February 2010
THE
REVERSE review
page
18
Remembering Our Customers’ Needs - A Treatise on Reverse Mortgage Marketing Segmentation Jesse Pujji When it comes to generating new business, the Reverse Mortgage business can feel like a numbers game. Your goal is to get as many leads as possible and convert them into actual sales. However, in that process it is very easy to lose sight of the fact that this information represents more than just leads; there is a vital human element. This month, Jesse Pujji from Ampush Media teaches us how to bridge the gap between the numbers approach of lead generation and the human element of Reverse Mortgages. The expert marketing segmentation methods he outlines will boost your sales, increase your conversion rates and ultimately help you grow your business.
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February 2010
Publisher Aman Makkar Editor-in-Chief Erica English Copy Editor Harpreet Makkar Production Jason Westbrook Creative Director Traci Knight Layout & Design Wilferd Guenthoer National Accounts Manager David Peck Printer The Ovid Bell Press
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THE
REVERSE review 16745 W. Bernardo Drive Suite 450 San Diego, CA 92127
© 2010 The Reverse Review, LLC. All rights reserved. The Reverse Review, LLC is a California limited liability company and is the publisher of The Reverse Review magazine. 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, The Reverse Review, 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, 16745 W. Bernardo Drive Suite 450 San Diego, CA 92127
I
note from the publisher
t seems that this year began with a sense of vast uncertainty. I say uncertainty because we’ve had to scramble to adapt our businesses to the new changes applied to RESPA, GFEs, and HUD Mortgagee Letter 2009-28, which goes into effect this month. Many of us have struggled with how we will cope with these changes; some may have felt a sense of defeat, while others may feel these represent positivity for our industry. Regardless of your initial reaction to these monumental changes, it’s not the change itself, but how you choose to tackle and adapt to these changes that will determine your continued success in the industry. An omnipresent theme at The Reverse Review has always been the education of our readership and this month we provide an eclectic mix of articles contributed by both industry veterans as well as a new comer.
They have provided their insight into such topics as marketing segmentation, direct mail marketing, RESPA, GFEs, and investments just to name a few. We hope you are able to directly apply the knowledge provided through these articles into your day-to-day business activity and as always we would love to hear your feedback. Have a great month!
Aman Makkar Publisher
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CONTENTS
14 The True Value
of Servicing: A Fair Portion or Leftovers? John LaRose
18 FEATURE: Remembering
28 Build Reverse-capacity:
Our Customers’ Needs - A Treatise on Reverse Mortgage Marketing Segmentation
HECMs for First-time Homebuyers
Atare E. Agbamu,CRMS
Jesse Pujji
24 When Investment Ideas
Cross Paths with Reverse Mortgages Jonathan J. Neal
ESSENTIALS 5 Note From the Publisher
8 Ask the Underwriter
12 Industry Stats
32 Ask the Servicer
33 Directory
34 The Last Word
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February 2010
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When Eight Isn’t Enough…
ask the underwriter
By Ralph Rosynek Recent Respa Reform changes initiated to better inform today’s senior seeking a Home Equity Conversion Mortgage (HECM) have resulted in a new level of tolerance for both origination and underwriting processes. Checklists everywhere are being updated to include new or enhanced internal controls and workflows to address the higher level of consumer disclosure considered by many as a more simple and efficient means of determining loan costs and fees. But, is it productive? While less than 30 days in effect at the time of this writing, it is important to note that from the onset, key elements, actions and information must come together in order for a successful transaction to occur. Upfront and simply stated, eight basic elements of information aren’t enough to start the Good Faith Estimate (GFE) disclosure process. Nine is the key, and of the nine, one can’t help asking which came first, the chicken or the egg? Borrower intent to proceed must be provided to the originator, as one of the 9 elements, BEFORE a completed GFE can be provided. In order to truly provide a written estimate of costs and fees, the Borrower(s) must provide their full name, property address, date of birth, social security number, an estimate of property value and gross monthly income (if applicable). These elements when combined with the principal limit derived from the addition of product choice, expected interest rate and margin to the mix are not enough to create the disclosure. Theoretically, the days of bringing a complete set of application documents to a face-to-face application appointment is in itself a dilemma. The word application becomes the operator as in essence, a GFE can not be issued until an application has been taken, and, an application is not considered an application unless the 9 basic data elements are provided (which includes the borrower intent to proceed). Does this sound like the dog is chasing its tail? Wait! I know what you are thinking – • How many borrowers are going to give you sensitive data over the phone or via e-mail? • If you have the 9 elements before you meet face-to-face, is the application considered a telephone or mail application? • Can’t I bring a printer to the face-to-face-meeting? • So what’s the application date for a mail or electronic application package? • How many borrowers will sign and complete a mail or electronic application package without a GFE? • What happened to a pre-qualification? Recognizing the effectiveness of the national wave of identity protection measures resulting from fraud, internet abuses and consumer targeting, are we not negating these measures by placing the senior’s need to know and be informed at a lesser level of priority? “Yes Mr. and Mrs. Johnson, I can tell you what you are eligible for on a preliminary basis, but I have to do an application to provide you with a written statement of costs and fees. Alternatively, I will need the following information as well as your intent to proceed in order to provide you with the Good Faith Estimate you are requesting.”
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A word of caution, while the above comment may seem somewhat awkward in presentation, and certainly a change in behavior and methodology for many, readers are urged to consult with your legal counsel before undertaking any form of “work around” to the application process and borrower request for a written statement of fees and charges. No doubt the crafters of the reform failed to realize the pre-qualification process. Little or no guidance was provided with respect to the borrower need to review before proceeding, hence there have been a number of “basement” brewed documents to circumvent the intent of the reform. By rule and regulation, the GFE is a binding document and attempts to send a “preliminary GFE” in the form of an altered GFE format and form have yet to fully be evaluated and commented on by HUD. Though initially considered a positive assist to the borrower by some originators, many of these initial adaptations increase origination risk and add more confusion to the process because of their lack of clarity and potential violation of disclosure requirements. Likewise, “acknowledgement of receipt” documents that are popping up in the marketplace need to be fully vetted with legal counsel, prior to use. For those electronic and mail originators, information elements are key to maintaining proper compliance with RESPA. Unless the borrower prior provides required information necessary to create a complete loan application package, providing a GFE upfront could seriously impact your ability to meet required date and evidence of disclosure rules. A new underwriting determination has recently been added by many lenders, “Incurable Disclosure Fault”. Basically, the progression of disclosure, application, dating and re-disclosure actions are out of synch and the file is faulted, requiring a complete new origination action with the creation of a new loan application package. When addressing an incurable disclosure fault, consider the additional ramifications of rules and guidelines which address the ordering of services prior to the date of the application, FHA Connection and Case file issues, time delays, updates and most important an explanation to the borrower which could raise issues of confidence and professionalism. Eight isn’t enough today, but is nine the answer?
