the reverse review

REVERSETHE

J U L Y / A U G U S T 2 0 1 1

review

P u t t i n g R e v e R s e L e n d i n g o n t h e R o a d M a P

John LevoniCK

3 prevalent misgivings of reverse mortgages

By Jonathan neal

a problem affecting

seniors nationwide

By John Smaldone

the industry without wells

and bofaBy dave Bancroft

INSIDEthis issue

The software that ...... won’t leave you

in the rain

Rev

erse

Vis

ion

Sui

te

ReverseVision

www.reversevision.com (919) 834 0070 [email protected] Inc. 3310 Pollock Place Raleigh, NC 27607-7006

ReverseVision is supported by more reverse mortgage lenders than any other software.

In these uncertain times, Freedom of Action can determine a company’s survival.

Strategically thinking companies choose ReverseVision because ReverseVision combines the highest independence with maximum compatibility.

ReverseVision protects its customers by giving them the maximum freedom of action.

| TRR4

The Report 9, 11

The Response 7

Ask the Underwriter 12

The Perspective 14

The Advisor 16

The Conversation 20

The Hot Seat 22

The Industry Roundup 24

The Opinion 41

The Resources 42

TRR 7&8.11

Are You Keeping Up With Changing Perceptions? 26A look at the most prevalent misgivings of reverse mortgages.Jonathan neal

Dodd-Frank: Putting Reverse Lending on the Road Map 28The industry awaits the implications that Dodd-Frank will have on reverse lending.John levonick

Transitions: A Reverse Mortgage Professional’s Experience 34Losing a job can allow for positive change and personal growth.Sarah hulbert

A Financial Problem Affecting Seniors Nationwide 38One senior’s experience sheds light on the amount of government aid available for those seniors struggling to keep their homes.John Smaldone

26 28 34

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the Essentials

l

the Core

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reversereview.com 8 TRR | 5

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© 2011 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

Letter from the Editorl

Printer The Ovid Bell Press

Advertising Informationphone : 858.832.8320e-mail : [email protected]

Subscriptions e-mail : [email protected]

Editorial Contente-mail : [email protected]

Meet the Team

Publisher AmAn mAkkAr

“Some of the best ideas are inadvertent.”

Editor-in-ChiefEmily VAnnucci

“You’re trying too hard ... try less.”

National Sales Rep. & Marketing Coordinator kAtE ShEEhAn

“Love what you do. Do what you love”... Done and done.

Copy EditorkErStEn WEhdE

I can’t read a menu, text or wedding invitation without proofreading it.

Creative DirectortrAci knight

Spell check got the best of me.

News EditorBrEtt g. VArnEr

“He who spends too much time looking over their shoulder, walks into walls.”

e

Our industry recently received some very significant news. The exit of Wells Fargo, like the exit of BofA, came as a shock to many in the industry, leaving many asking questions and scrambling to keep up with the changes. Be sure to keep a close eye on reversereview.com, where we will keep you abreast of all the latest breaking news.

On this topic, I want to turn the attention to an article Sarah Hulbert put together for this issue. With the recent exit of multiple large lenders, I feel as if this article is coming at the perfect time. Sarah faced some hard decisions when her employer decided to exit the reverse space earlier this year and many employees are most likely finding themselves in the same position Sarah once was. I love this article because it delves into the many scary and sometimes open-ended questions one must ask themselves when standing at a crossroads.

In addition to discussing the steps she made to move on, she also touches upon the idea of embracing change. I feel as if every month I mention change in my letter to you. The concept is so apparent in our industry and Sarah confirms it by shining a

light on it once again. While I don’t want to rewrite Sarah’s article for her (I’ll stop before I give away any more details), I want to thank her for sharing her inspiring story with all of our readers.

We’ve put together a great double issue for you to peruse for the next two months. Be sure to check out the crossword puzzle Ralph Rosynek created. Hopefully this will be a fun summer activity for those beachgoers out there, or those of you who just need a quick break from your busy workweek.

We at The Reverse Review are using this break for, yes, a couple of summer trips, but mainly for the purpose of planning our three biggest issues of the year. Stay tuned for a great fall lineup that begins in September.

Please enjoy all of the hard work that went into our July/August issue of The Reverse Review. Have a fabulous summer!

Until next time,

Editor-in-Chief{ e m i l y v a n n u c c i }


Feedback is very important to us here at The Reverse Review. Send us your thoughts on past articles or something that is on your mind and we will publish it in this section, the Response. [email protected]

As the executive director of the Coalition for Independent Seniors, I am writing in response to an article in the June 2011 issue of The Reverse Review entitled “The Industry’s Message to Washington, D.C.” by John Mitchell.

The Coalition for Independent Seniors (CIS) is a nonpartisan, nonpolitical, public policy coalition dedicated to preserving the opportunity for seniors to stay in their homes and protecting their ability to live financially independent lives. CIS is dedicated to communicating on behalf of senior homeowners to thosewho can have an impact on their

ability to live financially secure lives in the homes they own. The organization is focused on doing the right thing for those members of our society who have lived fiscally responsible lives and want to continue to do so in the comfort of their homes.

This year, we’re lobbying Congress to preserve the consumer-friendly third-party counseling requirement,the HECM Saver and other consumer-friendly protections in the federally-backed program. Additionally, we will continue to work to educate members of Congress and federal regulators about the benefits of reverse

mortgages and the financial freedom they can provide to qualifying seniors. Though the article in the June issue was written by a CIS board member, CIS did not commission the study outlined in it. The study does not in any way represent the public policy positions of our organization.

Our organization is committed to promoting the benefits of the reverse mortgage as a financial tool for seniors and to building a solid reputation for the industry among policy makers in Washington. To learn more about what we do, visit our website at www.cforis.org.

- H. West Richards, Executive Director,Coalition for Independent Seniors

THE

J U N E 2 0 1 1

review

Industry’s Message to Washington, D.C.

the

John Mitchel l , CPA

EFFECTSOF THE NEW

COMPENSATIONGUIDELINES

By Joshua shein

PR TIPSON A BUDGET

By Justin Meise

5 WAYSTO BUILD YOUR

NETWORKBy tiMothy a. sherMan, esq

INSIDEthis issue

the reverSe review July/August 2011

the Response

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l

the Contributors

l

John LevonickDodd-Frank: Putting

Reverse Lending on the Road Map, pg 28

John Levonick is responsible for identifying and managing compliance

risk. He has focused on working creditors, servicers, secondary

market participants and technology vendors in providing guidance on consumer finance laws.

Levonick’s experience as Chief Compliance Officer, Regulatory Counsel and

Associate General Counsel in the mortgage lending industry has given him

the ability to provide the guidance and direction necessary navigate the

challenges of a constantly changing regulatory

environment.

FeatureArticle

dave bancroft The Opinion, pg 41

David Bancroft, former Executive Vice President and board of director member at Security One Lending, is an industry expert in the origination of reverse mortgages. Bancroft was the Founder and President of Omni Reverse Financing Inc, specializing in Government lending. Omni Reverse was one of the largest originators of HECM Mortgages in the country and was acquired by Security One Lending in [email protected] | 949.355.4653

kevin brown Tax Tip, pg 21

Kevin Brown is the Vice President of Sales and Marketing at Industry Consulting Group, Inc. (ICG) and is responsible for all marketing, customer service and sales activities. He also serves as a Business Development Executive where he leads corporate product development relating to the reverse and forward mortgage industries. Kevin has over 20 years of experience in the tax service and mortgage space.

Sue haviland The Advisor, pg 16

Sue Haviland is Co-founder of ReverseMortgageSuccces.com. Haviland has been in the mortgage industry more than 25 years. Unlike many others Haviland originates reverse mortgages each and every day and has earned her Certified Reverse Mortgage Professional designation. If you would like to profit from the largest niche to ever hit the mortgage industry, grab the free course and profit-producing tips at www.reversemortgagesuccess.com.

Sarah hulbertTransitions ... , pg 34

Sarah Hulbert is the Retail Business Development Manager at 1st Reverse Mortgage USA®, a division of Cherry Creek Mortgage Company, Inc. With nearly 20 years of industry experience covering most aspects of the reverse mortgage business, Hulbert served four terms as co-chair of NRMLA’s Board of Directors. She is a current board member (ex-officio) and co-chair of NRMLA’s Standards and Ethics Committee. 425.200.0753 | [email protected]

reza JahangiriThe Hot Seat, pg 22

Reza Jahangiri is Founder and CEO of American Advisors Group, a private national reverse mortgage lender. Since AAG began in 2004, the company has grown to become one of the largest originators in the country with a national marketing campaign backed by former Senator Fred Thompson. Jahangiri sits on the board of CIS (Coalition for Independent Seniors) and has also served as CEO and President of several successful healthcare services companies prior to entering the reverse mortgage business.

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the Report

May 2011 Top Lenders Report

1 2 3 4 5Wells FargoBank, N.A. Endorsement

1092

MetLife Bank, N.A.

Endorsement 932

One Reverse Mortgage, LLC

Endorsement 430

Bank of America, N.A.

