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D EC ./ JAN . 2 0 1 7
H O T S EAT
David Peskin sits down in our Hot Seat PG. 17
ORIG INAT ING
Latino baby boomers and retirement PG. 18
HMBS
A year in review PG. 21
LAST WORD
Closing challenging loans PG. 30
The Reverse Review Dec./Jan. 2017
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reversereview . com
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The Reverse Review Dec./Jan. 2017
From the editor RE
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A NOTE FROM JESSICA GUERIN
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INSIDE THIS ISSUE | ONE MILLION HECMS AND COUNTING
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DEC . /JAN. 2017
The HECM program is unique in that its success requires a strong partnership between the lending community and government. In order to provide the best product to consumers, both entities must work together to ensure the product’s safety, affordability and long-term viability for this nation’s
Meet the Team SENIOR PUBLISHER
Reza Jahangiri PUBLISHER
Erik Richard EDITOR-IN-CHIEF
Jessica Guerin
seniors. As the government agency in charge of overseeing the program, HUD’s role in HOT SEAT
ORIGINATING
PG. 17
PG. 18
David Peskin sits down in our Hot Seat
Latino baby boomers and retirement
HMBS
A year in review PG. 21
L AST W O R D
Closing challenging loans PG. 30
the HECM is critical. So we reached out to HUD’s acting deputy assistant secretary Bob Mulderig to get his take on the current state of the reverse mortgage market in light of recent
DEC./JAN. 2017
COVER
We talk to HUD’s Bob Mulderig as the HECM celebrates one million loans.
Traci Knight
COPY EDITOR
Kersten Deck MARKETING DIRECTOR
Alycia Greer
policy change and volume dips. Mulderig, who assumed his role in May, recently oversaw the release of a proposed rule allowing for HECMS on condominium properties. While he says the agency’s mission to better the HECM is ongoing and future changes are inevitable, he also stresses the program’s importance. Since its inception, it has offered a financial solution to more than one million Americans—a milestone we celebrate in this issue’s Spotlight. That’s a testament to its value and, as Mulderig says, its ability to help 200 seniors a day find financial security is a fact we must not lose sight of.
JESSICA GUERIN Connect with me about how you can participate. Reach me at jessica@reversereview.com
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4 | TRR
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Printer The Ovid Bell Press Advertising Information phone : 630.207.3882 email : jessica@reversereview.com Subscriptions email : information@reversereview.com Editorial Content email : jessica@reversereview.com © 2016 Reverse Publishing LLC All rights reserved. Reproductions or distribution of any materials obtained in the publication without written permission is expressly prohibited. The views, claims and opinions expressed in articles and advertisements herein are not necessarily those of The Reverse Review, its employees, agents or directors. This publication and any references to products or services are provided “as is” without any expressed or implied warranty or term of any kind. While effort is made to ensure accuracy in the content of the information presented herein, Reverse Publishing LLC is not responsible for any errors, misprints or misinformation. Any legal information contained herein is not to be construed as legal advice and is provided for entertainment or educational purposes only.
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table of contents 08 / STATS
TRR 12.16/1.17
21 / HMBS
October top lenders and HECM endorsement stats through September REVERSE MARKET INSIGHT
15 24
HMBS 2016 Transformation takes its toll, while tails temper troubling tapering. JOE KELLY
10 / NRMLA NEWS Read about the association’s current initiatives.
13 / ROUNDUP A collection of recent facts and surveys affecting the reverse market
15 / BOOK REVIEW
23 / SERVICING
The Unnatural Stress of Natural Disasters HECM servicers work overtime to help victims of Hurricane Matthew. SYDNEY GODBEHERE
24 / SPOTLIGHT
Retirement planning expert Wade Phau’s new book on reverse mortgages
17 / HOT SEAT David Peskin
President of Reverse Mortgage Funding
One Million HECMs and Counting Reverse originators reflect on their work as the program meets this important milestone.
30 / LAST WORD
The Originating Challenge Tackling tricky cases to help borrowers close their loans
18 / ORIGINATING
Why Should We Pay Attention to Latino Baby Boomers?
21
18
PATRICIA WHITLOCK
How this community’s seniors could benefit from the HECM SEAN SKAGGS
20 / ORIGINATING
30
Taking Flight
One originator takes his work to new heights. REX DUFFIN
FEATURE
26/ FEATURE
YOU CAN DO IT!
Robert Mulderig HUD’s acting deputy secretary of single-family housing talks HECMs. JESSICA GUERIN
REACH OUT TO US ABOUT WRITING FOR TRR. INFO@REVERSEREVIEW.COM
"We are very committed to the program at HUD… We’ll always continue to evaluate the program and to consider how we can make sure that it best serves the borrowers who need it. reversereview . com
8 TRR | 5
The Reverse Review Dec./Jan. 2017
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contributors
John K. Lunde
David Peskin
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
David Peskin is president of Reverse Mortgage Funding LLC (RMF). Prior to joining RMF, Peskin was the CEO of BBRO Holdings, LLC, a financial services consulting firm, where he assisted various Ginnie Mae issuers and private equity firms as they analyzed reverse mortgage opportunities. Peskin founded the Senior Lending Network in 2004, where he created one of the industry's first directto-consumer televised advertising campaigns. He served as a NRMLA board member from 2006 to 2012.
Joe Kelly
Sydney Godbehere
Patricia Whitlock
Sydney Godbehere is the vice president of loan operations for Celink. She has worked at Celink for 10 years and is passionate about providing the highest-caliber service to clients and borrowers. She credits her team and Celink’s mission, vision and values with inspiring her work every day.
Patricia Whitlock is a Certified Reverse Mortgage Professional with FirstBank and has been originating reverse mortgages exclusively since 2005. She served as a lieutenant in the U.S. Navy and taught English as a second language in Greece for 18 years. equity, $8 trillion, is VP of the board of directors of the Suffolk County Retired and Senior Volunteer Programs and is active in the Patchogue, New York, Chamber of Commerce.
8 | Stats g
21 | HMBS 2016 g Joe Kelly is a founding partner of New View Advisors. Before establishing New View in 2008, Kelly managed all aspects of Lehman Brothers' prime mortgage finance agenda, and structured the first proprietary reverse mortgage securitizations. At New View Advisors, Kelly continues to develop new reverse mortgage loan products, valuation models, quantitative research and online products for his clients.
17 | Hot Seat g
23 | The Unnatural Stress of Natural Disasters g
Sean Skaggs
18 | Why Should We Pay Attention to Latino Baby Boomers? g Sean Skaggs, with New American Funding, is part of an elite cadre of mortgage professionals who have achieved Certified Reverse Mortgage Professional (CRMP) status. The certificate, which requires one to pass a rigorous exam and background check, confirms a competency in the area of reverse mortgages and a dedication to uphold the highest ethical and professional standards. Skaggs is also a Mensan.
30 | The Originating Challenge g
Rex Duffin
LOOKING TO CONNECT WITH THE REVERSE COMMUNITY?
20 | Taking Flight g Rex Duffin is a Certified Reverse Mortgage Professional and Senior VP at Sun American Mortgage Company. He is passionate about the reverse mortgage business and takes a personal interest in the lives of his customers. As a seasoned veteran, he has been involved in the world of reverse mortgages since 1989.
ADVERTISE IN THE REVERSE REVIEW!