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contributors Ralph Rosynek - Ask The Underwriter, page 8
Ralph Rosynek is President and CEO of 1st Reverse as well as a HECM DE Underwriter. Mr. Rosynek has been involved in mortgage lending for over 30 years with the last 5+ years exclusively providing reverse mortgage lending solutions. To contact Mr. Rosynek or to learn more about 1st Reverse Financial Services, Please visit www.1streverse.com or call 877.574.1000.
John Lunde - Reverse Market Snapshot, page 12 John Lunde is President and founder of Reverse Market Insight, the premier source for market intelligence and analytics services in the reverse mortgage industry. RMI clients include five of the top ten reverse mortgage originators, both lender and independent servicers, as well as some of the largest financial services firms in the world. Find out more at www.rminsight.net or call 949.281.6470.
John LaRose - The True Value of Servicing: A Fair Portion or Leftovers?, page 14
John LaRose has worked tirelessly for more than 20 years to promote the obligation and need for ethics in the mortgage industry. Recognized throughout the reverse mortgage industry as a niche-marketing specialist, he is also frequently called upon for his advice and counsel.
Jesse Pujji - FEATURE: Remembering Our Customers’ Needs - A Treatise on Reverse Mortgage Marketing Segmentation, page 18 Jesse Pujji is a co-founder at Ampush Media, a disruptive lead generation company combining Wall Street analytics and marketing intelligence. Prior to Ampush, Jesse worked as an investment professional at Goldman Sachs and a consultant at McKinsey & Company. He graduated from The Wharton School at Penn with honors. Jesse can be reached at jesse.pujji@ampushmedia.com or by telephone at 800.AMPUSH1. Jonathan J. Neal - When Investment Ideas Cross Paths With Reverse Mortgages, page 24
Jonathan Neal is the senior partner at CCG-Capital Consulting Group, LLC a sales and training consulting firm located in Atlanta Georgia. Through his 30 years of experience John’s primary focus has been on post-retirement and estate planning. Jonathan is recognized nationally as an author and coach, managing and training financial/insurance professions who work principally in the senior market place. Jonathan can be reach by phone at 678.906.2850 or email at jneal@ccgcap.com.
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Build Reverse-capacity: HECMs for First-time Homebuyers, page 28 - Atare E. Agbamu CRMS Author and columnist, Atare E. Agbamu CRMS, is director of reverse mortgages at Minneapolis-based AdvisorNet Mortgage, LLC. A member of BusinessWeek Market Advisory Board, Agbamu is author of Think Reverse and more than 100 articles on reverse mortgages. He can be reached by phone at 612.436.3711 and e-mail at aagbamu@ advisornet.com or atare@thinkreverse.com. Ask The Servicer, page 32 - Ryan LaRose Ryan LaRose is the Executive Vice President of Celink, an independent reverse mortgage subservicer. Ryan has over 12 years of servicing experience; exclusively in reverse mortgage servicing since 2005. In addition, Ryan is an active member of the NRMLA servicing and technology committees. Visit his website at www.CeLink.com or contact him directly at 517.321.5491. The Last Word, page 34 - Mark A. Sisco Mark A. Sisco is the RSD with Covenant Mortgage and is the driving force of the retail sales and training group of the Reverse mortgage division. He holds a California Broker’s license and a Florida origination license and is an accomplished speaker with over 13 years in the mortgage industry with the last 3 years devoted to the Reverse mortgage industry. Mark can be reached at www.covenantreverse.com or contact him directly at 877.FHA.1800.
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T h e T r u e Va l u e of Servicing: A Fair Portion or Leftovers?
In 1992 I was contacted by a large, nationwide FHA Title I (home improvement loan) lender in New York who was working on a securitization with one of the Wall Street firms, and he said to me, “We need a servicer for a securitization of about 5,000 Title I loans and we are willing to pay you 75 bps. We need an answer right away.” I told him I would have to think about it because proper servicing of this product required 150 bps, to which he responded, “I need to clarify something. I am in a room with over 15 people who are signing documents as I speak and we cannot go any further without you accepting our offer. Oh, and 75 bps is all that is left over.” All that is left over? I foolishly said yes, and I am still servicing what was “left over” from that transaction to this day. I say foolishly, because the expectations were for Nordstrom level service at Dollar Store prices, and nobody in that room cared a bit because it was all about sealing the deal. This deal was made
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with little or no thought to what would happen to that portfolio as it aged. This is not an article about securitizations nor is it about the economic valuation of mortgage servicing rights as one might have assumed when reading the title. It is about the very real and mostly intangible benefits that define quality servicing of reverse mortgage portfolios. (Note: For the purposes of this article, the word ‘servicer’ means subservicer as well.) In looking at the flip side of a quality well-run servicing operation, you will be able to determine rather easily what could happen to a portfolio if it was poorly managed by a servicer. Valuation of a lender or investor’s servicing rights is directly linked to the value the servicer brings to bear on the portfolio. In fact, they fit together like the proverbial “hand in glove”. There are various economic valuation models that determine mortgage servicing rights (MSRs) and they are provided to those who engage in the practice of buying and selling them. To the best of my knowledge, none of these models take into any consideration the quality of servicing. Quality of servicing is all too often assumed - and we all know what happens when one assumes.
Let’s now translate this lead-in to define quality reverse mortgage servicing. In the 24+ years in the business of servicing loans, I have not experienced anything like this product. On the forward side of loan servicing operational performance benchmarks revolve around delinquencies, defaults, cure rates, loss mitigation results, etc. Few of those come into play with reverse mortgages so the reverse industry had to develop a whole new set of benchmarks in determining what quality servicing actually means.
