the reverse review february 2009

8/14/2019 The Reverse Review February 2009

1/48

THE

REVERSEreview

Spotlight: Brian D. Montgomery

page

26As the nal days of the Bush Administration came to a close, we had the privilege of

engaging in a candid conversation with Brian D. Montgomery. We spoke about his persona

accomplishments, and experiences while in ofce as well as his advice for the new

administration. Read for a glimpse into the personal thoughts of one of the most inuential

people on FHA and HUD over the last eight years.

February 2009


2/48


3/48


4/484reversereview.com

THE

REVERSEreview

THE REVERSE review

THE INDUSTRY STANDARD SINCE 1995e Industry Standard is not just a slogan.

Six of the top 10 reverse mortgage originatorsuse Ibis Soware for their websites, retail

and wholesale businesses.

ose lenders are using:

Ibis RMO:Loan origination modules include CRM,

Quick Quote, Proposal, Application,Underwriting, Documents, Closing, Pipeline

Reports, and Cost Templates. Plus Brokerand Correspondent Management. Full state

specific application and closing packages canbe stored, printed, and emailed.

Ibis Quik Quote:Bilingual consumer calculators,

already in use at: www.rmaarp.com www.wellsrm.com

and many other websites

Ibis also provides:

Ibis RMA:A complete counseling package forHUD-Approved reverse counselors.

For more information, visit

www.ReverseMortgageHomePage.com

Or call (800) 566-5077

Publisher Aman Makkar

Design & Production Jason Westbrook

2008 The Reverse Review, LLC. All rights reserved. The Reverse Review, LLC is a California

limited liability company and is the publisher ofThe Reverse Reviewmagazine. Reproducons

distribuon of any materials obtained in the publicaon without wrien permission is express

prohibited. The views, claims and opinions expressed in arcle and adversement herein are

not necessarily those ofThe Reverse Review, its employees, agents or directors. This publicao

and any references to products or services are provided as is without any expressed or

implied warranty or term of any kind. While eort is made to ensure accuracy in the content

of the informaon presented herein, The Reverse Review, LLC is not responsible for any errors

misprints, or misinformaon. Any legal informaon contained herein is not to be construed as

legal advice and is provided for entertainment or educaonal purposes only.

Postmaster : Please send address changes to The Reverse Review, 11440 W Bernardo Ct, Ste 2

San Diego, CA 92127

11440 West Bernardo Court

Suite 220

San Diego, CA 92127

Subscriptions and Editorial Contentphone : 858.217.5332

email : [email protected] : www.reversereview.com

Advertising InformationRates, specicaons, and deadline informaon available.

phone : 858.217.5332

email : [email protected]

Copy Editor Harpreet Makkar

Printer The Ovid Bell Press

Editor-in-Chief Erica English


5/48

February 2009

editors not

When I thinkabout a New Year, a few words come to mind,Renew, Rebuildand Refresh. They each havedierent meanings, things we all care about:commitments, success in business, friendships

and restoring new successes in a New Year.

Rebuilding in this small space is not hard,

especially with the new reverse mortgage loanlimits being increased to $625,000, opening

the door to a whole new income bracket

of borrowers. This will undoubtedly have a

posive impact in our industry.

Lately Ive been planning for 2009, gathering

new editorials, campaign ideas and helping

new companies with their campaigns.

Addionally, I would like to invite our readers

to share quesons they may want answered in

2009. Our goal is to be a monthly guide for the

conversaons taking place within the industry.

Speaking of which, recently Ive had

the pleasure of campaigning new

books hing the circuit, and Im

proud to announce that some of your

favorite TRR contributors are releasing

new books. The well respected Atare

Agbamu shares with us his valuable

insight and informaon for every loan

ocer in our industry to beer service

our senior clients in, Think Reverse!.Addionally, Monte Rose shares his training

and speaking pracces in Go Sell. Go Serve.

Its going to be a very excing year and we

want you to join us by giving us your feedback

on what you want to read each month. Please

send your emails to feedback@reversereview.

com as we aim to create an interacve

publicaon with our wonderful readers in

2009.

Enjoy!

Erica English

Editor-in-Chief



CONTENTS

ESSENTIALS

12 Got Content?Valerie VanBooven

5 Note From the Editor 7 Ask the Underwriter 10 Industry Snapshot

45 Directory

16 Creang a World ClassReverse Mortgage

Training ProgramJacqueline Del Priore

40 Birth of a NewIndustry, Part IIMichael Banner

30 What the HECM:Reverse Mortgages

can be Used to Buy a

HomeWeiner Brodsky Sidman

Kider, PC

37 Grandma Ritas Heirand the 20 Year

MistakeAtare E. Agbamu, CRM

22 Building an EecveAdvisor Referral

EngineMonte Rose

26 SPOTLIGHT:Brian Montgomery

46 The Last Word : You are Terminated!


7/48

February 2009

Aaaaahhhh, February, for some, the month before springshould arrive, for others Ground Hogs Day, a Presidenal

Birthday Holiday month, and for many the month of love and

chocolate!

While my wife would prefer I recall the more romanc side of

February 14th last year, I must admit a dierent event of the

day ran a very close second.

You see, as I opened a large Fedex box delivered to me that day,

a rather thin le slid out, and then the package with a note

Will 2 pounds do it?....P.S., I just love your Underwriter(s) it

proclaimed.

As I curiously opened the package, I was presented with a

classic symbol of underwring communicaon; chocolate, two 1

pound bags of pink M&Ms, one plain, one peanut.

We use love in so many ways these days, we love our cars,

we love our home, we love our loved ones, and we love our

Underwriter(s)!

While the chocolate isnt necessary for us to do our job, (and

many of us certainly do not need the calories!), I have oen

thought of sharing the love and the chocolate in reverse to

some of the villagers whose eorts brought the le before me

that I am going to underwrite as I munch my way into sugary

bliss.

Honestly, that day, I would have loved to send a pound to the

appraiser who chose to do the appraisal on the manufactured

home before the foundaon inspecon, couldnt read the tags,

and le enough white space in the report to verify the loss of a

current copy of the Appendix D appraisal protocol.

Perhaps the chocolate would have given him/her the required

energy to go that extra mile and ll in all of the spaces, make

appropriate comments, and incorporate all of the required

documentaon.

Too oen we accept reports from our vendors withoutquesoning quality or content. More importantly, we do not set

the appropriate expectaons for the nal work product. Some

of the things I would especially love to know as I read through

an appraisal report are:

The name of the lender for whom the report was prepared.

Property tax amounts and homeowner informaon

The FHA Casele box was lled in with what number?

The comparable photos were clear and correctly matched

to the correct properes.

The Locaon Map indicators were on the right side of thhighway that divided the subdivision.

The funconal obsolescence comment of tandem

bedrooms was drawn on the sketch without two separat

entry doors.

Oil tanks, outbuildings, sepc elds, well locaon, pao

gazebos, and other site improvements were drawn and/

commented on.

Interior photos depicng the hole in the oor behind th

toilet, the big grey spot on a wall, the missing les in a

ceiling, a dangling light bulb, and other notable features

interest were described and a recommended/lack of nee

for repair acon/inspecon proposed.And my remaining economic life is?

And how about that site value?

The pavement that split le to the subject property and

right to the next parcel, is it a private road?

That large black line that runs from one pole to another

across the back of the home is it a power line?

That puddle in the corner of the basement is it sewage

seepage or a surprise?

The report menons a scenic and picturesque landscape

(??), the rear photo was shot from across the creek in th

back of the yard to get the gazebo, pool and pao in one

frame the report says ood zone X.The report legal descripon indicates, see aached lega

descripon or refer to preliminary tle report, yet the

pdf of the report has no aachments.

The subject photos remind me of a winter wonderland

scene from a postcard. Hows that roof doing under all o

that snow?

The unit has space heat. And?

Nice electrical box photo any idea why one fuse is

missing?

The blue tarp on the back of the roof in the photo was fo

Thanks for comp 4,5 and 6 what are they for?

Is 35 DOM in a stated declining market a typo?

What a novel idea, every subdivision should have an

equestrian estate as one of the comps.

So, as those bags of pink M&Ms embark upon their Fedex

journey to Underwriter(s) around the country (I like the M&

Peanuts!) in the next few weeks, why not start a new tradio

and dont forget your quality appraisers - drop them both a

good appraisal checklist and a pound with your note P.S. I ju

love your appraisal quality.

ask the underwriteRalph Rosy

Will 2 pounds

do it?........