REACH A NATIONAL AUDIENCE OF RM PROFESSIONALS. CONTACT US FOR MORE INFORMATION. info@reversereview.com
reversereview . com
8 TRR | 7
The Reverse Review Dec./Jan. 2017
stats
October 2016 Top Lenders Report
12345 American Advisors Group
Finance of America Reverse
One Reverse Mortgage
Reverse Mortgage Funding
Synergy One Lending
Endorsements
Endorsements
Endorsements
Endorsements
Endorsements
832
471
270
195
187
Lender Endorsements LIBERTY HOME EQUITY SOLUTIONS INC
164
Lender Endorsements
LIVE WELL FINANCIAL INC
145
BROKER SOLUTIONS INC
RMS/SECURITY ONE LENDING
PEOPLES BANK
12
11
101
FRANKLIN FIRST FINANCIAL LTD
11
NATIONWIDE EQUITIES CORPORATION
95
SUN AMERICAN MORTGAGE CO
11
HIGHTECHLENDING INC
85
VIP MORTGAGE INC
10
76
MCM HOLDINGS INC
9
FIRSTBANK 73 ADVISORS MORTGAGE GROUP LLC
REVERSE MORTGAGESCOM INC
INTERCONTINENTAL CAPITAL GROUP
9
56
GSF MORTGAGE CORPORATION
9
HOME POINT FINANCIAL CORPORATION
55
GATEWAY FUNDING DIVERSIFIED MORTGAGE
8
UNITED SOUTHWEST MORTGAGE CORP
55
BANK OF NORTH CAROLINA
8
OPEN MORTGAGE LLC
50
US MORTGAGE CORPORATION
8
UNITED NORTHERN MORTGAGE BANKERS LTD 45
UNIVERSAL LENDING CORPORATION
7
M & T BANK
42
SOUTHERN TRUST MORTGAGE LLC
7
FAIRWAY INDEPENDENT MORTGAGE CORP
39
AKT AMERICAN CAPITAL INC
7
SUN WEST MORTGAGE CO INC
33
MCS MORTGAGE BANKERS INC
7
THE FEDERAL SAVINGS BANK
33
HOMESTEAD FUNDING CORP
6
RESOLUTE BANK
32
NOVA FINANCIAL & INVESTMENTS CORP
6
CHERRY CREEK MORTGAGE CO INC
28
GERSHMAN INVESTMENT CORP
6
LONGBRIDGE FINANCIAL LLC
28
GOLDWATER BANK 6
PLAZA HOME MORTGAGE INC
26
HOMEBRIDGE FINANCIAL SERVICES INC
6
THE MONEY SOURCE INC
26
HOMEOWNERS MORTGAGE ENTERPRISE
6
MONEY HOUSE INC
24
ACADEMY MORTGAGE CORPORATION
6
AMERICAN PACIFIC MORTGAGE
23
AMERICAS MORTGAGE RESOURCE
6
QUONTIC BANK FSB
20
RESIDENTIAL HOME FUNDING CORP
6
BANK OF ENGLAND
18
YADKIN VALLEY BANK AND TRUST
6
BANC OF CALIFORNIA NA
17
WILLOW BEND MORTGAGE CO
5
EVOLVE BANK & TRUST
5
15
NATIONS LENDING CORP
LAND-HOME FINANCIAL SERVICES
15
SKYLINE FINANCIAL CORPORATION
5
COMMUNITY FIRST NATIONAL BANK
14
SUCCESS MORTGAGE PARTNERS INC
5
AMERICAN NATIONWIDE MORTGAGE COMPANY 13
ALPHA MORTGAGE CORPORATION
5
TOWNEBANK 13
LEADER ONE FINANCIAL CORPORATI
5
8 | TRR
stats
HECM Endorsement Stats Through September 2016 { FIGURE }
01
PURCHASE
$1,200
REFI STANDARD
$800 $600 $400 $200
{ FIGURE }
9/1/16
8/1/16
7/1/16
6/1/16
5/1/16
4/1/16
3/1/16
2/1/16
1/1/16
12/1/15
11/1/15
$0 10/1/15
DOLLARS IN MILLIONS
HECM ENDORSEMENT INITIAL PRINCIPAL LIMITS
$1,000
02
HECM ORIGINATORS (FHA & NON-FHA)
INDUSTRY SUMMARY
TRAILING TWELVE MONTH ENDORSEMENTS 5,000
3,000
11
2,467
1.65%
1,553 -18.31%
4,020
Retail Endorsement Growth
12
2,524
2.31%
1,705
9.79%
4,229
5.2%
1
2,199 -12.88%
1,690 -0.88%
3,889
-8.04%
2
2,645 20.28%
1,932 14.32%
4,577 17.69%
3
2,669
0.91%
1,857 -3.88%
4,526
-1.11%
4
2,465
-7.64%
1,775 -4.42%
4,240
-6.32%
5
2,034 -17.48%
1,605 -9.58%
3,639 -14.17%
6
2,190
7.67%
1,573 -1.99%
3,763
3.41%
7
2,033
-7.17%
1,497 -4.83%
3,530
-6.19%
8
2,440 20.02%
1,938 29.46%
4,378 24.02%
9
2,219
-9.06%
1,519 -21.62%
3,738 -14.62%
10
2,159
-2.7%
Wholesale Endorsement Growth
15.4%
2,000 1,000
Total Endorsement Growth
11 12 1 2 3 4 5 6 7 8 9 10 Retail
MO.
-2.7%
4,000
0
INDUSTRY SUMMARY
Wholesale *Numbers Represent Months
4.65%
* Figures Above Reflect Change from Prior Month
RETAIL UNITS CHG%
TOT
28,004
WHOLESALE UNITS CHG%
1,753
15.4%
20,397
TOTAL UNITS CHG%
3,912
-7.12%
4.65%
48,441
%%%%% LOOKING FOR MORE STATISTICS? Go to rmsinsight.net for all of the industry’s latest stats and rankings. Brought to you by Reverse Market Insight reversereview . com
8 TRR | 9
The Reverse Review Dec./Jan. 2017
nrmla news BROUGHT TO YOU BY NRMLA STAFF
Reverse Mortgages: Fact vs. Fiction
CFPB PUBLISHES HECM SERVICING E X A M I N AT I O N PROCEDURES The CFPB updated its Supervision and Examination Manual by including new exam procedures for reverse mortgage servicing. The examination guidelines are for government auditors or examiners (in this case, CFPB employees) to utilize when they audit and examine entities subject to the CFPB’s supervision authority. The exam procedures cover eight modules, including Servicing Transfers, Loan Ownership Transfers, and Escrow Disclosures; Account Maintenance, Payments, and Disclosures; Foreclosures; and Consumer Inquiries, Complaints, and Error Resolution Procedures. YOU CAN VIEW THE SERVICING E X A M I N AT I O N G U I D E L I N E S AND A MEMORANDUM W R I T T E N B Y N R M L A’ S L E G A L C O U N S E L J I M M I L A N O AT NRMLAONLINE.ORG.
A new NRMLA graphic, available for download from reversemortgage.org, debunks five common misconceptions about reverse mortgages. NRMLA explains to consumers that borrowers never lose ownership of the home, that HECM closing costs are comparable to other FHA mortgages, that borrowers will never owe more than the value of the home, that having a conventional mortgage doesn’t automatically disqualify them from getting a reverse mortgage, and that reverse mortgages are not a loan of last resort. Members are encouraged to share the infographic on Facebook, Twitter and LinkedIn, and use the graphic as part of your educational materials.