The RESPA Challenge
What do you think most people say when they hear about reverse mortgage servicing? Their assumptions sound something like this: “You guys have it made! All you do is keep track of accounts and disburse money when the borrowers want it, right?” Nothing could be further from the truth. Much is written about the origination process of reverse mortgages, and appropriately so. Counselors, loan officers, processors, underwriters, and closing/title agents are the first point of contact for the borrower. These first points of industry contact form and frame the reverse mortgage experience for every borrower. Therefore, it is the responsibility of these individuals to ensure that everything is timely and properly executed, and that everyone is working hard to ensure the borrowers have a pleasant and informed experience. At present time, there is much scrutiny around and about this front-end process from both state and federal levels, and this is appropriate too. Those individuals involved in the origination process work directly with the borrowers, the family members, friends, and trusted advisers. Additionally, these same individuals will reap the first and largest portion of the revenue from the reverse loan product. Let’s now move forward in the typical life cycle of the reverse mortgage as it is passed to the servicer. The application to closing process of a reverse mortgage generally takes 30-60 days, though from time-to-time it may take longer. When the servicer receives a loan after closing, it is being entrusted with an investor’s valuable asset that will be in its possession an average of seven (7) years. While there are multiple “touch-points” that frontline industry professionals will have with borrowers in the origination process, they number far less, and pale in comparison, to the touch-points a servicer will have with the borrower over the life of the loan. These touch points begin with the servicer’s initial contact with the new borrower. On forward loans the first call to the new borrower may be as brief as 45-60 seconds. Not on the reverse side! In the reverse world, that first borrower call averages 4-5 minutes and it is not uncommon for these calls to go on for 20+ minutes. The average senior borrower requires more explanation, more patience, and those of us who service this product understand and accept this responsibility willingly. Every month, shortly after statements are mailed, the incoming calls are simply off the charts. The senior borrower is much more attentive to detail and they will ask about anything they do not understand, and at length. Servicers have to explain the servicing fee set-aside every month, monthafter-month, and often to the same borrowers. (On a related, but separate note: Who was it that first thought a servicing fee set-aside was a good idea? Can we talk?) As we continue working through the life cycle of a reverse mortgage, there are additional touch-points between the servicer and borrower. After the first year of the loan, the borrower will be required to certify residency. This may seem like a simple process: mail a letter out and get a signed certification back. Our experience demonstrates that certifying residency can be anything but simple at times. Some borrowers perceive the contact as an intrusion;
Stricter RESPA rules, lower principal limits, a more complex FM1009 and other changes pose a serious challenge to our industry. Lenders will take on additional responsibilities and need to be meticulous while working with brokers. Brokers will lose all or most of the YSP and any mistake made in the GFE could cut into their origination fee as well. But there is also good news around the corner... ReverseVision Inc.
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some react in a downright hostile manner; and some (every year) question the validity of our request. Each of these exceptions consume considerable amounts of time: explaining the reason behind the request; reminding them of the fact that they agreed to this during the closing process; and reiterating that it is required for HUD insurance to remain in place. If the borrower has required repairs from closing, there is a significant amount of time spent educating the borrower on the process and their obligations under the Repair Rider. Frequent phone calls and letters are generated back and forth between the borrower, the contractor, and HUDcertified inspectors – all in an effort to assist the borrower in completing their repairs while, at the same time, trying to protect the borrower from unscrupulous home improvement contractors. It is not uncommon to find a remodeling company attempt to talk the borrower into additional (and possibly unneeded) repairs, nor is it uncommon for a repair invoice to come in higher than the quoted bid. In each of these situations, the
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reverse servicer is responsible for working with the contractor along with the borrower, to resolve these issues amicably. When the borrower has no money for taxes and insurance, a servicer is faced with a very complex and delicate situation. Some borrowers have family members who can help them and some have financial reserves outside of their reverse mortgage. Unfortunately there will be approximately 2-3% of any reverse servicing portfolio that represents borrowers who have little or no additional resources. They may have only social security income to live on and their reverse mortgage has been fully drawn and spent. Regardless of how you feel about these situations (i.e., foreclose or ride it out), servicers must work diligently with these borrowers to resolve the defaults. Throughout the process, a servicer must respect the borrowers’ dignity, and there is nothing easy about coming to resolution in these cases.
The RESPA Opportunity
The death of a borrower or his/her spouse is, without a doubt, the most difficult and traumatic situation a servicer has to deal with on a daily basis. Servicers will be working with grieving family members who run the gamut of needing gentle but guiding “hand-holding”, advising them of their responsibilities regarding the loan, all the way to working alongside them for the next year to properly dispose of the property if the last surviving borrower has passed away. Servicing staff who manage this process require the patience of a saint, the calm presence of a Tibetan monk, and the sensitivity and compassion of a funeral director. From the investor’s standpoint, servicers appreciate the need for return on investment, just as we understand the need for multiple investors in the reverse mortgage space. The difficulty, as we see it, is a potential new investor’s lack of understanding around servicing the unique needs and demographics of reverse mortgage borrowers. Investors must come to the deeper understanding that putting together a reverse mortgage securitization is far more than the structure of the transaction. In other words, it is not simply determining “who gets what” - with the servicer getting whatever is “left over.” It is tempting to commoditize the reverse mortgage servicing process and the loans without understanding the very “high touch” aspects of the reverse mortgage product. The truest value of servicing extends above and beyond the cost of processing paperwork, and in fact it is a gross injustice to all reverse mortgage servicers to think that all we do is keep track of accounts and disburse money when the borrowers want it. When a servicer takes on each and every new loan, and for the life of the loan thereafter, it becomes the calm, reassuring voice of reason for the lender; the monthly point of contact for all things financial; the helpful hand to hold during grief and transition. Reverse mortgage servicing warrants fair portions, not leftovers.
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REMEMBERING OUR CUSTOMERS’
NEEDS A TREATISE ON REVERSE
MORTGAGE MARKETING SEGMENTATION
BY JESSE PUJJI
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T
raditional performance marketing and lead generation is all about the numbers. No surprise there. Ask any direct marketer about how to close sales, especially in the reverse mortgage space, and they’ll tell you just that: it’s a numbers game. Direct mail, telemarketing, TV marketing and internet leads all boil down to source cost, conversion rates and eventually, cost per acquisition. Want profits to go up? Lower cost per acquisition, which means increase conversion rates or decrease lead source costs. Want volumes to go up? Buy more leads or try a new type of direct marketing, but keep conversion rates the same or lose profit! This is nothing new—it’s how virtually all performance marketing works. It makes sense too! Performance marketing and lead generation are very elegant ways of allocating and spending a budget. They are clean, simple, straightforward and go back to the dollars and cents. You can track performance, compare vendors easily, test results, drive better performance, measure it and then rinse and repeat. It’s easy to understand what’s happening to your investment. Let’s face it: branding campaigns are a challenge. Spending on advertising which isn’t measurable is difficult at best and can be wasteful at worst. Our industry wasn’t built that way and while we desperately need some large branding campaigns, it’s tough for any one to pioneer those efforts. But somewhere, between the CTRs -Click through rates, and the ROAS -Return on Ad Spend, and the CPA -Cost per acquisition, we’ve forgotten something. We’ve forgotten the human; the human who could be our grandmother or father, the human who may be dealing with a challenging medical situation or living with a sub-optimal retirement. Every human has become a row in an excel spreadsheet, a lead we need to buy from Vendor X or a “nonconverter”. And while our industry was built around direct marketing, ask any Reverse Mortgage loan officer and they’ll tell you: this is the most human of all businesses. This business is all about the person: who they are, what their situation is, their family, their fears, doubts, needs and on and on. Most direct marketing and lead generation almost completely misses the question of “who?” The numbers game requires that you buy 100 leads of different types, call them and some portion will convert. It never goes under the surface to ask,“why did they (or didn’t they) convert?”