P.S., I just love

your Underwriter(s)



Atare E. Agbamu,

CRMS- Grandma Ritas

Heirs and the 20

Year Mistake, page

37

Atare Agbamu is

the author of Think

Reverse! (The Mortgage Press,

coming this fall) and more than

100 arcles on reverse mortgages.

A reverse-mortgage specialist

in Minnesota and an adviser toinstuons across the country,

he writes the Forward on Reverse

column in The Mortgage Press, since

2002. Atare can be reached by email

at [email protected]

Jacqueline De

Priore

- Creang a WorClass Reverse

Mortgage Trainin

Program, page 1

Jacqui Del Priore

is the Director

of MCTI (The Mortgage Career

Training Instute), a company

which specializes in reverse

mortgage sales and product

training.

As former VP of Training and

Development for World Alliance

Financial, she has helped hundre

of reverse mortgage loan ocers

achieve success in our industry.

For more informaon, contact

Jacqui at 516-983-9396 or email

her at [email protected]

contributorsRalph Rosynek-Ask the Underwriter, page 7

Ralph Rosynek is President and CEO of 1st Reverse as wellas a HECM DE Underwriter. Mr. Rosynek has been involved

in mortgage lending for over 30 years with the last 5+ years

exclusively providing reverse mortgage lending soluons.

To contact Mr. Rosynek or to learn more about 1st Reverse

Financial Services, Please visit www.1streverse.com or call

877.574.1000.

John Lunde- Reverse Market Snapshot,page 10

John Lunde is President and

founder of Reverse Market

Insight, the premier source

for market intelligence and

analycs services in the reverse mortgage

industry. RMI clients include ve of the top te

reverse mortgage originators, both lender an

independent servicers, as well as some of the

largest nancial services rms in the world.Find out more at www.rminsight.net or call

949.281.6470.

Joel Schiman- What the HECM: Reverse Mortgages Can

be Used to Buy a Home, page 30Joel Schiman is a member with the law

rm of Weiner Brodsky Sidman Kider,

P.C. The rm serves as General Counsel

to the Naonal Reverse Mortgage Lenders

Associaon and advisor to reverse mortgage

lenders and industry parcipants throughout the naon.

Mr. Schiman can be reached at [email protected] or by

telephone at 949.798.5570.


9/48

February 2009

Michael Banner- The Birth of a New Industry Part II, page 40

President & CEO of LoanWell America Inc., Michael hasbeen in the mortgage industry for 27 years. He is one of

few Reverse Mortgage professionals accredited to teach

connued educaon classes for CFPs, CPAs, aorneys

& insurance agents. A proven senior advocate, he is a

member of NRMLAs State & Local Issues Commiee

and sits on the Board of Directors for the FPA of Tampa Bay. Michael has

been interviewed by the Wall Street Journal, the Tampa Bay Business

Journal, Sr. Market Advisor & The Reverse Mortgage Wire as well as

numerous other Reverse Mortgage Internet sites. Please visit his website

at loanwellrm.com or call 877.700.0555

Monte Rose- Building an Eec

Advisor Referral

Engine,

page 22Monte Rose has

helped hundreds o

seniors obtain a reverse mortgage

during the past 17 years. He is an

accomplished speaker and widely

quoted industry expert, appearing

nancial publicaons and naonal

syndicated media. He was head of

naonal retail sales for Financial

Freedom Senior Funding Corpora

Monte is a Cered Senior Adviso

and a Cered strengths Coach

with Gallup University. For more

informaon, call 800.516.0545 or

email

[email protected].

Sam Collins- You are

Terminated!, page

46

Sam Collins is the

President of Sam

Collins Reverse Markeng, LLC and

Founder of REMALO, the ReverseMortgage Associaon for Loan

Ocers. REMALO is a web based

Naonal sales, markeng, training,

and full service center, created

exclusively for Reverse Mortgage

Loan Ocers, Correspondents,

Branch Managers, and key

execuves, and brokers. www.

remalo.org or 877.262.7656

Fed Kamensky- What the HECM: Reverse Mortgages Can be Used to Buy a Home,

page 30

Fed Kamensky is an associate with the law rm of Weiner Brodsky

Sidman Kider, P.C. The rm serves as General Counsel to the

Naonal Reverse Mortgage Lenders Associaon and advisor to

reverse mortgage lenders and industry parcipants throughout the

naon. Mr. Kamensky can be reached at [email protected] or by

telephone at 202.628.2000.

Valerie

VanBooven- Got Content?,

page 12

Valerie VanBooven

RN BSN is a Senior

Service Markeng Expert and the

Naonal Markeng Director for

Next Generaon Financial Services,

a Division of 1st Mariner Bank.

She is a professional speaker and

the author of the books Aging

Answers (2003) and The Senior

Soluon (2007). She can be

reached at

[email protected].

Please visit her website at www.

myseniorservice.com



reverse mortgage industry snapshot

10 Regions, ranked by HECM unit volume YTD. Including rank change from prior YTD, as well as growth rates.

Also includes acve lenders and growth

Lender distribuon graph and table, showing number of lenders growing at various growth rates YTD vs. prior

YTD, including volume aributable to each group of lenders.

Client Noces

1) Help improve data quality in the Reverse Mortgage industry. If you believe your companys numbers on this report are inaccurate, please email us (support@

rminsight.net) and we will review your feedback promptly. Please include your name, company and contact informaon along with a thorough descripon of the

suspected inaccuracy. Thanks!

2) If you received this report as a trial or sample and would like to purchase this report or future reports for your company, please visit: www.rminsight.net/MICrepo

php

3) If youve been looking for a source for Reverse Mortgage intelligence beyond MIC endorsement numbers, weve got just what you need. Find out more at www.

rminsight.net/rmarket.php

Rank Chg 2008YTD YTDChg% 2008 Chg%

1 1 29,139 21.34% 877 92.32%

2 -1 21,640 -15.51% 775 48.47%

3 - 14,087 17.82% 420 100.96%

4 - 11,701 2.34% 531 60.91%

5 1 10,478 29.79% 315 88.62%

6 -1 8,342 0.24% 320 90.48%

7 1 6,663 15.08% 304 87.65%

8 -1 6,135 -11.89% 308 55.56%

9 - 4,130 25.3% 199 57.94%

10 - 2,861 1.2% 183 79.41%

115,176 6.36% 2,949 76.48%

Endorsements Active Lenders Region Share

Region 2007TOT 2008YTD Chg%

Southeast/Caribbean 24,014 25.30% 14.08%

Pacific/Hawaii 25,612 18.789% -20.56%

Mid-Atlantic 11,956 12.231% 10.78%

Midwest 11,434 10.159% -3.79%

Southwest 8,073 9.097% 22.03%

New York/New Jersey 8,322 7.243% -5.76%

Northwest/Alaska 5,790 5.785% 8.19%

New England 6,963 5.327% -17.16%

Rocky Mountain 3,296 3.586% 17.81%

Great Plains 2,827 2.484% -4.85%

Industry Totals 108,287

Growth Rate Lenders YTD MIC Last YTD

-100%

266 2,341

-99% to -1%599 53,547 82,345

0 to 100%402 23,789 17,726

101% to 200%117 5,486 2,277

201% to 300%71 7,053 2,029

301% to 400%41 1,556 341

over 400%175 13,536 1,228

New Lenders1,544 10,209

Lender Distribuon by YTD Growth Rate

Stascs Provided by Reverse Market Insight - December 2008

Top 10 Rankings by Region


11/48

February 2009

2 year trend graph of monthly HECM unit volume and industry penetraon against 62+ homeowner households naona

Appendix

1) All stascs based on retail originaons from HUDs Monthly HECM MIC reports

2) Loans are in unit volume, based on HUD reported mortgage insurance cercate issuance

3) Lenders are aggregated using HUDs lender idencaon numbers and unique lender names, along with feedback from

reporng lenders

HUD Regions and Corresponding States/Territories

Region 1 - New England

Conneccut

Maine

Massachuses

New Hampshire

Rhode Island

Vermont

Region 2 - New York/New Jersey

New York

New Jersey

Region 3 - Mid-Atlanc

Delaware

District of Columbia

Maryland

Pennsylvania

Virginia

West Virginia

Region 4 - Southeast/Caribbean

Alabama

Florida

Georgia

Kentucky

Mississippi

North Carolina

Puerto Rico

South Carolina

Tennessee

U.S. Virgin Islands

Region 5 - Midwest

Illinois

Indiana

Michigan

Minnesota

Ohio

Wisconsin

Region 6 - Southwest

Arkansas

Louisiana

New Mexico

Oklahoma

Texas

Region 7 - Great Plains

Iowa

Kansas

Missouri

Nebraska

Region 8 - Rocky Mountain

ColoradoMontana

North Dakota

South Dakota

Utah

Wyoming

Region 9 - Pacic/Hawaii

Arizona

California

Federated States of Micron

Hawaii

Nevada

Region 10 - Northwest/AlasAlaska

Idaho

Oregon

Washington

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

6000

8000

10000

12000

2007-1 2007-5 2007-9 2008-1 2008-5 2008-9

Penetration

Units

MIC Units Penetration %

24 Month Penetraon and Unit Volume


12/48

GOT

Content?