HUD ANNOUNCES FORECLOSURE MORATORIUM IN DISASTER AREAS
FHA Reduces Condo Owner-Occupancy Levels
Housing Secretary Julián Castro said that his department will grant a 90-day moratorium on foreclosures and forbearance on foreclosures of FHA-insured home mortgages, including reverse mortgages, in disaster-declared sections of North Carolina, Florida and Georgia hit by Hurricane Matthew. View the full press release and get more information on disaster relief options for FHA homeowners at hud.gov.
FHA updated its Condominium Project Approval and Processing Guide by clarifying the definition of owner occupancy and establishing new conditions under which occupancy levels in existing projects can be reduced from 50 percent to 35 percent.
ONE MILLION HECMS AND COUNTING
homeowners who have benefited from FHAbacked reverse mortgages to 1,002,679.
The reverse mortgage industry reached a monumental milestone: 1 million HECMs. FHA endorsed 3,919 loans in October, bringing the total number of older
“As an industry, we are proud to offer a financial product that helps older adults supplement their retirement funds while living in their own homes,”
10 | TRR
said NRMLA President and CEO Peter Bell. “We are grateful to the U.S. Department of Housing and Urban Development, and especially to the work of the late Ed Szymanoski, for modeling the original pilot program that made the HECM program possible.”
Mortgagee Letter 2016-15 retains a minimum owner occupancy requirement of 30 percent of the declared units in Proposed and Under Construction Condominium Projects. Its policies are effective immediately. “FHA believes this requirement offers a balanced approach between providing affordable, sustainable housing opportunities and managing risk to FHA’s Mutual Mortgage Insurance Fund,” the agency stated.
nrmla news CRMP Sees Significant Growth in 2016 Interest in the CRMP designation has reached an all-time high, with application submissions doubling from last year.
IN THE PRESS: 2 If you’re nearing retirement or already there, and you’re worried you won’t have enough money, a reverse mortgage might be a smart strategy, writes NerdWallet personal finance reporter Deborah Kearns, whose article, “How to tell if a reverse mortgage is right for you,” appeared in USA Today. “The key to deciding if a reverse mortgage is right for you is finding the right company to work with,” asserts 63-year-old Eileen Redden of Bayside, New York, who has a reverse mortgage line of credit. In addition to describing the features and costs of reverse mortgages, Kearns interviewed Paul Fiore, executive vice president at AAG, who provided tips to help consumers avoid potential scams. 2 Money magazine editor-at-large Penelope Wang interviewed Wade Pfauprofessor of retirement income at the American College of Financial Services and author of Reverse Mortgages: How to Use Reverse Mortgages to Secure Your Retirement,—about recent regulatory improvements to the HECM program and why reverse mortgages should be considered part of a retirement plan. “Used strategically, a reverse mortgage can greatly improve the sustainability of your retirement income,” Pfau told Wang for her article, “A Surprising Suggestion for Retirement Income.” After comparing different scenarios using reverse mortgages with other forms of retirement income, Pfau found that reverse mortgages improved the sustainability of retirement portfolios and resulted in larger amounts for heirs. “Reverse mortgage loans help cushion market risk, and they reduce the need for investment portfolio withdrawals,” he says. 2 Financial planning expert Neil Krishnaswamy wrote “5 Ways a Reverse Mortgage Can Help Your Retirement” for NextAvenue, public media’s first and only national service for America’s booming 50plus population, to explain how reverse mortgages can improve retirement spending outcomes. His reasons include providing funding to pay taxes for Roth IRA conversions and actually leaving a larger inheritance to heirs. Krishnaswamy’s column was reposted to forbes.com.
Thirty-eight people have already earned the designation in 2016, compared with 22 for all of last year. Another five people are preparing to take the exam. This brings the total number of CRMPs to 146. CRMPs are geographically distributed throughout the United States, with representation in 37 states. California has the most CRMPs (39), followed by Florida (17) and New York (12).
Top 3 states with most CRMPs
NRMLA CONGRATULATES the following individuals for achieving the status of CRMP. 4 Craig Bryant Banc of California Tustin, California
4 Mary Nelson VIP Mortgage Scottsdale, Arizona
CA
FL
NY
The types of individuals pursuing the designation have also evolved over time. While the CRMP was designed for loan originators, current designees include wholesale account representatives, trainers, underwriters, processors and title insurers.
NEW DATA SOURCE FOR HECM 10-YEAR LIBOR SWAP RATE Beginning October 31, expected interest rate calculations made for LIBORindexed HECM loans are now based on data sourced from the Intercontinental Exchange (ICE) Benchmark Administration instead of the Federal Reserve Board’s H.15 statistical release. Guidance contained in Mortgagee Letter 2016-15 replaces requirements issued in ML 2007-13 that directed mortgagees to use the H.15 statistical release as the source for LIBOR rates, which ceased publication October 31, 2016. ML 2016-16 clarifies that mortgagees must continue to the use the LIBOR 10Year Swap when calculating the expected interest rate for LIBOR-indexed HECM loans even though ICE does not use the term LIBOR in its reference to the 10-Year swap rate.
Thank you FOR JOINING
NRMLA WELCOMES OUR NEWEST MEMBERS 4 Homeowners Financial Group USA, LLC Santa Fe, New Mexico 4 McGuireWoods LLP San Francisco, California 4 True Concept Title Dunedin, Florida 4 Navicore Solutions San Diego, California 4 National Payment Services Co., Inc., Studio City, California 4 1st National Reverse Mortgage Ann Arbor, Michigan
4 Atlantic Coast Mortgage LLC Fairfax, Virginia 4 Lakeshore Home Solutions Cleveland, Ohio reversereview . com
8 TRR | 11
The Reverse Review Dec./Jan. 2017
877-721-3847
#integrity #loyalty #diligence #compassion
www.rfslends.com 12 | TRR
NMLS #1025894
THIS MONTH
HEALTH CARE FACTS
A LOOK AT THE NEWS AND STATS AFFECTING THE MARKET
Most adults will need long-term care.
GET UP-TO-DATE retirement facts, home price stats, senior trends and HECM market developments in The Reverse Review’s monthly Roundup.
RESEARCH REVELATIONS
Study suggests potential HECM market is close to 14 percent of all retired households.
An MIT study concluded that 12 to 14 percent of all retired households could benefit from a HECM. Of the 3,730 households analyzed by researchers:
55%
were eligible for a HECM
40%
of those eligible did not have retirement savings
14%
had no financial assets
60%
About 70 percent of adults over 65 will need long-term services and support at some point in their lifetime. This demand is expected to double over the next 35 years.
had no defined benefit plan income
-Bipartisan Policy Center report, “Healthy Aging Begins at Home"
BABY BOOMER STATS Vital Statistics
Almost 2/3 of the nation's home equity, or $8 trillion, is held by this generation.
MONEY MATTERS
Many seniors cannot make ends meet. A recent report finds that 53 percent of U.S. older adults living alone, and 26 percent of older couples, lack the financial resources required to pay for their basic needs. The states with the highest rates of economic insecurity among the elder population are: 1. Mississippi
2. Massachusetts
3. New York
—Economic Insecurity and Older Americans Insecurity in the States 2016
RETIREMENT WOES 41% Money remains the greatest concern. A survey of financial planners revealed that 41 percent of their retiree clients fear running out of money above all else. reversereview . com
8 TRR | 13
The Reverse Review Dec./Jan. 2017
H A P PY
Holidays FROM
THE REVERSE REVIEW !
