the reverse review november/december 2012

retirementreal estateseniorsreverse mortgagehome equityrealtorsbaby boomerslenders

how Educating REaltoRs can elevate this niche product

selling thE hEcM

f o R P u R c h a s E

THE

the rev

erse

re

vie

w t

he

re

ver

se r

eview the reverse review the reverse review

the

re

ve

rs

e r

eview

the reverse review

secrets of a

top-tier Loan officer

INSIDEthis issue

nrMLa Meets in san antonio PG. 16

refUtinG THE NEW YORK TIMES PG. 22

+ John Yedinak sits down in oUr hot seat PG. 20

reviewn o v e m b e r / d e c e m b e r 2 0 1 2

REVERSE

| TRR2

The ReveRse Review november / december 2012

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

in the rain

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At our core, each of us finds what truly matters. At Urban Financial Group, our path

to success boils down to six unwavering principles: Client Focus, Integrity, Teamwork,

Respect for Each Individual, Innovation and Responsible Citizenship. These values are

woven into the DNA of our entire staff and embedded in our culture. These six principles

guide our behavior and set the bar higher for each of us every day.

So in a world where people and businesses are faced with and tempted by shortcuts,

we at Urban resolve to take the right path – every time. It’s this determination to do the

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Find out how we can partner with you. Email us today.

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* According to RMI measuring number of endorsed wholesale units January – December 2011

CLIENT FOCUS INTEGRITY TEAMWORK INNOVATION

RESPECT FOR EACH INDIVIDUAL RESPONSIBLE CITIZENSHIP

| TRR4


l

Meet the TeamSenior PublisherReza JahangiRi

PublishereRik RichaRd

Editor-in-ChiefJessica Linn gueRin

Creative DirectorTRaci knighT

Copy EditorkeRsTen Wehde

Marketing DirectoraLycia coLacion

Advertising Sales Rep.BRianna conLon

Printer The Ovid Bell Press

Advertising Informationphone : 949.269.1600

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© 2012 Reverse Publishing, LLc All rights reserved. reproductions or distribution of any materials obtained in the publication without

written permission is expressly prohibited. The views, claims and opinions expressed in article

and advertisement herein are not necessarily those of The Reverse Review, its employees, agents or directors. This publication and any references to products or services are provided “as is” without any expressed or implied warranty or term of any kind. While effort is made to ensure accuracy in the content of the information presented herein, Reverse Publishing, LLc is not responsible for any errors, misprints, or misinformation. Any

legal information contained herein is not to be construed as legal advice and is provided for entertainment or educational purposes only.

Postmaster : Please send address changes to The Reverse Review, 3800 West Chapman Ave.,

Orange, CA 92868

From the Editor

Roger Reynolds is mourned by his friends and colleagues after his passing in september. Reynolds, who began originating reverse mortgages in the early ’90s, worked for multiple firms throughout the space, including Director’s Mortgage, norWest Mortgage, security one Lending and Wells Fargo. “Whenever you talked to Roger he was always upbeat and smiling,” said Reynolds’ former partner and longtime friend, karl Lowry. “everyone he touched came away blessed and better for having known him.”

In Memory of Roger Reynolds sign up for the newsletter at reversereview.com.

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roger reynolds: an early pioneer in the reverse mortgage industry

As we wrap up our last issue of 2012, i can’t help but reflect on all that has happened in this industry in one year’s time. While it’s evident that change is the norm around here, 2012 has certainly seen a lot of it—some of it disappointing (big bank exits, lackluster volume) and some of it exciting (lender expansions, company acquisitions, new issuers).

The road ahead in 2013 promises more change for the industry as we work with legislators and the cFPB to revise the rules and regulations guiding the program, and continue our mission to educate the public about the product.

so, i thought i’d reach out to some of our leaders in the space and ask exactly what change they would like to see in 2013. Maybe if we put it down on paper, it will be more likely to happen.

I would like to see the industry finally expand its reach beyond the needs-based borrower. in order to accomplish that objective, we need product acceptance from the financial planning community. The hecM should be a part of an overall retirement plan in order for the retiree to better manage longevity risk relative to their liquid and investable assets.”~ Torrey Larson, CEO of Security One Lending

“ i’d like to see the mainstream press report many more of the positive, life-changing stories from consumers that we in the industry have the opportunity to experience every single day.”~ Pete Engelken, CEO of Genworth Financial Home

Equity Access

“ i would like to see a solution to our T&i issues and further advancements made in educating the public, lawmakers and regulators.”~ Reza Jahangiri, CEO of American Advisors Group

“ i would like to see more stability and clarity in the reverse mortgage industry—stability derived from new investments made and new entrants into the industry, and clarity from the regulators (including Fha) on such things as limited underwriting for hecM applicants and from the bureau on loan originator compensation issues.”~ Jim Milano, Weiner Brodsky Sidman Kider

Editor-in-Chief{ Je s s i c a Li n n Gu e r i n }

A NOTE fROMJESSIcA LINN GuERIN

Want to talk to Jessica?reach her at [email protected].

“


trr 11.12 / 12.12

Finding success with

the HECM for Purchase

november / december 2012

cover

RETIREMENTREAL ESTATESENIORSREVERSE MORTGAGEHOME EQUITYREALTORSBABY BOOMERSLENDERS

HOW CREATIVE MARKETING CAN ELEVATE THIS FLAILING NICHE PRODUCT

Selling THE HECM

F O R P U R C H A S E

THE

THE REV

ERSE

RE

VIE

W T

HE

RE

VER

SE R

EVIEW THE REVERSE REVIEW THE REVERSE REVIEW

THE

RE

VE

RS

E R

EVIEW

THE REVERSE REVIEW

SECRETS OF A

TOP TIER LOAN OFFICER

INSIDEthis issue

NRMLA MEETS IN SAN ANTONIO PG. 16

REFUTING THE NEW YORK TIMES PG. 22

+ JOHN YEDINAK SITS DOWN IN OUR HOT SEAT PG. 20

reviewN O V E M B E R / D E C E M B E R 2 0 1 2

REVERSE

08 | reportThe industry’s latest stats and rankingsReveRse MaRket InsIght

10 | indUstrY Updateheadlining stories of the past monthReveRse MoRtgage DaIly

15 | nrMLa newsRead about the association’s current initiatives.MaRty Bell

16 | nrMLa Meets in san antonioa recap of events at the annual Meeting & expo

19 | a niGht for ncoaThe industry joins forces to raise funds for the national council on aging with a Western-themed affair.

“It seems that the key is to adjust marketing efforts to focus on building relationships with developers and Realtors. By educating them about the possibilities afforded by this specialized product, it might be possible to reach a greater number of consumers. If this concept becomes our mission, we may see the H4P play a bigger role in the HECM marketplace in years to come.

46 | selling the hecM for purchasehow educating Realtors can elevate this niche productjessIca lInn gueRIn

MIchael BanneR

Table of Contents

Want the online version?reversereview.com/magazine

@

in this issUe...

22JiM corYoriginating

33raLph rosYnekunderwriting

54MichaeL d. kentLast Word

20 | hot seatJohn r. YedinakFounder and managing editor of Reverse Mortgage daily

24 | oriGinatinGthe secrets of a top-tier Loadvice on how you can become a successful loan officerjoshua sheIn

27 | oriGinatinGforgotten termsa look at term versus tenure paymentsjoseph confoRtI

28 | MarketinGMarketing 101TRR’s new marketing columnist talks about the concept of educational marketing.kevIn DelgauDIo

30 | techis Your Bank account safe from cybertheft? What you can do to protect your businessalexanDeR j. chauDhRy

34 | appraisinGconquering reverse Mortgage decline and preparing for the futurehow knowing more about your property can help you manage riskBIll MohleR

37 | LeGaLproposed rules by the cfpB promise changes for reverse Mortgage LendersWhat you need to know to be preparedjIM MIlano

41 | secondarY Marketspreads tighten amid constant changea snapshot of the hMBs marketDaRRen stuMBeRgeR

42 | spotLiGhtthe Legislative Landscape in 2013how the hecM will fare in the wake of the electionh. West RIchaRDs

RETIREMENTREAL ESTATESENIORSREVERSE MORTGAGEHOME EQUITYREALTORSBABY BOOMERSLENDERS

HOW CREATIVE MARKETING CAN ELEVATE THIS FLAILING NICHE PRODUCT

Selling THE HECM

F O R P U R C H A S E

THE

THE REV

ERSE

RE

VIE

W T

HE

RE

VER

SE R

EVIEW THE REVERSE REVIEW THE REVERSE REVIEW

THE

RE

VE

RS

E R

EVIEW

THE REVERSE REVIEW

SECRETS OF A

TOP TIER LOAN OFFICER

INSIDEthis issue

NRMLA MEETS IN SAN ANTONIO PG. 16

REFUTING THE NEW YORK TIMES PG. 22

+ JOHN YEDINAK SITS DOWN IN OUR HOT SEAT PG. 20

reviewN O V E M B E R / D E C E M B E R 2 0 1 2

REVERSEFEATURE

| TRR6


JOHN K. LuNdE 08 | the indUstrY’s stats and rankinGs g 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.net949.429.0452

MARTY BELL15 | nrMLa news g marty bell is nrmLA’s senior vice president of communications and marketing. This is bell’s professional Act III after careers in books, journalism and the broadway theater. bell is the author of two novels and four nonfiction books, and his writing has appeared in publications including Playboy and New York magazine. bell wrote and produced the award-winning documentary film The Boys of Summer and produced 15 broadway shows (including Ragtime, Fosse and Dirty Rotten Scoundrels) that won 27 Tony Awards.

JOHN R. YEdINAK20 | hot seat g John r. Yedinak is the founder and managing editor of reverse mortgage daily (rmd), the leading publication for breaking news and insight for the reverse mortgage industry. Yedinak also serves as the president of Aging media, a business-to-business media holding company that owns rmd, Senior Housing news and Home Health care news. He lives in chicago, Illinois, and attended Southern methodist University in dallas, Texas.

Contributors

JIM cORY 22 | what’s YoUr incentive? g Jim cory is co-founder and ceo of Legacy reverse mortgage, a reverse mortgage originator in San diego, california. cory began his reverse mortgage career 13 years ago and he serves on the board of directors for the national reverse mortgage Lenders Association. cory has a bachelor of arts degree from the Pennsylvania State [email protected]: @LegacyJim

JOSHuA SHEIN 24 | the secrets of a top-tier Lo g Joshua Shein recently joined maverick Funding to expand its national network and establish its maryland operations. Previously, Shein was ceo of 1st maryland mortgage corp/Great oak Lending Partners. Under his leadership, the company became one of the fastest-growing reverse mortgage companies in the U.S. Prior to that, Shein was a vP at nAJo emergency Products. He graduated cum laude fromIthaca college.

JOSEpH cONfORTI27 | forGotten terMs g Joseph conforti is vice president and reverse mortgage specialist at oswego community bank in oswego, Illinois. He is responsible for all of the reverse mortgage production for his multibank holding company, which has more than 90 locations in the chicagoland area. conforti speaks regularly to senior groups and professional organizations throughout the chicago market, drawing on more than 16 years of experience originating reverse mortgages.

KEvIN dELGAudIO28 | MarketinG 101 gKevin delGaudio is marketing director at the Senior reverse network, a division of Long Island, new York-based Jet direct mortgage. He is a graduate of Long Island University with a degree in marketing. delGaudio started his mortgage career in 2002 and is still an active mLo, licensed in new York and new Jersey. He is often referred to as “robin Hood” by his friends, associates and clients because of his passion for helping seniors secure funding. delGaudio is working on his first book, a consumer’s guide to reverse mortgages, due out before the end of 2012.

ALExANdER J. cHAudHRY30 | is YoUr Bank accoUnt safe froM cYBertheft? g Alexander J. chaudhry is general counsel of Fnc Title Services. chaudhry works on areas of real estate law that impact title insurance agencies with a specific focus on HECMs. He is responsible for corporate and transactional matters, licensing, and regulatory and litigation concerns. He recently worked with insurance enforcement officers on cyberthreat issues facing the title insurance industry.

fRANK HOWARd31 | titLe tip gFrank Howard is president and ceo of eTitle express, Ltd, one of the leading originators of reverse mortgages in the Washington metropolitan area. With more than 35 years of experience in the mortgage and title industries, he has closed more than 3,500 reverse mortgages and authored one of the first adjustable-rate mortgages in the country. Howard has also served on Fannie mae’s advisory board of directors.

Jim Cory

Marty Bell

John K. Lunde

Alexander J. Chaudhry

John R. Yedinak

Joshua Shein

Want to write for this magazine?email [email protected] for more information.

2

KevinDelGaudio

Frank Howard

Joseph Conforti


ContributorsRALpH ROSYNEK33 | the concern over UnderwritinG deniaLs g ralph rosynek is the vice president for national correspondent Production at reverse mortgage Solutions. rmS is a premier provider of reverse mortgage servicing, a Ginnie mae seller/servicer and offers mortgage banking support to the reverse mortgage industry. rosynek is currently a member of the nrmLA board, co-chair of the Professional development committee and holds HUd Hecm direct endorsement [email protected]

BILL MOHLER34 | conqUerinG reverse MortGaGe decLine and preparinG for the fUtUre g bill mohler handles the product and development efforts for valuation vision, a leader in providing innovative alternative valuation products for real estate, lending, servicing and capital markets. With more than 15 years of technology, data, and product experience, mohler is a veteran in the mortgage space as a key player heading up design and development of proprietary products and solutions offered at valuation vision.

JIM MILANO37 | proposed rULes BY the cfpB proMise chanGes for reverse MortGaGe Lenders g Jim milano is a partner with the law firm of Weiner Brodsky Sidman Kider. milano’s practice focuses on regulatory compliance for the financial services industry, particularly with respect to reverse mortgage issues. milano is nationally recognized as one of the leading lawyers in the area of reverse mortgage law, and is a frequent speaker on topics of interest to industry members at various trade association conferences and webinars.

Want to write for this magazine?email [email protected]

for more information.