Valerie VanBooven


13/48

February 2009

Two of the most fascinang and important books Ive read

this year (and last year) are: Get Content, Get Customers.by Joe Pulizzi and Newt Barre, and The New Rules of

Markeng and PR by David Meerman Sco. Both books will

give you a much more in-depth discussion on the shi that

has taken place in markeng products and services in a VERY

short period of me.

It is more important than ever that you begin to understand

how the internet is impacng your business, and will

connue to have a much bigger eect on your boom line

this year and in years to come. Your prospects and adult

children of aging parents arent looking in the local maniacal,

over-adversed, over-priced version of The Senior Timesfor a reverse mortgage, an adult day care, or home care

needs, or assisted living, or elder law aorneys, or medical

equipment.

They are looking online. They are searching for you. Make

sure they can nd you in every possible way. Leave no stone

unturned, and you will see a very large increase in your

business. The beauty of this strategy is that you can do it all

on your own me, and its all free. Thats right if you can

take the me, you can change your business direcon in 48

hours with a weekends worth of work and some weekly

maintenance.

The more CONTENT you have to oer (beyond the usual

boring brochure-on-the-web stu), the more trusted you

will become as a thought leader in your local area, and

perceived as an expert in your business.

Aer all, who do I trust to write a reverse mortgage for

my mother when I live a thousand miles away? The guy

who has the weekly blog content and really seems to not

only care about seniors, but also understands the long-

distance caregiving situaon? OR the guy who has aprey corporate website, that says nothing dierent from

gazillion other websites that I have visited today!?

I trust the thought leader. I trust content. I trust

personalized content.

I trust that if I nd educaonal videos, a blog, and host of

other links poinng to this business owners site, they mu

be extremely involved and commied to what they do.

On the internet, percepon is reality. Have you taken a

really hard look at how you are perceived? Lets shi gear

moment a look at 5 Emerging Trends in 2009. Even thougyou probably sell SERVICES and products, this informaon

relevant to you too!

According to eMarketer reports, this year, online sales in t

US alone will jump from $136.8 BILLION to $142.4 BILLION

(thats an INCREASE of nearly $6 BILLION in online spendi

Or how about this stasc: Nielsen Consumer Insight rep

that in 2009, consumers will spend 17% MORE me on

eCommerce websites every DAY!

Emerging Trend #1: Consumers Are Increasingly Turning TThe Internet As A Way To Save Money

You know all those people I just told you about who are

coming online to shop? Well, according to this survey, 80%

them say theyre now shopping online to save money.

And further, 95% of these people report that theyre

movated to buy by oers of free shipping, and 83% are

movated to buy by special prices.

You dont need expensive campaigns orcustom built websitesto reach

customers. The secret to content markeng is to put yourself in the

customers shoes and then look for ways to simplify and improve his or

her life. Its about using the same words in your markeng materialsthat customers use in theirsearch queries. The more in-tune you are

with the customerthe easier this process becomes.

Get Content. Get Customers. By Joe Pulizzi and Newt Barre



Clearly, 2009 will be the year of the deal!

So if you currently oer special discounts on your site, get

them up front and center, so your visitors can nd them

instantly. Do NOT wait for them to dig around your site and

possibly stumble across them.

BUT...

Before you put all of your eggs in the special deal basket,

theres one other related trend you should know about...This

same survey reports that 88% of people are shopping online

in order to save me, and 83% say that they do it because

its less hassle.

So not only are your visitors coming to your site trying

to save money, theyre also looking for ease and

convenience. So make sure youre giving it to

them, by oering the best customer shopping

experience possible.

As well all soon discover, its the websites that

oer a combinaon of pricing and IMPECCABLE

customer service that will connue to thrive this

year.

Emerging Trend #2: Consumers Are Making More

And More REPEAT Purchases Based On Automated

Recommendaons

This recent 2008 Razorsh Consumer Experience reportshows that a whopping 65% of online buyers made

addional purchases from a website based on automated

recommendaons the site gave them.

Thats 6 out of 10 of your customers buying MORE, based

purely on your suggesons for other products they might

like.

Sounds like the perfect job for email markeng, right?!

I strongly believe the people who thrive in 2009 will be

those who spend a LOT of me using email markeng to

nurture the relaonships they have with their customers andsubscribers.

To be really eecve in building these relaonships -- and in

recommending the products people will be MOST interested

in -- youre going to need to be smart about your list.

Gone are the days when having a BIG list was your main

goal! Its me to think quality rather than quanty.

If you build a huge list lled with people who couldnt care

less what youre oering them, then all your email eorts

will be wasted.

Its far beer to have a smaller list of highly qualied

subscribers. The other thing to pay aenon to as you foc

on your email eorts in 2009 is the kinds of emails youre

sending out.

Im nding that shorter, more concise promoonal messa

are far more eecve than long, drawn-out emails that

bombard the reader with informaon.

Finally, the savvy email marketer will spend a lot of me

TESTING in 2009.

Currently only about 40% of marketers

do any tesng at all, which is praccally

criminal, because those who do test are

twice as likely to get email markeng

conversion rates of 3% or MORE!

So make sure you test dierent kinds of

oers, dierent subject lines, dierent mes

day and week for mailing, etc., to make sure yo

really capitalizing on your email.

Emerging Trend #3: Shoppers Are Making More Purcha

Based on Recommendaons Received Through Social

Media Sites

Heres a surprising stasc: 49% of Web users now make

purchase based on a recommendaon they received throa social media site (like Facebook, MySpace, and so on).

Okay, maybe thats not so surprising, but you know what

Apparently only 25% of online business owners created

Facebook page this year!

Despite its clear success rate, marketers have generally

been slow to make the leap to social networking. So if you

havent tested the social media waters, NOW is the me t

get started! Social networking is the perfect way to develo

your online presence, and connue to culvate lasng

relaonships with your potenal customers.

Before you run o and start building your social networki

proles and pages, you should know that other forms of

social media sites will also be crucial tools for your busine

in 2009. Take the social bookmarking sites, for instance (li

Digg, Delicious, and StumbleUpon). Currently, 52% of peo

are using these sites as they search for informaon online

and a full 81% of users read the links marked as most

popular or most emailed.

?


15/48

February 2009

So what does this mean for you? Another key strategy for

you in 2009 will be to create lots of content, and get it to

appear on these sites. Youre going to want to write arcles

that are relevant and useful... and that your readers will

want to pass along to their friends, family, and colleagues,

and recommend on the social bookmarking sites.

In doing so, youll connue to raise your online prole,

establish yourself as an expert in your eld, and build thoseall-important relaonships with your potenal customers.

Emerging Trend #4: A Typical Internet User Is Spending 20%

MORE Time Each Day Reading Blogs

Nielsen Consumer Insight reported in December that people

are now spending 20% more me EACH DAY reading blogs.

Do YOU have a blog yet? Do you add new posts to it on a

regular basis?

If you havent started a blog yet -- or if you havent been

giving yours the aenon that it deserves -- TODAY is the dayyou should start! As with social media, blogging is GREAT for

establishing your reputaon online, for building relaonships

with your market, for creang new content for your site, and

can even help you get a TOP ranking in the search engines

(which in turn can generate up to 7 TIMES more sales).

You dont need to be a natural-born writer to create your

own blog, nor do you need to be a technical wizard! There

are plenty of places where you can even get FREE blogs to

get yourself started..... and as for the actual wring, a blog

is all about showing YOUR personality, and sharing youropinions and ideas. So dont sweat it if youre not a word

nerd. Just write from the heart, and your readers will love it!

Emerging Trend #5: Web Surfers Are Spending 46% MORE

Time Watching Online Videos

Finally, a trend that will connue to have a HUGE impact on

Internet marketers everywhere -- and really change the way

we sell online -- is the growing popularity of online video.