CHARLOTTE

Endorsement 332

Urban Financial GroupEndorsement 280

Lender Endorsements

GENWORTH FINANCIAL HM EQUITY 199

GENERATION MORTGAGE COMPANY 155

AMERICAN ADVISORS GROUP 124

SECURITY ONE LENDING 95

GUARDIAN FIRST FUNDING GROUP 82

NEW DAY FINANCIAL LLC 63

SENIOR MORTGAGE BANKERS INC 55

SUNTRUST MORTGAGE INC 50

REVERSE MORTGAGE USA INC 50

MONEY HOUSE INC 49

FINANCIAL FREEDOM ACQUISITION 48

PNC REVERSE MORTGAGE LLC 39

GREAT OAK LENDING 32

M AND T BANK 31

EQUIPOINT FINANCIAL NETWORK 29

SUN WEST MORTGAGE CO INC 25

ASPIRE FINANCIAL INC 23

LIVE WELL FINANCIAL INC 22

THE FIRST NATIONAL BANK 22

ROYAL UNITED MORTGAGE LLC 21

AMERICAN PACIFIC MORTGAGE 17

NATIONWIDE EQUITIES CORPORATION 16

SUN AMERICAN MORTGAGE CO 16

PRIMELENDING A PLAINSCAPITAL 15

PLAZA HOME MORTGAGE INC 15

GATEWAY FUNDING DIVERSIFIED 15

VIG MORTGAGE CORP 14

CHERRY CREEK MORTGAGE CO INC 13

MAS ASSOCIATES 13

HARVARD HOME MORTGAGE INC 12

REVERSE MORTGAGE SOLUTIONS INC 12

WEBSTER BANK 12

SIDUS FINANCIAL LLC 12

UNITED NORTHERN MORTGAGE BANK 11

HOME SAVINGS OF AMERICA 11

ENVOY MORTGAGE LTD 11

CHRISTENSEN FINANCIAL INC 10

AMTEC FUNDING GROUP LLC 9

FIRST EQUITY MORTGAGE BANKERS 9

FIRST SECURITY MORTGAGE INC 9

IREVERSE HOME LOANS LLC 9

LIBERTY BANK 8

Lender Endorsements

| TRR10

John k. lunde The Report, pg 9, 11

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.rminsight.net | 949.429.0452

Jonathan neal Are You Keeping Up With

Changing Perceptions?, pg 26

Jonathan Neal is a Senior Partner with CCG-Capital Consulting Group, LLC marketing and sales consulting firm located in Atlanta Georgia. CCG’s primary focus is built around their (TPM) Third Party Marketing program. TPM is based on the belief that in order to be successful in the senior market place professionals selling financial/insurance services and products must build and maintaining relationships with highly respected centers-of Influence. [email protected]

ralph roSynek Ask the Underwriter, pg 12

Ralph Rosynek has been The Reverse Review “Ask the Underwriter” columnist for more than two years. Rosynek is the Vice President for National Correspondent Production at Reverse Mortgage Solutions, Inc. RMS is a premier provider of reverse mortgage servicing, a Ginnie Mae Seller/Servicer and offers complete mortgage banking support and services to the reverse mortgage industry. He is currently seated as a member of the NRMLA Board, co-chair of the Professional Development Committee and holds HUD HECM Direct Endorsement [email protected] | 708.774.1092

mark a. SiScoThe Conversation, pg 20

Mark Sisco is the RSD with West Star Reverse Mortgage and is the driving force of the retail sales and the training group of the Reverse Mortgage division. He holds a California Broker’s license and several other origination licenses and is an accomplished speaker, with over 18 years in the mortgage industry. 949.922.7859

John SmaldoneA Financial Problem Affecting Seniors

Nationwide, pg 38

John Smaldone, Founder of Taylor, Bean and Whitaker and former Senior Vice President of TransLand Financial Services Reverse Mortgage Divisions is the Executive Vice President of Hanover Financial Services, a consulting firm primarily in the reverse mortgage industry. With 42 years of mortgage banking experience and 10 years in reverse mortgages, Smaldone intends to remain in the reverse mortgage industry taking on long-term consulting assignments. [email protected]

brett g. varnerThe Perspective, pg 14

Brett G. Varner is the News Editor for www.ReverseReview.com. Varner has served the mortgage industry for 10 years in leadership capacities in sales, marketing and operations. His unique and knowledgeable perspective is focused on developing useful content and strategies in a forum of open and lively debate.

alain valleS, crmpThe Advisor, pg 17

Alain Valles, CRMP is President of Direct Finance Corp., Hanover, MA, one of the leading reverse mortgage brokers in the country. Valles received a master’s in real estate from M.I.T., an MBA from The Wharton School, and graduated summa cum laude from the Univ. of Massachusetts. Valles’s mission is to improve the quality of life through responsible financing. [email protected] | 781.878.5626

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the Contributors

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TPO loan volume continued to grow in April, but it wasn’t enough to keep wholesale endorsements from declining -13.3 percent. Retail was down -18 percent, and it will be important to see if TPO volume is growing the business (through non-FHA-approved brokers) or just migrating FHA brokers to TPO producers.

Last month we showed a chart that illustrated the impressive growth of TPO loans and the clear lead of a few sponsors in this channel. The updated chart shows continued growth as TPO loans made up 30 percent of all wholesale loans in April. Competition has also increased as many sponsors race to catch up.

MetLife ran out to a big lead in March but grew slower in April, while Urban, Genworth, Generation, BofA and Security One all grew significantly to more than double TPO business from 360 to 735 loans. In the future, we’re hoping to analyze just how much TPO business is coming from originators new to the industry, but for now it’s clear that the sponsor side is becoming a much more competitive market.

This month’s report also raises a point in the discussion about industry consolidation, as the table illustrates that some of the largest lenders declined much faster than the industry in April. We don’t put too much stock in any one month’s results, but it’s startling to see that 88 percent of the industry’s decline this month came from just two lenders: Wells Fargo and MetLife.

The two lenders were 44 percent of the industry in March, so their decline is far larger than their market share. The smallest originators didn’t catch a break though: Top 10 lenders Urban and One Reverse both saw 12-month highs and Security One came in just one loan shy of its recent peak. g

INDUSTRY SUMMARY

retail endorsement growth

-17.96%wholesale endorsement growth

-13.29%total endorsement growth

-16.18%

TRAILINg TweLve - MONTH eNDORSeMeNTS

10,000

8,000

6,000

4,000

2,000

08 10 11 12 1 2 3 45 6 7

*Numbers Represent MonthsRetail Wholesale

* Figures Above Reflect Change from Prior Month

5

6

7

8

9

10

11

12

1

2

3

4

tot

units chg% units chg% units chg%

2,465

2,900

3,358

3,969

3,405

2,976

4,004

4,343

4,049

4,075

4,515

3,704

-8.43%

17.65%

15.79%

18.2%

-14.21%

-12.6%

34.54%

8.47%

-6.77%

0.64%

10.8%

-17.96%

2,086

2,404

2,521

2,672

2,558

2,307

2,547

2,207

2,413

2,805

2,785

2,415

-25.84%

15.24%

4.87%

5.99%

-4.27%

-9.81%

10.4%

-13.35%

9.33%

16.25%

-0.71%

-13.29%

4,551

5,304

5,879

6,641

5,963

5,283

6,551

6,550

6,462

6,880

7,300

6,119

-17.33%

16.55%

10.84%

12.96%

-10.21%

-11.4%

24.0%

-0.02%

-1.34%

6.47%

6.1%

-16.18%

ReTAIL wHOLeSALe TOTAL

April EndorsementsRetail and Wholesale Volumes - ReveRse MaRket InsIght

43,763 29,720 73,483


the Report

90

100

200

300

400

500

600

700

800

1/1/2011 2/1/2011 3/1/2011 4/1/2011

HECM TPO Endorsements by Sponsor

MEMBERS TRUST COMPANY FSB

GRAYSTONE TOWER BANK

DOVER MORTGAGE COMPANY

MCM HOLDINGS INC

JAMES B NUTTER AND COMPANY

NATIONWIDE EQUITIES CORPORATIO

CHERRY CREEK MORTGAGE CO INC

NATIONWIDE EQUITIES CORPORATION

FINANCIAL FREEDOM ACQUISITION

LIVE WELL FINANCIAL INC

PLAZA HOME MORTGAGE INC

SECURITY ONE LENDING

SUN WEST MORTGAGE CO INC

WELLS FARGO BANK NA

BANK OF AMERICA NA CHARLOTTE

GENERATION MORTGAGE COMPANY

GENWORTH FINANCIAL HM EQUITY A

URBAN FINANCIAL GROUP

hecm tpo endorsement by sponsors

| TRR12


ask the Underwriter

The Ultimate Reverse Mortgage Crossword Puzzleralph roSynek

Tired of those endless sudoku puzzle? Tuck this edition of The Reverse Review into your beach bag and take a moment to play with words and numbers in this unusual crossword puzzle.

While your Underwriter is taking a few deserved days for basking in the sun and visiting favorite ports of call, I would be remiss in not giving you the usual midsummer wake-up call: Summer is almost halfway over and fall is rapidly approaching! Have you reviewed your strategy?

Answers will be published in the next edition of The Reverse Review. Have a safe and productive summer!

down i

1 Provides mortgage insurance on loans made by approved lenders

2 Added to an index to calculate a rate3 Limit for period or term4 Agent for the borrower(s)5 No change in rate6 Indexdefinition7 Payment plan type8 Form of communication9 Reverse mortgage trade association10 Not the initial11 HUD value or loan limit12 Underwriter type13 Accrual method14 All must be cleared with proceeds15 Acronym for 11 down16 Regardless of age17 Interbank city

across g

1 Borrower permission or desire2 Reverse mortgage4 Actuarial determined term associated with a reverse mortgage6 Reflectschangestothe100-yearfloodplain7 Life estate component8 Included in monthly payment calculation9 One for the lender, one for HUD10 Includes fees and charges11 Ended12 Generally an attachment to a legal document that can be used

to insert language or signatures13 Payments and interest calculation change14 Survives incapacity15 Final may be a “short form”16 The average yearly combined cost of a reverse mortgage17 Not a complete report for determination18 Attorney …19 Nodebtdeficiencypassedontoheirs20 Once the HECM lender forecloses21 Facility to handle repairs22 Licensing authority


boxes requiring numbers

1 Index for monthly LIBOR2 Swap index for expected rate3 Floodplain years for manufactured

home foundation4 Minimum co-borrower age5 Oldest year of manufactured

home eligibility6 HECM maximum claim amount7 Residential loan application for

reverse mortgages8 HUD/VA addendum to URLA9 Manufactured home appraisal

report10 Uniform residential appraisal

report11 Maximum number permitted FHA

HECM loans to borrower12 Multiplier for minimum title

insurance coverage13 July 1, 2011, monthly servicing

fee amount14 Additional guidance, minimum

origination fee15 Percentage over $200M in value16 $185,000 value origination fee

amount17 Small residential income property

appraisal report18 Number of days appraisal report

is valid19 Condo appraisal form20 DE form used to modify value or

for comments21 Individual condo appraisal report22 HUD HECM handbook23 HUD HECM program code24 Number of days updated

appraisal report is valid25 Maximum lender paid comp in

borrower-paid scenario

1 1 1 7

2 3 2

4 5 6

2 3 4

12

7 8 9 10 11 13

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9 5

5 10 8

7

11 9 10

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12 12 13

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15

16 17 18

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16 17 19

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| TRR14


the Perspective

Truth in a Telescopebrett g. varner

Over the past few months, I have spent a considerable amount of time thinking about the people that make up the reverse mortgage industry. Through my involvement in different capacities, I have

experienced a fairly detailed cross-section of the faces and personalities that define us as an industry.