S
o how do we solve this problem? How do we maintain the elegance of quantifiable marketing spend while not forgetting that our buyers are actual people. We can’t know everything about everyone we talk to in the performance marketing business. We can’t quantify every issue and think through all the reasons. It’s nowhere near as efficient as the current system. So where do the numbers of performance marketing tie back to the who, the what and the why? The answer is in building a marketing segmentation. Specifically, a needs-based marketing segmentation. Most people are already somewhat familiar with marketing segmentation: take a bunch of people, split them up into groups where there are similarities and
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market to them in the same way, or sell them similar products. Reverse mortgages, after all, are the children of a marketing segmentation activity. Someone a long time ago asked, “What financial product would people over the age of 62, with greater than 50% equity in their homes want?” The answer was reverse mortgages and the rest, as they say, is history. Grouping similar people together sounds straightforward, but in fact there are a host of different ways you can go about doing it and some are better than others. So what are the major types of marketing segmentations? What do the ”experts” use? How can they be used to improve current performance marketing efforts? That’s what this article is all about. Marketing segmentation is the process of taking a group of consumers and dividing them up into similar groups in order to improve marketing, positioning, product design or other factors related to selling. By splitting consumers into groups, you gain a lot of insights into the customers and improve your overall strategy. Basic segmentation requires creating a number of separate groups which when added together are all encompassing. Once you segment the market, you can better understand which areas are underserved and which are overly competitive. The science of marketing is first segmentation, then targeting - choosing which segments to go after and then positioning - deciding what marketing mix and messaging to reach the segment with.
W
hile there are many types of segmentations, the three most common are demographic, behavioral and needs-based. Using all of them is important. Understanding each and its relevant shortcomings are also important. So let’s take a look at each type of segmentation, highlight its importance and point out some shortcomings to remember. To keep this simple, fun and entertaining, let’s use the example of beer drinkers. The first type of segmentation is the most common: demographic. This is also the easiest to perform and quickest to implement. Demographics are any of those factors that you’d hear a police officer use to describe a suspect: age, gender, race, or religion. Additionally, demographic can include income, occupation, education and a host of other factors. It’s anything objective used to describe a person. It will tell you critical factors about the person you are marketing to and give you a number of clues about this person and generally paint a real picture; and for a direct marketer, it can be very powerful. For example, simple data will show us that someone 70+ years of age is far more likely to convert than someone below 70 years of age. Where we focus our lead generation activity and which leads we focus on converting can and should be a part of bringing both science and the human into marketing efforts. Using the same example, wouldn’t we want to call a 70+-year-old prospect more times than a prospect below the age of 70? So what does a simple demographic segmentation look like for beer drinkers? Let’s keep it simple: age, gender and income level. Let’s make five segments: Young Males; Young Females (income not important for younger people); Older, Rich Males; Older, Poor Males and Older Females (again, income not as important. As you can imagine, a campaign which just touts
beer will not resonate with all of these groups. Young males like the excitement of football and cheerleaders and a simple, cheap product like Bud Light. Older Females, on the other hand, might like the sophistication of Stella Artois. Using a few simple demographics and creating simple categories has already improved our marketing efforts.
S
o what’s the challenge with demographic segmentation? First off, it’s implicit. It requires us to use averages and assumptions to determine what a consumer actually wants. Using our beer example, there are probably a number of older females who enjoy Bud Light but we’ve assumed this to be untrue. Like lead generation, demographic targeting ends up being a numbers game. Let’s look to a more poignant example: using demographic analysis, I find my perfect customer. He was born in 1948, is a male and of British nationality. He’s affluent, on his second marriage and comes from a well known family. Clearly, there can only be one of this customer, right? Wrong! These factors perfectly describe TWO people: Prince Charles and Ozzy Osbourne! Clearly, demographically speaking, these two are twins, but it’s also obvious that they are worlds apart. Their consumption, needs, desires and behaviors are vastly different. So what about behavioral segmentation? This, too, is a tool with significant value to a marketer. Behavioral segmentation aims to split consumers up by observed decisions they have made or their attitudes and usage towards specific products. By understanding a consumer’s behavior, we can better understand how to reach
them and we can add another layer of intelligence to our direct marketing efforts. For reverse mortgages, a straightforward behavioral segmentation would be the payment type a senior would be most likely to select. Those looking for an annuity stream versus those looking for a credit line are very different. The lead is different, the script used to call and the pivot point of the call would all be very different depending on how they answer the question around payment type. Perhaps a better behavioral indicator would be “readiness to buy”. Is the consumer just getting information, are they comparing price quotes or are they looking to close a deal? Behavioral segmentation and understanding the potential segments and their issues, presumably, would bring back human elements to our consumer base and thus allow us to better reach these people. What’s a behavioral example for beer? The most obvious might be usage. At its simplest, there are heavy drinkers (>10 cans per week), medium drinkers (2-10 cans per week) and light drinkers (<2 cans per week.) Without a doubt, we’d want to market and reach to people differently depending on what we believe their usage patterns to be.
S
o what’s the challenge with behavioral segmentation? Again, it’s implicit. It tells us what the customer is doing but it is the “what” and not the “why”. We can attempt to segment by these factors and it will allow us a better understanding of our client, but it doesn’t “hit the nail on the head”. Similarly, it can lead to confusion. We understand what a customer has done (e.g., filled out a lead form) and perhaps that sends us a signal. But we don’t know they have filled out that form (e.g., their child made
“PERFORMANCE MARKETING AND
LEAD GENERATION ARE VERY ELEGANT WAYS OF ALLOCATING AND SPENDING A BUDGET. THEY ARE CLEAN, SIMPLE, STRAIGHTFORWARD
AND GO BACK TO THE DOLLARS AND CENTS.”