14 | TRR
The Reverse Review is the gift that keeps on giving. Check out reversereview.com for a complete archives of reverse industry coverage.
&
BOOK REVIEW
FIND IT ON
A new book outlines how a
reverse mortgage can be an important tool in retirement income planning. There’s a new book to add to your shelves this holiday season. Reverse Mortgages: How to Use Reverse Mortgages to Secure Your Retirement, by Wade Phau, is the latest text that aims to explain how the loan could play an integral role in retirement income planning. Phau is a well-known retirement planning expert who has written extensively on the topic for outlets like Forbes and The Wall Street Journal. A principal and director of retirement research at McClean Asset Management Wade D. Pfau has a doctorate in and a professor economics from of retirement Princeton University. He was named in income planning InvestmentNews' at The American Power 20 list in 2013 and appeared on its top College of Financial 40 Under 40 list in 2014, Services, Phau has and received Financial Planning magazine's been researching Influencer Award. He and writing about is a two-time winner reverse mortgages of the Journal of Financial Planning's for the past two Montgomeryyears. Warschauer Editor's
“My background is with financial planning, and I'm an outsider for the reverse mortgage industry. I'm trying to demonstrate with quantitative analysis how reverse mortgages can positively impact retirement income plans,” he says. “I provide the language used in financial planning that can help reverse mortgage originators to be on the same wavelength as financial advisors and consumers who are attempting to build retirement income plans.”
Award, a two-time winner of the Academic Thought Leadership Award from the Retirement Income Industry Association, and a best paper award winner in the Retirement category from the Academy of Financial Services.
“It wasn't high on my to-do list until late 2014, as I suppose that the conventional wisdom that reverse mortgages are not a good idea had influenced me,” Phau says. “But once I started looking at them carefully, I was fascinated by their potential role in an overall retirement income strategy… At first I just meant to create a chapter about reverse mortgages for a more general book on retirement income, but I ended up with enough material to justify calling it an entire book.” Because he does not originate loans, like the authors of most other reverse mortgage texts do, Phau says his book presents readers with an unbiased resource of information about the loan.
HOW TO USE REVERSE MORTGAGES TO SECURE YOUR RETIREMENT IS AVAILABLE NOW ON AMAZON.
Phau’s goal is to help people overcome misconceptions about the loan and learn more about its usefulness. “Conventional wisdom about reverse mortgages is still pretty negative. They have mostly been viewed as a lastresort option for when all else has failed,” he says. “But the growing popularity of variable-rate HECMs with their potential for line of credit growth calls for thinking about reverse mortgages in a new light.” He says he believes more and more retirees will come to appreciate the benefits of the loan. “Social Security and home equity are the two biggest assets for the typical retiree. The financial planning profession has spent a great deal of effort over the past few years to educate the public about Social Security claiming strategies. Now it is time to turn greater attention to home equity.” “Once people see the potential of reverse mortgages, a common question is: Why doesn't everyone use them? It seems too good to be true. After reading the book, I hope readers can also understand the underlying mechanisms for why reverse mortgages work as they do.” n reversereview . com
8 TRR | 15
The Reverse Review Dec./Jan. 2017
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16 | TRR
DAVID PESKIN President of Reverse Mortgage Funding LLC
From his favorite movie and the craziest thing he’s ever done to his thoughts about the reverse mortgage market, we get the facts from David Peskin, president of Reverse Mortgage Funding LLC.
Ten years from now I will still drive Jean Noble,
>
my head of marketing, crazy. I flood her inbox
>
with ideas!
off the side of a mountain in Jackson Hole, Wyoming.
> If
I had three wishes they would be to have my
> If
I could meet anyone, past or present, it
own private plane, a yacht and five more wishes.
would be John D. Rockefeller.
>
If I could trade places with someone for
a day, I would choose The President of the
United States. Who wouldn’t want to be the most
The craziest thing I’ve ever done was parasail
>
MY CELEBRITY CRUSH IS MARGOT ROBBIE.
powerful person in the world for just one day? >
For success I have sacrificed personal time
>
If I could time travel, I would go to the year
with my family.
2100 to see what technology exists and what the future holds.
>
When I was younger I wanted to be a
The greatest setback for our industry was focusing the sales pitch on the “no monthly
mortgage payment” benefit. While this product
veterinarian.
feature appeals to the needs-based customer,
can't go without seeing my kids for too long! I
today’s reverse mortgage client likes the idea of
I love it. I can’t wait to see them at the end of the
to make payments and how much, or make no
> I
being in control. They can choose if they want
have four kids and they keep me super busy, but
monthly payments at all.
day. >
When I was a kid I was very
>
entrepreneurial. I had various
into their client meetings, they would provide a
delivery service, and I was even
value-added service.
a magician for a very short
>
>
Ten years from now the reverse mortgage
My first job was working as
industry will be a mainstream solution for all
worst job ever!
in banks and credit unions and recommended by
homeowners 62-plus. The product will be offered
a cashier at a grocery store—
>
My parents taught me how to work hard for
>
My favorite time of the day is bedtime. I can
what you want.
relax after a long day and watch some TV with my family.
> The
incorporated the benefits of reverse mortgages
company to a restaurant
period of time!
influencers on the importance of the product. If financial advisors, Realtors and builders
businesses, from a painting
My favorite vacation was in Iceland with my boys.
The future of reverse mortgages is educating
best lesson I've ever learned was to hire
the right people, take your time and make the right decision for your business.
financial advisors, Realtors and builders. >
I would encourage a family member to
consider a reverse mortgage because it
provides an array of options and it’s unlike any other solution on the market.
WHAT DAVID THINKS
People should seek a career in the reverse mortgage industry because there are tremendous growth opportunities. reversereview . com
8 TRR | 17
The Reverse Review Dec./Jan. 2017
ORIGINATING
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THINK
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Why Should We Pay Attention to Latino Baby Boomers? By Sean Skaggs
How this community’s seniors could benefit from the HECM
Author Isabel Allende writes that “in Spanish, the word for retirement is jubilación. Jubilation. Celebration.” For many of us that is
"For many Latinos, reaching a sustainable retirement and maintaining homeownership are still difficult due to a variety of financial and cultural factors, which could leave them in situations where they are not physically safe, financially secure, socially connected, or close to support services. Reverse mortgages (hipotecas revertidas) could provide a solution to many of these concerns."
18 | TRR
what we want in retirement, a chance to celebrate and enjoy the results of a life welllived. Latino baby boomers are no different. Latinos in general represent a growing share of the population and purchasing power. Projections indicate that by 2030, more than 8.4 million Latinos will be 65 years of age or older. Yet, for many Latinos, reaching a sustainable retirement and maintaining homeownership are still difficult due to a variety of financial and cultural factors, which could leave them in situations where they are not physically safe, financially secure, socially connected, or close to support services. Reverse mortgages (hipotecas revertidas) could provide a solution to many of these concerns.