Last month, I had the unique opportunity to spend an awe-inspiring evening at the Mount Wilson Observatory in the San Gabriel Mountains. While viewing the universe through their 60-inch telescope, accompanied by members of their passionate staff and Tyler Nordgren, an energetic professor of astronomy and physics at the University of Redlands, I was irritated to find my thoughts drifting to the reverse mortgage industry. However, I realized that the perspectives opened up by the observatory, combined with the dedication of those associated with it, was reminding me of some important lessons about leadership, passion and commitment.

I experienced a very ethereal dichotomy that evening, feeling both at one with the universe and immensely insignificant. It was very difficult to understand how in a universe populated by millions upon millions of galaxies, stars and planets that intergalactic objects could exist with harmony and consistency.

My thoughts found their way to the reverse mortgage industry as I realized that my experience that night, albeit on a very different scale, was similar to my experience with the industry and its makeup. What makes the industry unique is not the product, but the people who are professionally drawn to it.

Despite efforts by many government officials, regulators and the media to depict the product as a complicated financial instrument, reverse mortgages, specifically HECMs, are really just government-insured deferred payment equity loans. For many, that statement will be construed as an oversimplification, but it is essentially true and does not undermine the necessity for consumers to understand the product and carefully weigh options.

Plus, reverse mortgages are but a tiny percentage of the housing finance industry and are largely overlooked as a product that can have significant impact on the larger market. This is a perception that corresponds with the feeling-insignificant aspect of my experience at the observatory. The industry is similar to a distant solar system that scientists have not yet been able to learn much about. There is some intrigue and curiosity about it, but there are many other aspects of the housing market that distract people’s attention.

When the surrounding noise of the housing market is filtered to focus on the reverse mortgage industry, like a telescope aimed at a particular object, fascinating aspects of the participants’ interworkings come to life. That night, I viewed two objects in particular that informed this analogy.

Looking through the telescope to observe M13, a globular cluster in Hercules, it struck me that on the surface, the industry is dominated by the top producing organizations,

A greAt teAm is usuAlly mAde up of greAt individuAls, And in the most successful teAms, no individuAl is greAter thAn the whole, either in imAge or reAlity.


but is also made up of hundreds of different organizations of varying size. Those organizations comprise the tens of thousands of individuals who serve the reverse mortgage community in one capacity or another. It is the individuals who define the industry and its role in serving the older American population. In dealing with people at all levels of hierarchy and involvement, I have learned very important lessons about why this industry is special. Many people who are drawn to this industry are driven by a true affinity for the product and demographic and appreciate the duel compensation of financial opportunity and personal fulfillment.

A globular cluster, like M13, is a colossal cluster of stars that orbit a galactic core and are tightly bound by gravity. M13 is made up of at least 100,000 stars, possibly as many as 10 times that amount. As I observed the cluster, there appeared to be a certain geometry about how the stars interacted. Professor Nordgren noted that what I observed was related to the fact that the cluster was indeed in a precise orbit, maintaining harmony and keeping each star in its position and maintaining the distances between them, without collisions.

When a team within the industry functions like a globular cluster (and I define “team” in this respect as broad enough to include origination, production, third-party service providers, secondary, investors, etc.), then each person is fulfilling his role and sustaining the harmony of interactions that lead to the highest levels of satisfaction for the seniors they serve. It is their dedication to what they do that drives this passion.Unfortunately, there are also those whose egos try to place them above

the industry. Through selfishness or hubris, they strive to elevate themselves above others and project an air of self-importance. Amazingly, I have seen this occur at all levels and roles within the industry. The compensatory feature of these types is that they are similar to the Ring Nebula.

The Ring Nebula is considered to be a planetary nebula that appears as a bright ring. This type of nebula is created when a dying star is rapidly expanding a shell of gas that is being explosively burned off. Essentially, the star will burn bright for a period of time before dying completely. The planetary nebula that I viewed appeared to me as a red ring with a core that was not visible.

I’ve always believed that those who place themselves in greater importance than the industry they serve or the people they work with are doomed to fizzle out or lose support needed to sustain them. They may fool or intimidate others for a while, but eventually they will alienate those they need the most and, like the Ring Nebula, they will run out of resources and fade away. A great team is usually made up of great individuals, and in the most successful teams, no individual is greater than the whole, either in image or reality.

Turning away from the telescope, the final lesson of the evening came from Observatory Superintendent Dave Jurasevich. We were fortunate to have

him as our guide for much of the evening. A retired mechanical engineer, Dave’s passion for astronomy led him to a role in which he oversees the operation of the observatory and the maintenance of the telescopes. As he spoke to us about the history of the observatory and showed us its inner workings, his passion and commitment shone through. He acknowledged that although he was not responsible for providing a guided tour to us, he felt obligated since he was at the observatory when we arrived.

Dave appeared as a leader who commands respect and commitment from the staff, not because of his position, but because of his own commitment and dedication to the observatory. He portrayed a humility and reverence for the responsibility his position has for the observatory, to those who work there and for those who support it.

From my experience at Mount Wilson Observatory, it was clear that I will never fully comprehend the expansiveness of the universe, but by observing the interactions and interrelations of different types of objects, I was left with a sense of wonder. In all aspects of our lives, we are a part of a much larger whole. In business, just as in life, our success is predicated upon not only the team with which we align, but the type of teammate we choose to be. g

My thoughts found their way to the

reverse Mortgage

industry as I realized that my experience that night, albeit on a very different

scale, was similar to my experience with the industry and its makeup.

What makes the industry

unique is not the product, but the people who are professionally drawn to it.

| TRR16


the Advisor

No Time to Work on the Loans I Don’t Have…Sue haviland

You’ve heard it said many times before: We all have the

same 24 hours in a day. Have you noticed, though, when your reverse mortgage pipeline is shrinking, you seem to be able to get less done in the day? Is it that you’re worried about your production? That seems like the easy answer but I think there is more to it than that. The timing for this article is interesting – we just finished the first half of the year. Are you where you want to be?

Indulge me here for a moment. Go back and look at your calendar. How are you scheduling your time? Is the focus on productive activities that bring in loans, or have you fallen victim to busywork? Personally, I normally have several different projects going at one time. It’s just the way I work best. Between writing, loan origination, coaching, committee work with NRMLA and personal and family interests, there’s a lot going on … BUT it’s all very structured. This did not happen overnight and it did not happen without a plan.

firstTHINK ABOUT THIS:

Are you a morning person or are you at your peak in the afternoon? Structure your activities around that time. For example, I am an early bird. I write for at least two publications each week: a senior-oriented magazine in Maryland, Reverse Fortunes (find me under Lead Central) and of course The Reverse Review. Over the years I have learned that I need to do my writing early in the

day. Those projects are normally off my to-do list before the phones start ringing and before I look at email. Schedule your time in blocks. Your best block may be an hour at a time. I find that I work best in about 45-minute increments. And yes, I actually set up these time blocks and use a timer!

secondTAKE A LOOK AROUND

YOUR OFFICEGo head, do it now. What distractions are in front of you right now? Your

phone (landline), your cell/smartphone, your computer, other people? Don’t let the time vampires get in your way and cause you to lose focus. If you have a door, shut it. Turn off the phone, etc., if you are working on a marketing piece or a presentation. Whatever is on your calendar for that time slot, let nothing stand in your way. Think about this: If you had a reverse mortgage application

scheduled right now, and you knew it was going to be a slam-dunk loan – borrower and the kids are on board, house is in beautiful condition, you are confident about the value – what would keep you from that appointment? I venture to say almost nothing. Treat everything on your calendar and your project list as though it were that reverse mortgage application. Another tie-in to this message is the time we spend on email and other outlets. Don’t let these potential distractions get in the way of your productivity. Don’t get me wrong; social media is extremely important and

how are you

scheduling

your tiMe? Is the focus on productive activities that bring

in loans, or have you fallen victim to

busywork?


sharing your thoughts and ideas with your peers, customers and prospects should be part of your overall plan, but don’t get sidelined. Book the time for this activity the same as you would any other. When you see the latest shiny object, don’t allow yourself to be pulled off course. Stay with your plan. Often, when I am consulting with Reverse Mortgage Success members, this becomes the topic. Keeping that laser focus and eliminating distractions is sometimes tough to do, but it is necessary.

thirdLOOK IN THE MIRROR

This may sound a bit odd, but how is your mindset? When you look in the mirror can you say that you are focused and on schedule, or just floundering and waiting for a loan to drop in your lap? Mindset and time management can go hand in hand. When you are busy writing loans, you are on your game and you just seem to get things done. Keep that momentum going … surround yourself with like-minded achievers, not the time vampires I referred to earlier. Study the habits of successful originators and see how they

structure their time. Are you doing $10-per-hour work? Consider hiring an assistant. Can’t afford to pay someone? Check with your local colleges. Students often need to gain some real-world experience. Need someone to hold your feet to the fire? Get a coach.

My timer is about to go off, so I need to bring this article to a close. Look at your calendar, prioritize your time, and structure your day the way it works best for YOU. Now get out there and help some seniors! g

Need assistance from the Advisor?Send your question to [email protected] and it may be addressed in the next issue.

?

How’s Your “Love-O-Meter”?alain valleS, crmp

The secret to a smooth reverse mortgage transaction and consistent referrals is to ensure you don’t meet your client’s expectations. You must exceed

them. Your client can’t just like you, they must love you.

Actually, they do. Studies show that reverse mortgages generated an amazing 80 percent approval rating from senior borrowers. But loan officers, always seeking to improve their own performance, can fall into the trap of thinking that everything is going wrong.

The senior borrower expects the loan to close. So as a loan officer you must go above and beyond the simple process of closing the loan in order to stand out and generate goodwill and referrals. But how can you tell if your customer really loves you? And if they love you enough to say yes when you ask for a referral?

Like anything else, you can’t manage

it unless you can measure it. So I have developed a reverse mortgage “Love-O-Meter” to help loan officers learn how to manage expectations and overcome the reluctance to ask for referrals.

The first chart on the following page depicts the typical loan officer’s perception of a reverse mortgage transaction. The bottom axis is the number of days from application to closing. The vertical axis is your “Love-O-Meter” scale, from Love to Hate. On Day 1, the borrower loves you, otherwise they wouldn’t move forward with the process. Unfortunately, as the process goes on, the loan officer begins to feel that the borrower is getting frustrated or concerned about their loan. Their affection drifts downward on the “Love-O-Meter” scale. Add a title or an appraisal issue and the next thing you know, >>

| TRR18

their feelings drop from Love to Hate. But, after 60-plus days, the loan finally closes and the borrower’s emotions have a slight upward bounce.