February 2010 TRR
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them). This last part is the critical shortcoming. For example, two customers may both want a lump sum loan payment. However, the first one may need it for critical medical expenses while the second wants to re-model their second home. Focusing solely on behaviors, we could miss the mark in our marketing efforts.
T
he last type of segmentation is a needs-based segmentation. A needs-based segmentation, while often times the hardest to gauge, is the holy grail of market segmentation. It answers the real question: why is the consumer doing what he or she is doing? What’s the motivation behind the activity at hand? This is an absolutely explicit understanding of the consumer. There are examples aplenty. In our world, why does our consumer need a reverse mortgage? Is it to re-model their home or to pay for healthcare? Is this a situation where they need cash or just some extra spending money? Again, why did they inquire? Did their son or daughter make them inquire or do they genuinely need the money? Understanding the difference will improve lead generation, conversion and customer service. In marketing speak; it gives us the deepest insight for designing and selling our value proposition. At a company level, it allows us to be forward looking (i.e. what is the potential as opposed to what we already know). To go back to our beer example, let’s try to understand why people may drink beer? Some like to binge, some enjoy the taste, some are social drinkers, others are connoisseurs. Regardless of how much they drink or their age, social drinkers are social drinkers. They do it “once in a while” typically at a party or some kind of gathering. Taking that fact about a consumer gives us real insight into them and allows us to explicitly target them.
“SEGMENTS SHOULD BE: IDENTIFIABLE,
ACCESSIBLE, SUBSTANTIAL
(LARGE), HAVE UNIQUE NEEDS AND BE
DURABLE (NOT LIKE FASHION TRENDS). REMEMBERING THESE TIPS WILL IMPROVE YOUR OVERALL STRATEGY.”
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So which segmentation type do we choose and how do we use it? First, a few more pieces of advice: Marketing segmentation is an art and a science. Most likely, the successful segmentation exercises will be a combination of the above types mentioned (statistically speaking, a needs based + demographic segmentation is usually the most precise and successful). In addition, it is easy to go crazy with segmentation and to find oneself frustrated with data and with too many meaningless segments. So remember, segments should be: identifiable, accessible, substantial (large), have unique needs and be durable (not like fashion trends). Remembering these tips will improve your overall strategy, bring humanness back into marketing and eventually, reduce your cost per acquisition.
S
o now what? We understand market segmentation but what is next? Of course, there is no silver bullet, but starting to think and understand how to divide consumers in a way that gives us better insights into them is the first step to bringing â&#x20AC;&#x153;marketing intelligenceâ&#x20AC;? to our performance marketing efforts. As we have surveyed the lead generation space, we find it difficult to understand how someone can call themselves a marketer and not take segmentation (and later targeting and positioning) into account as they run lead generation campaigns. Whether TV, phone or Internet based, marketing segmentation is one of the building blocks of any campaign. For us, segmentation and then research, is the starting point to anything we do. It forces us to think beyond the numbers and remember that these are people and the more we remember the who, the what and the why, the better our chances are of reaching them.
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I received an email the other day from a reverse mortgage broker in which he asked an interesting question. Since I have had a number of conversations with this broker in the past I knew that he was in fact looking for answers based on my financial planning experience rather than just trying to get me to justify a sale. The question at first glance appears to be simple enough, â&#x20AC;&#x153;Should a reverse mortgage be pursued in this situation?â&#x20AC;? In reality to answer this question with some semblance of correctness we have to look at it from a number of different yet related perspectives. In other words, rather than a simple yes or no we had to make an objective assessment of a situation, taking into consideration all the different aspects and their comparative importance.
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The reason I wanted to share this is because it is a real life situation that comes up on a regular basis. What makes it interesting to me is that I have had this same question posed to me a number of times by a number of different people in the reverse mortgage, investment planning and insurance fields; and more often than not they were look for the validation of a sales presentation. So here is the question as it was written via email: Jonathan, have you thought about the potential advantage of utilizing a reverse mortgage to pay taxes on a Roth IRA conversion? Of course at first glance the simple answer is yes, but when giving advice, about someone elseâ&#x20AC;&#x2122;s money at least, a little time should be given to thought. So I have thought about it, as a matter of fact I have thought about it, written about it and had numerous conversations with a lot of different people about the potential advantages. On the other hand I spent a lot more time thinking, talking and writing about all the disadvantageous. Here is my actual replay: The Roth question comes up a lot, and I almost never give the person asking the question the answer they are looking for. A Roth conversion usually implies one if not both of the following. (1) A significant tax liability will be generated. If this isnâ&#x20AC;&#x2122;t the case why bother. (2) The person considering the conversion is not going to need the funds for a minimum of five years. If this is the case why not just wait until they do need the money. Even if a person does have to start complying with RMDs there are numerous other options that would prove more beneficial than paying all the taxes up front. I am sure that there are cases where this would make since, but I have yet to see the situation or model where it does. Thanks, Jonathan
What you need to take into consideration is that the answer I gave is nothing more than my opinion. As such there is no doubt you can find any number of other people who will have opinions that will differ from mine. The point I want to make here has nothing to do with my opinion of this particular question, what it has to do with is the reality, you as a reverse mortgage professional are faced with, when it comes to what people plan on doing with the money they generate from a reverse mortgage. In other words the real question is what, if anything, is your responsibility when it comes to how people use their own money? The truth is that I have heard many different reasons for why people decide to do a reverse mortgage ranging from what I considered to be really well thought-out and smart reasons to some downright dumb ones. However,
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what I have to keep reminding myself is that whether a person’s reasoning makes sense to me or not is irrelevant, after all it is their money and my opinion is nothing more than that, my opinion. On the other hand, if a reverse mortgage professional is involved in the decision process of a senior when it comes to whether or not they do a reverse mortgage that includes the opinion(s) and presentation(s) of one or more people in the insurance, investment or accounting fields we have ventured into a whole new arena filled with pitfalls and land-mines AKA liability and conflicts of interest. Think about it from this point of view, the sale of one product or service depends on the sale of some other product or service either immediately, prior to, or just after the completion of one or the other. Could it be reasonable for some third party to construe that sales people involved in the two transactions benefited mutually from the success of the other? Granted that this case could be made on almost every reverse mortgage, but when the funds from the reverse mortgage end up being used to purchase an investment or insurance product it is almost a certainty that bells and whistles are going to be set off in at least one regulatory office. When it comes to Roth IRAs you are dealing with federal laws written expressly to address a specific type of qualified account and the tax status of deferred taxes related to those accounts. This is one of those areas where it pays to abide by the old saying, “Fools rush in where angels fear to tread” or keep in mind what a securities attorney once told me, “my business depends on the acts of the rash and the inexperienced attempting things that wiser people avoid.” The conversation of IRAs and other qualified accounts into Roth IRAs has been popular among some investment and insurance advisors since
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they came into existence as part of The Taxpayer Relief Act enacted in 1997. Unlike other qualified accounts where the tax deferral of the investment is fairly simple to follow, the Roth conversions require that the deferred taxes of the old account be addressed at the time of the implementation of the Roth. Satisfying the tax liability generated by converting an existing qualified account to a Roth is a serious issue that should not be taken lightly. Food for thought: If you are not a Lawyer, don’t give legal advice; if you are not an accountant, don’t give tax advice; if you are not a registered equities broker, don’t give securities advice; and if you’re not a licensed insurance agent, don’t give insurance advice.