Check this out: 94% of Internet users now watch online

video with some level of frequency, and people now spend

a whopping 46% MORE me each DAY watching videos,compared to last year!

So if you havent dipped your toe into the online video

world, youd beer get cracking!

Video, like blogging, has mulple benets for your

business:

You can use video in your salescopy in order to more

eecvely sell your product or service... you can use it for

SEO purposes and trac generaon (Google LOVES video

to create informave or educaonal videos for your niche

and to spread the word about your business. (Hint Hint)

You dont need to have a lot of complicated equipment or

technical experse to produce your own quality videos.

Theres no denying that 2009 is going to present somechallenges for ALL of us, but you dont have to hide your

head in the sand and wait for the recession to blow over!

If all of this seems overwhelming, confusing, and downr

impossible given the 500 hats you wear each day as a

business owner, I would recommend either:

Learning more about how to do all of this stu and1.

becoming a serious student.

Or, hire someone to do it for you at a reasonable price2.

Watch the free video that tells you everything you need tknow at www.LTCSocialMark.com.

Order your copy now atwww.monterose.com

Monte Roseserves up sales productivity

at the kitchen table



Creating a World Class

Reverse Mortgage TrainingProgram

In this three part series for The Reverse Review we will explore the components of a

comprehensive Reverse Mortgage Training Program and strategies for effective implementation.

A well-developed training program is the cornerstone of any world-class organization. It is the

foundation for growth and sustenance. It is the vehicle to work as a team, have everyone on th

same page and brand effectively as a company.

As Vice President of Training and Development for World Alliance Financial; I was tasked with

establishing a training department as part of their plan for strategic growth. I spent two yearsworking hand in hand with the best loan officers, crafting our necessary tools and developing be

practices. During my tenure at World Alliance Financial, I created and implemented the reverse

mortgage curriculum. Later, when we rolled out our wholesale division, I had the privilege ofspeaking firsthand to hundreds of mortgage brokers who specialized in marketing reverse produc

nationwide. Through this, I gained the benefits of their insights and experiences. I also worked

closely with customer service, providing me invaluable knowledge of the true customer experien

from a closed loan and a failed-to-close loan perspective. This enabled me to create the tools

needed to properly and proficiently serve our customer base.

Jacqueline Del Priore


17/48

February 2009

Working for a well-developed corporaon, the basics were

already in place. There was a clear-cut path to transion loan

ocers smoothly to the sales oor. The human resources

department held rst day training for all employees to explain

our mission statement, our sales model, their job descripon

and our organizaonal chart. As a result, the sales agent knew

very clearly why he or she was there and what the company

was all about. They understood how they would be evaluated,when, and by whom. Having a clearly dened job descripon

and expectaon served to make a more eecve sales agent.

If not handled inially by a conscious and responsible human

resource department, these important points will need to

obviously be covered in training.

In dening the culture of your organizaon, your mission

statement will be the mantra of your company. Highly

eecve acvity begins with the end goal in mind. If you dont

already have a mission statement, write one now. It should

serve as the very rst page of your training manual and be

visible at all mes both in your training and sales areas. Itsupports one of the most basic tenets of success: Begin with

the end goal in mind. Your acons at work should consistently

support this mission statement at all mes. With this in place,

you can more closely assure that your team will all be on the

same page.

Always set the right tone for training. Let there be a posive

expectancy for training amongst your crew and do not fail

to live up to that expectaon. Too many loan ocers view

training as drudgery and a waste of otherwise producve me.

If training is fruiul and fun, your loan ocers will love to

come to training. They will bring their best selves to the table.For newly hired loan ocers, training will be the gateway

between orientaon and actually taking their place on the

sales oor. Dont put anyone in training you dont believe

is capable of doing a good job. Camaraderie starts here. Its

also an exercise in team building. Those same persons will go

on to support each other and challenge each other in their

daily acvies. Bonding begins with striving to master the

material and help each other through the course work. This is

where leadership skills will potenally be revealed. Your team

leaders are oen idened in training. Everyone should be

able and will be called upon to do a good job. The reward will

be the earned privilege of walking on the sales oor.

Ive been blessed to work in some of the most state of the art,

amazing training environments. Ive also been crammed into a

room like a bunch of sardines and I will tell you that the single

most important aspect of any actual training me is that it

be solely dedicated, uninterrupted me. No phones ringing,

no interrupons and no excuses. On the rst day of training,

the rules should be outlined clearly. The most important rule

will revolve around the respect that this carved out me will

command. The atude of senior management should sup

this as well. The respect for training will serve to shape a

culture of success within our organizaon.

Going forward, we will be exploring the framework of what

comprehensive inial reverse mortgage training should

include. To begin with, you will want your training to conta

a good strong introducon. This is the me to get excited!Why? Before you, is the task of speaking about one of the

most amazing growth segments of the mortgage industry. T

is your chance to introduce a new, rewarding and lucrave

career to your audience!

You are in a great space. You need to share this with your

people. You need to let them taste the opportunity that

exists. It is absolutely true that we could build a business t

will be fruiul for the rest of our working careers with the

demographic we serve! What other business can make the

same claim? You will know you have set the stage properly

when your people start showing up early for training. You wthem to experience what success in the reverse space can f

like and to understand that through mastery of the materia

success can and will be realized.

I like to give an historical perspecve of the reverse

mortgage. This helps loan ocers understand some of the

misconcepons surrounding the product. History can set

expectaons correctly on what can at mes be frustrang

about our somewhat new and evolving industry. Included

this history should be the creaon of HUD and an explana

of its mission to help Americans achieve and maintain hom

ownership. We can speak about how the FHA operates wiHUD and insures our reverse mortgage program allowing

signicant benets to borrowers and lenders alike. This is a

good me to introduce the aspect of mortgage insurance a

its funcon in assisng lenders and borrowers to achieve th

goals. While the HECM oen seems too good to be true

with many favorable aspects, the borrower funds his ability

have such a mortgage with the inial mortgage insurance a

connues to do so with the addion of the monthly mortga

insurance premiums throughout the life of the loan.

Mortgage 101 is essenal. An important point to make her

is to carefully segment training to be most eecve. Youmust address the sales trainee with no previous mortgage

experience. These persons could be lost if not brought up

speed with basic terminology such as what is a mortgage/n

Who is the mortgagor and who is the mortgagee? What is

deed, renance and purchase money mortgage? Rememb

we are in the mortgage business. A glossary of key mortga

terms will be helpful. As for former forward mortgage loan

ocers, Ive actually asked them to take two steps back and

reverse! The same skills dont necessarily apply and cant



ensure success. So, advise them to check their egos at the

door and listen up.

Some seasoned loan ocers will need to join new trainees in a

quick study of the adjustable rate mortgage. Most important

here is the terminology of margin, index and cap. The proof

that one is ready to move on is when they can simply explain

how an adjustable rate mortgage works. Much to the horrorof my students, I am a huge proponent of geng students up

in front of the class. I put the dry erase marker in their hand,

and while I sit in their seat, I ask that they teach me along

with the rest of the class. I found this a powerful tool to have

everyone pay careful aenon! I might employ a technique

like this to be sure everyone could explain an adjustable rate

mortgage and contrast it to a xed rate mortgage. Id ask the

types of quesons they might expect from a client to make

sure their answers illustrated they really understood.

Understanding the senior demographic is very important. One

of the rst things I did as part of my inducon into the world

of reverse mortgages was to watch almost 20 hours of focus

group tapes. In these tapes, seniors who were solicited for

a reverse mortgage but decided not to take it, spoke about

what their percepon of the product was, what they sll were

unclear about and what would have made their experience

a beer one. This was invaluable. I never forgot this and

made it part of the training. I thought it was great for the loan

ocers to hear in their own words what the seniors wanted

and needed from them. We made a popcorn party of it with

discussion aerwards. Tesmonials can be a powerful part of

training. In the age of digital cameras, I would say, whenever

a client is willing to speak on camera or be recorded, do sofor training purposes. Its refreshing to bring in a loan ocer

who received a nice thank you card and have him speak briey

about how he handled the challenge at hand and what he felt

he did correctly.

Complaint leers and negave press can serve as a valuable

lesson as well. Encourage everyone to speak about his or her

impression of what went wrong and how it might have been

prevented. Its good to make the point that things can and

do go wrong and somemes are perceived badly. Its how we

choose to handle these situaons that will maer in the end.