4 chart One 3Typical Loan Officer Perception of the Transaction

The first challenge is that many loan officers don’t ask for referrals from the borrower at all! They simply hope that by doing a good job the senior will automatically become an advocate after the loan closes. But you should start asking for referrals on Day 1, when the customer loves you! You can’t risk waiting until the loan closes.

The second chart highlights when you should be asking for referrals. Don’t wait until the loan closes or you’ll be behind the curve.

4 chart twO 3When to Ask for Referrals

Now comes the tricky part. The first chart depicting the downward slide to Hate is rarely the borrower’s perception of the transaction, but rather the loan officer’s.

A classic example is when a loan officer promises to call the borrower with an update and forgets to do so. A few days go by and the loan officer remembers and then assumes the borrower is upset that they didn’t receive the update. The next thing you know the loan officer is avoiding calls and dumps everything on the processor when the fact of the matter is the borrower still loves you.

It’s only when time goes by without a response or update that the borrower’s attitude drops to meet our perception. Chart Three shows the loan officer’s perception relative to the borrower’s perception. If the loan officer begins to assume the borrower is not happy, sooner or later that assumption will become true.

4 chart three 3Loan Officer’s Perception vs. Borrower’s Perception

The key is to make sure both the borrower’s and loan officer’s perceptions match and fall in the Love zone.

How can you raise the Love-Hate line to all Love, all the time? Start by doing a better job explaining the details of the loan transaction; highlighting the different players involved, from the appraiser to the closing attorney or settlement agent; and staying in touch throughout the transaction.

The fourth chart highlights the objective of the borrower loving you from beginning to end, which makes for more opportunities to ask for and receive referrals and introductions to new referral sources. This can be accomplished by weekly phone updates, handwritten notes, stopping by with a small token of your appreciation (a box of chocolates always goes a long way), and emailing timely information.

Y

Y

Y

studies show thAt reverse mortgAges generAted An AmAzing 80 percent ApprovAl rAting from senior borrowers. but loAn officers, AlwAys seeking to improve their own performAnce, cAn fAll into the trAp of thinking thAt everything is going wrong.


4 chart FOur 3Constant Love = More Referrals

But if you want to truly excel in the reverse mortgage business the goal should not be getting the borrower to love you evenly throughout the process. Chart Five shows you must work to get the borrower to love you more and more as the process goes on. If you set that as the goal and miss it by a bit, you’ll still be winning! When this happens you’re building tremendous goodwill and creating advocates who will go out of their way to refer you.

Besides the obvious necessities of explaining the process better and keeping the senior informed, I actually describe the “Love-O-Meter”

4 chart Five 3The Goal Is to Have the Borrower’s Love for You Grow!

to my borrower at time of application. I explain where we are on the chart and that my goal is that they will learn to love me even more. It may sound silly, and you can imagine the teasing I get. During the loan process I ask the borrower how I’m doing and let them know it’s OK to let me know if I’m slipping toward Hate. This gives me a chance to correct any issues and get back on track.

We all know that we must do better than just closing the loan. We must exceed the senior’s expectations. Test your own “Love-O-Meter” to help ensure that you “feel the love” from your borrowers and generate goodwill and referrals. g

tax MonItoRIng / exeMptIon InfoRMatIon | tax payMent / BoRRoWeR notIfIcatIon | full oR paRtIal outsouRcIng Models

“I want a tax service company that understands the reverse mortgage market.”

At ICG, we know the key to an effective Reverse Mortgage product is all in the details. Conventional tax service models merely report delinquent accounts to their customers. ICG goes beyond the conventional model and embraces proactive, loss mitigation and industry best practices into our taxserviceproductstoprovideclientsanend-to-endsolutionspecificallydesigned for the Reverse Mortgage market.

We understand your industry, investor guidelines, regulatory requirements and more importantly your client base. We welcome the opportunity to design a solution exclusively for you.

Industry Consulting Group, Inc. is committed to helping Reverse Mortgage companies overcome the challenges related to tax defaults.

call us at 972-991-0391 or visit www.icgtax.com today.

Y Y

| TRR20


the Conversation

Tick Tock, Tick Tockmark a. SiSco

Long-term unemployment figures are at 9.1 percent. Where does this fit in with the reverse mortgage scenario and lending in general? The Bureau of Labor Statistics official unemployment rate of the U-6 is more than 16 percent and property values are down in 18 of the top 20 markets (except for Washington, D.C., and Seattle, Washington). Consumer confidence is

down, big-ticket items are no longer being bought and employers do not need to hire additional staff. For more than six months, 6.2 million Americans have been without a job. This is not a bump in the road; this is America facing terrible times.

Baby boomers near the age of retirement are being let go from their current employment due to their age. As sad as it is, they are being replaced with a new, younger workforce for half their income. Jobs are in demand and employers know they can hire for less money. This is not to say it is the employers’ fault. The financial and economic issues these companies face make it difficult for them to stay in business if changes aren’t made.

This creates a situation where the 62-year-old baby boomer has to draw upon his investments to survive and make ends meet years ahead of his scheduled retirement. Many seniors do not know enough about the options and advantages of a reverse mortgage to help them through this process; this is where education must come into play.

I truly believe that the reverse mortgage program will survive and in fact get stronger in years to come. The bottom line is seniors need help and reverse mortgages offer a solution to this problem providing that these seniors have equity in their homes, as most of them do. On the other hand, 62-year-old baby boomers may not have this same equity. During the refinance boom, some of these baby boomers used their homes as ATMs and many cashed out on their equity.

Finding the right scenario for someone to take out a reverse mortgage is perhaps

more time-consuming for the loan officer in terms of marketing and planning. Remember, in most cases, a senior does not need to have a job to qualify but needs to be able to provide for taxes and insurance. If they can’t pay these obligations then a reverse mortgage is not the answer. One should consider selling and perhaps downsizing with a new reverse mortgage purchase. A reverse mortgage should never have been an option for those who fell behind on their taxes and insurance. Greed most likely took over on the part of the loan officer and the lender, and the new qualifying counseling protocol was not what it is today. As long as we have the right reverse mortgage educators, salespeople need not apply.

I remember the media blaming the brokers for these bad loans when in fact it was the investors, bankers and lenders who were offering these products based on the investors’ guidelines, which were met through the underwriting procedure. Why is the investor protected when most people lost their investment portfolio due to bad paper loans and financial institutions collapsing? I say: Too bad, Mr. Investor, but your investment went south. Embracing new industry mandates has been a challenge but has helped weed out the unethical loan officers, lenders, appraisers and title reps (the list goes on) that fueled the greed.

I do not expect home values to begin to return to their previous levels until 2015. Even then, they will be slow to gain momentum. One way to stabilize the housing market – and granted, this is only a start – would be a program designed to forgive the homeowner of any amount owed above the value of their home. It


In 2005, AARP conducted a

national study of homeowners

over the age of 65 and found

that only 31 percent of the

respondents were aware of

property tax relief programs

available to them in their state

and only 3 percent of these

respondents

had actually

applied for relief.

So you might ask, why

are there so many older

Americans not taking

advantage of these valuable

programs?

The hard truth is that

people listen better than

they research. In most

transactions, you have a title

company or a real estate

agent that is steering the

homeowner and advising

them on the more common

exemptions. Tax relief

programs generally highlight

areas that may be taboo in

conventional transactions,

such as income, age, overall

assets and disabilities. Based

on these factors, the closing

and/or real estate agent

may be less likely to broach

the subject or may lack

the detailed knowledge to

communicate the options to a

prospective client.

Today, 35 states offer tax

relief programs and 15 others

offer equivalent exemptions

for older Americans. We

recommend to our clients

that they expand their closing

process or implement a

post-closing routine to

include a road map to

tax relief programs and

other exemptions for each

homeowner.

As an industry we may not

be able to stop tax defaults,

but with a little extra effort at

the closing table we can help

homeowners reduce their tax

burden, which can only lead

to fewer tax defaults and/or

a reduction in the amount of

funds advanced in tax default

situations.

would also set in place a new loan for 100 percent of the market value of the home with a new rate of around 5 percent over a 30-year fixed-rate mortgage. For instance, if a homeowner had a first mortgage of $300K and a second of $200K, and the property was valued at $300K, the $200K would be forgiven.

The real scenario is that the longer a property sits on the market, the worse it becomes for all concerned. Many homeowners live in their homes for years without making a payment before foreclosure goes into effect. Homeowners facing foreclosure on an underwater property neglect the property and refuse to pay their mortgage. The homeowner in some cases will rent out the property, only to walk away without ever paying the mortgage while cashing in on the tenant’s rent payments. Homeowners will damage and sell off everything imaginable in the house, leaving the bank with a shell of a house and causing values in the neighborhood to drop. Banks do not

have the manpower to spend the money policing these empty properties against vagrants. The association also loses as the property deteriorates with overgrown vegetation and physical obsolescence. I have witnessed asset managers receive the asking price on a REO and still refuse to accept the offer.

The real estate agent representing the REO is also at risk of walking into a dangerous situation upon home review. The banks go as far as paying the squatters to leave the property, so why not let the original owner have a chance to see if they can qualify for the new loan program? With the current situation, we will never get through the bad housing inventory. If the investor

was on the hook and the homeowner had a chance to keep their home (providing they could qualify), they may continue to

take care of the property. In this scenario, the housing situation would rebound much faster.

Leveling the playing field with loan forgiveness and implementing the new loan program is a step in the right direction. The biggest challenges for the reverse mortgage program are value and education. Those of us in this for the long haul have been dealt our hand of mandates and wait to see the changes in the industry. You must truly be passionate for our industry’s cause to understand the reverse mortgage program and

have a real dedication to stay on course and provide a true benefit for the client. g

with the current

situation, we will

never get through

the bad housing

inventory. If the investor was on the hook and the homeowner had a chance to keep their home (providing they

could qualify), they may continue to take care of the property. In this scenario, the housing

situation would rebound much faster.