Financial Challenges Many people rely on Social Security for most of their income in retirement, but Latinos may be unable to if they recently immigrated and didn’t contribute long enough. Other affecting factors may be that they worked in industries that don’t contribute to Social Security (like seasonal or transitory work), were self-employed, or received rental income. A growing number are also retiring without private pensions because employers have moved away from offering a guaranteed amount of income for life, in favor of 401(k) plans, which depend on what employees contribute. Very few Latinos have access to these Individual Retirement Accounts, and even if they did, they often didn’t have enough disposable income during their working years to fund them. Unpredictable factors like the loss of a spouse, caregiving and other health care issues, and family financial needs put additional stress on these limited resources. The result is that more than 60 percent of Latino seniors do not have sufficient income for retirement. Still, many Latinos want to stay in their homes until they pass away. Homes have strong emotional connections and many are willing to sacrifice a great deal in order to age in place for as long as possible. Many prefer to completely pay off their houses and pass them on to their kids while they live in poverty. This reduced income often leads to painful trade-offs to save money and make ends meet that can be harmful to their longterm health and finances—ignoring home or car repairs, cutting medication, skipping meals and medical appointments, avoiding social engagements, and missing mortgage payments. Cultural Challenges Many Latinos also have cultural differences and unique histories that make it more difficult to access the real estate industry. Foremost is that a quarter of Latino clients prefer to conduct business in Spanish, and the mortgage industry does not have many fluent Spanish speaking sales staff.
ORIGINATING This means there is a lack of access to good advice and plenty of misinformation about lending in general. Loans are complicated to understand in the first place, without adding the extra difficulty of discussing terms and conditions in another language.
the population at large to provide care for their own parents. More than 84 percent of people over 65 are coping with at least one chronic health condition, and often more as they age. What were once routine activities could become cause for concern for an aging borrower’s health and safety. A simple fall could become a life-or-death situation. This puts pressure on the younger generation to balance a work-life schedule so they can care for their aging parents.
84%+
HMBS
Despite the challenges many in the community face, recent surveys indicate that Latinos are especially optimistic about their finances next year and the economic mobility of their children. In fact, the highest growth in high school graduation rates was achieved by young Latinas in the last decade, which means their futures are looking bright. How can loan officers and real estate agents contribute to the economic advancement of the our Hispanic population? By increasing cultural competency, building trusted brands, and educating Latino clients about reverse mortgages, the mortgage industry can help them continue to achieve the American dream of property ownership and truly celebrate their tercera edad (golden years). n
ORIGINATING SERVICING
Secondly, currency devaluations like the Mexican Peso Crisis of 1994 and bank nationalizations during la década perdida (aka the Latin American debt crisis) have left many Latinos feeling as if they could not trust government or financial institutions The Reverse Mortgage Solution to protect their wealth. The Latino housing Real estate professionals should be able to sector was the hardest hit during the explain the product in a way that demystifies housing crisis of 2008 and further fueled this the process, while providing mistrust. The decrease in home accurate information to Latino values left them with less equity LATINO customers and their families. or without a home. CONNECTIONS New American Funding’s Many Latinos also have a community and real estate strong connection to family, agent outreach through our demonstrated by their Latino focus department, New heightened preference for buying American Dream initiative (a More than 84 percent partnership with NAREB to multigenerational housing. of people over 65 are increase minority participation This allows grandparents to coping with at least watch over their grandchildren in general in the mortgage one chronic health or adults to care for their industry), NAF360 family-centric condition, and often aging parents. Latinos, often culture, and our involvement more as they age. daughters, are more likely than with the National Association
of Hispanic Real Estate Professionals help to achieve these goals. It’s important that those in the reverse mortgage space actively work to educate members of the Latino community about how a HECM can help them achieve financial security in retirement.
SPOTLIGHT
reversereview . com
8 TRR | 19
The Reverse Review Dec./Jan. 2017
ORIGINATING
Taking Flight By Rex Duffin
-
One originator takes his work to new heights. I began working in this industry in the late ’70s, and my time in the HECM world has taught me that nothing beats working with a borrower in person. The product’s
complexity and rampant misconception means that the loan often requires a lengthy discussion to clear up confusion and educate borrowers on how it really works. I have spent my career doing whatever I can to make a face-to-face meeting happen. I started originating mortgages for a relatively small regional lender, and we faced—as most lenders did—significant challenges during the mortgage meltdown. In 2008, with the downturn in full bloom, I turned my attention to reverse mortgages. It didn’t take long for me to become deeply passionate about the life-changing benefits of this unique financial product. But I soon learned that to be successful in closing these loans, I had to get in front of borrowers. This was fine by me, as I enjoy meeting with clients in their homes far more than sitting behind a desk! I will be the first to say, I’m not fond of hissing cats or hyper dogs that sometimes insist on donating a portion of their coat to my slacks, but I do enjoy connecting with clients on a personal level and learning about their lives. The more I know about their situations, the better I am able to help. My lender’s footprint spans four states—Arizona, California, Utah and New Mexico—and because of this, it can be difficult to get in front of their clients. This does not stop me. Whenever
"I soon learned that to be successful in closing these loans, I had to get in front of borrowers. This was fine by me, as I enjoy meeting with clients in their homes far more than sitting behind a desk!" 20 | TRR
possible, I climb into my vintage 1967 Piper Cherokee and fly to my clients, wherever they are. I’ve been passionate about the world of flight since I was 16. When I received my first hardearned paycheck as a teen, I took flight instructions each week. And I did this without my parents’ knowledge! I knew it would be easier to inform them about it on the day before I soloed than to ask for permission. My surprised dad drove to the airport with me and was quite shocked when I actually took controls of the aircraft that day. When I tell a customer to meet me at their local airport, that I’m flying in myself to meet with them, they are usually quite
surprised. I am quick to tell them, though, not to be too impressed. My airplane is probably not worth as much as the car they drive. If there’s a restaurant at the airport, I will buy them breakfast as we look over the application. Other times, they give me a ride to their home and we’ll spend the better part of the day together, talking about how a HECM could meet their needs. Some call me crazy for flying a single-engine airplane, but I’m grateful for the privilege and I think my customers appreciate the fact that I will fly to meet them. For me, it’s a win-win as I get to do two things I love: fly my plane and help people find a path toward financial security. n
HMBS
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LEARN
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HMBS 2016 By Joe Kelly
HMBS ISSUANCE BY QUARTER
2011 2012 2013 2014 2015 2016
However, on the strength of tail issuance (a record 27 percent of all issuance through October) and highly seasoned pools (a record $939 million), HMBS issuance is almost keeping pace with 2015’s totals. These two market segments are smoothing out the bumps for the reverse mortgage industry during difficult times. n
FIXED %
$312,880,078
67.3%
Q2
$570,829,415
$404,470,718
$975,300,133
58.5%
Q3
$1,927,639,673
$1,564,124,032
$3,491,763,705
55.2%
Q4
$3,003,997,895
$748,461,283
$3,752,459,178
80.1%
Q 1
$1,954,598,264
$994,003,421
$2,948,601,685
66.3%
Q2
$1,921,759,584
$427,355,811
$2,349,115,395
81.8%
Q3
$1,994,098,197
$667,183,011
$2,661,281,208
74.9%
Q4
$1,901,136,975
$824,303,975
$2,725,440,950
69.8%
Q1 Q3
$1,918,257,083
$764,623,717
$2,682,880,800
71.5%
Q2
$1,980,365,104
$611,969,866
$2,592,334,970
76.4%
$1,893,092,198
$772,405,157
$2,665,497,355
71.0%
Q4
$1,490,462,669
$491,192,877
$1,981,655,546
75.2%
Q1
$1,468,962,699
$786,053,712
$2,255,016,411
65.1%
Q2
$1,556,177,659
$596,171,875
$2,152,349,534
72.3%
Q3
$1,524,191,593
$570,681,068
$2,094,872,661
72.8%
Q4
$1,575,333,969
$515,265,228
$2,090,599,197
75.4%
Q1
$1,868,902,091
$521,205,115
$2,390,107,206
78.2%
Q2
$1,881,414,477
$637,884,595
$2,519,299,072
74.7%
Q3
$577,225,518
$1,623,966,616
$2,201,192,134
26.2%
Q4
$285,436,885
$2,179,820,808
$2,465,257,693
11.6%
Q1
$438,989,850
$1,275,781,640
$1,714,771,490
25.6%
$545,293,255
$872,154,719
$1,417,447,974
38.5%
Q3
$545,285,095
$978,177,310
$1,523,462,405
35.8%
Q4
$587,410,168
$1,354,704,124
$1,942,114,292
30.2%
Q1
$469,366,214
$1,537,953,533
$2,007,319,747
23.4%
$464,699,743
$2,051,040,739
$2,515,740,482
18.5%
Q3
$431,620,526
$1,787,930,024
$2,219,550,550
19.4%
Q4
$429,149,338
$2,281,199,969
$2,710,349,307
15.8%
Q1
$298,819,954
$1,759,806,453
$2,058,626,407
14.5%
$272,890,799
$2,054,336,256
$2,327,227,055
11.7%
Q3
$312,645,993
Q2
Q2
Q2
$2,223,820,376
$2,536,466,369
12.3%
10/2016 $113,581,751
$718,835,079
$832,416,830
13.6%
TOTALS $36,784,348,416
$35,686,298,849 $72,470,647,265 50.8% reversereview . com
8 TRR | 21
SPOTLIGHT
include restrictions on the initial draw amount and new Financial Assessment requirements. FHA reports only about 49,000 endorsements for Fiscal Year 2016, compared with nearly 58,000 in 2015. Through October, 2016 issuance is running at about $775 million per month, down from $788 million per month in 2015.