2

Bill Mohler

Darren Stumberger

Jim Milano

H. West Richards

Jessica LinnGuerin

Michael Banner

Michael D. Kent

dARREN STuMBERGER41 | spreads tiGhten aMid constant chanGe g darren Stumberger, managing director at Knight capital Group, heads Agency mbS trading and is responsible for HmbS/ HremIc trading, distribution and risk management. Prior to Knight, Stumberger held mortgage trading and finance positions at Goldman Sachs, morgan Stanley, merrill Lynch, Standard & Poor’s and Kbc Group [email protected]

H. WEST RIcHARdS42 | the LeGisLative Landscape in 2013 g H. West richards, executive director of the coalition for Independent Seniors, served in the U.S. House ofrepresentatives and held the distinction of serving as the youngest chief of staff in congress. richards worked in association with the law firm of Troutman Sanders, LLP and later headed up business development for Arthur Andersen business consulting in Atlanta.

JESSIcA LINN GuERIN46 | seLLinG the hecM for pUrchase g Jessica Linn Guerin is the editor-in-chief of The Reverse Review. She has worked on the editorial teams of Chicago Home & Garden, Chicago magazine and Time Out Chicago. Prior to joining the magazine, Guerin managed the marketing efforts for a commodity brokerage firm in the chicago board of Trade. She has a master’s degree in magazine publishing from northwestern University and a b.S. in journalism from boston University.

MIcHAEL BANNER46 | seLLinG the hecM for pUrchase g michael banner, founder of the American c.e. Institute and national education director for Security one Lending, has been in the mortgage industry for more than 30 years. banner has held reverse mortgage classes for more than 3,500 financial advisors. He is certified to teach financial planners, cPAs, LTcI agents and attorneys about the product and has been featured in the Wall Street Journal, on the Fox business network and in various regional publications.

MIcHAEL d. KENT54 | Last word g michael d. Kent joined reverse mortgage Solutions in February 2010 as senior vice president of lending and business development after more than 30 years of mortgage banking experience in senior and executive level management positions. He is responsible for the design, implementation and management of the company’s lending efforts, including production channel design and production source risk assessment.

Ralph Rosynek

| TRR8


september 2012 top lenders report

1 2 3 4 5Genworth Financial home equityEndorsement 443

american advisors GroupEndorsement 410

one reverse Mortgage Endorsement 365

urban Financial GroupEndorsement 282

security one lendingEndorsement 264

Lender Endorsements Lender Endorsements

Report

10,000

8,000

6,000

4,000

2,000

0810 11 12 1 2 3 4 5 6 7

*Numbers represent monthsretail Wholesale

9

GENERATION MORTGAGE COMPANY 197

REVERSE MORTGAGE USA INC 108

CHERRY CREEK MORTGAGE CO INC 60

ASSOCIATED MORTGAGE BANKERS 56

PROFICIO MORTGAGE VENTURES LLC 53

GMFS LLC 52

M & T BANK 52

THE FIRST NATIONAL BANK 50

SENIOR MORTGAGE BANKERS INC 46

NET EQUITY FINANCIAL INC 45

SUN WEST MORTGAGE CO INC 43

GREENLIGHT FINANCIAL SERVICES 43

NEW DAY FINANCIAL LLC 36

MAVERICK FUNDING CORP 35

MONEY HOUSE INC 35

NATIONWIDE EQUITIES CORPORATION 34

PLAZA HOME MORTGAGE INC 28

REVERSE MORTGAGE SOLUTIONS INC 22

GREAT OAK LENDING 22

HIGH TECH LENDING INC 22

ASPIRE FINANCIAL INC 21

AMERICAN NATIONWIDE MORTGAGE 20

FIRSTBANK 20

VAN DYK MORTGAGE 19

TOP FLITE FINANCIAL INC 19

OPEN MORTGAGE LLC 19

ROYAL UNITED MORTGAGE LLC 19

LEADER ONE FINANCIAL 17

HOMESTREET BANK 16

GATEWAY FUNDING DIVERSIFIED 16

TOWNEBANK 16

UNITED NORTHERN MORTGAGE 16

UNIVERSAL LENDING CORP 15

VIG MORTGAGE CORP 15

SUCCESS MORTGAGE PARTNERS INC 14

VANGUARD FUNDING LLC 13

oct

nov

dec

Jan

Feb

mar

Apr

may

Jun

Jul

Aug

Sep

tot

Units chG% Units chG% Units chG%

3,032

2,675

2,676

2,949

2,870

2,504

2,614

2,587

2,821

2,143

2,415

2,147

-16.06%

-11.77%

0.04%

10.2%

-2.68%

-12.75%

4.39%

-1.03%

9.05%

-24.03%

12.69%

-11.1%

1,612

1,978

1,891

2,212

2,547

1,870

1,979

1,840

2,361

1,704

1,705

1,536

-18.26%

22.7%

-4.4%

16.98%

15.14%

-26.58%

5.83%

-7.02%

28.32%

-27.83%

0.06%

-9.91%

4,644

4,653

4,567

5,161

5,417

4,374

4,593

4,427

5,182

3,847

4,120

3,683

retail wholesale total

31,433 23,235 54,668

-16.83%

0.19%

-1.85%

13.01%

4.96%

-19.25%

5.01%

-3.61%

17.05%

-25.76%

7.1%

-10.61%*Figures above reflect change from

prior month

retail endorsement Growth

-11.1%wholesale

endorsement Growth

-9.91%total endorsement

Growth

-10.61%

trailinG twelve - Month endorseMents

industrY suMMarY


Report

80%

75%

70%

65%

60%

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8/1

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9/1

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2/1

/12

3/1

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4/1

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5/1

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6/1

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Brought to you by:

LookinG for More statistics? Go to rMinsiGht.net for aLL of the indUstrY’s Latest stats and

rankinGs.

% % % % %

Reverse Market Insight - LogoOctober 9, 2009 3005C Process

Blk CPANTONE COLORS

R E V E R S E M A R K E TI N S I G H T

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Arm

| TRR10


nov./ dec. edition

news direct to YoU: The industry’s headlining stories at your fingertips

want even More Up-to-the-MinUte news? visit reversemortgagedaily.com.

an Update of this past Month’s BreakinG news

headlining news1. ocwen acquires genworth for $22 millionocwen Financial corporation entered an agreement to purchase genworth Financial home equity access for $22 million in cash. as part of the deal, genworth will change its name to Liberty home equity solutions. ocwen said the deal, which is expected to close in the first quarter of 2013, will complement its existing mortgage-related businesses. genworth, which originally entered the reverse mortgage business when it purchased Liberty Reverse Mortgage in 2007, has retail, wholesale and correspondent operations and is the third-largest reverse mortgage originator in the u.s. ocwen is one of the largest mortgage servicers, with a $128 billion loan portfolio in Q2 of 2012.// October 31, 2012

2. reverse mortgage lenders prepare for delays in the waKe of hurricane sandyhurricane sandy devastated the eastern seaboard, affecting nearly 284,000 homes and causing approximately $23 billion in damage. For reverse mortgage lenders, the destruction could have a long-lasting impact. Those with loans in affected areas must crosscheck properties with the Federal emergency Management agency to begin the process of determining which homes will require new inspections and appraisals. closing dates will likely be suspended to ensure funding and insurance requirements, and loans in a rescission period will also be halted until further clarification comes from hud/Fha regarding property inspection obligations under the hecM program.// November 1, 2012

3. nrmla responds to the new yorK times’ reverse mortgage articleThe New York Times published a response written by nRMLa’s Peter Bell to its article criticizing reverse mortgages. in the op-ed, Bell called the Times article “unfair” and pointed out the establishment of consumer protections that have been enacted to prevent fraud. Bell also pointed out the financial challenges many seniors face in today’s economic environment and how reverse mortgages can provide a sound solution to these problems.// November 4, 2012

4. ocwen, walter bid $3 billion for rescap servicing ocwen Loan servicing, LLc and Walter investment Management corp. won their bid for Residential capital’s mortgage servicing and origination platform assets at auction. The $3 billion bid is subject to documentation and Bankruptcy court approval. as of March 2012, Rescap was servicing more than 2.4 million loans with an aggregate unpaid balance of $374 billion; approximately 68 percent of these loans are owned, insured or guaranteed by Fannie Mae, Freddie Mac or ginnie Mae. The acquisition will make ocwen, an approved ginnie Mae issuer, at least the fifth-largest mortgage servicer in the u.s. // October 25, 2012

5. Zillow: home values post gains but recovery is polariZedhome values saw the largest quarterly gain in the third quarter since 2006, but the increase was not seen across the board, according to data from housing hub zillow. While recent reports have claimed that recovery is under way, zillow said not to count on gains just yet. Recent data marked the fourth consecutive quarter of increases with a 1.3 percent gain over the last quarter. zillow projected an additional 1.7 percent gain in home prices by the third quarter

of 2013. still, the company said the pace of recovery is uneven and that seasonal changes in the housing market could hinder recovery or temporarily reverse it in some places.// October 31, 2012

6. cfpb and fhfa to create the largest-ever mortgage databaseThe cFPB and the Federal housing Finance agency have announced plans to work together to build a common database of mortgage information starting in 2013 to better gauge market trends in relation to consumer habits. according to the agencies, the national Mortgage database will be the largest collection of such data in the u.s. and will contain information dating as far back as 1998. The partnership “will create a unique resource that benefits the government and public as we seek to answer important question about how the housing finance market is evolving and changing,” said FhFa acting director edward J. deMarco.// November 1, 2012

7. fha: no reverse mortgage hybrid product anytime soonspeaking at nRMLa’s annual convention in san antonio, Fha deputy assistant secretary charles coulter said that the industry should not expect a hybrid reverse mortgage anytime soon. The concept of a hybrid program, which would allow for some of the loan proceeds to be taken up front at a fixed rate, has gained overwhelming support from nRMLa as well as originators and secondary market participants. still, when coulter listed pending changes to the program, a hybrid option was not among them. “a hybrid would be ideal, but putting a product in place would not happen in a short enough time span,” coulter said. “it’s not a near-term alternative.”// October 25, 2012

Brought to you by:

Industry Update


1 2 3 4

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Industry UpdateWho else is making waves in the industry?check out TRR’s new website to see who’s a part of the conversation. reversereview.com

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company

Winner Premier Reverse

Closings

Runner-up stewart Title

best reverse mortgage loan

origination system

Winner Reverse Vision

Runner-up Reverse Mortgage

solutions

best reverse mortgage appraisal

management company

Winner Landmark Network

Runner-up coester appraisals

one to watch in the reverse industry

Winner Nationwide Equities

Runner-up all Reverse Mortgage

company

best reverse mortgage celebrity

spoKesperson

WinnerFred Thompson

(AAG)

Runner-up henry Winkler

(one Reverse)

best reverse mortgage lead

provider

Winner AAG

Runner-up new Retirement

best reverse mortgage retail

brand

WinnerAAG

Runner-upone Reverse

The winners of the 2nd annual Reverse Mortgage daily awards are in!

rMd tallied more than 45,000 votes to determine the top companies in each sector of the market. rMd tallied more than 45,000 votes to determine the top companies in each sector of the market.

| TRR12



Roundup

Market trends

Home Equity Bouncing BackThe housing market is showing signs of recovery with home equity reaching its highest level in more than two years. hud’s september scorecard indicated that home equity increased by more than $860 billion since the end of 2011. homeowner equity also rose, reaching $406 billion in the second quarter of 2012 alone, a 13.5 percent increase from the end of 2011. The scorecard noted that, while recovery remains fragile, the market is moving in the right direction.

deMoGraphics

Cities with the Highest Maximum Claim AmountsThree cities have taken over the top spots for the highest average loan amount, according to Reverse Market insight’s July endorsement figures. Atlanta, Orlando and Pensacola are all showing notable jumps in average home values for hecM loans in 2012.

Atlanta$199,000 to $309,000

Orlando$119,000 to $341,000

Pensacola$133,000 to $167,000

the senior consensUs

Without Pensions, Many Retirees Will Rely Solely on Social Security

a study released by Boston college’s center for Retirement Research states that many aging households will have to rely solely on social security to fund retirement. Research indicated that 36 percent of all households do not receive any sort of pension coverage, and that the social security dollars they must rely on will only replace 40 percent of

their pre-retirement earnings. The study stated that pension coverage is declining among employers and shows no signs

of improving on its own.

at the Latest n e w s a n d s t a t s

affectinG the Market.

here’s a Look

Movers & Shakers

Maverick Funding’s Reverse Mortgage Network Expands Workforcereverse mortgage network, a subsidiary of maverick Funding, is moving quickly toward its goal to expand from 32 to 45 states by 2013. The company is hiring loan officers and retail operations staff, and recently relocated its new Jersey headquarters to accommodate its rapid growth. Maverick has also significantly grown its processing, underwriting, licensing, compliance and closing/funding departments. “maverick Funding has more than doubled in size during the last 18 months and the reverse mortgage network will continue to be an essential part of our expansion,” said ceo ralph vitiello.

Generation Mortgage Company Launches New Wholesale Partner WebsiteGeneration mortgage launched a newly designed website for its wholesale division, featuring a marketing tool kit, training materials and up-to-date reverse mortgage information. voted “best Wholesale Lender” by reverse mortgage daily for the second year in a row, Generation seeks to provide useful tools and information to assist its clients in growing their reverse mortgage production.

Open Mortgage Continues Expansion, Hires Tom Aarons as Director of Secondary MarketingTexas-based open mortgage announced the hiring of Tom Aarons as director of secondary marketing. Aarons, who has 28 years of experience in mortgage banking, has led an accomplished career in the field, serving as manager on a multitude of portfolio and corporate acquisitions and working with counseling auditors and attorneys on various mortgage banking issues.

Have a company update you would like to see publisHed?

in companies across the reverse space.

Read about the latest developments

Email it to [email protected].

| TRR14


CALL TODAYor visit us online!

888.272.1214landmarknetwork.com

Follow us @LandmarkAMC © 2012 Landmark Network, Inc. All rights reserved.

Find Value eVerywhere Providing you solutions to meet your Appraisal, Alternative Valuation and Post-Closing QC Audit needs.