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Taiwan has seen the future of retirement cash flow: There is a reverse mortgage in it, and it plans to help its firsttime homebuyers think reverse early, a notion I have been advocating here for years. Chang Chin-oh, a professor of Land Economics at National Chengchi University in Taipei City, Taiwan, recently gave this hint about Taiwan’s evolving reverse-mortgage model: “The program will also encourage young people to start planning a home purchase early for retirement.” Let me repeat: Plan a home purchase early for retirement! In Think Reverse! (2008) and in several articles before the book, I argued that in an era of uncertain retirement cashflow sources, our home equity, thanks to reverse mortgages and other equity take-out products, has become the new pillar of retirement security. The retirement-planning industry and policy leaders have been urging Americans to save for retirement for decades. To this sound traditional advice, I add a complementary new call: Build Reverse-capacity! To build reverse-capacity, young families should plan their home purchase early and not use their home as a “piggy bank” to pay for non-emergency pre-retirement consumption. Using the tax code, Congress should create incentives to support reverse-capacity building. As a nation, the earlier we embrace this idea (that is, reverse mortgages for first-time homebuyers and reverse-capacity building) the more secured retirement cash flow will be for most homeowners who may not have enough disposable cash for traditional savings. It may also encourage non-homeowners to view homeownership differently and more favorably. The circumstances of two couples I served in August 2003 convinced me of the power of this idea. In an October 2003 article (“The Fate of the Glenns: Your Equity or Your Freedom” [The Mortgage Press]), I told their stories. Here is the gist: Paul and Paula Glenn* were at a very low point physically and financially. To save their home, their loan officer sent them to me for a reverse-mortgage solution. Because of their large forward lien and the lower county-by-county FHA loan limits at that time, I couldn’t help them. They probably lost their home.
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By contrast John and Abbie Stevens*, also weighed down by financial and health problems, had sufficient home equity. We were able to pay off their creditors and leave them with $20,000 in a growing HECM creditline. They had cash for groceries and their medications in the comfort of their home.
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My experience with the Glenns and the Stevens persuaded me that home equity, tapped judiciously through reverse mortgages and other equity takeout products, will play a critical role in retirement cash-flow management. If you can buy a home with the understanding that it is also a pillar of your retirement security and you plan to hold on and build home equity one mortgage payment at a time, you will be fine, even if Wall Street goes off the cliff again. The Taiwanese seem to have grasped this idea from the get-go, and they plan to put it into their reverse mortgage model, slated for rollout later this year. On December 16, 2009 they held a major reverse-mortgage seminar in Taipei City. Invited were many reverse-thinking folks from government, business, and academia. One of the designers of our 20-year-old HECM program was invited to share the American experience. The Taiwanese are thinking more holistically about reverse mortgages. To encourage Taiwan’s growing elder population to use reverse mortgages, they may be subsidizing their program more generously than we have ever done here. They believe its social and economic benefits will more than pay for the subsidy they will provide. Again, Professor Chang: “If the policy [reverse mortgage] is carried out successfully, it will ease the government’s financial burden and have a positive impact on the local real estate industry.”** Taiwan’s approach contrasts sharply with our government’s tepid support for our HECM program as shown by Congress’s refusal to give the Federal Housing Administration $800 million subsidy it asked for in June 2009 to shore up the HECM insurance fund because of falling home prices, a result of the Wall Street-led financial crisis we are still living with. For 20 years the program ran successfully without a need for public subsidy, thanks to hefty mortgage insurance premiums and conservative actuarial assumptions and robust house prices for much of that period. When our financial system broke down in 2008 and property values headed south, FHA HECM insurance risk managers figured an $800 million subsidy will help maintain the program at pre-crisis payout levels. The knee-jerk congressional turn-down forced FHA to slash cash advances from HECM by 10 percent in October 2009 (with rumors of more cuts to come). As you read this, a deadly mixture of high government mortgage insurance premiums, lower cash advances, one-product industry monopoly, and poorly-disclosed HECM non-recourse promise rollback (see “An Assault on Fairness …” www.thinkreverse. com) is sapping demand for HECMs and depressing origination activities in an industry that could supply cash to help Congress deal with escalating entitlements and mounting national debts in the years ahead. It is penny smart, dollar foolish.
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You don’t have to be a rocket scientist to understand that if we encourage more seniors to use reverse mortgages (as Taiwan plans to do), they will be using their own assets. If we discourage them, as Congress seems to have done by refusing a small subsidy relative to the multi-trillion-dollar bailout of Wall Street, they will turn to far more expensive government sources for supplementary income. At a time of rampant national, state, and local governments’ debts, approving FHA’s HECM subsidy request was the rational option, but Congress blew it. We can learn a thing or two about reverse mortgages and retirement cash flow from the Chinese in Taiwan. * Made-up names to conceal identity ** “Cabinet will finish reverse mortgage study next year” by Ted Yang, Taipei Times (December 17, 2009, page 12) http://www.taipeitimes.com/News/biz/archives/2009/12/17/2003461169 Copyright © 2010, ThinkReverse LLC/Atare E. Agbamu All Rights Reserved.
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Advertorial by SMART Marketing
Does Direct Mail still work?