QUARTER TOTAL
$102,318,576
SERVICING
The HECM program changed in a few short years from predominantly fixed rate to adjustable rate, big bank to non-bank lenders, and Fannie Mae to Ginnie Mae financing. Recent changes also
ADJUSTABLE
$210,561,502
HMBS
Transformation takes its toll, while tails tempter troubling tapering.
FIXED
Q1
ORIGINATING
2010
2009
The Reverse Review Dec./Jan. 2017
You are their face of
trust.
freedom.
confidence.
security.
Your reverse mortgage holders count on you. Ensure superior service over the life of their loan by choosing Celink as your reverse mortgage servicing ally.
22 | TRR
celink.com | (844) 228-2101
SERVICING
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REPAIR
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The Unnatural Stress of Natural Disasters By Sydney Godbehere
HECM servicers work overtime to help victims of Hurricane Matthew.
Celink’s repair administration department revisited this experience when Hurricane Matthew and the recent flooding in Louisiana wreaked havoc throughout the South. Natural disasters throw the best people, places, systems and processes into disarray. Celink borrowers were impacted in great numbers by these instances. Phone
This touch point with borrowers, while they are hurting and vulnerable, must be handled gently and firmly at the same time. This is no small feat and requires care, professionalism and great finesse. Repair administration professionals work with clients and borrowers to innovate procedures that work for all and make rocky roads smooth, always remembering that their primary goals are to get borrowers back to their lives as soon as possible and protect client interest in the property. n
View our digital version... Reverse Review articles (current and past) are available on our website. Access a wealth of online content about the business of HECMs. reversereview.com reversereview . com
8 TRR | 23
SPOTLIGHT
Repair administration is a critical aspect of the reverse mortgage process. When a borrower applies for a reverse mortgage, an appraisal provides the lender and borrower with a full assessment of the property’s liabilities and assets. The structure must be brought up to code and put in good and proper repair prior to closing. Repair
In the aftermath of any natural disaster, repair administration professionals provide critical assistance to borrowers at a time when they are most vulnerable. Everything they know about “normal life” feels lost, and servicers are charged with helping piece borrowers’ lives back together. Repair situations are never black and white; there are huge gray areas, and sometimes procedures need to adjust slightly in order to create the best outcome for all.
SERVICING
After closing, the only time a borrower will encounter the repair administration department is if and when an insurance claim is made on the property for damages (commonly referred to as “loss drafts”). Servicing departments protect their clients’ interests and serve as the liaison between the lender, the borrower and the insurance company. What happens when natural disaster strikes, HECM properties are impacted and countless insurance claims are made at once?
Meetings were held to remind staff that while the workload was obviously overwhelming at times, and phone calls seemed to lead to upset borrowers rather than resolution, it was clear that making everyone happy might not happen right away. It was critical that the team be reminded that what it was going through could not possibly compare to what borrowers were going through.
HMBS
than not, and unbeknownst to many homeowners, zoning requirements and standards of safety and operation have changed in the years their home has been occupied. Small repairs that may have been put off for years now become requirements for closing. For the majority of borrowers, doing these repairs and bringing their homes into HUD compliance comes as a relief. For some, this closing requirement feels intrusive and unwarranted.
calls were nonstop and borrowers were in a state of shock; they simply could not fully grasp what had just happened. They didn’t want to hear about procedures—they wanted their homes restored and their sense of safety returned. Repair administration professionals were charged with balancing borrower interest (“Get me back in my home!”) and protecting client interest. ORIGINATING
When borrowers obtain a reverse mortgage to access home equity, their lenders take a substantial interest in their homes. More often
administration professionals oversee the process of a borrower bringing his home up to code and in full and safe working order. Servicing professionals in the repair administration department walk a tightrope between vigorously protecting the lender and HUD’s interests in the property while respecting and protecting the borrowers. In the best of circumstances, the process moves smoothly and without incident, and repair administration professionals will appear to glide across this wire.
The Reverse Review Dec./Jan. 2017
SPOTLIGHT IN THIS MONTH’S EDITION
WE CELEBRATE ONE MILLION HECM LOANS.
One Million HECMs and Counting
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Reverse originators reflect on their work as the program meets this important milestone.
Land Home Financial Services
dec./jan.
2017
WANT TO SEE MORE ARTICLES LIKE THIS?
See them at reversereview.com.
T
his fall, the reverse mortgage program surpassed one million loans, an important benchmark that highlights just how many seniors stand to
benefit from this product. In its 27 years, the HECM program has helped seniors across the country find financial security in their later years, and we know it’s the program’s dedicated originators who have worked hard to make it all happen. HECM originators have weathered countless policy changes, taking the time to educate themselves about new guidelines and stay current on product changes. They have worked hard to combat misconception, believing ardently in the HECM’s value and teaching anyone willing to learn about the important role a reverse mortgage can play in retirement planning. To honor this program milestone, we reached out to a handful of seasoned reverse specialists and asked them to share their reflections about the HECM world and what their job means to them. 24 | TRR
COLLEEN MOORE
When I reflect on my time in the world of HECM, I can honestly say it is one of the greatest sources of pride that I have in my professional career. An estate attorney introduced me to the reverse product back in the early 2000s. I am ashamed to say I knew virtually nothing about this wonderful product, and throughout the years, it has dramatically expanded my ability to “make a difference.” What moves me is not just making money or gaining recognition, but actually having a positive impact on people’s lives. HECM does that, and it empowers those of us in the industry to truly love what we do!
g
Being a part of the HECM program has taught me how to love what I do. Even though it is hard sometimes, I have mastered the art of thinking out of the box to accomplish the borrower’s goals. This totally places the focus on the needs of the borrower, and that creates growth in anyone! The “one million” milestone is significant for everyone in our industry. We have struggled for so long to gain recognition and acceptance in the lending world, and hitting that milestone means, very simply, we are getting there!