A topic for the closing table?

| TRR22

t h e

hot

s e a t

From the best job he has ever had to his most memorable moment,

we get the personal and professional facts from Reza Jahangiri, CEO

of American Advisors Group, in our monthly edition of The Hot Seat.

hothotU

SeatSeatC C

20 questions - things you need to know or may have been wondering -JULY/AUGUST 2011


reza

> you can’t always be crazy, but you should try.> ten years from now I want to have a footprint in the music or food biz.> my favorite website is the Drudge Report … I’m a news junkie, even if the stories are a

bit junkie!> i never miss an episode of Six Feet Under. Oh wait, that was five years ago … I guess I don’t watch

much TV. > the best job i’ve ever had: No-brainer: It’s AAG.> the worst job i’ve ever had was valet parking, although it taught me how to be a good tipper. > my favorite time of the day is dusk. It’s beautiful in Southern California as the sun is setting into

the ocean.> right now i’m listening to: Wow, this one’s tough. Wilco, M. Ward, Andrew Bird, Josh Ritter, Ryan Adams, Jenny

Lewis, Elvis Costello and Paul Simon. I like Muzak.> i’ve never lived outside of Newport Beach, which is kind of sad. I want to spend at least a few years in NYC before

I grow up.> i always try to stay away from coffee, but it’s difficult.> the best lesson i’ve ever learned was to not be judgmental; life is more gray than black and white.> the most memorable moment in my life was when I got to jam with Elvis Costello by chance in Prague.> a good friend is one who loves you for who you are, but is willing to call you out when you are not being yourself.> the worst purchase i’ve ever made was commercial real estate in 2005!> the best purchase i’ve ever made was a J-45 Gibson.

> the future of reverse mortgages is excellent. Why else would we all be reading this mag? Only the tip of the iceberg has been exposed in connection with our industry. As product awareness increases, the housing market settles and the senior population continues to grow, the market will take off.

> the greatest setback for our industry was the global financial crisis. Not only did it eat into home equity, I think it had a negative impact on the mindset of many seniors in connection with financial products.

> the most fascinating thing about the reverse mortgage industry is how it has been around for more than 20 years (FHA-insured) and is still so misunderstood.> if i could change one thing about the

reverse mortgage industry it would be to increase awareness.

> the ideal characteristics of leaders in the

industry are: Passionate, determined, systems-driven, creative and willing to fight.

P E R S O N A L

P R O F E S S I O N A L

AmericAnADvisors

GroupCEO

The fuTure of reverse morTGAGes is excellenT. Why else WoulD We All be reADinG This mAG? only The Tip of The iceberG hAs been exposeD in connecTion WiTh our inDusTry. As proDucT AWAreness increAses, The housinG mArkeT seTTles AnD The senior populATion

conTinues To GroW, The mArkeT Will TAke off.

The most memorable

moment in my life

was when I got to jam with Elvis

Costello by chance in

Prague.

| TRR24


the Industry Roundup

industryrOundup July/August edition

movers k shAkersfirsT nATionAl bAnk: Hired Joe Hansler as National Reverse Mortgage Manager. Joe will be responsible for expanding retail volume by recruiting production centers and loan officers nationwide.

fDic:

President Obama announced his intent to nominate current Vice Chairman Martin Gruenberg to the Chairman post of the FDIC.

rms: Standard & Poor’s Rating Services raised its ranking of the company from “above average” to “strong.”

urbAn: Officially finalized its deal to acquire Guardian First Funding Group and began rebranding the marketing campaign featuring Robert Wagner.

morTGAGe cADence: Spun off its compliance and document preparation services to create a new company, Finale Document Services.

AAG:

Took client testimonials to a new level with a booklet of testimonials, called In Their Own Words, highlighting a variety of ways reverse mortgages have impacted its clients.

up-k-comers

AmericA’s reverse TiTle: Launched in 2010, announced plans to expand in the reverse mortgage market.

1sT reverse morTGAGe usA:

Leveraging the large retail footprint from the forward division of parent company Cherry Creek Mortgage, 1st Reverse announced plans to expand retail reverse mortgage production.

ThirD-pArTy oriGinATions:

As the industry in general declined, endorsed loans from third-party originators doubled to 735 units.

bAy Docs, inc:

Launched Reverse Express product to enable Reverse Mortgage USA users to run pre-qualification scenarios and order applications documents

cfpb:

Hired Christopher Haspel to an undisclosed senior leadership post. He was formerly with Ginnie Mae as their Director of Mortgage-backed Securities Monitoring Division.

WhAT hAppeneD?hecm AcTiviTy:

After crossing over to positive year-over-year growth in March, endorsement volume declined for two consecutive months.

home prices:

The S&P/Case-Shiller Home Price Indices announced that the national index fell by 4.2 percent to reach new lows since the recession began.

Wells fArGo:

Announced its decision to exit the reverse mortgage industry, closing their retail division due to concerns about unpredictable home values.

vicki boTT:

The Deputy Assistant Secretary for Single-family Housing at HUD resigned her position effective June 24, 2011, to tend to personal family matters.

a roundup of this past month’s breaking news: Who moved where; Why a company closed its doors; Who is new to the industry?

Find it here


the EssentialsThe Essentials | i’sen sh l | - your monthly source of in-depth information,

industry updates, highly opinionated views and at-your-fingertips news.

Sarah hulbert

John levonick

Jonathan neal

John Smaldone

E

It takes a lot to create an attention-grabbing, informative article and The Reverse Review is very fortunate to

have worked hand in hand with industry leaders over the past couple of years. We are always searching for new

writers and industry-related articles. If you are interested in contributing your views and have what it takes to

intrigue our readers, we would love to hear from you! Email [email protected] to start the conversation.

| TRR26

n 2008 when I first started writing about reverse mortgages, the prevailing perception of the product in the financial/insurance world was primarily negative. That negativity was overwhelmingly rooted in the belief that costs associated with a reverse mortgage were unjustifiably high. ¶ Like most negative perceptions, on its face this misunderstanding appeared to be impossible to overcome. Fortunately, perception is not reality, but rather nothing more than what seems to be reality from a specific point of view. The problem with perception is that there is no rule that insists it be based on fact.


the Essentials

Are You Keeping Up With Changing Perceptions?

A look at the most prevalent misgivings of reverse mortgages. Jonathan neal

I

tax reduction

financial planning

LTClife insurance

ReverseMortgage

perceptions


In this case, once people started taking a step back and asking the question, “Too expensive compared to what?” people were able to prove mathematically that compared to other financial planning tools, reverse mortgages were very competitive. Hence, perception was trumped by reality, except for those who choose to consider math a pseudo-science.

In any event, over the past three-plus years those of you working with reverse mortgages have done a very good job at dispelling that once enormous hurdle because today the cost feature is not the automatic deal killer it once was.

Today, when I talk to financial planners and insurance advisors – those with concerns about including reverse mortgages in their senior client planning process – mention totally different reasons for their misgivings.

the thRee Most pRevalent Reasons I heaR aRe as folloWs:

Their retired clients are already in a comfortable position financially, with incomes more than adequate

to meet their monthly needs, and they see no need for any additional income.

This is a viable argument, and if you are going to promote the virtues of math when they work in your favor, you have to accept them when they work against you. However, another issue might not be taken into consideration: taxes. The idea that a person can maintain their income, yet reduce the amount of income tax they

pay, almost universally gets a positive reaction from planners and clients alike.

One example might be a senior couple with an adjusted gross income of $50,000 and no debt. They aren’t what we would consider rich, but they are comfortable and really don’t need any additional income. Based on the 2011 federal income tax tables they will pay $6,650 in federal tax this year. If they replace $12,000 of their income with money generated from a reverse mortgage they would still have an annual income of $50,000, but their taxes would be $1,800 less, a reduction of 27.07 percent in taxes paid. They may not need the money, but I would bet that given the choice they would find something they’d rather do with that $1,800 than write a check out for taxes.

Having said that, let me give a warning to the wise: Venturing into this arena without being well versed can be a career killer. It is not that hard to learn what you need to know, and it doesn’t take much to keep abreast with changing issues, but if you are not willing to put in the time and effort I strongly suggest you don’t venture into this field.

Making the last payment on a mortgage is one of, if not the most, significant and rewarding financial

accomplishments in the lives of most Americans. As such, it is understandable that for many seniors the idea of putting any type of mortgage on the home they worked so hard to own outright far exceeds their comfort level. Even in cases where a reverse mortgage may be a sensible alternative, this objection is almost always too strong to overcome.

Personally, I don’t think specific objection to reverse mortgages will ever go away as long as the term “mortgage” is part of the product name.

The last negative perception I want to comment on is one that recent economic and market upheavals

may have started to dispel. Basically what we are dealing with here is the idea of leaving a legacy. For many people, passing assets to family, friends and charities is an attractive idea, and in some cases, this idea grows beyond any rational expectation. Over the years I have known a number of retired people who were making unnecessary personal sacrifices in order to pass on assets to people and organizations. Because this idea is often extremely personal it can be a touchy topic to broach. >>

in any event, over the past three-plus years those of you working with reverse mortgages have done a very good job at dispelling that once enormous hurdle because today the

cost feature is not the automatic deal killer it once was.

planners and advisors don’t include reverse

mortgages in their client planning process

one4The senior is comfortable with his/her

currentfinancialpositionandhas no need for additional

income.

two4The senior is uncomfortable putting a

mortgage on a home he/she worked hard to own.

three4The senior feels as if they can’t pass on their

legacy and assets.

3continued on pg 42

| TRR28


the industry awaits the

impLiCations that

dodd-FranK wiLL have

oN rEVErSE LENDiNG.



John LevoniCK

$

| TRR30

The current federal regulatory landscape for reverse lenders is in a “wait andsee” mode. The broad obligations and implications imposed upon the mortgage lending industry by the Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) are currently focused on the forward and secondary markets. Dodd-Frank has clearly put reverse lending on the road map by specifically identifying and earmarking reverse lending as subject to future study and potential regulations that may result from the study, which will be conducted by a special office within the newly created Consumer Financial Protection Bureau (CFPB). While Dodd-Frank has not had much of an immediate and direct impact on reverse lending, there have been indirect implications that have affected reverse lending originators based upon changes to LO compensation and concerns about steering.

the CFPB and the oFFiCe oF oLdeR aMeRiCans

The newly formed CFPB, a federal agency that was established under Dodd-Frank, is dedicated to the protection of consumers from predatory practices and other abuses in the lending industry. With the creation of the CFPB, Dodd-Frank effectually consolidates into a single agency, (with its authority commencing on July 21, 2011), an accountability that was historically spread among seven different federal agencies. The primary focus of this agency is consumer protection and shall have both rulemaking and enforcement authority that will help to better protect seniors from predatory lending and what may perceived as banking and securities practices that, in their determination, have led to many elderly consumers losing their homes.