877.550.8837 www.smart--marketing.com In 2003 when we launched our company in the middle of the refinance boom, direct mail was like the gold rush for mortgage companies. Dropping mail, meant phone calls and the more mail you dropped, the more phone calls you got. The dynamics of how much or how little you made, could easily be correlated to the amount of mail being sent. A time came when this approach needed to be thought out in more detail as the mortgage markets got more competitive and response rates started to drop. As a marketing company, we looked to find a niche where we could anchor ourselves in the direct mail industry and continue to grow and flourish with our customers - enter the Reverse Mortgage, a strong hold for Smart Marketing over the years. Since we started our business, there have been many changes in the Reverse Mortgage industry; the biggest being the tremendous growth. At the first NRMLA show we attended there were about 400 members in the organization, since then the industry has grown by almost 8 fold. The future shows even more growth with baby boomers turning 62 every day! During the past few years we have witnessed the growing pains of the industry and have seen many mixed messages being sent to the Senior population. Various advertising tactics have been implemented that are misleading and confusing to the prospective Reverse Mortgage participants. Some companies are pushing the envelope on sales tactics, in part due to an ever increasingly competitive market place and the need to generate higher response rates. These types of messages can be damaging to everyone in our industry. In fact, acceptable advertising practices in the Reverse Mortgage industry have become a recent concern as highlighted during the last NRMLA tradeshow in November of 2009. Smart Marketing has held onto our anchor in the Reverse Mortgage industry over the years and in fact now only focuses on direct mail for Reverse Mortgages. Unlike other marketing companies that just offer a direct mail product for Reverse Mortgages - this is all our company does, market for Reverse Mortgages! To that point, we have a very vested interest in the successful evolution and longevity of this industry. Smart Marketing plans on continuing to keep our anchor down and grow as we have over the years, with those committed to this product and the success of this industry. Our mailer is time tested, proven, and specialized for Reverse Mortgages. We only target Seniors who can actually obtain a Reverse Mortgage; not just people who own a home and are over the age of 62, as some of the companies we compete with for market share tend to focus on. More than anything, Smart Marketing sends a clear and clean offer that is both informative, straight forward, and is not misleading to prospective candidates for a Reverse Mortgage. We spend the extra money on printing our letters on high quality paper, in full color, with larger and easier to read print, plus give all our customers real time call tracking capabilities. We even plant 5 trees for every 1,000 mailers we sell, in an effort to offset the waste stream that is created from direct mail advertising. Our templates for a successful direct mail piece have been followed
with great success for many years. We feel we are helping to educate the Senior population about this product and over the years have helped thousands of Seniors discover the benefits of a Reverse Mortgage. An added value of working with our company is that we have been mailing millions of these letters into the Senior market for many years. That being said, we have branded recognition with our letter that in many markets can be capitalized on to give our customers a leg up on the competition. Each letter we send is tailored to each potential clients own unique situation, so they have an idea about what they can expect from a Reverse Mortgage. We don’t saturate markets and in fact, only mail for any given territory once every 90 days. We know that our customer’s success is our success and strive to be seen as a marketing partner to our clients, not just a company that does direct mail. Hence, why we have many customers with whom we have been working closely for many years. In an age of high tech advertising choices is direct mail still a wise investment? There are many ways to reach out to potential customers in the market place, from Internet advertising, Radio, and TV to Community based programs. Having a strong and successful advertising plan means you’re going to utilize more than just one form of media to try and attract new customers. There is a reason why most of the top companies in this business have direct mail as part of their advertising and media budgets – because it works! It has worked and will keep working because you’re sending a targeted message to a targeted prospect. Seriously though, let’s not kid ourselves; the response rates of years gone by have dropped off for direct mail and all forms of advertising with increased competition. This industry has changed from where it once was only a few years ago and recently with some less than terrific media coverage on Reverse Mortgages as well as governmental changes in the program; times have gotten harder for everybody involved in this industry. People who are familiar with this product will have an easier time selling it than somebody who is just now learning about the benefits of a Reverse Mortgage. Those who apply basic “Sales 101” experience and knowledge and who make a practice of actually following up with potential customers; will have a much greater return on their investment. Companies that really care about helping their Senior clients will also be much more successful, than those just trying to turn numbers. Smart Marketing can assist in implementing an effective capture strategy with an automated pipeline management system, for those who want to integrate Internet marketing as part of their direct mail programs. This allows for a hybrid approach to getting more for your marketing dollar by reaching out with more than one form of media coverage at a time. If you have any questions about our programs and how we might be able to help your company grow in 2010, please call us at 1.877.550.8837 or drop an email to traam@aol.com. More information can be found @ www.smart--marketing.com February 2010 TRR
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Does the Ginnie Mae reverse mortgage securitization program pose any challenges from the servicing perspective?
ask the servicer
By Ryan LaRose Much has been recently written in our industry about the Ginnie Mae HMBS program for reverse mortgages. Although the program has only been around for a few years, it has profoundly changed the dynamics of our industry and has been incredibly successful in providing a viable secondary market alternative to Fannie Mae. Consider this: HMBS volume increased from $1.36 billion in 2008 to $8.54 billion in 2009, a 629% increase! Any lender that has researched the HMBS program knows that the levels of complexity can be rather daunting on the “front end” – from obtaining Ginnie Mae approval, to the various ways a securitization can be structured and customized, to developing and maintaining a healthy and active secondary market execution for the sale of the end product. When I read some of the detailed information on structuring a HMBS and the complexities surrounding secondary market executions, I have to admit, I felt happy to be won the servicing side of the business! In 2009, my company initiated the approval process to be a HMBS Participation Agent and discovered first-hand how seriously Ginnie Mae takes their responsibilities. Their testing process was the most thorough our IT and Accounting Departments had ever experienced. At the conclusion of the process, department team members stated, “We sure hope we don’t have to do that again!” So how does the HMBS program create or require its own unique challenges and complexities for a servicer?
On the other hand, it is critical for a HMBS issuer to understand, and be properly prepared for, the “back-end risk” they assume by securitizing their loans – versus selling the loan, and therefore that same “back-end risk”, to Fannie Mae. I have seen a number of HECM lenders back away from the HMBS program when they learn that loans must be purchased out of the security when the loan balance reaches 98% of the maximum claim amount - regardless of whether that same loan is eligible to be assigned to HUD.
On a very high level, day-to-day servicing duties and responsibilities are not significantly impacted by the HMBS program. There are, however, several features of the program which may require servicers to enhance system controls and reporting functionality. Specifically, those areas of the program that can affect servicing systems and operations are:
For instance, if the loan is in any stage of default at the time of buyout, it cannot be assigned to HUD at 98%. The issuer is thereby required to maintain the loan on their balance sheet until it pays off, is liquidated through a foreclosure, deed in lieu of foreclosure, or through a short sale. If title to the property is passed back to the holder of the loan through a foreclosure or deed in lieu, the issuer then takes on the risk (and expense) of having to market and attempt to sell that home, better known as REO management.