SPOTLIGHT
SEAN MILLER
their lives more than you can ever know… I consider you as much a family member as any of my blood family.”
Reverse Mortgage Funding g I am honored to be able
represents progress—albeit progress slower than we would like. It means the HECM product is that much closer to becoming the product it can and will be to a nation of older Americans who are definitely in need of additional retirement options. My passion for my work is firmly rooted in serving aging people and the elderly, and I feel a sense of honor in doing so. The work is just the result of that passion, and with my experience and knowledge in the field of reverse mortgages, I am able to serve older adults in a valuable and meaningful way. Due to the uniqueness of the HECM product, the age demographic of the typical client, and the multitude of challenges our clients may face financially, physically, mentally or emotionally, the role of the HECM originator is often more vocational than just transactional.
am passionate about my work because for some, this program allows them to maintain their home and their independence. My work in this industry has made me even more empathetic to others’ situations and I have enjoyed the opportunity to help others, as I have done in all of my careers. It is truly enlightening to be able to educate others and show them how things can work for them.
DENNIS LOXTON
Liberty Home Equity Solutions
Prior to entering the HECM industry in late 2004, I was a financial advisor and then an institutional securities wholesaler. While those were both interesting careers, they did not provide the sense of accomplishment that we get every time we close a HECM. At every closing, we look at our clients across the table and know we’ve helped improve their financial and housing situation. It’s this type of unique fulfillment
g
This product is sold with a very long life cycle. In some cases, there are clients that take 12, 24, or even 36 months to make the decision to move forward. In addition to learning to be very patient with prospects and family members, this business also forces you to learn humility rather quickly. We
have a special position of trust when working with our clients, and this is a responsibility that we take seriously. It is this special bond with our clients and their families that provides a sense of accomplishment that I didn’t get in past careers. n reversereview . com
8 TRR | 25
SPOTLIGHT
I’ve been in this industry for over 25 years, and find it incredibly rewarding to see how profoundly I’m able to help change seniors’ lives. After helping a couple who had been in their home more than 40 years, I received the following letter from their son. It does a great job summing up why I’m so passionate about what I do. “You are my family’s saving angel. You truly are a gift from God. Through your undying efforts and tenacity... you saved my parents from being homeless and improved
g
1st National Reverse Mortgage g To me, this milestone
SERVICING
Liberty Home Equity Solutions
MICHAEL GRULEY
confirms to me that the program is still strong and gaining traction in spite of the naysayers. I
While today’s reverse mortgage professional definitely needs to have the brain of a forward loan officer, our role as a HECM originator isn’t just about pushing paper—it’s about the entire holistic approach of serving the client. Many times, a client will ask us for advice because we’ve established a special level of trust that few others do. Over the years, I’ve been approached by many forward firms looking to get into the space and I advise them that unlike the forward world, you need to be prepared for clients calling three, four or five years later just wanting to talk, and that they need to hire the right professionals that are capable of providing a high level of empathy and service.
HMBS
SUSAN A. POMFRET
First Bank g This milestone
ORIGINATING
to help improve seniors’ lives and earn a living doing what I love. My work in this industry has made me a better communicator, given me more patience and created an awareness that life is so fragile and short. The role of the HECM originator is truly unique in that we have the ability to break down the needs of the individual and structure the reverse mortgage to address the needs of a particular client.
ED O’CONNOR
and sense of service that motivates me to always provide the highest level of service possible to our clients.
The Reverse Review Dec./Jan. 2017
By Jessica Guerin
A TRR exclusive
Robert An interview with
Mulderig
HUD’s acting deputy secretary of single-family housing talks HECMs.
When you talk to Bob Mulderig about his work, one thing is abundantly clear: The man loves his job. His enthusiasm for his role as acting deputy assistant secretary of HUD’s single-family housing program is palpable. “I think this has got to be one of the best jobs in government,” he says. “It’s a really fascinating place to work, but it’s also a place that has helped, by last year’s standards, 4,000 people close on their homes every business day of the year. There aren’t too many people who can say they are involved in an organization that makes such a positive contribution to this country every day of the year.” In May 2016, Mulderig took for former DAS Kathleen Zadareky, who left office for the private sector. Mulderig had been working as a deputy for Zadareky since joining HUD in early 2015.
But Mulderig says despite taking over during this state of flux, he felt prepared for the job. “We have an incredibly strong staff, a relatively small group of people pulled from a couple of different offices here in headquarters as well as the homeownership centers, and they are the primary HECM team,” he says. “And of course we have an industry that is extremely committed… Since I became acting, my job has been to do what is necessary to support the staff and be in touch with the industry in any way I can to help bring the policy changes that were already in play across the finish line.” While he enjoys the work, Mulderig says it’s not without its challenges. “I have to tell you in all honesty, if the excitement of the job is working with the private sector, it is also a challenge because there are so many different constituencies,” he says. “We know every day that we don’t exist without the lending community, it’s simply the reality.”
He has a long history in the affordable housing sector, where he was worked since 1990 on both the local and state levels “We are dependent on our industry partners and must make sure in the Baltimore area. In 2011 he joined the U.S. Treasury that all the constituencies are well satisfied between industry and Department, working for the Community advocates, and especially our consumers. Development Financial Institutions Fund, It’s a challenge, but I can’t say that it’s an which supports community banks and unhappy one.” other financial organizations involved in "I think this has got to community development through grants Mulderig has overseen the release of a be one of the best jobs in and tax credits. When he took over for much-anticipated proposed rule that government... It’s a really Zadareky last year, the industry was still would allow condominiums to secure fascinating place to work, grappling with the effects of Financial FHA financing. Released in September, but it’s also a place that Assessment and other policy changes that the rule would establish guidelines for has helped, by last year’s have caused a significant dip in volume. FHA approval and reinstate the spot standards, 4,000 people
close on their homes every business day of the year."
26 | TRR
approval process in unapproved condominium developments. “We recognize that the condo world is one of the key avenues for affordable homeownership, especially for more urban areas where house prices have been on the rise. For a lot of people, a condominium is going to be the first place where an affordable home can be found,” Mulderig says. “The condominium market is very key for FHA and it just makes sense
for us to do what we can to expand credit access in the condominium world, because it’s really important that we make every opportunity available.” HUD has sought feedback from interested parties regarding the proposed rule, a process Mulderig says the agency takes very seriously. “I cannot tell you the incredible care that is given to every single comment. I have seen so many different versions of the documentation of every comment and the disposition of
reversereview . com
8 TRR | 27
The Reverse Review Dec./Jan. 2017
FACTS ABOUT
HUD
FHA
HUD - The Department of Housing and Urban Development is a cabinet department in the executive branch of the federal government. - Originally called the House and Home Financing Agency, it was formally named the Department of Housing and Urban Development in 1965 as part of President Lyndon Johnson’s “Great Society” program.