At Landmark, we are committed to dedicating the time and effort it requires to take care of your orders. This is only one of the reasons why we were voted #1AMC by Reverse Mortgage Daily readers for the second year in a row. But don’t take their word for it, experience the difference for yourself.

vOTeD #108 in OverALL rAnking AnD #3 in The reAL esTATe CATAgOrY.

Nov TRR ad.indd 1 10/19/12 9:00 AM


NRMLA News

NEW

S FR

OM

NRM

LA

brought to you by marty bell :

national reverse mortgage

lenders association

new MeMBersImpac Mortgage Irvine, Calif.Cofmar Financial Inc. Pikesville, Md.Proficio Mortgage Ventures, LLC Henderson, Nev.Primary Residential Mortgage, Inc. Salt Lake City, UtahGeorgetown Mortgage, LLC Georgetown, TexasAmerican Financial Resources, Inc. Parsippany, N. J.Wholesale Capital Corporation Moreno Valley, Calif.National Title Solutions, Inc. Naperville, Ill.Wolfe Financial, Inc. Asheboro, N. C.Vinings Mortgage Atlanta, Ga.Bank of England Greenville, N.C.A.K.T. American Capital, Inc. El Segundo, Calif.Patriot Home Mortgage St. George, UtahArlington Financial Corporation Yonkers, N.Y.

Bank of England Jacksonville, Fla.

overaLL, 58 coMpanies have Joined the association in the past Year.

THIS YeAr’S

boaRd of diRectoRsJoe DeMarkey of MetLife Bank and George Lopez of JB Nutter have been elected co-chairmen of the NRMLA Board of Directors for 2013. Supporting them as vice chairs are Pete Engelken of Genworth Financial Home Equity Access and James Cory of Legacy Reverse Mortgage. John LaRose of Celink (secretary) and Sherry Apanay of Urban Finacial Group (treasurer) fill out the Executive Committee.

it’s sometimes Fair WeatherSo here we are, 585 reverse mortgage professionals heading to San Antonio to thoroughly discuss all aspects of our business at nrmLA’s three-day Annual meeting & expo. And we all wake up monday morning to get gobsmacked by the following headline in The New York Times (on the front page, no less): “Loan Lifeline to retirees Is Taking Its Toll: reverse mortgages costing Some Their Homes.”

In the story, financial reporter Jessica Silver-Greenberg, a rookie on reverse mortgages as far as we know, identifies a list of issues with reverse mortgages. And here’s the rub: each issue she brings up was tackled at a session at our conference.

In San Antonio, keynote speaker and HUd deputy Assistant Secretary charles coulter alerted the attendees to imminent changes in the Hecm program, including possible financial assessment and possible limitations on the availability of fixed-rate, full-draw loans.

Karin Hill and her HUd staff presented data showing a declining tax and insurance default rate in more recent books of business, as well as a growing cure rate among those in trouble.

A panel of industry marketing heads took a hard look at the ethics of messaging, pointing out compliant requirements in advertising, showing unacceptable ads and how to construct those that are acceptable.

nrmLA counsel Jim brodsky went through a list of new legislation and regulation. Another panel looked at helping clients to understand the process that will take place at the end of a loan. And a packed room engaged in an energetic and candid bout of self-evaluation, listing all the industry problems they could think of, as well as potential solutions.

It makes one think: If ms. Silver-Greenberg had joined us all at the conference, would she have written the same story? or would she have seen a responsible industry working to improve the consumer experience?

OTheR membeRs eleCTed TO The bOARd ARe:

8 mark browning, homechex

8 Nick buscaglia, m&T bank

8 Colin Cushman, Generation mortgage

8 George downey, harbor mortgage solutions

8 sarah hulbert, 1st Reverse mortgage UsA

8 Reza Jahangiri, American Advisors Group

8 bart Johnson, Premier senior home equity

8 Torrey larsen, security One lending

8 steve mcClellan, Urban Financial Group

8 Jerry mcCoy, Nationstar

8 Joe morris, Open mortgage

8 John Nixon, bank of America

8 Jean Noble, Urban Financial Group

8 scott Norman, sente mortgage

8 Ralph Rosynek, Reverse mortgage solutions

8 bob sivori, security One lending

8 Gregg smith, One Reverse mortgage

8 sandy Tennekoon, moneyhouse

8 Robert Yeary, Reverse mortgage solutions

and one More thinG…For the next Annual meeting, we’ll all be heading back to new orleans on november 3-6, 2013.

Past chairpersons serving in an ex officio capacity include Jeff Taylor of Wendover Consulting Group, Cheryl mcNally of harbor View Consulting and James mahoney, former chief executive of Financial Freedom.

NRMLA member

| TRR16


NRMLA MEEtS iN SAN ANtoNio

Largest crowd in three Years Meets in texas

six hundred reverse mortgage professionals met in san Antonio in October for NRmlA’s Annual meeting & expo. Guests attended panel discussions to hear industry leaders sound off on a range of issues affecting the space, and in the evenings they attended networking events to meet and mingle with colleagues from across the country.

hiGhLiGhts incLUded:

> a presentation by fha’s charles coulter on the administration’s plans for the hecM program

> a lively talk with former senator and reverse mortgage spokesman fred thompson about the upcoming election

> a presentation by ginnie Mae president ted tozer about the state of the hMBs program

> an insightful analysis by economist jared Bernstein on america’s economic challenges and the growing importance of reverse mortgages as a retirement tool

SAN ANTONIO

2 3 4

5

1. AAG’s Reza Jahangiri, Fred Thompson and Rms’ Robert Yeary

2. tRR editor-in-Chief Jessica Guerin3. landmark Network’s erik Richard

with CIs’ West Richards4. Patti deGennaro of lenders Reverse

Closing services and Thomas Cali of Cascade settlement Agency read the latest issue.

5. matt hydrew and Trevor Gauthier of mortgage Cadence

1

want to see more photos

from san antonio?

visit us at reverse

review.com!

Who Was at NrMLa

2012


BY

INV

ITA

TIO

N o

NLY

6 7 8

9 10

12 13

11

6. david stroop, Joe Gilson and Aaron stein-sapir of mortgage Information services

7. hUd’s Karin hill and metlife’s Joseph demarkey8. FhA’s Charles Coulter presents to the crowd.9. baydoc’s megen lawler and Kathleen leonard, ready for

the evening’s Western-themed fete10. scott Norman from sente mortgage awards Jim milano

with the Jim mahoney distinguished service Award for his efforts to advance the reverse mortgage industry in Texas.

11. Ginnie mae President Ted Tozer talks hmbs.12. Celink’s shannon Ozanich and Robin Rice13. A lively crowd applauds Fred Thompson.14. Fred Thompson talks with NRmlA’s Peter bell.15. Attendees chat at Urban Financial Group’s booth.

14

nrmla’s annual meeting & expo

october 15-17hyatt regency

san antonio,texas

15

| TRR18


For more information contact: Kimberly SmithExecutive Vice President Sales Toll-Free 877-955-7771 [email protected]

Generation Mortgage Company:• Specializes in Reverse Mortgages

• Voted Best Reverse Mortgage Wholesaler Two Years in a Row 2011, 2012

• Excellent Marketing Support Program

• Top Quality Customer Service

• Expert Industry Training

Proud member of:

© 2012 Generation Mortgage Company, 3565 Piedmont Road NE, 3 Piedmont Center, Suite 300, Atlanta, GA 30305 — 866-733-6090.NMLS #1319. All Rights Reserved. For our state(s) legalese, visit: www.generationmortgage.com/statelegalese.

Ahhhh...A perfect fit.


For more information contact: Kimberly SmithExecutive Vice President Sales Toll-Free 877-955-7771 [email protected]

Generation Mortgage Company:• Specializes in Reverse Mortgages

• Voted Best Reverse Mortgage Wholesaler Two Years in a Row 2011, 2012

• Excellent Marketing Support Program

• Top Quality Customer Service

• Expert Industry Training

Proud member of:

© 2012 Generation Mortgage Company, 3565 Piedmont Road NE, 3 Piedmont Center, Suite 300, Atlanta, GA 30305 — 866-733-6090.NMLS #1319. All Rights Reserved. For our state(s) legalese, visit: www.generationmortgage.com/statelegalese.

Ahhhh...A perfect fit.

Night NCOAFOR

seven coMpanIes joIneD foRces In san antonIo to host a WesteRn-theMeD fete to RaIse funDs foR the natIonal councIl on agIng.

It’s A

M o r e t h a n 4 0 0 c o n f e r e n c e at t e n d e e s c a M e t o t h e e v e n t

and took part in a host of Texas classics, including armadillo racing, bull riding and line dancing to a live country band. The event, which was organized by rhiannon behnke and Kimberly Smith, raised more than $13,000 for ncoA and was hosted by Security one Lending, Urban

Financial Group, American Advisors Group, Generation mortgage, one reverse mortgage, Premier reverse closings and reverse mortgage Solutions. The evening was sponsored by Landmark network, bay docs, reverse vision, mortgage cadence, Jb nutter and coester vmS. “our sincere thanks goes to the hosts and donors of this event,” behnke said. “Without the willingness to participate in this combine effort, none of this

could have been possible.”

guests mingle amongst the

lifelike décor at the

Buckhorn saloon and Museum.aag’s cheryl chargin is

lassoed by a cowboy outside the saloon.

event organizers Rhiannon Behnke and kimberly smith with ncoa’s carol zernial, sam hunter and Barbara stucki

dan and gina shackelford, Bob sivori and eric hiatt from

security one Lending

Ralph Rosynek and Michael kent of RMs get ready to race armadillos with

kimberly Browne of uBs ag.

Moneyhouse’s david Levis with

Luis alberto de Jesus

urban Financial’s Britany Luth, kristen sieffert and summer hurst with knight capital’s

Vanessa Warren (second from left)

Jim cory of Legacy Reverse Mortgage draws a crowd with his bull-riding skills.

TRR’s alycia colacion with RMs’ Thomas helm

ˆ

| TRR20


thehotseatthings you need to know or may have been wonderingnovember / december 2012

the hot seat

From his first job and his favorite website to his thoughts about the reverse mortgage market,

we get the personal and professional facts from John Yedinak, founder and managing editor of

reverse mortgage daily, in our monthly edition of The Hot Seat.


P E r s o N a l

reverse mortgage

dailyFoundeR/

Managing ediToR

john > ten years from now I’d like to be married and have a family.

> My celebrity crush is hard to pick, but if I had to choose it would be marion cotillard.

> if i could meet anyone past or present it would be richard branson.

> My favorite movie is Love Actually. It’s the best christmas movie too.

> My favorite website is gawker.com—it’s trashy and awesome at the same time.

> i never miss an episode of Showtime’s Homeland, the best show on Tv.

> when i was younger i wanted to be ryne Sandberg, the second baseman for the chicago cubs.

> i can’t go without diet dr Pepper. I seriously go through withdrawal without it.

> My first job was a lifeguard and swim coach at Salt creek. It was probably one of the best jobs I’ve

ever had.

> My favorite time of the day is brunch on the weekends.

> My ipod go-to artists are Kanye West and Jay-Z.

> i’ve never taken a journalism class.

> i always root for the underdog, unless they’re playing the chicago bulls.

> the most memorable moment in my life was when I was about 10 feet from President obama as

he was accepting his nomination for president in Grant Park. even if I don’t know whether I’m going to vote for him again,

it was an amazing experience.

> the best purchase i’ve ever made was a macbook Air. It’s the best computer ever made.

> the greatest setback for our industry was the mortgage crisis and the impact it had on home values.

> i am optimistic about the reverse mortgage industry because you can’t argue against the need that exists for the

product. Anyone who says that it’s not needed doesn’t realize how little people have saved for retirement and how hard it

is for many seniors to pay for daily expenses.

> if i could change one thing about the reverse mortgage industry, I would make it less reliant on the government for

a solution.

> In shaping appropriate regulation of the reverse mortgage industry, government officials need to understand

how the product ACTUALLY works and how seniors benefit. It’s pretty simple, but many government officials fail to

understand.

> the development of a proprietary market for reverse mortgages will require time and lots of capital. Anyone who

thinks there will be any type of proprietary product to compete with the Hecm in the next few years is crazy.

> the biggest challenge in the reverse mortgage industry is public perception. It will take a lot of hard work to

change.

P r o F E s s i o N a l

i can’t go without diet

dr pepper. i seriously go through withdrawal without it.

fun fact

the best purchase i’ve ever made was a macbooK air. it’s the best computer ever made.

| TRR22


oriGinatinGdIScUSS

he very loans that are supposed to help seniors stay in their homes are, in many

cases, pushing them out.”

Wow, what a doozy. after an unusually tough headline, the first sentence of the october 14, 2012, The New York Times article was a real stomach punch. Jessica silver-greenberg and her newspaper really went after the reverse mortgage with this article, conspicuously placed on the first page above the fold.

But her biting remarks didn’t stop at that. she continued with this: “into the void left by the big banks have moved smaller mortgage brokers and lenders. some of them steer seniors into expensive, risky loans with deceptive sales pitches and high-pressure tactics, according to regulators, housing counselors and elder-care advocates.” yikes. now the smaller independent mortgage brokers and lenders are in effect being lured by incentives to push seniors out of their homes.

Many in the industry were in san antonio for the annual national Reverse Mortgage Lenders association conference and were hardly in a place to assume the proper defense. While the industry regrouped, who was one of the first to rebut this piece of sensationalism? none other

than Jack guttentag, known fondly as the Mortgage Professor, who has authored a series of articles about the HECM product and its benefits. For those of you who are unfamiliar with guttentag, he is a professor emeritus of finance and the former Jacob Safra Professor of international Banking at university of Pennsylvania’s Wharton school. he defended our industry valiantly, refuting silver-greenberg’s claims with salient points that echoed comments made by many in the industry.

however, our beloved Mortgage Professor never adequately addressed the issue of incentives. he also never addressed the attack made on smaller,

independent companies, or the rampant misuse of the word “broker” and the accusation that our industry is basically being overrun by subprime originators.

i understand that the professor likely skipped over these points of contention because his main objective was to defend the product itself. so, with a thanks and a nod to the Mortgage Professor, i’m going to respond to the Times article to directly refute the claims made against the hardworking professionals in this industry.