As a mandate issued within Dodd-Frank, the CFPB prior to January 21, 2012, shall create the Office of Financial Protection for Older Americans (Office

of Older Americans). The Office of Older Americans is to be created to focus on financial products and deceptive practices that will affect older Americans. This Office of Older Americans shall be ultimately responsible for providing the development, implementation and evaluation of the CFPB’s programs, policies and systems necessary to address the needs of older Americans with respect to financial products.

seC. 1076 oF the dodd-FranK WaLL

stReet ReForm and Consumer ProteCtion

aCt oF 2010. Subtitle G, Section 1076 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 provides two directives for reverse lending: a reverse lending study and possible resulting regulations.

The CFPB, most likely through the Office of Older Americans, shall conduct a study on reverse mortgage lending practices prior to July 21, 2012. The purpose of this study appears to be threefold. fi rsT , it will attempt to identify any potential unfair, deceptive or abusive practices in the origination of reverse mortgage that would

be necessary to protect unsuspecting seniors. secondly , the study may address circumstances surrounding a potential product suitability standard for the reverse product as it applies to the individual borrower’s circumstance. Thi r d , the study will attempt to address potential issues that may exist in the practice originating reverse

mortgages that are ultimately used to fund investments, annuities, and other investment products.

A portion of the study focuses on the use of reverse mortgages as investment collateral. This is consistent with the overarching theme of the other mortgage lending provisions of Dodd-Frank,

specifically “Risk Retention and the categorization of the Qualified Residential Mortgage.” Dodd-Frank is clearly attempting to create more responsible mortgage products and lending practices by putting pressure and risk on the secondary market investors.

The sTudy


J o h n s a y s :

dodd-FranK has clearly put reverse lending on the road map by specifically identifying and earmarking reverse lending as subject to future study and potential regulations that may result from the study,

which will be conducted by a special office within the newly created Consumer Financial Protection Bureau (CFPB).

Integrated Disclosure with Model Disclosures. According to Section 1076, the bureau shall provide for an integrated disclosure standard and model disclosures for reverse mortgage transactions that combines the relevant disclosures required under the Truth in Lending Act (15U.S.C. 1601 et seq.) and the Real Estate Settlement Procedures Act, with the disclosures provided to consumers for Home Equity Conversion Mortgages under section 255 of the National Housing Act. On May 18, 2011 the CFPB submitted two prototype disclosure

examples as part of the Know Before You Owe Project to the industry for comment. These two prototype disclosures combined the Good Faith Estimate disclosure, as required by the Real Estate Settlement Procedures Act (12 U.S.C. 2601 et. seq.) and the Truth in Lending Act Disclosure as required by the Truth in Lending Act (15U.S.C. 1601 et. seq.). While it was not explicit, these disclosures were clearly intended to apply to the forward lending market, as they did not specifically address reverse mortgages. It is currently assumed that the CFPB will

undertake the creation of the model disclosures as described in Section 1076 separately for the reverse products.

r esulTs from The

sTudy. Depending on what the Office of Older Americans finds in its reverse lending study, the CFPB may issue regulations that remediate any potential unfair, deceptive or abusive practices that would be identified. Also, there is a chance of guidelines that may attempt to define suitability, and the circumstances where a reverse mortgage may be

suitable for potentially qualified borrowers. And finally, should there be a nexus between the investment products that the reverse loans fund and any potential abusive practices and/or suitability concerns, be confident that there will be proposed requirements that address this as well. Effectively, Dodd-Frank has set the stage for a potential overhaul of reverse lending requirements, from disclosure requirements to underwriting practices and product guidelines.

So, there should be no surprise from the CFPB in subject matter of the first round of rulemaking as it applies to reverse lending, depending on the results of the research provided by the study conducted by the Office of Older Americans. Note that the earliest that the bureau may seek to promulgate any rules anticipated by this section 1076 of Dodd-Frank will be in late 2012 or early 2013,

giving the industry plenty of time for

commentary, and preparation in anticipation of the final regulations.

dodd-FranK’s negative impaCt on Reverse Lending – Loan originator Compensation

Effective April 6, 2011, reverse mortgage brokers could no longer assist cash-strapped HECM borrowers by offering closing cost credits. The Dodd-Frank Loan Originator Compensation requirements effectively eliminated the ability of brokers to offset expensive closing costs, crippling the brokers’

ability to compete with larger retail entities that can absorb origination costs. Coincidentally, the deal Congress struck to avoid a governmental shutdown in April included the FY 2011 Continuing Appropriations Act (H.R. 1473), cutting off $88 million from the Department of Housing and Urban Development’s budget for loan counseling programs. As a result, reverse mortgage counseling will lose its funding starting in fiscal year >>

The reGulaTions

the earliest that the bureau may seek to promulgate any rules anticipated by

thiS SECtioN 1076 oF DoDD-FraNkwill be in late 2012 or early 2013.

8

| TRR32

J o h n s a y s :

the BRoad and sweeping obligations and implications imposed on the mortgage lending industry by the Wall Street reform and Consumer Protection act of 2010 may be whittled down as the mortgage lending and banking industry focus their energies on risk retention and the qualified residential mortgage. By the time the office of older americans is obligated to submit its reverse lending study, Dodd-Frank may look significantly different.

2012 (October 1, 2011), negatively impacting counseling agencies that can no longer afford to waive the counseling fees for HECM applicants, thus forcing the borrower to pay even more closing costs. This combination of the Dodd-Frank Loan Originator Compensation limits, with the loss of funding for counseling, may severely impact borrowers that need to access equity in their property and do not have the cash to cover closing costs.

dodd-FranK’s indireCt Contribution to Reverse Lending - titLe Xiv and instaLLment saLes RestriCtions

It is not all bad news on the reverse lending front when it comes to Dodd-Frank. Another indirect result of Dodd-Frank that has a potentially positive impact on the reverse lending market is the new restriction on an owner-financed sale or installment sale. Dodd-Frank is not merely targeted to reel in the practices of banks and lenders; Dodd-Frank is bold enough to restrict how private property owners can finance the sale of their own home. Title XIV Section 1401(2)(E) Mortgage Loan Origination Standards, effectively restricts private property owners who want to sell their own property using owner financing through an installment sale. Dodd-Frank requires any homeowner who sells their property using owner financing to fully amortize the installment sale note, eliminating the ability for a balloon note to be negotiated between the buyer and seller. For seniors

who seek to downsize and sell their home to a borrower that may not qualify under today’s strict credit guidelines by using owner financing, a 30-year, (or in some cases a 20-year) full amortization term is not really practical because the equity realization will not be timely for the senior, as it might have been with a balloon note.

So as a result, in this slow real estate market, a senior may be forced to stay in their oversized home while they try to sell it, or mark down the price and lose valuable equity. The positive here is that a reverse loan would be a valuable way for the seniors to subsidize their cost of living while they wait ever so patiently for the market to rebound and for credit guidelines to loosen, but as with everything else in life, time is money.

in ConCLusion

While reverse lenders eagerly await the impending CFPB reverse lending study and the resulting potential regulatory impact, the bottom line is that the industry has time on its side. The broad and sweeping obligations and implications imposed on the mortgage lending industry by the Wall Street Reform and Consumer Protection Act of 2010 may be whittled down as the mortgage lending and banking industry focus their energies on risk retention and

the qualified residential mortgage. By the time the Office of Older Americans

is obligated to submit its reverse lending study, Dodd-Frank may look significantly different. Once the CFPB director is appointed and confirmed, the CFPB officially takes its authority, has the opportunity to respond to comments submitted on behalf of the proposed regulations, and finally promulgates the regulations, there might be a considerable amount of distractions that push the attention away from the reverse lending industry, potentially adding further delays to any impact.

As of this exact moment, Dodd-Frank has not had a significant impact on reverse lending, but there have been some indirect implications that are not overly burdensome. This does not mean the reverse market can breathe a collective sigh of relief. It is the responsibility of every single reverse lender to have their “best

practices” compliance model in full effect. Do not be the bad actor that the CFPB uses as an example that will reflect poorly on the industry and create burdensome obligations for those who have done their best to provide the seniors of our nation with a means of affordably accessing the equity in what might possibly be the single largest asset they have ever owned. g

| TRR34

t some point in our lives, most of us find we need to change jobs (whether by choice or not). Losing a job is a significant life stressor, and depending on how we manage it, the related stress can contribute to major illness and loss of well-being. Earlier this year, I was faced with exactly that situation: My employer decided to exit the reverse mortgage business altogether. ¶ While not unexpected at the time the decision was announced, it still created a great deal

of anxiety in my life. I had never been in a position where I faced the loss of a job. Against my wishes, I had to seek out and determine what career path I would take going forward.

A


the Essentials

Transitions: A Reverse Mortgage Professional’s Experience

Losing a job can allow for positive change and personal growth.

Sarah hulbert


To say that the reverse mortgage industry has been challenging during the past several years is an understatement. Nearly every day brings news of new licensing requirements, inaccurate media coverage, program changes or the exit of yet another large reverse mortgage lender. It seems the only thing we can count on these days is change.

Yes, these are difficult times, but I have always found great strength in my commitment to this industry. After nearly 20 years of focusing solely on reverse mortgages, I am as passionate as ever about the product and the tremendous amount of good it offers senior homeowners and their families. This commitment gives me strength; earlier this year, however, it did little to lessen the stress of facing a job change.

I have always been a firm believer in managing stress through positive thinking and planning. I recently ran across an interesting quote attributed to the late neurologist, psychiatrist and author Viktor Frankl, M.D., Ph.D. Frankl, who was imprisoned at Auschwitz during World War II, wrote:

“Everything can be taken from a man but one thing: the last of human freedoms to choose one’s attitude in any given set of circumstances, to choose one’s own way.”

Life has a way of throwing curveballs, but nothing is insurmountable as long as you make a conscious decision to approach the situation in a constructive and positive manner. That was the decision I made when I learned it was time to start looking for new opportunities.

What’s going on around here?

I first suspected change was in the air about three months before it occurred. I continued to go to work as usual every day, but my mind was constantly running with thoughts such as “What’s going to happen?”, “When is it going to happen?” and “What should I do about it?” Oh, it was an exhausting time! I was still very busy with day-to-day responsibilities – and made sure the quality of my work did not suffer – but I was definitely distracted.

Finally, when I couldn’t stand the waiting game for another moment, I decided to be more proactive: I went to the key decision-maker in the company and got straight to the point, asking: “What’s going on? Where do we go from here?” Unfortunately, 24 hours later, I got the answer I feared: The company had decided to exit the reverse mortgage business.

Oh no!

OK. Now I knew change was upon me. Whenever I enter such a period in my life, one of my favorite quotes comes to mind:

“The only people who like change are wet babies.”