What are the rules and expectaons for a reverse mortgage

loan ocer working within your organizaon? We work in a

carefully regulated industry and for good reason! Lets spell

this out from the beginning. How does one lawfully operate?

Something as simple as the fact that we work for one broker

or banker at a me should be a point of discussion. Many

persons coming from other industries may be unaware of this.

What would be considered misconduct? Always begin with a

discussion of ethics. There is no doubt that this discussion will

connue to thread throughout the training.

At this point, it would be good to introduce the NRMLA Cod

of Ethics and Professional Responsibility. The purpose for

the introducon here is this: NRMLA Members will be held

responsible for the acons of their employees. Let it be

known that there will be an expectaon of honor and integ

in the dealings they have with their senior clientele and a re

vigilance within the organizaon regarding this. Later, the

Code of Conduct can be examined and examples introduceillustrate points. An acceptance of this code in wring shou

be required as part of the transion to the sales oor.

It is important to remember that we speak to the Senior

Community. We serve a very special and protected class. T

is not to be taken lightly.

Before we get to the basics of product training, its oen

helpful to run through the mechanics of how the applicao

actually becomes a loan. Lets get an overview of the

originaon steps and where it goes from there. A ow cha

is most useful. Who is in charge of these important processteps? Invite your openers, processors and underwriters in

to speak briey about what they do. Outline the procedure

for communicaon with these persons. Will it be via email

within a certain meframe? Its good to have this in wrin

for future reference. One can never underesmate the pow

of clear communicaon and direcon. This is a good me t

insll respect for your operaons sta and may set the tone

for future friendly discourse.

Product 101

Now lets get down to the fundamentals of the product. Oproduct is a reverse mortgage, which allows seniors to tap

the equity in their home without having to make a monthly

mortgage payment. I like to begin by contrasng this to a

forward mortgage. I like to discuss the reasons why seniors

might be in the market for mortgage money and how our

product could meet their needs versus a forward mortgage

product. This is eecve simply because clients oen need

to understand clearly why taking a HECM is beer than goin

down to their neighborhood bank and taking a home equit

loan or a personal loan.

During this part, I oen like to isolate and discuss the beneof our product as they are revealed throughout the training

write them on big Post-Its and put them around the train

room on the walls so they are always in plain view. As the

loan ocers uncover and idenfy new benets, they are ab

to paste their own Post-It on the wall for the benet of th

class.

One of the most important benets to be understood is the

non-recourse benet. It is what has always separated the


19/48

February 2009

HECM from other reverse mortgages and it is the reason for

the rather hey mortgage insurance premium. The non-

recourse feature as it pertains to the borrower guarantees

that the borrower will never owe more than the value of the

home at the me of repayment. It also guarantees that the

promises of the loan will be insured should the lender default.

The fact that the federal government makes this guarantee

holds quite a bit of weight and is a very important benet forseniors. Have the students pracce arculang this benet. I

frequently queson students as if I am a borrower. I ask them;

Why am I paying that mortgage insurance premium again?

A great student will be able to blurt back as if speaking to the

client; It provides one of your most important assurances; the

federal government guarantee of your benets throughout the

life of the loan and the insurance that neither you, nor your

heirs will ever pay more than the value of your home at the

me of repayment. It gives you peace of mind!

In the product training, role-playing is an eecve training

mechanism. Remember if your loan ocers answer thequesons quickly and condently in training, they will handle

quesons and objecons just as prociently with your clients.

The purpose of the training is to not only impart knowledge

but also insll condence in the product and the loan ocers

ability to handle customers.

A glossary of special reverse mortgage terms should be

provided. Make sure the denions match those in the

training. Be sure to compliment when correct verbiage is

used. A more eecve sales force will speak consistently

with the same vocabulary. Later, when we are working wit

proprietary products, it will be useful to speak the same

language when interpreng guidelines or using a product

matrix.

Product training should include such key terms and concep

as the expected and inial interest rate, maximum claim

amount and principal loan limit. Aer explaining these key

terms and their funcons, its very helpful to show where t

are disclosed and discussed in the inial applicaon proces

I oen include an examinaon of the respecve disclosure

forms in the training.

HECM Training must answer the queson; How is my

principal loan limit determined? Borrowers will inially

want to know if they are qualied and for how much. Theyinevitably will ask how in the world we came up with the

gure!

While we will need to teach that the principal loan limit is

determined by the age of the youngest borrower, the expec

interest rate and the maximum claim amount, we will also

need to pracce how that can simply be conveyed to our



clients. It will be helpful to pracce this in role-play. Cauon

your loan ocers against geng too technical.

Create a simple exercise to be sure the loan ocers

understand that the maximum claim amount is always the

lesser of HUDs lending limit or the appraised value. In

training, it is the phrase we hear most commonly confused.

Later, we can introduce its importance in the calculaon formany things.

I believe it is helpful to teach the expected interest rate alone

in the beginning as HUDs risk management determinant in

the principal loan calculaon. In this way, loan ocers can

conceptualize this component as separate and apart from the

inial interest rate.

Introduce the Principal Limit Lock Disclosure as part of this

lesson. This disclosure serves to dene and explain the

expected interest rate and its part in the calculaon of the

principal loan limit.

State that the PLL Disclosure creates a sense of urgency for

the borrower to sign today. This is important for sales! You

will want to communicate that while the borrower may enjoy

a larger loan limit due to a decreased expected rate at closing,

all things being equal, they will never be aorded less than

they are signing for today and can proceed with a sense of

certainty. Role-play speaking with the borrower about the

benet of applying today and help loan ocers state their case

simply without being too technical.

Another aspect of the PLL Disclosure that should be clearis when it actually goes into eect. The expected rate the

day the borrower signs the 1009 stays in eect for 120 days

beyond the date the lender orders the FHA case number.

While the nuances of this need to be discussed in training,

you should also discuss how much of this type of informaon

needs to be conveyed to the borrower and if so, how it may be

done plainly.

Ive found that while the circumstances of the lock are a bit

complex to understand, the review of this document serves to

clarify them well and is extremely helpful.

Product training should serve to thoroughly address all

frequently asked quesons.

Other important aspects to address in product training would

be property acceptability, occupancy issues, HECM counseling

and maturity events.

I nd that there is oen an abundance of quesons aributed

to counseling, especially from forward mortgage loan ocers.

Counseling seems to be that extra dreaded foreign aspect o

this procedure! Dont be too bogged down in inial produ

training with counseling quesons. Later you will need to

introduce HECM Counseling protocol and go through the AA

Guide to Homemade Money. You will need to decide when

and how you will set the expectaons for counseling as par

of your sales process. At this me, there are a few importa

points to make that can be facilitated with the help of a blacounseling cercate. The loan ocers need to know that

HECM Counseling is mandatory, the cercate is good for

180 days and the loan cant proceed unl the borrower has

delivered to you a counseling cercate signed by both the

counselor and the borrower. Be sure that your training state

in wring that no services can be ordered prior to having th

fully executed cercate in hand. Also, be explicit about w

needs to be counseled, how they may access counselors an

the cost.

As with any mortgage product, the interest rate will be a

concern for borrowers. While the HECM has enjoyed a

relavely aracve interest rate of late, the majority of HECare monthly adjustable rate loans and this does prompt ma

consumer queries. An understanding of the index is crucial

Since a picture is worth 1,000 words, arm each loan ocer

with a good historical graph of the performance of the inde

Later, in training, we can idenfy the history of the index as

detailed in the HECM Important Terms (TIL) Disclosure.

An important point to train about the inial rate is when it

adjusts. It is also very key to have the borrower understand

the inial rate is a prevailing rate and will oat unl closing

Aer the rst adjustment, the HECM monthly adjustable w

change monthly inhibited only by the lifeme cap which wi

be established at closing.

The inial rate and lifeme cap as listed on the Comparison

Form and other applicaon disclosures are an esmate of

what would be if the borrower were closing the day the

disclosures were prepared.

In my experience, its best not to introduce the relaonship

between the inial interest rate and principal loan limit gro

unl aer the structure loan has been discussed.

In the next issue, we will connue discussion of other

important components of product training such as principa

limit distribuon and the structure and funcon of the loan

We will also discuss the servicing fee and set aside, repair

set asides and other special situaons that are unique to th

originaon of the HECM. Part Two will begin an in-depth

look at the sales process and the job aids that help achieve

maximum producvity.


21/48



Wouldnt your job be easier ifsomeone warmed up your audience,like Ed McMahon did with Johnny

Carson? Wouldnt it be easier to havea conversation with a prospect if youwere introduced by someone theyknew and respected?