First, let’s get on the same page when it comes to key definitions. Smaller,

What’s Your Incentive?JIM cORY

t

GOING TO The sOURCe

ms. silver-Greenberg ends the article by again calling out brokers whom she claims “steer seniors toward lump-sum loans, which carry a fixed interest rate.” What she fails to realize, as many who have opined on this subject do, is that almost everyone (including many seniors) hate adjustable-rate mortgages. Seniors are generally terrified of the uncertainty of these mortgages.

“


oriGinatinG

independent mortgage origination companies can be brokers or lenders. Brokers simply work with several lenders and perform all of the origination functions for a lender or bank. (i’m using simple terms here; bear with me if you’re an expert.) The loan is submitted to the lender’s underwriter for a decision. if it

passes underwriting requirements, the lender then funds the loan and the broker moves on to another, often local, customer. This is small business with a local appeal at its best, and the broker/lender relationship has been going on since the dawn of the mortgage industry.

When a loan is not acquired through a broker, lenders then perform the necessary origination functions in-house, taking over the job of the broker. This is called retail origination. The vast majority of lenders in the reverse mortgage space only originate loans through their retail channel. in this case, the lender is performing the broker functions and also the lending functions. in either case, the incentives are remarkably similar.

Big banks operate in a similar manner, with the possible addition of a few more mortgage banking functions after the loan has been funded. in her article, Ms. silver-greenberg writes of a “mortgage broker from Wells Fargo,” which is, of course, incorrect, as brokers are independent and therefore not considered employees of any major bank or lender. (For the record, i’ve seen this error twice in broker-bashing articles this year.) But for convenience’s sake, and since most of the bashing is against the broker,

let’s just lump the lenders into one category, which we’ll call “lenders.”

When a loan is originated by a lender without the help of a broker, the lender then earns the compensation that would otherwise go to the broker as well as the commission it earns for handling the lending aspect of the transaction. herein lies the crux of my argument against the misuse of the term broker: The lender is incentivized in virtually the same manner as the broker, however they earn more per loan. if you’re speaking about brokers and lenders, it is thus disingenuous to write, “Brokers earn higher fees on these loans and even more money when they sell the loans into the secondary market,” because lenders, and not brokers, sell the loans to the secondary market, and they are the ones who earn higher fees. in a sense though, i can’t really blame Ms. silver-greenberg, as the majority of writing on this subject, including the cFPB’s report, generally says the same thing that she did.

Ms. silver-greenberg ends the article by again calling out brokers whom she claims “steer seniors toward lump-sum loans, which carry a fixed interest rate.” What she fails to realize, as many who have opined on this subject do, is that almost everyone (including many seniors) hate adjustable-rate mortgages. seniors are generally terrified of the uncertainty of these mortgages. Most reverse mortgage customers not only demand low, fixed-rate reverse mortgages, they also think we originators are trying to rip them off if we mention the adjustable-rate reverse mortgage. Remember, these seniors lived through the mortgage world that existed in the ‘70s and ‘80s, where interest rates reached dizzying heights at 18 or 19 percent. To them, the possibility of the adjustable rate reaching its maximum of 10 percent higher than the initial rate is terrifying. Many seniors opt for lower fixed rates or lower draws in an effort to preserve at least a little of their long-term equity.

Furthermore, the author states that lump-sum loans are up 70 percent today from 3 percent in 2008, insinuating that mortgage brokers have caused this tremendous change. But she fails to mention that the fixed-rate reverse mortgage was only just introduced in 2008, and it had a much higher rate then than it does now.

Working with an admittedly limited data set, the august 2012 hecM endorsements as reported by hud show that brokers originated a higher percentage of aRM reverse mortgages in that month than the industry as a whole, that being 28.1 percent compared to the industry average of 24.7 percent. To reach this number, one must extract the number of brokered loans that were originated by licensed lenders through sponsored “broker” relationships with other licensed lenders (basically lenders acting as brokers). While more data is clearly needed to substantiate this phenomenon, the takeaway here is that while brokers are being blamed for steering clients toward fixed rates, recent data shows the opposite appears to be the case.

every lender and broker therefore has the same basic incentive structure, and instead of pointing a finger at one group or another, the industry as a whole can and should do a better job of making sure each client gets the best reverse mortgage for his or her situation.

it’s a shame that a newspaper with such a good name like The New York Times would print a hack job such as this. We can thank the good Mortgage Professor for his defense of reverse mortgages and we can only hope that next time there won’t be so much misinformation. Who knows, maybe the next article will be about a smaller, independent mortgage company that saved a local senior from foreclosure. But that will probably be lost with all of the other feel-good stories, somewhere in the middle of the “good news” section. Wait, they don’t even have that… x

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“...the author states that lump-sum loans are up 70 percent today from 3 percent in 2008, insinuating that mortgage broKers have caused this tremendous change. but she fails to mention that the fixed-rate reverse mortgage was only just introduced in 2008, and it had a much higher rate then than it does now.

| TRR24


oriGinatinG

aving managed and trained hundreds of loan officers over the past 10 years, i

have seen it all. i’ve seen brand-new loan officers have a killer year and seasoned ones strike out, regardless of the market. i have seen the entire spectrum of style from members of my team and have learned many things from each of them, from both their successes and their challenges.

While each loan officer has his or her own technique and style, there are a few common characteristics that are consistent among successful loan officers and distinguish them from the average performers. Top loan officers are able to close more loans and larger loans because they have learned how to do their job more efficiently and effectively than their colleagues. The good news is that most of these characteristics can be learned, and with practice, they can be implemented properly to improve your sales approach.

everyone knows that relationships matter, and personal connections are the most reliable sources for building a client base. We have all seen

relationships being cultivated over a lunch meeting, a golf outing or a night out at the ballpark. nothing beats an in-person, face-to-face meeting for establishing and solidifying a relationship.

However, for many loan officers, the relationship-building opportunities with referral sources and potential borrowers are usually limited to telephone conversations, so the importance of being able to effectively communicate by phone cannot be overstated. a top producer knows that establishing rapport is key to closing loans—and he or she knows how to embrace the borrower regardless of location. it shouldn’t matter if the borrower is sitting in the next town or on the other side of the country—top loan officers are able to develop solid relationships that can be the difference between a quick, one-time loan and a steady referral base.

deveLop a phone strateGY

Top producers have spent time fine-tuning their phone strategies. developing a phone strategy requires more than creating a script for what

you are going to say when you make contact. it is the framework that sets the tone for your responsiveness, and like building any relationship, this takes focus, organization and discipline.

taLk often

determine a frequency for touch points. Successful loan officers have figured out how to regularly check in with their prospective borrowers, even if it is just to say hello or chat about the weather. it is critical to learn how to stay in touch and find the balance between calling a prospect too often (every few days) and not often enough (every few months). even more important is recognizing that a one-size-fits-all schedule won’t work for every borrower. Learn to read your borrower and determine the right frequency for following up and staying in touch. This lets a borrower know you are still a resource even if there is no update on the loan. our job is to educate and inform, and to build a trusted relationship during this process—this is what produces results.

h

The Secrets of a Top-Tier LO JOSHuA SHEIN


oriGinatinG

taLk LonG

Top producers truly care about their borrowers. They know how to establish a personal connection and have learned that faking it simply won’t work. if you don’t honestly and genuinely care about the borrower and their needs, you will never achieve truly top-tier success. successful producers have learned that caring and understanding their borrowers’ families’ needs and situations builds trust, which translates into results and sales. get to know your borrower intimately. ask questions, take notes and listen to what they tell you. ask questions and bridge back to their comments to show that you are engaged in their answers. When you take an interest in people, they remember you, and when people remember you, it’s good for business.

keep Up BY keepinG track

Track details and personal information. When building an authentic relationship, it is important to remember the details, and the opportunity to act on those details is an impressive tool to have in your arsenal. When you are talking to a prospective borrower, make sure to take a moment to note details about your conversation. The goal is to get to know your borrower on more than a superficial level, and that takes engagement. send a personal note of greeting or make a call on special occasions, birthdays and holidays, and be sure to use cRM (customer relationship management) software to assist you in tracking this information—you will never remember it on your own, and old-school note cards just won’t fly anymore.

Make referraLs work for YoU

the BiG ask

3 Referrals from borrowers who have had a great experience are like gold. a majority of your work, getting to

a point of trust and authority, has already been established by your prior borrower. Mine your contacts for referrals. Friends, relatives and neighbors can be potential sources of your next deal, but you have to ask. asking your borrower for referrals should be a constant habit. Because they share many of the same characteristics (age, economic status and interests) as their social group, you can make contact with potential borrowers who are primed for your business.

foLLow Up

3 once you’ve made contact with a referral, you’ve made the first step to your next loan. Top loan officers are masters of following up. Whatever the results of that first conversation, it is imperative to follow up and follow through. Make a date for a second phone call, and if they need more information, make sure it’s in their hands in a timely fashion. When the time comes, make the call. if there is no further action, don’t write the potential borrower off; circumstances change all the time, and if you’ve made an effort to keep in touch, there’s a good chance you’ll successfully close a deal. Be patient but persistent; it may take six months or even a year, but the loans will come through.

keep in toUch

3 don’t stop once the loan closes. a borrower left dangling after the deal ends is likely to be a dead end. successfully maintaining your relationships with previous borrowers often results in referrals and repeat business.

patience is a virtUe

3 We live in a world of instant gratification, so it takes effort to cultivate patience. But patience is often required to make it into the top tier of loan officers, particularly with a reverse mortgage client base. Progress can be excruciatingly slow, but it will happen if the strategies i’ve outlined above are adhered to. nurture your prospective borrowers, build the foundation for relationships and eventually success will come. it is important to stay focused on the process and let the results happen organically; stick with it and give it time. it is easy to get distracted by co-workers and the latest app or new idea to close more loans. if you’re honest with yourself, take a minute and look in the mirror: are you really working at full capacity? are you focused all day, every day, while you’re at work? are you working to build your business and your career every day? When you are, it’s amazing how quickly things can fall into place.

if you already possess some of these characteristics, congratulations. however, a top producer knows that their style must continue to be developed with practice and patience. if you don’t, don’t fret. once identified, these tactics can be easily integrated into your day-to-day style and sales approach. For a loan officer, these practices can be the difference between a gratifying career and a short one. x

While each loan officer has his or her own technique and style, there are a few common characteristics that are consistent among successful loan

officers and distinguish them from the average performers. Top loan officers are able to close more loans and larger loans because they have learned how to do their job more efficiently and effectively than their colleagues.

The good news is that most of these characteristics can be learned, and with practice, they can be implemented properly to improve your sales approach.

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| TRR26


To be successful, you need more than a partner; you need an ally. Moneyhouse is committed to growing your reverse mortgage business. We o�er actual people to assist you (not automated phone menus). We are developing new marketing tools you can customize to help you secure borrowers. We also provide e�cient services to close loans fast to make you and your clients happy.

Did we mention we have some of the industry’s pioneers working at Moneyhouse, too?

ONE HOUSE.

NMLS # 169716; Corporate Office: 52 Paseo Covadonga St., San Juan, PR; Licensed by the Commissioner of Financial Institutions of Puerto Rico # IH-040. Florida Mortgage Lender License - MLD821; Oklahoma Mortgage Banker License - MB002207; Not all products and options are available in all states. Terms subject to change without notice. Copyright 2012 The Moneyhouse, Inc. All Rights Reserved

Sandy TennekoonSenior Vice President, Head of US Expansion

Gloria BetencourtAccount Executive

ONE TEAM.

ONE GOAL.


oriGinatinG

or those of you who have been in this business awhile, you’ve probably heard a senior relay

the story about how they, or a friend of theirs, took out a reverse mortgage and everything was going along fine until their reverse mortgage term payments stopped.

“how can this be?” they say. “i can’t afford to live in this home with the meager income i have from social security!” and then the inevitable statement: “Those reverse mortgages are no good and don’t offer help when you need it the most.”

When i attend senior seminars or gatherings, either as a speaker or attendee, i usually hear this story from someone who knows someone who took out a reverse mortgage. This friend can no longer afford to live in his home and has little or no equity left because of the reverse mortgage and the current market conditions. After some discussion, I typically find out that the senior was receiving term reverse mortgage payments and totally forgot that the payments would stop after a certain number of months or years. The senior grows comfortable with this extra income and does not give a second thought to the fact that someday the payment stream will end.

There was probably a very good reason for setting up this person’s reverse mortgage to distribute term rather than tenure payments, which last for as long as the senior lives in his home. Maybe they had to pay for a caregiver and did not have the funds available, or perhaps they needed a certain amount of money to meet monthly expenses. These are all very good reasons to put a term payment in place, and the ability to offer various payment options depending on a borrower’s needs is a fantastic feature of the hecM.

yes, we all know that the terms are disclosed to our senior customers several times during the origination process, and many times you get the knowing nod from your senior borrower that this is a term payment and therefore the income stream will end after a certain amount of time. But sometimes this concept does not hit home.

i often hear a multitude of reasons from a borrower as to why a term payment will work:

i will be selling my home before then.

i have an investment that is about to come through and then i won’t need the monthly income any longer.

i’m selling another property i own and i will pay off the reverse loan with the proceeds.

i am getting a renter or my son/daughter is moving back in soon and they will help with monthly expenses.

When these best-laid plans don’t materialize, the payment setup is not given a second thought because the income from the reverse is still there.

as reverse mortgage professionals, we need to listen closely to our clients’ needs and discuss with them carefully the various possibilities offered by a reverse mortgage. it would be easy to be the order taker and follow through with the type of mortgage that a customer thinks is best, but it’s important to stop and assess if they are thinking long term. What if something does not happen as they plan? That brief moment of pause and reflection may help a senior avoid a costly mistake many years down the road. suggesting a tenure payment and making plans to supplement it with investment income or retiring debit (so there are no monthly payments) could go a long way in helping a senior. you will know best once you start working with your client if there are sources of income or ways to save money that would make a tenure payment a better solution.

a percentage of your clients will only benefit from a term payment and so that is what you will end up writing, but keep your options open and look for other solutions that your client might not have considered. share your experience and education with your senior clients; you do reverse mortgages every day, but your client will do only one. one more happy, lifelong reverse mortgage customer should be our goal. x

Forgotten Terms JOSEpH cONfORTI

F

Want to see more stories like this?visit reversereview.com.

