TRR
population grows to more than 20 percent of the U.S. population by 2050, the need for long-term care will only increase, especially for those 85 and older. The GAO report states that there is no plan for how the OAA is going to fund this growing need. In fact, it says the current multiple-federal-agency model is actually lowering the quality and increasing the cost of care, while causing the premature institutionalization of our seniors. The GAO study offers few solutions but does highlight the “village models” that have popped up across the country, where senior members pay a monthly due of $400-$500, on average, typically to a nonprofit organization that serves as manager. These villages recruit volunteers and hire services for things like laundry,
food delivery, medical care, entertainment, home repair and transportation. The GAO is excited about the village model because it enables seniors to age in place as they desire, but more importantly, federal funding only accounts for 5 percent of these villages’ operating budgets on average. Most of the funding is memberprovided, so these villages are enabling older adults to live independently and not drain federal funds. So what does Uber have to do with this? Well, if I asked you a few years ago if a new cab service would outnumber yellow cabs in NYC in 2015, you’d probably have said it’s not likely. By leveraging technology, Uber is replacing service models that have been in place for decades. I believe Uber-type service models will open up new possibilities for HCBS. Interestingly enough, transportation is cited as a top concern for older adults. Public transportation is not as suitable for older adults as it is for younger adults. It turns out the traditional kitchen-table conversation is exactly what seniors want. It also makes me want to ask those lawmakers who are trying to force seniors to drive to counseling, “Whose interests are you representing anyway? Are you that out of touch with seniors?” The problem with villages—and why they mainly exist for middle- to higherincome members—is that older adults need to have income to pay dues and fund services. So given that home equity is the largest asset most older adults have, I bet more people could afford to join these villages if they used a reverse mortgage to turn that home equity into cash. It could be the key to funding Uber retirement. This is also why homeownership is the best investment most younger adults can make, but that is another discussion for another day. n
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