Developing a staple of referringadvisors is the most cost effectivemeans of ensuring sales success.

Most top producers I know areproficient in advisor outreach. Its aabout relationships, follow-throughexpertise, and fit. Understanding thadvisors needs is paramount.

Building an effective advisor referral engine

Monte Rose


23/48

February 2009

Advisor segmentaon

I divide advisors into four categories: Professional Advisor,

Business Partner, Community Services, and Friends/Family.

There are four prerequisites to building an eecve advisor

referral pracce.

First, you must build a relaonship. This is something that

requires me, aenon, and some emoonal investment.

You must be likeable and knowledgeable.

Second, you must be a contributor. Know how your program

synchronizes with their business. What can you oer that

will strengthen their relaonship with their client? Help them

use your technical experse in their market.

Third, you must arm the advisors reputaon. Minimize

the noise. Go to them rst when theres a problem and

make sure they know youre handling the problem.

Fourth, be dependable. Own the transacon. Do what you

say when you say it. Make credibility, reliability, impeccable

follow-up, and experse the foundaons of your personal

brand.

Professional Advisors

The primary disnguishing characterisc present in this

segment is high-level professional designaons or special

For example, CPAs, CFPs, Registered Investment Advisors

and Elder Law aorneys would fall into the professional

advisor category.

These professionals take their duciary responsibility

seriously. They are highly analycal gatekeepers: the

numbers must make sense, and the soluon you

recommend must t. Oen, their greatest concern is

negave amorzaon and, secondly, adjustable rate

mortgages with a 10% lifeme interest rate cap over the

start rate. Therefore, developing a preferred provider

relaonship with a professional advisor is likely to require

much explanaon and signicant me to prove your

trustworthiness.

The clientele of this advisor segment give great credenceto the advisors recommendaon. A referral from a

professional advisor is one of the strongest referrals

a salesperson can receive. Each professional advisor

segment is its own community, with its own code of ethic

professional organizaons, cerfying bodies, publicaons



and watering holes. Since it is dicult to gain experse

in all of them, its far beer to specialize in the niches where

you have the easiest access and the best t.

Business Partners

Business partners provide a product or service to your

eligible prospects. They can be very pragmac and focusedon the sale. You provide the liquidity tool that enables

their customer to buy. Be cauous, but not oended, when

they press you for a split. Most will understand your

explanaon regarding your inability to split revenue with

them. From those who do not, run.

Make sure you employ sucient rewalls to insure their

client is served well. The primary strategy you will employ

for the benet of their client is full disclosure. Make certain

that the whole story is always told and all the opons at their

disposal are reviewed.

Business partners run the gamut. If they oer senior

products or services, they can be a potenal referral

source. Agencies that specialize in long term care insurance,

boat brokers, real estate oces, remodeling contractors,

home security devices and equipment, safety and medical

equipment retailers, and so forth.

The consumer segments life stage needs will alert you

to what products and services are of interest and, thus,

what providers might become referral sources for you.

For example, some seniors require medical aenon or

assistance. They also use medical products that assist the

mobility (e.g., motorized wheelchairs, walking aids). Med

equipment providers are a potenal referral partner. Meewith the owner or manager and oer them a brochure an

display device for their display area. Reverse mortgage

brochures or booklets are appropriate for a variety of wai

rooms (denst, therapist, pharmacy).

Community Services

The community services segment is comprised of an

assortment of senior advocacy organizaons and service

providers such as: LivHome, Area Agency on Aging, count

conservatorship oces, and non-prot organizaons. The

encompass ethnic, faith-based, neighborhood, cultural,cause or interest-based, topical, tribal, polical, as well

as inter/intra/mul-generaonal groups. The community

segments are driven by heart. Their interest is serving and

protecng a vulnerable constuency or protected class of

persons, seniors. They can be sales-averse. If youre a ha

charging salesperson, your dialect and tone may aggravat

the community organizaon or senior advocate.

Community services as a referring segment is a large and

complex lode of potenal business. It is one of the most

overlooked areas of business development. Salesperson

with a high mission drive and a gentle authenc persondo well with this audience. Becoming a recognizable

insider is a key to successful penetraon.

Salespersons who use communies as a starng point for

their business are typically locals who already have inte

access owing to their own aliaons or memberships,

whether formal or otherwise.

Its the un-sales referring network.

Friends/Family

Seniors oen look to friends or family to shop on their

behalf. Or they may direct the seniors aenon to

informaon worthy of invesgang more closely. I have a

client who was referred to me by a trusted neighbor. The

neighbor was aware of the declining health and nancial

challenges of the senior, and alerted the senior to invesg

reverse mortgages. This lead, the neighbor, responded

an inexpensive adversement in a local senior publicaon


25/48

February 2009

One of the advantages of having an internet presence is that

relaves can shop from afar on behalf of their loved ones.

Your website provides them easy access to informaon, and

you become known. Your photo, your brand persona, the

virtual you is on display.

The movaonal spectrum ranges from greed to

compassion. On the one hand, they may want to accesstheir inheritance in advance. Or they may be worn out,

need relief from care giving and the reverse mortgage is the

nancing mechanism. It may be a maer of distance, and

they cant care for their loved one because they are too far

away.

This is the most dicult niche to culvate because of its

moving target nature. However, know that your local

visibility eorts will bring you some friends and family

referrals over the long haul.

Locate your Advisor true north

Two key quesons will help you determine your advisor

niche t.

Whom do you understand when they speak?1.

Who listens to you when you speak?2.

If you dont understand them when they speak and they

dont listen to you when you speak, thats a prey good

indicaon that youre not a t.

To become a preferred provider you must add value to

their pracce or business. What can you do to improve

their dexterity and facility with the nancial tools that

may not be in their primary area of experse? Help themunderstand the senior mind more completely, and therefo

raise their game by adjusng their bedside manner or

communicaon delivery to improve their eecveness.

Answer this queson, How can I help them cement the

relaonship with their clients, enhance their reputaon, a

aract new clients?

Remember, you want to tell your story to as many advisor

as possible. You are prospecng. You are not selling. In

this stage of the game, you are creang connecons and a

constuency for your professional brand.

Your goal is to become their preferred reverse mortgageprovider.

Atare Agbamuis one of only a handful of people in the reverse mortgage arena who possesses a co

manding understanding of the reverse mortgage industry. As an originator, he has hands-on experience

ucating seniors and their advisors. As author of the Forward on Reverse column inThe Mortgage Pre

since 2002, Atare Agbamu communicates nationally with the housing finance community, bringing

unique insights and experience of an ardent reverse mortgage expert into a wider business context.

This book combines Atares keen insights and know-how with extensive research to create afirst of its kind

source for the reverse mortgage industry. It offers a comprehensive overview of the industry plus detailed informat

on marketing and originating reverse mortgages.

Present and future reverse mortgage professionals and senior advisors will profit from decades of experience skfully woven into this book. If you plan to succeed in this industry, this book is the place to start.

Sarah F. Hulbert, President, Senior Financial Corporation and former four-term Co-Chair of NRMLAs Board of Directors

Part I:

The new pillar of

retirement security

Part II:

Marketing reverse mortgages:

Its all about education

Part III:

Originating reverse

mortgages

Part IV:

Enhancing freedom: The

essence of reverse mortgages

Part V:

A new frontier in mortgag

lending

Think Reverse! Table of Contents

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$49.95Plus Postage& Handling



UpClosePersonal&

Brian D. Montgomerwith


27/48

February 2009

On FHA Reform:

We wanted to start with one of your main initiatives, FHAReform. Give us a sense of the history, what has transpiredover the years, where it stands today, and where it shouldbe? Additionally, where you would like to see it in the future?

Certainly after I got here in June of 05, it became quicklyapparent to us that FHAs market share had declinedsignicantly, and we saw it when we peeled back the

onion. Our traditional borrower, lower income borrower,rst-time borrower, minority home borrower, you name it,

had gone toward the sub-prime route. This concerned usfor reasons that we all since have learned and we realizedwe needed to reform FHA, not just legislatively, but also

administratively. The administrative side was lower hangingfruit. Our appraisal protocols were unique. The fact that

we didnt use technology for the case binders and still

required all lenders t

submit a rather thickcase binder really se

us apart from the re

of the industry. So,we worked hard to

better align FHA withthe rest of the indust

We didnt want to cutcorners, but at the

same time we thoughwe could at least brinFHA into the late 90s

to speak.