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| TRR28


elcome to TRR’s new column on marketing reverse mortgages! The scope of this column will be predicated on what you, the reader, are specifically looking for in regard to marketing hecMs, as well as topics that i believe

will help you grow your pipeline. i encourage you to contact me and let me know what you would like to read about in future issues. Let me know if you’re considering a product or service that you would like me to review before you commit your valuable time and hard-earned money. nothing irks me more than wasting time and money on something that doesn’t work. in fact, not knowing if a marketing strategy is going to perform well is one of the main reasons why people don’t try something new.

as the author of this column, i will be reaching out to various providers of marketing products and services. When feasible, i will actually use the product or service before providing a full review of its quality, ease of use and effectiveness. i will also include a comprehensive cost/benefit analysis. If something proves to be useful, I will share my results with you; i will not be reviewing anything that does not add value to your marketing program. in addition, i will try and negotiate a free trial or a discounted

Marketing 101KEvIN dELGAudIO

w

MarketinGPromoTe

purchase price from the vendor. This way, you can try it out yourself, at a reduced risk, and see if it works for you.

now, let’s move into something a little meatier: marketing, specifically reverse mortgage marketing. i won’t bore you with stories of the industry’s tarnished past. you already know about that and hopefully you weren’t part of the problem. The way i see it, 51 years after nellie young took out the very first reverse mortgage, seniors still haven’t been educated to the point where they fully understand reverse mortgages, and neither has the general public. On the flip side, consider these facts from a 2006 aaRP survey:

consUMer evaLUations were verY positive:

* 58 percent of borrowers indicated that the loan had completely met their needs, 24 percent said their needs were mostly met, and 12 percent said their needs had been partly met.

* 93 percent of borrowers reported that their reverse mortgages had had a mostly positive effect on their lives, compared with 3 percent who said the effect was mostly negative.

* 93 percent of borrowers and 75 percent of non-borrowers reported that they were satisfied with their experiences with lenders.

so the question remains: if the vast majority of reverse mortgagors are pleased with their reverse mortgage experience, why is there still such a hurdle in convincing seniors to take one out, or to even consider it?

The reason is a very simple fact: We, the industry, have done a very poor job of educating the public. i think we all tend to get wrapped up

Meet tRR’s neW MaRketIng coluMnIst,

kevIn DelgauDIo.


MarketinG

in the short-term view of commissions and profits versus the bigger picture of mass-market acceptance. We need to leave our used car salesman’s plaid jackets at home for the next few years and truly educate the public through our combined marketing efforts. That starts with each and every loan officer and continues with lenders, and even more importantly and appropriately, with our trade associations. We need to debunk the myths and lies that have proliferated in this industry.

The proverbial ball has been dropped and we all need to do our part in turning things around— 79,000,000 baby boomers will turn 62 between 2008 and 2026. That’s a huge window of opportunity for all of us! The entire industry needs to put more emphasis on educating the public and our seniors rather than just “selling” to them. Just think for a moment what it would be like if reverse mortgages had the same marketplace acceptance as forward mortgages do. it boggles the mind, doesn’t it? i know it boggles mine!

So how do we do it? I am officially claiming to have coined the term “educational marketing.” (yes, you read it here first!) What exactly is educational marketing? Think of it as marketing that is geared more toward educating the prospect than selling to the prospect. I am a firm believer in spending my valuable time selling only to those who have raised their hand and said they were interested. it is the job of marketing to get more people to raise their hands. We need to target our marketing more efficiently to reach that goal. I’m reminded of an old tag line for a discount designer clothing store here in new york. it said, “an educated consumer is our best customer,” and that phrase couldn’t apply more to our industry.

our collective marketing efforts must debunk the myths and lies believed by

the general public. i was discussing a family friend’s circumstances with my 74-year-old mother recently. The woman we were speaking about is 75, has been a widow for decades and has struggled financially for most of that time. I suggested that she tell her friend to speak to me about a reverse mortgage and Mom replied, “yes, but i don’t think she’ll want to do it because the bank will own her home.” My own mother! That was when it hit me: as an industry, we really need to start educating the public and there is no better time than now.

so, as this column moves forward, i will emphasize educational marketing as much as possible, for i sincerely believe therein lies the future success of our industry.

as a reverse mortgage professional, you must realize that you don’t have to be the best loan officer or lender to be wildly successful, but you do have to be a great marketer of reverse mortgages! you can be the most organized; you can know every rule, guideline and regulation; and you can have the fanciest office, but if you don’t have a pipeline of interested and qualified prospects, nothing else really matters. That is what marketing is all about.

Marketing must become your most important priority if you plan on being successful, and education is the key to that success. i strongly suggest that we all do a comprehensive review of our marketing efforts and strategically plan to educate the public, and our seniors, in the upcoming year. good luck and good marketing! x

Have a marketing question or a product you’d like us to investigate? Please email your comments and suggestions to kevin at [email protected].

79,000,000 BaBY

BooMers WIll TURN

62 beTWeeN 2008 ANd 2026. ThAT’s A hUGe

WINdOW OF OPPORTUNITY

FOR All OF Us!

AccORdING TO KEvIN

We, the industry, have done a very poor job of educating the public. I think we all tend to get wrapped up in the short-term view of commissions and profits versus the bigger picture of mass-market acceptance.

You don’t have to be the best

loan officer or lender

to be wildly successful, but you do

have to be a great marketer

of reverse mortgages!

@

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| TRR30


techProTecT

he agency responsible for improving online security for EU financial institutions

recently warned banks to “assume that all of your customers’ Pcs are infected.” The european network and information security agency, working for the eu institutions and Member states, delivered its warning in response to the recent “high Roller” cyberthefts that were reported by security firms Mcafee and guardian analytics.

The high Roller Report described a series of highly automated cyberattacks targeting high-balance accounts (hence the name “high Roller”) using customized spyeye and zeus malware. The attacks began in europe and spread to Latin america and the united states. according to the report, cyberthieves

attempted to steal at least $78 million in fraudulent online transfers from accounts at more than 60 financial institutions.

The u.s. victims were all companies with commercial accounts that typically held a minimum balance of several million dollars. companies, unlike consumers, are not protected when online financial fraud occurs. For consumers, federal banking regulations limit liability for cyberfraud, but there are no such protections for commercial accounts.

The high Roller victims were found through online reconnaissance and targeted spear-phishing emails to individuals or businesses that banked with specific financial institutions.

Phishing is a method of email fraud in which the perpetrator sends out legitimate-looking emails in an attempt to gather personal and financial information from recipients. generally, phishing emails come from what appear to be well-known and trusted websites like eBay or PayPal. i’m sure that many readers have received such emails and have learned to be suspicious of unexpected requests for confidential information, and do not divulge personal data in response to these types of general phishing email messages.

however, a spear-phishing attack is a different story. Those emails are likely to be from what appears to be a trusted source, like someone within the recipient’s company who is in a position of authority. cyberthieves

Is Your Bank Account Safe From Cybertheft? ALExANdER J. cHAudHRY

t

GOING TO The sOURCe

Cyberthieves conduct reconnaissance and social engineering, often through social media sites like Facebook and Twitter, to obtain information to bolster the legitimacy of the spear-phishing email. spear-phishing is often successful because the apparent source of the email is likely to be a known and trusted individual, there is information within the message that supports its validity, and the request the email/individual makes seems to have a logical basis to the recipient.

YoU think YoU can’t Be dUped, BUt

keep in Mind that MaLware Botnets

have enaBLed the theft of More

than $100 MiLLion froM onLine

victiMs since 2007.

ACCORdING TO AlexANdeR


conduct reconnaissance and social engineering, often through social media sites like Facebook and Twitter, to obtain information to bolster the legitimacy of the spear-phishing email. spear-phishing is often successful because the apparent source of the email is likely to be a known and trusted individual, there is information within the message that supports its validity, and the request the email/individual makes seems to have a logical basis to the recipient.

according to security experts, employee awareness is your best defense against being duped into disclosing online banking credentials to cybercriminals. Businesses should explain to all employees that they should never respond to an incoming message requesting private information and should never click on a link sent in an email from a dubious source. Businesses should also establish specific guidelines for employees who use social media sites to make clear what topics and details about the company can be discussed in a public forum.

employee awareness, however, will not completely insulate a company from cyberfraud, as many computers are already infected. according to a federal complaint filed by Microsoft, it has detected more than 13 million suspected infections of malware worldwide, with more than 3 million infections in the united states. Businesses cannot rely on antivirus software to determine if their machines are infected as the zeus malware is detected only 23 percent of the time by the most up-to-date antivirus software.

according to the high Roller Report, fraud prevention solutions like anomaly detection have proved effective. often, cybercrooks’ behavior can be detected

because they do something different from the legitimate, routine behavior of the actual account holder. For instance, your business may only initiate domestic wire transfers, but a cyberthief might attempt to initiate multiple international transfers, which will appear out of the ordinary compared to your usual online activity. The basic idea of anomaly detection is to monitor the online banking activity of each account holder from login to logout and compare it to established legitimate patterns. any action or transaction that seems out of the ordinary is suspicious and alerts the bank to a potential threat. The Federal Financial institutions examination council (FFiec) highlighted the effectiveness of anomaly detection in preventing banking fraud when it included anomaly detection as a minimum expectation for a layered security approach in its 2011 guidance supplement. unfortunately, not all banks currently meet these minimum guidelines.

Therefore, at a bare minimum, businesses should determine if their financial institutions comply with the FFiec guidance and employ anomaly detection measures. if your bank cannot provide sufficient assurance of such monitoring, you should seriously consider moving your accounts to an institution that offers more robust protection. you think you can’t be duped, but keep in mind that malware botnets have enabled the theft of more than $100 million from online victims since 2007.

Look for a future article about how you can secure your company’s online banking platform. x

To stay up to date on the latest developments on the fight against cybercrime, follow these excellent resources on Twitter:

cybersecurity blogger Brian krebs @briankrebs andthe Microsoft digital crimes Unit @MicrosoftdcU

tech

ggg

8

fRankhowaRd

a good loan officer will order

a title examination prior to taking a loan application to ensure that there are no unknown liens or mortgages of record. A title examination can reveal a variety of problems, such as unreleased trusts of record, judgments, an undisclosed co-owner, security agreements that were filed for products purchased or home improvements that were unknown to the owner. discovering such details early on in the loan process can prevent major holdups or may indicate that the transaction can’t proceed, which would save the customer the cost of appraisal. most incidences can be cured, but it makes sense to know in advance that there may be a potential problem. Having a good title company is a lifeline in this business.

have a question for this column? email [email protected].

FIND US ON:FACEBOOK AND

LINKEDIN

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| TRR32



UnderwritinGLeArn

have recently noticed increased market discussion about the causes and effects of various

changes in hecM production levels. The opinions out there seem to vary in regard to the significance of these events and how they will shape our market. Perhaps one of the most interesting aspects of this discussion is related to the idea that an increase in underwriting denials could be a contributing factor to reduced pull-through and endorsement rates.

i think this situation invokes the old chicken-and-egg question: While i concur that underwriting is a contributing factor to lower production levels, i am not so sure that it directly caused this noted drop in production. it left me to wonder: Which came first?

the Borrower pooL expands

There is no doubt that the hecM product is maturing. Longer life expectancies and the growing number of baby boomers are increasing the number of eligible reverse mortgage borrowers. Previously, forecast statistics suggested that only 2 percent of eligible borrowers have engaged the product; this is bound to change soon.

Market indicators suggest that the product’s maturity, coupled with changes in senior financial stability profiles and property value fluctuation, have negated the previous assumption that the hecM is a niche product for

desperate borrowers. The result of this analysis supports the idea that there is a much broader pool of potential borrowers. additionally, it appears that this increased number of potential borrowers has been fueled through consumer education efforts, increased lender participation, secondary market product confidence and increased consumer acceptance.

While the basic tenants and guidelines for the hecM program have remained the same, recent events and new data have certainly influenced lenders and hud to increase additional safeguards for potential borrowers, and they have done so by issuing further guidance and clarification.

an increase in UnderwritinG deniaLs

When addressing the chicken-and-egg question, we need to examine if this increase in underwriting denials is a reaction to changes in our workforce preparedness, meaning that it’s a reflection of our inability to adequately pre-qualify and originate eligible borrower loans.

Media reports of lenders building large retail origination forces and wholesale relationships raise a concern. Previously, a large part of product training, knowledge and skills was delivered to the workforce by large bank and financial services institutions. The deep pockets of these companies allowed the focus to be on development of the workforce and provided for a considerable portion of in-depth product and program education, training and development.

With the exit of many of these larger entities, does the movement of once second-tier lender companies to primary spots mean that we will lose the resources needed to develop a qualified workforce? Based on

the immediate and long-term costs involved in expanding market share, are training and education needs getting lost in the shuffle? Is this contributing to the increase in underwriting denials?

Rapidly growing loan volume in a competitive market is a common business strategy employed to offset the costs of expansion. When this is a company’s focus, it’s difficult to step back and consider infusing additional capital upfront to address all of the costs associated with strategy implementation— including workforce development. This could be the root of the problem.

the chicken or the eGG?

Regrettably, i believe a more granular analysis of underwriting denial factors will reveal loan eligibility and quality flaws in the loan origination process, and it will indicate that flawed aspects of a loan file are ignored, left instead to be remedied in underwriting. My sense is there will be a connection between increased underwriting denials and a lack of skill and knowledge among members of the workforce, which prevents them from adequately identifying eligible borrowers.

in taking the volume approach and ramping large sales and operations forces quickly, are we pushing files too far through the system before a decision is made due to the inability to recognize file issues upfront? My vote is yes.

in conclusion, the age-old question doesn’t tell us whether the chicken or the egg came first, but when it comes to reverse mortgage underwriting, i can tell you that i believe that a lack of proper workforce training led to the increase in underwriting denials that we are seeing in the market today. x

The Concern Over Underwriting Denials RALpH ROSYNEK

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| TRR34


he last few years haven’t been easy for

the mortgage industry. declining home values, record foreclosures, regulation and tighter lender requirements have conspired to make recovery a tedious and painful process. The truth is, the reverse mortgage industry might need to prepare for another agonizing shock as the bill comes due on more than half a million estimated reverse mortgages.