It is so true; I have yet to meet a person who doesn’t struggle, on one level or another, to embrace change.

Yet in nearly all circumstances, change becomes an opportunity for reflection and for personal and professional growth.

Keeping that in mind, I allowed myself one day to have the requisite “pity party,” complete with sadness, anger, self-loathing, a glass of wine (or two) and many “woulda, coulda shouldas.” Not only was my life going to change, I was faced with having many difficult conversations with my employees, whom I was responsible for laying off. It was not an easy few days, but then again, the day it becomes easy to lay off employees is the day I need to hang up my manager’s hat.

I owe a debt of gratitude to my husband, children, friends and family for putting up with me and providing me with a strong foundation

and much patience, understanding and encouragement during this time. It was not easy on any of us.

Hmmm…

Change was upon me; it was time to step back and re-evaluate what was important to me as a professional in this industry, as well as what was necessary for my family and me. I knew the decisions I made going forward would dictate the future of my career, and my family’s happiness and well-being. I had a big job ahead of me! >>

to say that

the reverse

Mortgage

industry has been

challenging

during the

past several

years is an

understateMent. nearly every day brings news of new licensing requirements,

inaccurate media coverage, program changes or the exit of yet another large reverse mortgage

lender. It seems the only thing we can

count on these days is change.

yet in neArly All circumstAnces, chAnge becomes An opportunity for reflection And for personAl And professionAl growth.

| TRR36

I remember plugging in my iPod and playing “Big Girls Don’t Cry,” by Fergie. Even though the song is about a relationship gone sour, some of the lyrics were particularly relevant and poignant: I needed “…to be with myself and center / Clarity, peace, serenity.” I know, it sounds a bit corny, but it’s so important to take the time and reflect on your needs and what will be best for you and your family.

Without a doubt, I knew I wanted to stay in the reverse mortgage industry. Having spent so many years in this business, I couldn’t imagine doing anything else. Fortunately, quite a few opportunities presented themselves, so I didn’t have to worry about whether an opportunity would arise – I simply had to make sure I selected the right one.

one . What do I enjoy doing,

career-wise?

two . What do my ideal workday

and workweek look like?

three . How do my answers to the

questions above relate to the areas in

which I excel?

four . In what sort of environment

doIthrive?Largecorporateoffice?

Homeoffice?Satelliteoffice?

five . What sort of corporate

culture appeals to me? Formal?

Relaxed? Small or large

organizations?

six . How will I relate to and

communicate with the people I will be

working with?

seven . Is it important to me

that my new employer be based close

to me geographically?

eight . Will this position allow me

to maintain my work/family balance?

nine . What are the opportunities

for growth within the company?

ten . Will I be able to continue my

outside, industry-related efforts and

responsibilities?

Answering these questions as honestly as possible was critical as I went through this exercise, and helped me identify needs and values important to me. I learned quite a bit about myself in the process, including:

g My greatest joys in this

business have been:

(a) working with seniors,

(b) mentoring originators

and helping them grow

their business, and

(c) creating and scaling a

business as it grows.

g I wanted to be a part

of a team of individuals

who have a strong

commitment to serving

seniors.

g I needed to work with a

team who not only “gets

it,” but who have already

begun building a solid

foundation to facilitate

future growth.

g I realized I thrived in the

more entrepreneurial

work environment

a mortgage banker

provides, even if it

meant I would be

faced with individual

and state licensing

challenges (which are

notassignificantunder

a federally pre-empt

organization).

g Strong, regular

communication is

imperative to the

success of any

organization and leads

to a more collaborative

work environment. I

needed to make sure my

new employer agreed

with this philosophy.

g I needed to be part of

my new employer’s

management team,

enabling me to lend

my experience and

knowledge to the

team as a whole while

simultaneouslybenefiting

from the knowledge

and experience of my

teammates.

g Opportunities for

personal growth are

essential, much more

so than the status of an

“impressive” job title. I

didn’t want to be boxed

intoonespecificrole;

rather, I was looking

for an opportunity that

allowed me to contribute

to other areas of the

company in addition to

my primary day-to-day

responsibilities.

g I needed to be able to

continue as an active

member of NRMLA,

both as a board member

and as co-chair of the

Ethics Committee.

g Finally, I wanted to be

challenged at work,

enjoy the people I

worked with and to have

FUN! I needed to feel

asolidfitwithmynew

employer’s corporate

culture.

Where to go? My next step was designed to evaluate my options. Writing has always been one of my escapes, a way for me to sort through my thoughts. I began composing answers to some of the following questions:

som

e th

ough

ts

Clarity


Choice

Keeping my goals in mind, I took a fresh look at the options at hand, making a list of pros and cons for each position I was evaluating. As I mentioned earlier, I count myself lucky to have had many possibilities come my way (particularly in today’s economy), all from very reputable companies who had a lot to offer. Narrowing down the list was difficult, but the insights resulting from my earlier exercises provided me with greater clarity about my requirements, and ultimately helped me narrow down my list to the final three prospects.

Now in my fourth month with 1st Reverse Mortgage USA®, the reverse mortgage division of Cherry Creek Mortgage Company, Inc., I am pleased to say I have settled in and couldn’t be happier with my decision to join the company. I am “up-to-here busy” ramping things up, but I am enjoying the challenge and the team I work with.

Corporate culture is an integral facet of any company. Fortunately, my new employer’s culture is a perfect fit for me. The company is filled with hard-working, knowledgeable individuals and we operate in a collaborative environment. We always make sure to maintain our sense of humor, be kind to each other and have fun in the process. After all, in any given month we spend the majority of our waking hours at work, so it is important to enjoy our jobs and the

environment and culture in which we work.

Looking ahead

As I said previously, the only thing any of us can count on these days is change. Rest assured the reverse mortgage industry will continue to evolve in the years to come. Being aware of these changes and being able to constantly adapt to a changing environment is something every industry participant – organizations and individuals alike – needs to be aware of and capable of doing.

None of us knows what the future holds for reverse mortgages, but I am certain of two things: 1 Reverse mortgages are a

fantastic product and there will always be a need.

2 The extra effort I put into my job search resulted in a position with a company that is an excellent match.

Interestingly, each position I evaluated resulted from a proactive search, where I spoke with key decision-makers within select organizations. I paid no mind to whether or not

job openings were posted. Instead, opportunities were created as a result of our conversations.

I made it a point to be straightforward in presenting my skill set, strengths, weaknesses, personal goals and concerns. I took my time, knowing this was an important, long-term decision—not just for me, but for my future employer as well.

And with that, I will leave you with one final quote, this time from Franz Kafka:

“All human errors are impatience, a premature breaking off of methodical procedure, an apparent fencing-in of what is apparently at issue.”

The decision-making process was not easy, but I am thankful I took the time and effort to approach the task in a thoughtful, methodical manner. As a result of these efforts, I am pleased to say I found my new “home” with a company that suits me perfectly. g

rest assured the reverse

Mortgage industry will

continue to evolve in

the years to coMe. Being aware of these changes and

being able to constantly adapt to a changing environment is something every industry

participant – organizations and individuals alike – needs to be aware of and capable of doing.

life hAs A wAy of throwing curvebAlls, but nothing is insurmountAble As long As you mAke A conscious decision to ApproAch the situAtion in A constructive And positive mAnner.

| TRR38

his true story highlights a financial problem that seniors are facing all over the country. This story brings to light the struggle my client endured when faced with foreclosure. I worked on this case for seven months, during which I could not find one program or subsidy available for seniors in a position similar to my client’s.T


the Essentials

A Financial Problem Affecting Seniors Nationwide

One senior’s experience sheds light on the amount of government aid available for those seniors struggling to keep their homes.

John Smaldone


When seniors are facing foreclosures or shortfalls on their homes, little funds are available for their aid. I discovered this through a grueling experience and was greatly disappointed in discovering what were obviously some mistaken priorities. Our government’s priorities lie not with the American people but with what our politicians find most beneficial to them and our country’s standing in the world order.

I got involved with one of my loan officer’s clients for whom we tried to obtain a reverse mortgage to pay off her existing loan but ultimately it ended in a shortfall. Our senior was 73 years old at the time, lived in her home for 36 years and had lost her husband eight years earlier. This woman is unable to work because she suffers from a bone degenerative disease. To add to that, her handicapped son lives with her. Her only means of support is Social Security and money from a part-time job her son holds.

She had a forward loan that, after five years, adjusted to a rate that more than doubled her monthly mortgage payment. The adjustment put her in a position in which she could no longer afford to make the mortgage payments, which ultimately led her to apply for a reverse mortgage. Following the appraisal, the loan was calculated with a $26,000 shortfall. I set out to negotiate a settlement with the bank on her behalf; by this time, she was five months behind in her mortgage payment.

I started negotiations with the bank in December 2009. After two months of getting the runaround, I was finally negotiating with them and assigned

to someone in the loss mitigation department. We had processed the loan and had it underwritten so we knew the exact amount we could guarantee this lender for a settlement. However, the lender was only servicing the loan at this point. The loan was in a security so the lender had to take the initiative to negotiate with higher powers. This seemed to be the stumbling block; it appeared that the servicer put forth very little effort in order to work out a settlement.

After almost three months of negotiations with the loss mitigation department, the settlement request was rejected and the bank told our senior to apply for a loan modification. I had doubts that she would be able to qualify for the modification, but she wanted to move forward anyway. I assisted her in this process and helped her with all of the necessary paperwork. After two weeks, what I feared would happen occurred; my senior was told she did not qualify for a modification.

In March of last year, she was served with a foreclosure notice and then a date for a trustee sale, which was to be on May 23, 2010. Seeking more effective ways

to assist her, I went to the Associated Press to see if they would be interested in covering this story.

After investigating the scenario, they printed an article about the situation. Other newspapers around the country picked it up, including local publications,

as did NBC, ABC and CBS. The news media portrayed the story about a disabled senior who may be forced out on the street by the bank. The story also mentioned that the bank had been contacted for a statement but declined. The pressure was now on the bank and this was my opportunity to push forward at warp speed.

In an effort to place additional

pressure on the bank, I relayed the story to a friend, Congressman John Duncan Jr., who was able to obtain a one-month stay of the trustee sale. He also wrote a letter to the bank. The trustee sale was rescheduled for June 23.