So, early in 06, we weto the Hill and sat dow

with members from bsides, Republicans anDemocrats, and show

them the volume in thstates, in particular

California. We met wMaxine Waters and the volume had almost vanished in he

district. She worked, as other Democrats and Republicanfor us to get FHA passed in the House. Unfortunately, it din the Senate but at least we started sounding the alarm

that something was amiss. For political reasons I think ittook way too long to get FHA Reform and what we eventu

got was not really what we originally set out. Nonethelesthere were some big victories and there are certainly the

loan limits.

As to the future, a major concern for both forward and

reverse, would be FHA becoming too large a share of thmarket. I dont know if that is healthy for the privat

sector in the totality of the mortgage market. Thatpart of what played into our decision on the loan limfor HECMs. We didnt want to crowd out jumbo lend

in the reverse phase, in the reverse portion. Right

As the nal days of the Bush Administration came to aclose, The Reverse Reviewhad the privilege of engagingin a candid conversation with Brian D. Montgomery, the(former) Assistant Secretary for Housing-Federal HousingCommissioner. As we spoke with Mr. Montgomery he sharedwith us his plans for Inauguration day, which he did not

attend, but he was one of a select few long-time Bush staffers who hadthe honor of accompanying former President Bush one last time on AirForce One as he returned to Texas.In his former position, Mr. Montgomery was responsible for overseeingthe $400 billion Federal Housing Administration (FHA) insuranceportfolio. In addition, he oversaw HUDs regulatory responsibilities inthe areas of the Real Estate Settlement Procedures Act (RESPA), thehousing mission of Government Sponsored Enterprises (GSEs) FannieMae and Freddie Mac, and the manufactured housing industry.

A



now, the FHA insured part is such a large majority of reverse

mortgages. We knew that if we had a jumbo product, we

would probably crowd out the enre non-insured private

market from that space.

Now I think FHA is well posioned with our volume growing

so much with some of the reforms that weve done, as well

as the business processing for engineering and laying thegroundwork for some systems upgrades. I feel very favorably

that FHA is up to the task and will connue to be so.

On the new Administraon:

What do you want to see happen in the coming years in the

new administraon?

Well, I certainly think they need to go back and look at

the pricing structure. We had a short-lived move toward

risk-based pricing, which only made immense sense to us,

especially in our space, where FHA borrowers with the

highest FICO scores were our lowest income borrowers.

So, we wanted to be able to give those borrowers, the lower

income borrowers that had the higher FICO scores, a lile

beer price on the premiums. We now have three pricing

buckets, but to protect the long-term solidarity of FHA, I

think, having risk-based pricing would do that. I think they

need to go back and make sure some of the seller funded

down payments dont come back. I know some members

of Congress are trying to introduce legislaon to bring the

back, but we recently announced the 2nd biggest re-esm

to the FHA Insurance Fund. While it is partly due to declin

home prices, it had more to do with the seller-funded dow

payment assistance, which almost drove us to the brink o

insolvency, but Congress nally acted and the prohibion

that began in October of 08.

On the HECM Product:

The HECM Market, naturally, is a much smaller market

than all the products that exist as a part of FHA. What are

your thoughts about the future of the HECM market and

the reverse mortgage industry; its success and its growth,

granted that its grown very slow in 2008? Talk to us abou

how you see it growing in 2009 and 2010.

A major concern

reverse, would be

a share


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February 2009

As you know, weve been enjoying almost exponenal

growth, starng at the turn of the century, we insured about

6,600 FHA HECMs and by the year 2007 it had grown to

about 107,000. Yes, youre right, in 08, we had an increase,

but a slight one. If memory serves me correct, we went

from 107,000 to 112.000, but growth, nonetheless. It just

shows you that FHA and reverse mortgages are not immune

to declining house prices. Certainly, a lot of seniors wantto get more bang for their buck, and I know from what

were hearing and seeing, some of them are sing on the

sidelines, waing for prices to go back up. Even looking at

the demographics, as we all know, one of the last numbers I

saw is by the year 2020, 30 percent of all Americans will be

age 65 and older. That is a staggering number. With such

a small market penetraon now with reverse mortgages,

I think youll only connue to see those numbers go up.

Im very opmisc on the future of the reverse mortgage

product, in parcular the HECM.

On Personal Accomplishment:

What is your greatest accomplishment while serving at HU

Do you feel you were able to accomplish all your iniave

while in oce?

Well, there was a lot of stu we did here that never made

the press, but in the aggregate, we think what was importwas what we have been talking on: administrave reform

doing the business process reengineering, and the lien, us

the Toyota lean model for our homeownership centers, so

we can more eciently and quickly process the case bind

We were the rst ones with a plaorm and we were len

the world know, in parcular Congress, something was

wrong with the mortgage market. Im poinng back to th

middle of 05, when you saw our volume drop percepbly

low, and the near expedienal growth of the subprime, th

we were mainly concerned when we looked at minories

African-Americans and Lanos in parcular, paying

signicantly higher for a loan than non-minories. It took

lile longer on the Senate side, but the good news is that

started early, and we stayed at it and we got the bill throu

I would also say FHA Secure is another one. I think 499,59

people have renanced with FHA since we launched that

about 15 months ago. Those were all subprime borrower

who knew they were facing a reset or had just reset, and

many of them with very high interest rates. They were ab

both forward and

becoming too large

e market.



to renance into a safe and secure FHA loan. So, we are

proud of that number, as well.

On Experiences:

What was your most rewarding experience during your

years of service?

As you know, I go to a fair amount of conferences, not that

I enjoy travel like I did maybe 20 years ago, but geng out

and meeng people who work in the industry; being able to

hear rsthand what lenders through realtors thought was

good and bad about the FHA product was great. I think by

everybody working together irrespecve of parsan polics,

we were able to do a lot for people. There were a lot of

people, by the way, that didnt want us to succeed. Their

inials both begin with an F. Fannie and Freddie. They

were doing what they could behind the scenes to, quite

frankly, drive us out of business. I didnt think that was

healthy for lower-income, rst-me homebuyers.

I feel good about some of the other things that we

arculated before to you. I also think in showing the

country that its important to have the FHA around in good

mes and in bad mes. This is the rst me youve seen

the naonwide downturn and prices like this. We can look

back at regional economic problems in the 80s, and the

manufacturing states, not just in the 80s, but also now. And

whos sll there? Private mortgage insurers are gone and

others, but FHA is here. Were here and open for business.

Were proud about that fact, as well.

On Hurricane Katrina:

Please share with us some of your work with the vicms of

Hurricane Katrina.

Well, you remember I came over here from the White

House and the oce I ran at the White House was called

Cabinet Aairs. One of the things that we did was that we

helped coordinate the post hurricane relief eort, and Im

backing up a lile before that. If you remember in 04, we

had four hurricanes move through the Gulf region literallyin a maer of three months. Was it Jean, Ivan? Anyway, its

amazing how you forget them. Im going back to the middle

of 04. This is pre-Hurricane Katrina, nonetheless, I helped

coordinate that eort at the White House, working among

agencies like FEMA and others, the Dept. of Educaon, HUD,

and the Dept. of Labor. Theres a whole host of issues that

pop up following a disaster. Things of that nature that most

people dont even know about. So, when I got over here to

HUD and I had only been on the job a month and one-half,

when Hurricane Katrina happened, the Secretary put me

in charge of the more immediate need of having FHA out

there looking to expand our role. FEMA tradionally does

the short-term shelter and even the short-term housing,

although, now this has been shied to HUD. FHA had not

been a disaster enty. Quite frankly, HUD really had not

been either. We put ourselves into that business in a big

way, coming up with the Katrina Housing Voucher Programwhich became the Disaster Housing Program that we used

in subsequent disasters. Geng out there, we sent team

of employees to Louisiana and Mississippi to help scout fo

manufactured home sites and a few of those went in. We

went down there to man the disaster recovery centers, w

with lenders on foreclosure moratoriums and theres a lot

that goes in, especially of the magnitude of Katrina, which

most of the public doesnt even know about. We had jus

started our FHA REFORM eort, which we had to almost

put on hold for about three months while we dealt with

the immediate aer eects of Hurricane Katrina. So it was

demanding me back then, and quite frankly, sll is.

On the Future:

What are your plans for the future, and do you plan to

remain involved in the work you have been doing? Are y

going to take any me o?