Reverse mortgage lenders are, of course, banking on the fact that while a property’s equity is depleting, there will still

be enough leftover equity to prevent the home from becoming upside down. With the near-term prospects of very slow equity building, the likelihood of building an equity cushion declines.

Let’s think about the cold, hard truth.While reverse mortgages fill a critical role in providing access to a borrower’s equity, it’s essential that the originator engage the homeowner in maintaining pride in ownership. Many borrowers take just enough out to supplement their income, and that leaves very little for repairs and renovations.

and, unless the lender specified that some of the loan must be put toward repairs, it’s likely that the property will have little or no capital improvements over the life of the reverse mortgage.

servicers add vaLUe

in a healthy market, even fixer-uppers can hold their value. unfortunately, in today’s market, that isn’t the case. Reverse mortgage servicers provide a critical role by helping the lender understand asset value and risk. This means more than determining the appropriate market price using automated

Valuation Models (aVMs) and Broker Price opinions (BPos), but really assessing potential neglect and repairs that will inevitably fall on the shoulders of the lender as properties turn to distressed assets. in a weak market, this could potentially become a double hit. Little equity and a large repair bill can easily put a home underwater overnight.

as of right now, it doesn’t seem to be an issue for servicers who are using reimbursements from hud and gses to perform valuation services. everyone’s eyes are on the valuation ball

Conquering Reverse Mortgage Decline and Preparing for the FutureBILL MOHLER

appraisinGvALUe

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The truth is, the reverse mortgage industry might need to prepare for another agonizing shock as the bill comes due on more than half a million estimated reverse mortgages.

going to the source


and not enough attention is being paid to repair and renovation risks. you may be wondering, how do i know this and why is it happening? i’ve seen BPos from nearly every valuation provider in the industry. Most still use the Fannie Mae form and have done little to enhance the information provided in the inspection. not only are most inspections exterior only, agents are also provided minimal guidance as to what is expected in regard to repairs. independent property inspectors can help bridge the gap, but they offer little or no insight into what repairs are actually required to market the property.

Let’s face the facts: The truth is there is no easy answer, and as valuation subsidies decline, it’s even likelier that lenders will have even less

information about the subject property. For reverse lenders with stipulations in the loan about property maintenance, if they haven’t been effectively tracking repairs, what do you do once the borrower is deceased?

here’s what i recoMMend as a potentiaL soLUtion:

3 first: every lender or servicer needs to do a better job of collecting repairs and maintenance. i’m nearly certain that Jiffy Lube knows more about how often i need to change the oil in my car than lenders know about what is expected for a property.

3 3 second: Track marketability. even if the house has no major structural damage, 20 years of no renovations can leave a property uncompetitive in the market. in the end, the goal will be to find

a buyer and maximize the sale price.

3 3 3 third Follow the trends. The best way to predict the future is to collect data to determine trends. everyone knows how to do that in terms of market price or value. But the tools currently employed do not allow us to adequately assess a loan portfolio and determine future repair costs.

a couple of weeks ago we actually had an agent turn in a BPo with a value of $1. When asked, they said it would be better to bulldoze and start over. From a valuation perspective, that’s definitely something you do not want in your reverse mortgage portfolio. collecting repairs, tracking marketability and following trends will only help increase our chances of reversing the decline of the reverse mortgage industry. x

appraisinG

H

A nationwide title and settlement company servicing

the reverse mortgage industry.

Our dedicated team of professionals has the experience and knowledge to smoothly close reverse transactions. Through years of experience, FNC has gained valuable knowledge by building strong relationships with reverse mortgage lenders and brokers, as well as the borrowers we service. We firmly believe that our clients deserve the

best treatment, and that is why FNC is where reverse mortgages take center stage.

240-864-4844 fnctitle.com

A BEttEr choicE!

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AccORdING TO BILL

as of riGht now, it doesn’t seeM to Be an issUe for servicers who are UsinG

reiMBUrseMents froM hUd and

Gsesto perforM vaLUationservices.

everYone’s eYes are on the vaLUation BaLL

and not enoUGh attention

is BeinG paid to repair

and renovation risks.

K

| TRR36



e knew it would come and now it is here—or at least it has begun. congress

passed the dodd-Frank act more than two years ago, enacting the consumer Financial Protection act that gave rise to the CFPB, and making significant changes to the federal Truth-in-Lending act (TiLa) and the Real estate settlement Procedures act (ResPa) as part of its mission to reform the mortgage industry.

since the bureau came into existence on July 21, 2011, it has been busy staffing up, issuing examination guidelines, examining financial institutions (including nonbank mortgage lenders), engaging in enforcement actions (mostly against credit card companies thus far) and writing regulations. This summer, the bureau issued six significant regulatory proposals. This article outlines two of those proposed rules, assessing their potential impact on the reverse mortgage industry and describing the industry’s response.

inteGrated discLosUre proposaL

section 1032 of the dodd-Frank act required the bureau to craft, in one year’s time, a proposal to combine ResPa and TiLa disclosures into one set of unified disclosures. This is the so-called “know Before you owe” (kByo) effort that the bureau has been experimenting with since the summer of 2011 through an informal outreach to industry and consumer advocates. This past July, the bureau published the integrated disclosure Rule, which suggests ResPa and TiLa mortgage

origination disclosures be combined and require an “all in” finance charge.

importantly, the bureau said it would exempt reverse mortgages from the integrated disclosure proposal, stating that it will instead implement a specific rule for reverse mortgages at a later date. The bureau said that in the meantime, reverse mortgage lenders should continue to use the current TiLa and ResPa disclosures. What this means is, if an integrated disclosure rule is finalized, those lenders that make both forward and reverse mortgages will have to maintain two sets of loan origination systems and loan documentation sets, and perhaps two servicing boarding systems.

under the integrated disclosure proposal, a “Loan estimate” will take the place of the gFe, and a “closing disclosure” will take the place of the hud-1 settlement statement. other changes made by the dodd-Frank act require additional disclosures (the affected Title XiV disclosures).

The bureau has requested industry feedback on effective dates for the implementation of these disclosures. other disclosures will become effective without delay on January 21, 2013 (including the disclosure regarding the reset of hybrid aRM loans, the loan originator identifier requirement, the disclosure regarding waiver of escrow after consummation, the consumer notification regarding appraisals for high-risk mortgages and the consumer notification regarding the right to receive a copy of an appraisal).

The loan originator identifier requirement on loan documents, and the consumer notification regarding the right to receive a copy of an appraisal, will affect reverse mortgages. We expect final rules to be put into place for these items by January 21, 2013, and lenders and systems providers should start preparations now to comply with these two items.

The “all in” finance charge and other concepts in the integrated disclosure proposal that deal with the aPR, points and fees will impact qualified mortgages, higher-priced mortgages and high-cost home loans. The bureau also proposed a new definition of a “transaction coverage rate,” which would be used in lieu of an aPR to determine high-cost home loan triggers, and perhaps be used for other loan classifications with APR and/or points and fees triggers (higher risk and qualified mortgages). However, these items would be forward-mortgage specific.

effective dates

The affected Title XiV disclosures provisions are set to take effect on January 21, 2013, unless the bureau finalizes regulations and establishes a delayed date, which can be no later than January 21, 2014. The kByo effort is mandated under Title X of the dodd-Frank act, not Title XiV. The bureau has asked for comments on effective dates for implementing the affected Title XiV disclosures in light of the fact that the KBYO proposal will not be finalized before January 21, 2013. The bureau states that it plans to issue final 8

Proposed Rules by the CFPB Promise Changes for Reverse Mortgage LendersJIM MILANO

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LeGaL

rules on the kByo integrated disclosure later in 2013.

some of the affected Title XiV disclosures will affect reverse mortgages. nRMLa requested that the bureau delay the mandatory compliance date of the affected Title XiV disclosures, as they might impact reverse mortgages, until the bureau can both finalize the KBYO Integrated Disclosure and finalize a reverse mortgage rule. indeed, the bureau solicited comments on whether the final Integrated Disclosures rule should put into effect the affected Title XiV disclosures for reverse mortgages, as applicable, by requiring creditors to comply with the proposed provisions that involve those disclosure requirements.

note that the affected titLe xiv

discLosUres incLUde:

1 | Warning regarding negative amortization features

2 | Disclosure of state law anti-deficiency protections

3 | disclosure regarding creditor’s partial payment policy

4 | disclosure regarding mandatory escrow accounts

5 | disclosure regarding waiver of escrow at consummation

6 | disclosure of monthly payment, including escrow, at initial and fully indexed rate for variable-rate transactions

7 | repayment analysis disclosure to include amount of escrow payments for taxes and insurance

8 | disclosure of settlement charges and fees and the approximate amount of the wholesale rate of funds

9 | disclosure of mortgage originator fees

10 | disclosure of total interest as a percentage of principal

11 | optional disclosure of appraisal management company fee

BeLow are nrMLa’s coMMents on

the affected titLe xiv discLosUres:

(i) Dodd-Frank Act specifically exempted reverse mortgages from some of these disclosures.

(ii) Most of the remaining disclosures would not apply to reverse mortgages.

(iii) The bureau should delay implementing a mandatory compliance date with the remainder of the Affected Title XIV Disclosures until it finalizes a KBYO rule for forward mortgages and finalizes a reverse mortgage rule (which we do not expect to happen until sometime in 2013).

NRMLA’s comment letters on the bureau’s proposals can be found in the Members section on NRMLA’s website, http://nrmlaonline.org/.

hoepa

The dodd-Frank act amended the hoePa provisions under TiLa to expand the coverage of high-cost home loans by lowering the aPR and the points and fees threshold, as well as removing the exemption from hoePa for purchase money loans and heLocs. The hoePa Proposal continues to exempt reverse mortgages from the TiLa high-cost home loan rule. however, the hoePa Proposal implements dodd-Frank act changes, which require pre-loan counseling disclosures of hud-approved counselors for all loan applicants, and pre-loan counseling sessions by HUD-approved counselors for first-time homebuyers and all consumers receiving high-cost home loans, as well as new pre-loan counseling disclosure for all mortgage applicants.

The hoePa Proposal states that it would not require a lender to provide a hecM applicant with the list of counselors required under the proposed rule if the lender is otherwise required by hud to provide such a list. nRMLa requested the bureau fully exempt hecM loans from hoePa

counseling disclosure requirements. as it is currently proposed, a lender that does not meet hecM counseling disclosure requirements would also have a hoePa violation on its hands. however, nRMLa did request that proprietary reverse mortgage lenders should be deemed to have met the hoePa Proposal counseling disclosure requirement if it follows hecM counseling disclosure rules.

The hoePa Proposal also discusses that state housing finance agencies may qualify as counselors for high-cost home loan borrower counseling and first-time homebuyers using loans with negative amortization. The hoePa Proposal also discusses that hud may soon begin approving individual counselors (in addition to counseling agencies) and that such broader approvals will help

add resources to forward mortgage counseling needs. also, the

proposal states that creditors may pay for counseling for these types of sessions, but acknowledges that this is

prohibited by hecM rules for reverse mortgage lending. This

conceivably could create a bit of “channel” conflict for lenders that offer both forward and reverse mortgages. nRMLa commented on these issues and asked the bureau to coordinate and cooperate with hud in order to ensure that “un-funded” mandates of such additional required counseling for the forward mortgage industry did not crowd out available hud-approved counselors for reverse mortgage counseling, and so that lenders could continue to operate with counselors under the hoePa rule as proposed without violating hud hecM rules.

We are in a tsunami and rip current of regulatory change that, over the next few months, will impact and shape the mortgage industry, including the reverse mortgage industry, for years to come. Stay tuned, and stay afloat! xThis article is based on the personal views of Jim Milano and does not represent the views or opinions of the law firm of Weiner Brodsky Sidman Kider PC, or its clients.

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Spreads Tighten Amid Constant ChangedARREN STuMBERGER

ith fixed-rate spreads tighter on the order of 50 basis points, the hMBs market

has reached all-time tights in spread and dollar price. The previous tights were set in late spring 2010 after we saw fixed spreads tighten from 120 to swaps to 60 from december to april. Currently, new issue fixed-rate HMBS trades at 55 to swaps for corporate settlement. Floating-rate hMBs has tightened 30 basis points, also reaching all-time tight levels.

There are several reasons for the tightening trend, but the primary reason is the announcement of the third round of quantitative easing (Qe3) by the Fed (not including operation Twist). With the Fed buying roughly 70 percent of newly originated forward mortgages, spreads on forward mortgage products have tightened dramatically. generally, in mortgage products investors analyze the amount of spread they will earn over the risk-free rate by valuing the embedded prepayment option. currently, coupon forward mortgages have a negative 50 basis point (prepayment adjusted) spread!

As we know in HECMs, refinances due to rate movement are few and far between, so when we quote fixed-rate hMBs spreads at 55, we consider that the nominal spread. however, because there is generally muted unscheduled prepayment activity, we typically assume the nominal spread is roughly the same as the prepayment adjusted spread. so, in this example, there is roughly a 100 basis point pickup in hMBs versus forward mortgages. it should be noted that other, more liquid asset classes, such as agency cMos and agency cMBs, have also tightened and hMBs still trades

cheap compared to these competing alternatives. The future of Qe3 is very much uncertain as chairman Bernanke’s future is uncertain and depends in large part on the nov. 6 election.

another driver of spread tightening has been what we like to call the structured or cMo bid. hReMic issuance picked up substantially over the summer and through the fall, and while close to 100 percent of floating-rate HMBS is structured into a par-priced floater and interest-only class, an increasing amount of fixed-rate hMBs is being structured now. We saw a similar trend in 2010 when dollar prices rose to record levels and lower-priced, fixed-rate bonds were created with interest-only classes. new structures are being formed to tailor offerings to new investor preferences and a good portion of the recent tightening can be attributed to this development. aside from newly originated hecMs being securitized and sold into the marketplace, there has been a perk up of secondary bonds trading (several hundred million weekly). With more than 40 billion of paper outstanding, it’s natural to see money managers, hedge funds and banks take profits after a run-up in prices like this.

aside from day-to-day market action, there are several themes that will dictate where we are headed in this industry. The accounting (true sale) issue plaguing issuers remains a huge concern with a fairly uncertain outcome. a best-case scenario would be minor program changes and some re-working of the legal documents to pacify the Big Four accounting firms and the SEC. There are program changes being contemplated by Fha

(as communicated by Fha members at the recent nRMLa conference). There seems to be a clear objective to reduce the amount of fixed-rate standard loans being originated. What the end result and industry volumes will look like after these changes is anyone’s guess. a best-case scenario here would be some redirecting of fixed standard borrowers to floating-rate and saver loans with no material negative hiccup in volumes measured on a unit basis.