We also started to have benefit car washes to raise funds for my senior, calling it, “Save (her name) Home from Foreclosure.” The media was all over it. Following the constant media attention and the receipt of the letter >>

when seniors Are fAcing foreclosures or shortfAlls on their homes, little funds Are AvAilAble for their Aid.

in March of last year, she was served with a

foreclosure notice and then a date for a trustee

sale, which was to be on May 23, 2010. seeking more effective ways to assist her, I went to the

associated press to see if they would be interested in covering this story.

after investigating the scenario, they printed an article about the situation.

other newspapers around the country picked it up, including local publications, as did nBc, aBc and cBs. the news media portrayed the

story about a disabled senior who may be forced out in the street by the bank.

| TRR40

from Rep. Duncan, the bank called me with a willingness to settle the loan so she could proceed with the reverse mortgage.

On June 8, her reverse mortgage was closed. Now, she is once again secure in the home she has occupied for 36 years, very happy and looking forward to life.

The Bigger Picture

With all of the TARP funds and other assistance programs that have developed in order to resolve the financial crisis of homeowners, none resulted in assistance programs aimed directly at senior homeowners facing foreclosures or similar hardships.

Without the help of a close friend, our government would have turned away from a senior who was in dire need of help. Her husband was a decorated Vietnam War hero, she worked and paid taxes her whole life, and yet there was nothing available in the way of grants or subsidies from our government to help her.

There is no way to spend seven months, like I did, on every case like this in the country. I took it upon myself to help, not realizing the time it would require to deal

with a problem of this nature. However, given the similar situation, I would do it all over again.

The only solution I can see is a program established by our federal government that would provide aid to a qualified senior in order to avoid foreclosure.

I proposed an appropriation bill outline to HUD and to a congressman about a year ago; unfortunately it fell on deaf ears. The congressman I previously mentioned tried to present it but to no avail. I give him credit for that, it was more than most would have done!

Save a Senior’s Home (SASH) would provide subsidy funds for seniors in a situation like my senior’s. The proposed program would be a joint effort on the part of the federal government, the lender who held the existing loan, the borrower and a lender willing to grant a reverse mortgage to the senior homeowner.

A program like SASH would not only save the senior’s home from foreclosure but would give the lender holding the loan incentive to join the program. The lender would not have to foreclose on the property and would not have to show the property on their balance sheet. The

major advantage to the lender is they would only have to come up with half of the shortfall.

The funds to get a program like SASH off the ground could come from existing TARP funds and stimulus appropriations that have not been used. The dollars that have already been appropriated would be a reallocation of funds, not a request for additional funds for a new program.

We as American citizens and as an industry serving our senior citizens need to speak out. We need industry lobbyists to help us promote programs like SASH. A program like this would aid those seniors who can qualify, so they will not lose their only means of personal security. We have many congressmen and senators who would listen to our industry lobbyist. It is difficult for an individual alone to be heard, even if the proposal is sound and should be adopted.

I think our seniors have put in their time for their country, their children and their struggles over the decades. We owe it to our seniors to give them the best retirement years possible. I think we would all benefit from a program like SASH, don’t you? g

An initial appropriation of allocated funds in the amount of $250 million.

Commitment to the homeowner for a reverse mortgage from a recognized lender.

The lender holding the existing loan would have to participate in the settlement with 50 percent of the shortfall between the reverse mortgage proceeds and the remaining payoff of the principal balance of the loan.

The other 50 percent of the funds to make up the shortfall would come from the SASH-appropriated fund program.

The shortfall couldn’t be more than 35 percent of the remaining pay off of the principal balance of the loan.

The borrower would have to qualify for the grant/appropriation. There would be strict qualifying guidelines and criteria in order for a senior to be eligible. (My senior would have been a perfect candidate.)

The senior would have had to be turned down for a homemodificationprogram and must have a rejection notice in hand.

The SASH PROGRAM Requires:

3 4

5

6 7


For Whom The Wells Toll!dave bancroft

I will never forget working the morning shift at Lake Mission Viejo back in 1990 when I opened the paper to see the words, “Buster Douglas Shocks the World.” I don’t know if a headline has ever gripped me with such surprise since then, but the sudden exodus of Wells Fargo from the reverse mortgage industry is definitely up there. So what does all this mean? Is this the beginning of the end for reverse mortgages or have we just entered the Twilight Zone of small business, something like a new and improved cottage industry? I have always felt like these mammoth brand names have the inside scoop and I always watch them closely. Wells’ recent Houdini act seems a bit out of character and doesn’t bode well for all of us in the arena. We may have just seen the last big carrier leave port and now we are left with a couple good-sized battleships to protect the mainland.

I can only speculate why Bank of America and Wells Fargo decided to ride into the

sunset, but the speed of the exit is not comforting. Truth be told, if you want to know the future, it lies in the secondary markets and how this product will be perceived by investors. On the Friday after the announcement, with great anticipation, there were a couple of trades done and the word is that they went relatively well.

By the time you read this article the picture should already be much clearer, but unfortunately I don’t have a crystal ball right now. I can only imagine that the fixed rates will suffer a little, probably somewhere in the 100 basis point range, while LIBOR takes it on the chin. The property tax and insurance situation is getting a lot of attention and the feeling is that nobody wants to foreclose on a senior even though the market demands it.

I have a feeling the next thing coming down the pike is a credit qualifier for the senior. Maybe it won’t be a FICO score, but it will be an underwriting condition that

will ensure the senior has enough income to cover their taxes and insurance. Social Security income will hopefully be sufficient for most, but if it isn’t, the benefit of the reverse mortgage will be severely reduced to allow for impounds … sidelining the

dough like the servicing fee did in the past. This type of restriction could possibly reduce the number of HECMs, but the alternative is scarier: no investor interest for fear of the growing tax and insurance problem.

So tomorrow will bring a new day with two of the industry’s biggest players gone. The sun will rise and shine on MetLife like never before. Snoopy has now been thrust into pole position with Urban right behind, licking its chops. Opportunity has never been larger for these guys and hopefully they will achieve more than their predecessors ever dreamed. I hope there will be a vacuum effect and that clients will reach out past their depository institutions for assistance in obtaining a reverse mortgage. We need companies that can build a reverse mortgage platform for the future and create a bridge large enough

for all of us to cross. We are definitely in some interesting times. Stay strong and have faith ... Mike Tyson was just inducted into Boxing’s Hall of Fame. g


the Opinion

industryOpiniOn the latest breaking news reported by a voice in the industry

Find it here

so toMorrow

will bring a

new day with

two of the

industry’s

biggest players

gone. the sun will rise and shine on Metlife like never

before. snoopy has now been thrust into pole position with urban right

behind, licking its chops. opportunity

has never been larger for these

guys and hopefully they will achieve more than their

predecessors ever dreamed.

| TRR42

l1st Reverse Mortgage USA

A division of Cherry Creek Mortgage Company, Inc.1strmusa.com877.217.0166

American Advisors Groupaagreverse.com

800.850.1356

AppraiserLoftappraiserloft.com

877.229.7799

CCG-Capital Consulting Groupccgcap.com678.906.2850

Celinkcelink.com

517.321.9002

lDirect Finance Corp.

dfcmortgage.com781.878.5626

Hanover Financial [email protected]

865.980.3583

Industry Consulting Group, Inc.icgtax.com

972.991.0391

iReverse Home Loansireverse.com/employment

800.486.8786

Mortgage Cadencemortgagecadence.com

888.462.2336

Reverse Market Insightreversemarketinsight.com

949.429.0452

lReverse Mortgage Crowds

reversemortgagecrowds.com800.604.6535

Reverse Mortgage Successreversemortgagesuccess.com

410.557.0294

Reverse Visionreversevision.com

919.834.0070

RMSrmsnav.com888.918.1110

West Star Lendingweststarlending.com

949.922.7859

l

the ResourcesInformation at your fingertips. A listing of advertisers and contributors featured in this issue.

Jonathan nealCONTINUED FROM PAGE 27

In many cases a reverse mortgage can be used to not only increase the amount they can pass on to family members, but also provide them with an opportunity to pay back something to a person, place or organization that had a positive effect on their life.

The example I use here comes from a real case that one of our affiliates brought to my attention last summer. Her client was a

retired schoolteacher who wanted to leave money to her alma mater, but felt guilty because if she did, she would be reducing the amount she would leave her two children. Her insurance advisor showed her a life long-term care policy that provided her with a very attractive solution to her problem.

Using the proceeds from a reverse mortgage, she was able to purchase a $250,000 LTC-life insurance policy that would pay her $5,000 in monthly LTC benefits if ever needed. If, on the other hand, she never needed long-term care, the $250,000 death benefit would be paid out as follows: $100,000 to each of her children and $50,000 to her beloved alma mater. And if she used part of it, whatever remained would be distributed to the three

beneficiaries: 40 percent to each child and 20 percent to her alma mater.

The result:

Her children end up with at least what they would have received initially; she has long-term care coverage that she didn’t have before, and she has, at minimum, created an opportunity for her alma mater to receive a sizable donation.

OK, so I only have ideas for two of the three reasons currently given for not considering a reverse mortgage, but give it some time. Much like everything else, the pros and cons of reverse mortgages will change.

As always, should you have any questions feel free to contact me: [email protected]. g


When the right direction is extremely important, rely on a tested and proven partner.

Michael Kent 281.404.7987 I Ralph Rosynek 281.404.7970 [email protected]

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| TRR44

Mortgage Cadence gives you the

flexibility to easily adapt to industry

changes and capitalize on new business

opportunities; creating a more efficient,

agile and profitable enterprise.

Enterprise Lending Solutions, Document Services and Compliance SolutionsIn every enterprise, there is an underlying rhythm – a cadence – in the execution of mortgage loans. Those companies that have seamless system integration and dynamic data flow across the enterprise are in rhythm and optimize their efficiency at every step. Their business flows in absolute harmony to increase productivity, retain customers, maintain compliance and reduce costs. Now your company can catch the rhythm and reach a whole new level of performance. Mortgage Cadence is orchestrating the ultimate mortgage origination performance by providing a true Enterprise Lending Solution (ELS) that handles both forward and reverse lending, as well as multiple business channels. With the Mortgage Cadence suite of solutions you have access to full end-to-end loan origination functionality, automated underwriting, business rule management, product and pricing, workflow automation, document services, and Web portals within one integrated platform. No other system in the market today can deliver this level of fully integrated performance tools and compliance support to accelerate the tempo of your enterprise.

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the reverse review

Documents

reverse lending

reverse review magazine

reverse mortgage lenders

u g u s t

e n d i n g o n t h

reversethej u

john levonicktransitions

seniors experience sheds