the reverse review november/december 2013

the rev

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the

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the reverse review

Embracing the New HECM

INSIDEthis issue

tiPs FOr CLOsiNG PrOBLeM LOANs PG. 22

CALCULAtiNG eXPeCteD rAtes PG. 24

+ rOBert sivOri sits DOwN iN OUr hOt seAt PG. 18

N O V / d e c 2 0 1 3

THE

reviewREVERSE

| TRR2

The ReveRse Review Nov./dec. 2013

Are you moving in the right direction?

REVERSEVISIONCONNECTING THE REVERSE MORTGAGE INDUSTRY SINCE 2007.

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Learn what thousands of trusted lenders, brokers, principal agents and investors already know...

REVERSEVISION is a powerful, yet easily mastered, tool that will accelerate your business service and performance.

reversereview.com 8 TRR | 3

Making success happen in Reverse Mortgage lending is easier when you work with the best in our business. With Urban Financial Group as your partner, you’ll have the resources and support of the industry’s #1 wholesale Reverse Mortgage lender.* It’s an empowering connection that can help you optimize your efforts and boost your sales.

• Call 855-77-URBAN (855-778-7226)

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* Since December 2011. Based on trailing 12 months’ endorsement volume. Source: Reverse Market Insight. NMLSID#2285.Formortgageprofessionaluseonly,nottodistributedtothegeneralpublic.UrbanFinancialGroupCorporateOffice: 8909 South Yale Avenue,Tulsa, OK 74137; Urban Financial Group, Inc. may do business under the name REVERSE IT!, which is a DBA, or division of Urban Financial Group, Inc. © 2013 Urban Financial Group, Inc. All Rights Reserved.

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UFG_RR_Ad_102813.indd 1 10/29/13 4:04 PM

| TRR4


l

Meet the TeamSenior PublisherReza JahangiRi

PublishereRik RichaRd

Editor-in-ChiefJessica gueRin

Creative DirectorTRaci knighT

Copy EditorkeRsTen deck

Marketing Directoralycia colacion

Printer The Ovid Bell Press

Advertising Informationphone : 630.207.3882

email : [email protected]

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© 2013 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

in this last issue of 2013,

otto kumbar, ceo of liberty home Equity Solutions, reveals his detailed, five-year plan to increase the hecM’s market penetration. some of you may have heard about this comprehensive public relations campaign—called the extreme summit—at nRMla’s november meeting in new orleans, where kumbar outlined his plan before a sizable crowd of conference attendees. The presentation was met with unanimous enthusiasm from the group, as the need to elevate the product’s reputation has long been established. Finally, it seems, the industry has a cohesive plan to tackle this challenge.

The extreme summit asserts that Fha’s recent revisions to the hecM program

give the industry the opportunity to reintroduce the product and begin a new conversation with the public about its potential. For the first time in the product’s history, leading companies have joined forces to pool millions of dollars into a united public relations effort. With this substantial financial pledge and input from the industry’s top marketing experts, the campaign aims to reshape the public’s perception of the reverse mortgage product.

The mission is a bold one, declaring a goal to increase volume to 300,000 loans by 2018, but kumbar and his team are determined to advance this product so that it can finally reach its true potential.

Read more about the extreme summit in our feature story on page 36 and find out what you can do to aid the effort to teach hundreds of thousands of seniors how a reverse mortgage can help them find financial security in retirement.

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

A note fromjessicA guerin

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

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


TRR 11/12.13

A look at the

industry’s new PR

campaign

NOVembeR / decembeR 2013

coveR

THE REV

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THE

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THE REVERSE REVIEW

Embracing the New HECM

INSIDEthis issue

TIPS FOR CLOSING PROBLEM LOANS PG. 22

CALCULATING EXPECTED RATES PG. 24

+ ROBERT SIVORI SITS DOWN IN OUR HOT SEAT PG. 18

N O V / D E C 2 0 1 3

THE

reviewREVERSE

09 | Movers and shakersThe latest developments in companies across the reverse space

11 | industry Updateheadlining stories of the past monthReveRse MoRtgage Daily

12 | reportOctober year-to-date volume for top reverse lenders and hecM endorsement stats through July 2013ReveRse MaRket insight

“Every great product in history had to battle and overcome obstacles to become widely adopted… It’s our turn to take on this challenge for one of the greatest products ever invented and help seniors live a more secure retirement. The reverse mortgage is not right in every situation, but it can help many more people than we’re helping today.