Financial assessment continues to be worked on with no clear implementation date set yet, and one can imagine the cFPB will increasingly focus on the sector with perhaps new rules to be implemented. news of ocwen and Walter investment corporation entering the space can be seen as positive news. With the exits of the Big Three, the entrance of larger, well-capitalized institutions in this fragile industry is very much welcomed. There should be more announcements in the upcoming months as financial institutions clearly see the value proposition in offering the hecM to seniors and the growth prospects of the marketplace. The origination and issuance landscape will continue to evolve in this very interesting time for the industry, but a primary question i have is what or who will begin to drive penetration rates higher among the borrower base. i entered this industry in 2006 and penetration rates were roughly 1 percent. almost seven years later we are at maybe 2 percent, and one can make the argument that fewer loans will be made in the near to intermediate term. as i’ve said in this column, the only constant in this industry is change. i would welcome a change in market penetration rates and would hope our trade organizations and origination community would be proactive in delivering fact-based, positive messages to media outlets and decision-makers in Washington. x

w

secondarY MarketHmbS

Want to see more stories like this?visit reversereview.com.

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spotLiGht articLehoW the hecM WIll faRe In the Wake of the electIon

nov./dec.

edition

narrowly divided electorate has spoken and it appears that, for the most part, the status quo in Washington has been maintained. The 2012 house and senate elections brought

more than 80 new members to Washington, but the house will remain under the control of the Republicans while the senate will continue to be dominated by a democrat majority.

For some in the industry, President obama’s re-election has dashed hopes of getting a technical corrections bill on the table to address what many believe to be onerous provisions of the dodd-Frank act. it has also dramatically slowed down the possibility of restructuring the cFPB.

For others, a democratic administration and a democratic senate promise continued support for the program. With this in place, we are likely to see support for hecM counseling remain as strong as it was in 2012. The key, however, will continue to be garnering support

for counseling appropriations from house Republicans, something that has been a primary mission for cis.

Personal politics aside, the new order in Washington will be in charge of instituting anticipated change to the industry in the coming year. it’s still unclear what these changes may be, but a closer look at the legislative climate post-election may help shed some light on what lies ahead for the hecM in 2013.

the conGressionaL aGenda

The most immediate challenge facing both the White House and Congress is the so-called “fiscal cliff”—the december 31 expiration of the Bush-era tax cuts, the payroll tax cut and the automatic implementation of mandatory, across-the-board cuts in federal spending (the “sequester”).

There will probably not be enough time to come to a long-term bargain on tax reforms and spending reductions. The most likely scenario is a short-term deal to avoid a tax hike and the implementation of steps to reduce federal spending come January 1. But even that is not a given. What is certain is that congress will be consumed with these issues during the lame-duck session.

on the spending side, the president will likely be more willing than congressional democrats to accept steep cuts in domestic spending if he can get Republicans to agree to a tax reform plan that results in more net revenues. But that is a big “if.”

While these negotiations go on, look for the house to embark on efforts to repeal parts of the dodd-Frank act, more investigations of the botched “Fast and Furious” gun-running scam, additional hearings on Benghazi and possible plans to reform entitlement programs. Most of those efforts will die in the democrat-controlled senate.

as for the annual appropriations process, what congress does on the 12 appropriation bills to fund the federal government (which have to be passed and signed into law by september 30) will depend largely on the negotiations surrounding the grand bargain. That will be the blueprint congress will use. if an agreement cannot be reached, then look for the Republican-controlled house appropriations committee to start passing its own version of the 12 spending bills in late spring/early summer based on the severe constraints of the sequester and/or a budget resolution approved by the Republican-controlled house Budget committee. it is not likely that the senate appropriations committee

a

the LeGisLative Landscape in 2013H. West RicHaRds


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spotLiGht articLe

will move at the same pace as the house and it is also unlikely that the senate Budget committee will produce a budget resolution.

We also expect there to be continued criticism surrounding the funding of regulatory agencies and the importance of addressing housing finance reform. Indeed, both the democratic senate and the Republican house can be expected to put forth proposals to address the reform of government-sponsored enterprises (gses) and the privatization of the housing market. gses like Fannie and Freddie were not addressed in the dodd-Frank act. The Federal housing Finance agency (FhFa) and hud have also begun dedicating significant resources to the reform effort in 2013.

how much work congress gets done in 2013 will largely depend on whether or not a grand bargain can be struck between congress and the White house on taxes and spending. if a bargain can be reached, the appropriations process will go rather smoothly and we might see some bipartisan action on issues such as immigration and education. But seven weeks is not a lot of time for legislators to craft an agreement, and they may be forced to kick the can down the road and allow the new congress to tackle the cliff issue.

dodd-frank reforM

of the nearly 400 rules established under the dodd-Frank act, only about one-third have been finalized, with the rest still in the works or not yet proposed. With growing criticism over the international implications of the law, the delayed rulemaking process and potentially burdensome regulations, the 113th congress will face important questions regarding the need to make technical, and even substantial, amendments to the law.

We expect legislative activity for the financial services sector to focus on continuing the oversight

of regulatory processes that arose from dodd-Frank to ensure that regulators stay within the “intent” of the congress. a recently successful judicial challenge to the regulatory requirements may cause agencies to prolong the implementation of dodd-Frank, as they would likely seek to avoid promulgating rules that would not withstand judicial scrutiny. as has been the case with President obama’s health care law, the most serious challenges are likely to come in the courts. in fact, dodd-Frank’s opponents in the financial services industry and the broader business world have had some success: Two judges have struck down regulations to implement the law. The gravest threat to dodd-Frank may come from a lawsuit that challenges the constitutionality of its fundamental components. The architects of dodd-Frank, of course, dismiss this challenge, but some legal scholars believe that parts of the suit may indeed have merit. Time will tell.

given the narrow control of the house and the senate, it is unlikely that congress will substantially modify or repeal the dodd-Frank act. instead, legislative changes will likely focus on technical corrections that involve a clear error or in areas where the new congress believes regulators will require a clearer statement of congressional intent. Republicans will continue pushing for substantive changes to the law and may attempt to use the commodities Futures Trading commission’s (cFTc’s) reauthorization as a vehicle to make them. This will make for a contentious reauthorization process in an already divided congress, and the obama administration can be expected to strongly resist substantive dodd-Frank changes.

a shift in the hoUse financiaL services coMMittee

The committee will face significant changes in the 113th congress, with chairman spencer Bachus (R-aL) reaching his six-year term limit and Ranking Member Barney Frank (d-Ma) retiring. Rep. Jeb hensarling (R-TX) is in line to be the new chairman of the committee. he has been a big promoter of gse reform that would transition Fannie and Freddie out of conservatorship after two years and privatize them at the end of the fifth year. Rep. Maxine Waters (d-ca) is expected to take over Rep. Frank’s role as ranking member and chief democratic defender of dodd-Frank.

Rep. hensarling and Rep. Waters could not possibly be more diametrically opposed in terms of their political philosophies and personalities. This dynamic in itself will require a very sophisticated government-affairs strategy to manage industry objectives. it has the potential to be even more combative than the relationship between Bachus and Frank, and if this proves to be true, further polarization in the house Financial services committee is likely.

chanGes ahead for the hecM

at nRMLa’s october conference, hud deputy assistant secretary charles coulter acknowledged that the agency intends to implement some changes to the reverse mortgage sector. “The hecM program is a valuable product and we’re committed, but need to make changes to ensure they’re valuable over the long term,” coulter said.

coulter said he hoped to see changes take effect within the next six months, but he remained vague on precisely what those changes would be. he did specifically state, however, 8

the Most iMMediate chaLLenGe facinG Both the white hoUse and conGress is the so-caLLed “fiscaL cLiff”—the deceMBer 31 expiration of the BUsh-era tax cUts, the paYroLL tax cUt and the aUtoMatic iMpLeMentation of MandatorY, across-the-Board cUts in federaL spendinG (the “seqUester”).

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To Move Forward,Work In ReverseJoin a winning team in a growing industry

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mortgage advisor, scan the image below

or visit

www.genworth.com

© 2012 Genworth Financial Home Equity Access, Inc. 10951 White Rock Road, Suite 200, Rancho Cordova, CA 95670 • NMLS # 3313 (800) 218-1415 • For a complete list of licenses, visit: www.genworth.com/reverse/licenses W-030612

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that adjustments need to be made to the fixed-rate product, as the majority of T&i defaults are coming from seniors who are taking out larger draws at closing. The cFPB also stated its concern about the product, noting that if borrowers use most of the proceeds at a younger age, they might eventually run out of money.

There is also serious concern among regulators regarding the health of the Mutual Mortgage insurance (MMi) fund, and changes could be made to the HEMC program specifically to ensure its solvency.

house democrats will be searching for ways to increase federal involvement in the reverse mortgage industry and they will be inclined to bolster the impact and the effectiveness of the cFPB. in general, house democrats predictably support continued funding for housing counseling and senate democrats across the board

can certainly be counted on for their continued support.

Bottom line: We have a divided government and that comes with its pluses and minuses. on the one hand, you have tea party folks (and even some house Republicans) insisting on the need for the government to exit the housing industry in favor of the full privatization of the marketplace. as a result, you can, at the very least, expect a push in the house to reduce the government’s role.

on the other hand, you have many—if not a majority—of house and senate democrats insisting on the need to expand the government’s involvement in the housing market. This could lead to an increase in the government’s role in the reverse mortgage industry and heavy regulation by the cFPB.

as we contemplate all of this, it is also important to note that our next congressional elections will be in 24

months and we may see a slight shift of power in the senate. The point here is that the political landscape continues to evolve even between presidential elections. Like in 2010, midterm elections can be impactful.

Whatever shape it takes, we can expect substantial changes to be made to the hecM program in 2013. it’s important for the industry to continue to educate congress in order to ensure that politicians are aware of the value of the hecM program. if the reverse mortgage industry wants to be a part of shaping the federal legislation that governs the program, the industry must continue to have a presence on the hill. We must participate in the process. Maintaining an open channel of communication with politicians on capitol hill can increase the industry’s base of reliable political support. ultimately, this is the key to ensuring our security in the face of inevitable regulatory change. x

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The ReveRse Review november / december 2012 retirementreal estateseniorsreverse mortgagehome equityrealtorsbaby boomerslenders

selling thE hEcM

f o R P u R c h a s E

reverse mortgage

wRittEn byJ e s s i c a l i n n G u e r i n a n d

M i c h a e l b a n n e r


real estateseniorsreverse mortgagehome equityrealtorsbaby boomerslenders

thE PuRchasE aPPEal

The hecM for Purchase was established in July 2008 when the housing economic Recovery act was signed into law and the Fha was granted the authority to create this variation of the traditional reverse mortgage. a hud Mortgagee Letter followed in October that officially implemented the program.

Many characteristics of the hecM for Purchase are the same as a traditional hecM, with the same loan-to-value calculations involved, but there are some unique aspects of the transaction. For example, a borrower must move into the new home within 60 days of closing, and if they own other properties, they must make the new home their primary residence and provide verification of their personal income and funds. Purchase borrowers must have a considerable down payment in order to meet the loan-to-value ratio requirements.

The premise of the hecM for Purchase—or h4P, as some call it—makes sense for seniors facing a common transition in their retirement years. as a special-purpose loan, it’s designed to accommodate a specific borrower, one who wants to buy a new principal residence and obtain a reverse mortgage in a single transaction. By selecting this option, the borrower can accomplish both tasks at once with only one set of settlement costs, effectively streamlining the process.

a slow staRt

The Purchase product has been slow to catch on. In 2009, its first full year in action, the h4P comprised just 560 of the 114,691 hecMs closed. in 2010, as more people became familiar with the option, this number more than doubled to 1,389, with most of the loans closing in california, Florida and arizona. The percentage of Purchase versus standard or saver hecMs is minimal. according to the cFPB, Purchase loans comprised just 1.8 percent of all hecMs 8

The Hecm for Purchase allows seniors to finance a portion of a new home using

a reverse mortgage. it can be a valuable tool for someone who is looking to downsize or move closer to relatives, but who has limited funds to support this transition.

in light of the dismal statistics regarding the boomer generation’s lack of retirement security, the hecM for Purchase has considerable potential and could thrive as a useful product for those who want to maintain liquidity and still purchase a new home. But despite the obvious appeal of a product that allows you to do this without taking on a monthly mortgage payment, sales of the seemingly promising product have waned, with industrywide numbers trickling downward and settling in a rather disappointing slump.

still, reverse professionals remain hopeful about the product’s potential, and many say they believe that with a focus on education and a little elbow grease, the Purchase product can become more dominant in the hecM marketplace.

how educatinGREaltoRs can

ElEvatEthis niche product

b Y J e s s i c a l i n n G u e r i n

we think lenders will eventually see a lot more success with the product and continue to believe it can double or triple the current hecM volume, but it will take time for lenders to establish the right distribution channels and work with a whole new set of partners for this to work.

| TRR48


originated in fiscal year 2010, a number that rose only slightly the following year to 2.3 percent.

The numbers are disappointing to many in the industry who believe the product could help thousands of struggling seniors across the country. at a Texas Mortgage Bankers association conference last year, John Lunde of Reverse Market insight (RMi) estimated the potential Purchase market to be roughly 70,000 seniors annually, considering statistics on senior homeownership and relocation, and factoring in the existence of other mortgage options.

so why is h4P voluME so low?