• • • • •
It is a common misperception that when a loan is insured by HUD an investor (or issuer) cannot lose money on a HECM. Just ask any investor who has had to file a foreclosure/REO claim! HUD insurance will cover most, but potentially not all, of the investor’s outstanding amount due from the HUD claim proceeds in this scenario.
• •
Pool tracking for securitized loans Multiple participations per loan tracking capabilities Participation accounting (reporting and remitting funds to Ginnie Mae) Enhanced investor reporting capabilities Detailed “advanced” tracking and the required buyouts of all loans that reach 98% of the maximum claim amount Buyout of any loan that has been liquidated (foreclosure, deed in lieu, etc.) Internal management and sale of any “real estate owned” (REO) properties
From my perspective, and as a sub-servicer of the HECM product for the last five years, the process of loans being originated by our clients, sold to Fannie Mae as the investor, and handed over to us for servicing was a fairly straightforward one. Standardized electronic interfaces were established long ago with Fannie Mae’s eBoutique system; monthly reporting and reconciliations with Fannie Mae are streamlined; and Fannie Mae handles the management, marketing and disposition of any foreclosed properties.
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The Ginnie Mae HMBS program has made an incredibly positive impact on our industry by generating liquidity and a long-term option for secondary market execution. At the same time, it does require a higher level of interaction, and integration across servicing operations, information technology, investor accounting, and secondary marketing. Lenders must fully analyze and understand the balance between reward and risk that comes with participation in the HMBS program. I look forward to receiving any questions you may have regarding servicing at: ryan@celink.com. Please remember: there is no such thing as a stupid question. No doubt, the question you ask will have been in the minds of other readers as well. If you wish to remain anonymous for my response, just let me know.
directory st
everse
FINANCIAL SERVICES, LLC
A
SUBSIDIARY OF WILMINGTON SAVINGS FUND SOCIETY, FSB
A Subsidiary of Wilmington Savings Fund Society, FSB
www.1streverse.com 877.574.1000
www.ampushmedia.com 877.AMPUSH1
www.appraiserloft.com 877.229.7799
www.AttorneyTrustReview.com 631.669.4370
Capital Consulting Group www.ccgcap.com 770.242.8029
www.cccsinc.org/reverse 866-616-3716
www.celink.com 517.321.9002
www.Covenantmortgage.com 877.FHA.1800
www.ecommission.com/ mortgageadvance.html 877.882.4368
www.ireverse.com/employment 800.486.8786
www.jbnutter.com 800.798.3946
www.RefreshBranding.com 877.465.5544
www.reversefortunes.com 866.592.2096
www.rminsight.net 949.429.0452
www.reverseit.com 866.250.7081
www.reversevision.com 919.834.0070
www.smart--marketing.com 877.550.8837
www.thinkreverse.com 612.203.9434
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the last word Mark A. Sisco Now into our second month of 2010 and with the never ending negative press and new legislation changes, we must continue to combat the misguided individuals and organizations who want to deprive the senior community of this wonderful product. For those of us in the reverse mortgage industry it is truly a numbers game to offset and discredit those against us. The more correct reverse mortgages we produce the more the word spreads. The best lead by far has always been the plain vanilla nonsugar coated referral. Case and point, this is a referral that came through the other day and as I spoke with the client I was informed that she, Martha, is 63 and her husband Ted is 80; their property is valued at $420,000 with a 1st. mortgage of $235,000. The client went on to inform me that she was planning on selling her home in 5 years or sooner and that Ted receives $1,400.00 per month through as income through social security and refinancing was not an option because Martha’s income is based on 1099 commission only. Their mortgage payment is $885.00 per month principal and interest and their taxes are $250.00 monthly along with Homeowners at $265.00 per month for a total of $1,400.00 PITI per month. Wow, Ted’s social security check only covered the mortgage! So what about the unforeseen expenses that, as a homeowner, are always on the horizon? Martha mentioned they lost 68 % of their retirement funds and hence her reason to go back into the work force. Now it was a real game of survival and the floodwaters were rising. Martha mentioned that they have very little disposable income to do anything, even a matinee movie at a senior discount rate of $4.50 per ticket. During the conversation she mentioned that they would be inheriting her father’s home free and clear when he passes and this bit of information was the key to fully understanding what took place next. Running the loan program on a HECM fixed they were going to be short to close in the amount of $15,388.04 due to the qualification based on the youngest borrower of 62 years of age. Remember that they are truly in dire straights and in need of much help. The only way to stop the bleeding was for Martha to come off the loan and qualify under Ted, which would net them additional cash out of approximately $37,000. Now without the principal and interest mortgage payment of $885.00 Martha and Ted would find themselves in a muchneeded better situation. Under normal circumstances I would never advise Martha to remove herself from the title and loan, especially with Ted in his eighties. However, the key is that Martha and Ted are planning to sell in 5 years or less and as long as Martha remained the beneficiary on the current home. Based on Martha and Ted’s five-year plan to stay in their current residence and through the HECM program they will have saved $53,100 in principal and interest payments and an additional $37,000 in cash out proceeds. If Martha’s husband was to pass away Martha would inherit the home and
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sell the home at that time providing there was equity or sign it back over to the lender in the case there was no equity. Martha is to receive the deed of her father’s home free and clear upon her father’s death and would move into her father’s home. In this event Martha would not be homeless and most of all have peace of mind. In the event that Martha would pass before Ted and providing Ted was able to maintain his current life style he would not be homeless either. I have also put them in touch with an elder attorney in the case that Ted would need assistance through Medi-Cal and the understanding associated with a situation that could arise. Solution, This is a prime example of the exceptional benefits that a reverse mortgage provides for seniors in the day-to-day unstable financial world we currently live in. She has already started thinking about the day a reverse mortgage may benefit her regarding her father’s property upon her inheritance. So as we continue down the road into 2010 let’s remember why we do what we do as reverse mortgage originators and break the bank in a record year and props to The Reverse Review for another year of dedication to our cause and keeping us posted with a viable avenue of expression and a network of people working together to have the Last Word. Have a great year!
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CCCS reserves the right to rescind or modify this offer at any time without notice. Copyright 2010, Consumer Credit Counseling Service of Greater Atlanta, Inc.