With a newborn, it is tough to take me o. The Secretar

nominee, Shaun Donovan, asked me to stay here for a few

weeks. So, Im going to do that. I will also be acng as

Secretary, Ive been told, unl he gets formerly voted in. Sto answer your queson, I will be here (Washington, DC) f

a few weeks, and then well start packing up to move dow

to Texas. Yes, I think I will stay in this eld, and Ive talked

some companies and Im close to a decision on that front

also want to do some consulng work, not just in housing

but some other areas and get involved with some non-

prots.

The Reverse Review would like to thank Mr. Montgomery

taking the me to share with us his invaluable experience

and thoughts regarding FHA and HUD. We know each and

every one of our readers will nd the informaon containabove to be of great value.


31/48

February 2009

One of the more excing developments for the reverse

mortgage industry stemming from the Housing and

Economic Recovery Act of 2008 was its authorizaon of theFederal Housing Administraon (FHA) to insure Home

Equity Conversion Mortgages (or HECMs) for the purchase of

homes (HECM for Purchase). HECM for Purchase has been

a long sought iniave of the Naonal Reverse Mortgage

Lenders Associaon (NRMLA) working collaboravely with

FHA, for the principal reason that it facilitates the ability

of seniors to downsize into homes that beer suit their

needs or to move from their exisng residence to another

geographical region to be close to family or others who can

beer provide the care and fellowship they desire.

Although the road to HECM for Purchaser as been along and not altogether easy one, in many ways, and as

discussed in this arcle, the hard part may have just begun.

Implemenng HECM for Purchase raises a number of issues

not previously dealt with by reverse mortgage lenders and

originators requiring new documents, policies, procedures

and processes. Although this may not be entertaining

reading for the squeamish (aer all, this arcle is wrien by

lawyers), the goal of the HECM for Purchase program is a

noble one, and the industrys eorts will greatly benet not

only the seniors we serve, but also their loved ones.

So, come along with us as we explore the guidance that has

been provided by FHA as well as some of the problems and

pialls on the road to implemenng HECM for Purchase.

What is a HECM for Purchase?

The new HECM for Purchase program allows senior

borrowers 62 years of age or older to purchase a home using

the proceeds from an FHA-insured HECM reverse mortgage.

On October 20, 2008, the FHA issued Mortgagee Leer

2008-33 (ML 08-33) implemenng amendments enacted

by the Housing and Economic Recovery Act of 2008. As isthe case with many mortgagee leers outlining new HECM

program terms, ML 08-33 raised almost as many queson

as it answered. The result is that FHA has further claried

ML 08-33 in its Frequently Asked Quesons publicaon o

its website (HECM for Purchase FAQ) and, as of the date t

arcle was submied for publicaon, HUD had informally

indicated its intenon to further clarify the program by

issuing a new HECM for home purchase mortgagee leer

the near future.

ML 08-33 denes a HECM for Purchase as a real estate

purchase where tle to the property is transferred to theHECM borrower, which the borrower will occupy as a

principal residence, and, at the me of closing, the HECM

rst and second liens will be the only liens against the

property. The HECM for Purchase FAQ further claries th

the HECM for Purchase program eliminates the need for a

second closing, allowing the senior borrower to purchase

new principal residence and obtain a reverse mortgage as

part of a single transacon.

The new HECM for Purchase program became available fo

loans with FHA case numbers assigned on or aer January2009. Prior to January 1, 2009, FHA-approved mortgagee

were allowed to take an applicaon for a HECM for Purch

however, they were not permied to process or perform

services that would result in a charge to a prospecve

borrower. HUD permied lenders to lock-in the expected

average mortgage interest rate for HECM for Purchase

applicaons taken prior to January 1, 2009. However, HU

indicated in the HECM for Purchase FAQ that the maximu

permied interest rate lock period of 120 days begins to r

Weiner Brodsky Sidman Kider, P



on the day the FHA case number is assigned to the loan, i.e.,

on or aer January 1, 2009.

Similar to tradional HECM renance transacons, in

HECM for Purchase transacons, lenders must calculate the

maximum claim amount and the principal limit in accordance

with HECM regulaons.

Eligible Property Types

Eligible property types for the new HECM for Purchase

program include exisng one-to-four unit properes where

construcon has been completed, the property has been

approved for occupancy (a nal Cercate of Occupancy, or

its equivalent, has been issued), and the property is occupied

by the borrower(s) as a principal residence. Any construcon

loan nancing for the property must be sased, the HECM

liens must be in a rst and second lien posion, and no other

liens against the property must exist at closing.

Certain types of properes are ineligible for FHA insurance

under the HECM for Purchase program, including, among

others: (i) cooperave units; (ii) newly constructed

residences where a Cercate of Occupancy or its equivalent

has not been issued by the appropriate local authority; (iii)

exisng manufactured homes built before June 15, 1976; and

(iv) exisng manufactured homes built aer June 15, 1976

that fail to conform to the Manufactured Home Construcon

Safety Standards, as evidenced by axed cercaon labels

(e.g., data plate and HUD cercaon label) and/or lack

a permanent foundaon as required in HUDs PermanentFoundaons for Manufactured Housing Guide.

Further, lenders and originators are not permied to take an

applicaon on a property that is under construcon and not

habitable. HUD made clear in its HECM for Purchase FAQ

that lenders and originators may only take an applicaon

once the Cercate of Occupancy or its equivalent has

been issued. This limitaon promises to create headaches

for senior purchasers and sellers on new construcon

by eliminang the ability of the purchaser to provide

preliminary loan qualicaon to the seller and necessarily

delaying closing for several weeks (to accommodate theprocessing and closing of the HECM for Purchase transacon)

following the compleon of construcon.

Title Requirements

HECM for Purchase can be used to sasfy outstanding

payment obligaons associated with a land contract,

contract for deed or other similar installment purchasing

arrangements. However, lenders and originators need to

ensure that the property which is the subject of the land

contract will (A) be used as collateral for the HECM loan,

and (B) will meet FHAs tle requirements (see discussion

immediately below).

ML 08-33 noted that FHAs tle requirements, as provided

in secon 255(b)(4) of the Naonal Housing Act and

implemented in the HECM regulaons at 24 C.F.R. 206.4provide, in part, that a HECM must be on real estate held

(i) in fee simple, or (ii) on a leasehold under a lease for no

less than 99 years which is renewable, or (iii) under a leas

having a remaining period of not less than 50 years beyon

the date of the 100th birthday of the youngest borrower.

Notably, ML 08-33, on its face, does not appear to include

a life estate as a permied property interest. ML 08-33

makes no reference to HUDs previous regulatory guidanc

authorizing tradional HECM renance transacons secur

by an interest in the property that is a life estate (provided

remaindermen subject their interests to the lien of the HEmortgage or deed of trust). Accordingly, without further

claricaon from HUD, it is an open queson whether a

HECM for Purchase transacon, where the senior holds

as a life estate, is insurable by FHA.

Monetary Investment Requirement

Senior borrowers must make a down payment sucient t

sasfy the dierence between the HECM principal limit a

the sales price for the purchased property, plus any HECM

loan related fees that are not nanced or otherwise ose

by other allowable FHA funding sources. As is the casewith tradional HECM renance transacons, seniors may

connue to nance closing costs, or elect to pay them out

of pocket. The required monetary investment must come

from an allowable funding source. Seniors will either nee

to use cash on hand or cash from the sale of other assets

for this down payment. For example, a withdrawal from t

senior borrowers savings or rerement account would be

acceptable funding source.

ML 08-33 further explained that seniors applying for a

HECM for Purchase loan may not obtain a bridge loan (or

so called gap nancing) or employ other interim nancitechniques to meet the down payment requirements and

pay for closing costs in connecon with HECM for Purchas

transacons. This restricon includes subordinate liens,

personal loans, secured or non-secured loans from other

assets (i.e., car, home equity line of credit, or investment

property or second home), cash withdrawals from credit

cards, seller nancing and any other lending commitment

that cannot be sased at closing.


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February 2009

HUD expressly noted in its HECM for Purchase FAQ that

seniors may not apply credit card cash advances towards

the required monetary investment or closing costs. Doing

so would be in violaon of FHAs requirement that all

outstanding obligaons connected to the HECM transacon

(whether for home purchase or renance) be sased prior

to or on the date of closing.

In addion, importantly, HUD indicated that gis are not

allowed as an acceptable source of funding. HUD explained

that prospecve borrowers may only use their own money

or money obtained from the sale of their own assets. FHA

also prohibits the use of loan discount points, interest rate

buy downs, closing cost assistance, builder incenves, gis

or personal property given by the seller or any other party.

Seller concessions and seller nancing are not permied.