For starters, the recent exit of big banks from the reverse mortgage industry hasn’t helped any. Wells Fargo, Bank of america and MetLife once topped the charts with the highest hecM for Purchase volume, and all three have left the reverse space in the past two years. since then, security one Lending and cherry creek have picked up the slack, but neither has been able to achieve the numbers we saw the big banks bring in.

“We have seen a few big success stories,” Lunde said, “but nationally we’ve been disappointed by the low volumes.” still, Lunde said he and his team at RMi remain hopeful that lenders will learn to better market the product to a wide base of potential consumers. “we think lenders will eventually see a lot more success with the product and continue to believe it can double or triple the current hecm volume, but it will take time for lenders to establish the right distribution channels and work with a whole new set of partners for this to work. builders, developers and realtors have been almost nonexistent in the hecm market before purchase was introduced, so most lenders weren’t set up to address the purchase opportunity when it was announced.”

Education and outREach

indeed, some lenders have caught on, learning to successfully sell the product by connecting with Realtors and developers. one notable success story comes out of st. george, utah, where cherry creek Mortgage partnered with a local builder/developer in 2011 to assist seniors looking to buy into the development through the use of a Purchase loan. cherry creek closed about 100 transactions in st. george that year, prompting RMi to laud its creative sales tactics. “single companies with an innovative approach to the customer, product and/or market can change the shape of the industry in a city, state or even nationally,” the company wrote in its newsletter.

other reverse professionals are taking a different approach, reaching out to the Realtor community in the hopes of establishing a referral base with active real estate agents in their areas. Many have found that in order to establish this connection, they will first have to educate Realtors about the H4P, as most seem to be wholly unaware of the existence of this niche hecM.

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The national association of Realtors (naR) does offer members some information about hecMs in general, including a “Field guide to Reverse Mortgages,” but it fails to mention anything about the hecM for Purchase. The association does, however, proclaim its support for the product: “The [hecM for Purchase] will streamline the process for seniors who wish to sell their home and purchase another, while receiving the benefits of income from a reverse mortgage. currently such a process would take three transactions, with three sets of closing and origination fees. The new product would entail only two transactions—the sale and purchase, streamlining the process and saving seniors money.”

Judy Burke, a Realtor based in Westlake Village, calif., was introduced to the h4P by a local loan officer who was teaching classes in her area about the program. once she learned about the benefits, Burke said she became a big supporter of the product. “i realized that it could be a great thing for people whose retirements didn’t turn out like they had wanted,” Burke said. “it could solve a lot of problems.”

Burke also said she thinks the h4P is not just a nice option for the right buyer, but can be ideal for a seller too, making a point that might be useful for reverse professionals looking to approach Realtors. “it provides the buyer with a position of strength, because we’re in a competitive market… and so if i can say my buyer is using a reverse Purchase, coming in with roughly 40 percent down and with no credit report requirement for the loan, that’s a good deal. i think it puts them second to a cash buyer.”

Burke said that she believes more Realtors will come around to this idea, but it will require a serious effort to educate. “i think education is the key for Realtors to realize that it’s not all about how to build the most equity as fast as you can.

For me, it’s just one more thing that will help the homeowner,” she said. “Loan officers need to educate the Realtor community so we can really understand the positives and negatives. We’re the ones interfacing with the [potential homeowners], and we should be able to offer them a variety of choices.”

gay White, a Realtor in Walnut creek, calif., agreed. White said she also learned about the h4P from a reverse professional. Martha echols, a reverse mortgage specialist with security one Lending, attended a marketing meeting for Realtors involved in selling homes in a senior development, where she met White.

White said that before meeting echols, she and most of her colleagues were unaware of the product. “everybody was very surprised that a program like this even existed,” White said, echoing Burke’s comment that lenders need to work on educating Realtors. “if there’s not education by the lender, [Realtors] are not going to know to look into it. i think that your challenge is to educate the agents rather than the general public,” she said.

White also predicts that more of her colleagues will embrace the product if lenders really focus on educating the Realtor community, adding that some of her colleagues are already catching on. “More agents are putting it in their arsenal of weapons,” she said. “i can’t say enough about it. i refer almost everybody to the hecM program to find out if in their particular situation, it would work for them.”

since meeting echols, White said she has facilitated three h4P transactions, and she credits echols with her success. “it was all because of Martha. she was down-to-earth and her presentation allayed my fears about reverse mortgages right away,” White said. “she was persistent and knowledgeable.”

White stressed the importance of

meeting with echols face to face. “The trust was there right away, because she wasn’t just a name, she wasn’t just emailing information. she was on hand to talk it through and showed she was dedicated to the program.”

For her part, echols said she did her due diligence, attending hourlong marketing meetings once a week to talk with Realtors, and that all her hard work paid off. “Forty percent of my business in the last year has been from Realtors,” echols said.

echols recommends that reverse specialists looking to connect with Realtors in their communities put in the time. “consistently go to the meetings, and make sure you handle each transaction with utmost care. handling a transaction poorly can damage your referral base,” she said. “every time i get a referral, i circle back right away and follow up [with the source].” echols said this consistent communication helps build an essential level of trust, but she admits that it’s a tough process. “handling a purchase transaction is not for the faint-hearted loan officer,” she said. “you have to be totally committed and it takes a lot of work.”

thE futuRE of h4P

While the current housing slump may be an inarguable barrier preventing the h4P from reaching any truly outstanding numbers, there are hardworking reverse professionals out there who have proved that with considerable effort and a little creativity, it is possible to sell the product in this environment. it seems that the key is to adjust marketing efforts to focus on building relationships with developers and Realtors. By educating them about the possibilities afforded by this specialized product, it might be possible to reach a greater number of consumers. if this concept becomes our mission, we may see the h4P play a bigger role in the hecM marketplace in years to come. x

| TRR50



Literally millions of seniors in all income brackets across this great nation are experiencing the perfect storm in regard to retirement planning. This is a fact that is hard to dispute. The recession has affected people of all ages, especially seniors, who are left with few options to support their retirement. a record low rate of return on cds, annuities and savings (vehicles once relied upon by many seniors to support retirement), coupled with record portfolio losses and declining home values, have put seniors at a loss. now, seniors all over this country are left to fret over their limited options, many likely thinking, “Maybe retirement is not going to be what i once thought it was.”

So I will ask my question again, but I’ll rephrase:

why isn’t the h4p the sleeping giant of the senior real estate market?

why isn’t a mortgage product that allows clients age 62 and older to forgo monthly principal and interest payments for as long as they live in their home the sharpest arrow in a realtor’s quiver?

thE Public PERcEPtion PRoblEM

although it has been around since late 2008, the hecM for Purchase has garnered little interest. in the past few years, i have taught classes on the h4P to more than 2,000 real estate agents across the nation, and i believe my unique experience can shed light on why it has been so difficult for Realtors, and consumers, to accept this program.

one main reason that this great product has not flourished is obvious. The traditional reverse mortgage has had so much negative press surrounding it for so many years now that we first must overcome that hurdle before any real estate agent will endorse the product. it has long been portrayed as a needs-based product or one of last resort. 8

Is the Hecm for Purchase the

“sleeping giant” of the senior real estate market? No one knows, but the product’s past performance certainly suggests that it’s not, which leaves me to wonder: Has the product failed us, or as an industry, have we failed it?

let’s awaken

this slEEPing

giant

one main reason that this great product has not flourished is obvious. the traditional reverse mortgage has had so much negative press surrounding it for so many years now that we first must overcome that hurdle before any real estate agent will endorse the product. it has long been portrayed as a needs-based product or one of last resort.

b Y M i c h a e l b a n n e r

| TRR52


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a response to the suggestion that a senior homeowner consider a hecM for Purchase tends to sound something like this:

“come on, i’m purchasing a $500,000 home and you are talking to me about a reverse mortgage?”

“Reverse mortgages are for poor people!”

“Maybe I should find another real estate agent.”

hearing this from a potential client is your average real estate agent’s biggest fear!

Because of the current economic climate, the traditional reverse mortgage has risen from relative obscurity in the beginning of this decade, becoming a common topic of discussion in practically all aspects of retirement planning. despite the uptick in discussion, a tremendous amount of misinformation and half-truths still surround the product. and unfortunately, at times our detractors seem to have much louder voices than our advocates. This is no easy hurdle.

it’s all about thE EffoRt

aside from the obvious need to enhance the public’s perception of the product, there is another, greater reason that the h4P is being overlooked. (and i know i will be getting a fair amount of grief about this—bring it on!)

here it is: The great majority of reverse mortgage professionals have no idea how to deal with Realtors. and of the few that do, many do not want to put forth the effort. Building a referral base of Realtors that can actually produce for you is very hard work. Teaching

real estate agents a totally new way of thinking—especially about a product that has gotten so much negative press—is even harder.

Make no mistake about it: This is a commitment that involves some serious time and dedication. it requires you to get up every day and “get to work.” you need to see a certain number of new agents every day, and you should visit the ones you have already identified as strong potential referral sources (Realtors tend to forget you if you don’t stay in front of them fairly often). all of this needs to be done while taking care of your existing clients—you’ve got to earn a living while building that referral base!

oh, and please don’t let me forget this little tidbit: The great majority of real estate agents in this nation don’t even make a living selling real estate. Many of them are part-timers who will probably never send you a lead. so, please add to your list of things to do “separating the time stealers from the real professionals.” These are the ones who truly make a living from their chosen profession and who have the most incentive to learn about h4P and the benefits of promoting the program to their clients. so, you see? This just ain’t easy, people!

This is about relationships. and guess what? your prime relationship is with your Realtor. That’s right, that Realtor is your primary client! Take good care of him or her and hopefully you will receive many referrals for years to come.

now, before anyone starts writing about their absolute dissatisfaction with me for actually putting into print the notion that we would consider anyone but our client to be our top

priority, please understand that is not exactly what i meant. By saying that you should consider your source of business to be your “primary client,” i am in no way suggesting that we are not putting the needs and desires of our senior client first and foremost. NRMLA’s Code of Ethics comes first! Our client comes first when it comes to their individual needs. But your client will probably be in your life for 30-60 days, and you and your referral source will be cultivating a relationship for years.

RisE and shinE!

so, is connecting with a Realtor in the hopes of gaining a referral source worth your time and effort? Let’s take a look at the numbers.

The reverse mortgage industry will close barely 60,000 units this year. The forward mortgage industry is on track to close 4 million-plus, and more than 2 million will be purchase mortgages. it is estimated that as many as 20 percent of those 2 million will be buyers over the age of 62.

i don’t know about you, but i like their numbers better!

as the national education director for security one Lending, i have been very fortunate to work with many professionals in this industry who have committed to this very difficult but financially rewarding model. And I can tell you this: The more Realtors we educate, the more h4Ps we write.

so, let’s awaken this sleeping giant. Let’s help Realtors all over the country sell more homes and, most importantly, let’s help as many seniors as possible obtain the highest quality of life possible during their retirement years! x

Make no mistake about it: this is a commitment that involves some serious time and dedication. it requires you to get up every day and “get to work.” You need to see a certain number of new agents every day,

and you should visit the ones you have already identified as strong potential referral sources.

| TRR54


y mom was a remarkable person. she was 5 feet, 6 inches tall and 105 lbs. soaking wet. A perfect, fiery, 50/50 blend of Irish and

german heritage. small in physique but a giant in stature. she raised nine children, volunteered at our church and numerous other organizations, and did all of this while working part time, contributing to the financial support of our family.

Like many parents of us baby boomers, Mom grew up during the depression. her dad, my grandpa ski, was a jack-of-all-trades, so he always had enough work to keep the family fed and often enough to help others not as fortunate.

Mom’s early childhood was a time when you made do with what you had and you were thankful for it. it was also a time when neighbors helped each other and we all realized we were in this together.

shortly after Mom graduated high school, Pearl harbor was attacked and the u.s. entered WWii. never one to sit around idle, Mom joined the war effort and became the local war bond queen, traveling the chicagoland area selling war bonds. Mom sold more war bonds than any other person in all of the chicago wards, and involved herself in just about every other war drive. My mom was a strong, independent person who had a powerful sense of family, community and country.

in 1983 my dad retired, and like so many good Midwesterners they sold the family home and moved to Florida. unfortunately, they would only enjoy two years of retired life together. My dad was killed in an automobile accident in 1985.

Mom stayed in Florida another 12 years, working in the local high school cafeteria, continuing her volunteer work and living a very independent life.

in 1997 Mom moved to california to be closer to family. It was a difficult time for her when she got to california. With her health beginning to decline, she became more and more dependent on her family and others. her ability to live independently was diminishing and volunteering was no longer an option.

Remembering MomMIcHAEL d. KENT

Last wordGUIde

Want to comment on this article?comment online at reversereview.com.

M

Mom passed on in 2001. The last couple of years were a particular challenge for me as i attempted to give my mom the assistance she needed while still respecting and honoring her independent spirit.

in our drive to compete and increase market share—to analyze lead cost, conversion rates, pull-through percentages, bond prices and profitability margins—we need to remember Mom.

We need to remember this person who was tested by economic depression and world war, who was strengthened by the challenge of being raised in a country that struggled.

We need to remember Mom, a person who has lived a life of independence, who is realizing she may need a little extra help, but is no less committed to being that independent person she has always been.

We need to remember Mom and be aware of that balance of assisting while respecting and honoring a lifetime of independence and contribution.

i feel so blessed to work in an industry that brings Mom so present to my mind every day. i hope all of us will keep our own mothers at the forefront of our minds as we work to grow the industry. i hope that each and every day we will take just a few moments to center ourselves in our work by remembering Mom. x

in oUr drive to coMpete

and increase Market

share—to anaLYze

Lead cost, conversion

rates, pULL-throUGh

percentaGes, Bond

prices and profitaBiLitY

MarGins—we need to

reMeMBer MoM.

we need to reMeMBer this

person who was tested

BY econoMic depression

and worLd war, who

was strenGthened BY

the chaLLenGe of BeinG

raised in a coUntrY that

strUGGLed.

AccORdINGTO MIcHAEL


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| TRR56


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the reverse review november/december 2012

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