FHA - In 1934, the National Housing Act established the Federal Housing Administration.
- The agency was intended to provide mortgage insurance loans to approved lenders.
- FHA is the largest insurer or mortgages in the world with more than 34 million properties insured since its inception.
28 | TRR
“We never stop thinking and analyzing what is the next best thing to do... Do I anticipate continued change? We never believe our work is done at FHA. I say that very seriously. And with guidance and support from the secretary we work every day to expand access to credit while at the same time mitigating risks to the Fund.”
every comment and the weighing of both sides when people make opposing comments,” he says. “Really, nothing is missed. The staff is so diligent in making sure that all comments are not only read and understood, but also really weighed in terms of their potential impact on any rule that we ever propose.” With all feedback considered, Mulderig says he hopes the proposed rule will move to final in the coming weeks. “We are hopeful that the final rule will be issued before the end of the administration, but we’ll just have to keep our fingers crossed and see what happens.” When asked if the industry could expect more change down the road, Mulderig says the program will likely continue to evolve. “We never stop thinking and analyzing what is the next best thing to do,” he says. “Do I anticipate continued change? We never believe our work is done at FHA. I say that very seriously. And with guidance and support from the secretary we work every day to expand access to credit while at the same time mitigating risks to the Fund.”
But Mulderig says it’s impossible to know what exactly is in store for the HECM market. Will a strong
proprietary market ever take hold? It’s hard to know, he says, but he would consider it a welcome development. “It is never FHA’s intent to be the only game in town. We have always taken the posture that we are the niche program—all of our programs are
niche programs—we’re there to serve underserved borrowers, and that’s on both the forward and the reverse side. To the extent that there are other products out there, it’s not a matter of taking any market share away from HUD’s HECM program, it’s really more of how can we make sure there are as many opportunities for borrowers as possible," he says. “I’m sure we could learn things from a proprietary market… We can always learn from what other players in the real estate financial market are doing.” When it comes to the product’s decidedly low penetration rate, Mulderig says it’s important to bring the focus back to helping consumers. “I tend not to focus on individual percentages… The key thing is making sure that the word is getting to borrowers who could use the program and for whom it would be the right answer for their financial situation.” “Good education with the community is important,” he says, adding that conversations about the borrower’s experience are also essential. “The whole focus [of the recent NRMLA conference] was creating a better borrower experience, and there was a lot of really healthy discussion about helping potential participants in the reverse mortgage program understand what the implications of the program are, how it can best serve them, and what they need to know about what the long-term impact of it is for their families. We can do a certain part of that in
government, but a lot of that is how well the industry educates consumers as to how the program can best serve them.” And, of course, making sure lawmakers have a solid understanding of the program is also essential to its longterm viability. With an administration shift on the horizon, Mulderig says he remains committed to working with leaders in Washington to ensure that they fully understand the importance of the HECM program.
“We are very committed to the program at HUD… We’ll always continue to evaluate the program and to consider how we can make sure that it best serves the borrowers who need it.”
“We look forward to working with members of Congress and new leaders in the executive branch in making sure that everyone understands the benefit of the reverse mortgage program,” he says. “It truly is a remarkable benefit to certain seniors for whom taking equity from their home makes a significant difference on how they are able to be sustained on a daily basis.”
makes it a valuable part of FHA’s offerings. “We are very committed to the program at HUD… We’ll always continue to evaluate the program and to consider how we can make sure that it best serves the borrowers who need it,” he says. “Of those 4,000 people who close on their homes every day, about 200 of them are HECM borrowers… that is something we must never lose sight of.” n
Mulderig says the HECM’s ability to bring access to credit to a very specific and important segment of the market
Wishing you a prosperous
New Year
Thank you for adding QuickCert to your list of HECM counseling agencies. (888) 383-8885 - OPS@QuickCert.org reversereview . com
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The Reverse Review Dec./Jan. 2017
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The Originating Challenge By Patricia Whitlock
There is nothing quite like the feeling of accomplishment when you close a difficult loan.
Tackling tricky cases to help borrowers close their loans
The pieces fall into place, and you have helped secure the future for another senior.
Title and appraisal issues can pose enormous roadblocks. I never could close the loan in rural upstate New York where primary access to the property was by way of a stone bridge maintained by a neighbor. I did manage to close the loan where a well was located in the cellar by getting the local water authority to write a letter stating that the well could be “grandfathered in” by laws that were in place when the house was built. Sometimes it is a matter of asking what exactly would be needed to clear a tricky condition, then getting on the phone or in the car to find it. A recent widowed borrower did not have a copy of her late husband’s death certificate. The hospital where he had died did not have a copy, and the New Jersey township where the couple had lived would not confirm on the phone whether they had a copy or not. The woman would have to go to the town offices and request a copy in person, and she would have to provide, in addition to adequate identification, a certified copy of her marriage certificate. The borrower refused to go—the town office was located, according to her, in an unsavory and dangerous part of town. My solution, maybe not the most creative but certainly the quickest, was to send a limousine to her home to drive her to the town offices, wait for 30 | TRR
a six-month effort to propose and negotiate a settlement with the servicer. Rachel did not have the $400 to pay for an appraisal, and my operations manager was not enthusiastic about laying out the funds for a loan that might never close, so we based the value on a best estimate of $400,000. We created a HUD-1 settlement statement and by estimating costs as closely as possible, and worked backward to a Principal Limit figure that we prayed the lender would accept. Hours were spent on the phone, mostly on hold with the automated system. A lengthy hardship letter and an explanation of what a reverse mortgage was were forwarded up the chain, step by tedious step.
"My experiences originating HECMs over the years continue to bring new challenges my way. But each time I am able to overcome the challenge the loan presents and help a borrower find financial security, I am reminded of the importance of the work that we do." her to complete her errand, and drive her home again. Perhaps the most challenging set of circumstances is seen in a “short re-fi,” the reverse mortgage equivalent of a short sale. I met Rachel when her search for a solution led her from a debt counselor’s recommendation that she try a HECM reverse mortgage, to the Yellow Pages, to me. She was a 65-year-old single woman just scraping by on her salary as a bus driver when she was laid off by the bus company and went on Social Security. When I visited Rachel with an application package, she took out her checkbook to show me how much Social Security
income was deposited every month, as many prospective borrowers do. Then she gave me her mortgage statement. Her monthly mortgage payment was the same, to the dollar, as her Social Security payment. She explained how she had done a recent refinance but when she lost the bus company job she could no longer afford the cost of living in her home. She cried when she told me that her grandson was waiting for her to buy him new shoes, but she just didn’t have the money. If she could just pay off the mortgage she would be able to live off her Social Security check, but the HECM proceeds were short by around $80,000 to cover the total owed. Thus began
Finally, the offer was accepted, but it was only good for 10 days. In that 10 days, we managed to get the appraisal and title done, and Financial Freedom got the file underwritten and closed. The servicer being paid off stipulated that no cash be given to Rachel, so when we worked out the final figures, the $20,000 or so overage stayed in a line of credit, earmarked for taxes. Rachel is still living in her home, and she calls me from time to time to tell me she’s OK, and to give me the name of one of her friends who will be calling me. My experiences originating HECMs over the years continue to bring new challenges my way. But each time I am able to overcome the challenge the loan presents and help a borrower find financial security, I am reminded of the importance of the work that we do. n
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The Reverse Review Dec./Jan. 2017
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