36 | the extreme summitThe industry unites to launch a nationwide public relations campaign to alter the perception of reverse mortgages.otto kuMbaR

Table of Contents

Want the online version?reversereview.com/magazine

@

iN this issUe...

24JeFFrey M. BirDseLLoriginating

31JONi PiLGriMappraising

42riChArD MANDeLLlast Word

14 | NrMLA NewsRead about the association’s current initiatives.MaRty bell

17 | roundupa collection of recent facts and surveys affecting the reverse market

18 | hot seatrobert sivoriChief operating officer at Reverse Mortgage Funding llc

20 | OriginatingLess is Moredoes limiting the hecM’s scope open the door for more opportunity?PhiliP e. liPP

22 | Originating the Good, the Bad and the Ugly how to close problem loansMichael J. WeltMan

27 | Originating Reflecting on the Reverse industry: Past, Present and FutureWhere we were and where we could go from hereMaRk DRaPeR

29 | Marketing Upping your response rateTargeting direct mail campaigns to reach seniors with mortgagesJeff bush

32 | ServicingWhere the Servicing ends What happens when a loan becomes due and payableRyan laRose

34 | spotlightEmbracing the New HECM Tips for marketing the revised productscott goRDon

FEATURE

| TRR6


john K. Lunde12 | top Lenders report g John K. Lunde is presidentand founder of Reverse marketInsight, Inc., a performancedata analysis and consultingfirm specializing in the reversemortgage industry. RmI clientsinclude eight of the top 10reverse mortgage lenders, plusinvestors, servicers and vendorsto the industry.949.429.0452,rminsight.net

mArty BeLL14 | NrMLA News g marty bell is NRmLA’ssenior vice president of communications and marketing.This is bell’s professional Act IIIafter 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 Playboyand New York magazine. bellwrote 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.

roBert sivori18 | hot seat g Robert Sivori is the chief operating officer of Reverse mortgage Funding LLc. before joining RmF, Sivori was a vice president at metLife, responsible for the strategic planning group. Previously he served as co-president of everbank Reverse mortgage and spent many years building a distinguished record at bNY mortgage company, where he held various roles, including president. Sivori currently serves on NRmLA’s board of directors.

Contributors

phiLip e. Lipp20 | Less is More gPhilip e. Lipp is the president of Allwest mortgage and a founding director of the california Association of mortgage brokers. Lipp has worked in the mortgage business with his wife, Ilene, for 29 years, helping low-income, first-time homebuyers, supporting initiatives to prevent predatory lending and assisting homeowners in foreclosure. Lipp has a b.A. from Antioch college and an mbA from Pepperdine University. He has a general contractor license and a real estate broker license.

michAeL j. weLtmAn22 | the Good, the Bad and the Ugly g michael J. Weltman is a sales manager for Firstbank. Weltman, who has 12 years of experience in the reverse mortgage business, is treasurer of the mortgage bankers Association in Tallahassee, Florida. He has also served as president of a local real estate board in Wakulla, Florida; holds a broker license and real estate instructor license; and has a license with the Florida department of Financial Services.

jeffrey m. BirdseLL24 | What to Expect When You’re Expecting g Jeffrey m. birdsell is product manager for ReverseVision. birdsell, who has more than 20 years of experience in the reverse mortgage industry, previously served as cIO for Financial Freedom and designed one of the first reverse mortgage software applications, the Reverse mortgage Analyzer. birdsell was also an original NRmLA board member and is a certified mortgage banker with the mortgage bankers Association.

mArK drAper27 | Reflecting on the Reverse industry: Past, Present and Future g mark draper is a reverse mortgage professional who has spent six years serving the New Jersey, New York and Pennsylvania markets. His philosophy is to listen to each customer’s needs and respond efficiently and effectively. draper focuses on building long-term relationships with his referral partners as a professional, experienced, trusted and knowledgeable resource. 732.447.6217, [email protected]

jeff Bush29 | Upping your responserate g Jeff bush is the president of overflowworks.com, a direct mail company that has handled more than 1 billion direct mail pieces in the mortgage industry. bush is the former owner of a mortgage banking company that closed more than 5,000 loans from 2000 to 2007, using direct mail campaigns as its primary source of lead generation. He has more than 20 years of experience in direct mail marketing. [email protected]

joni piLgrim31 | reverse Mortgage Customer Service Teams g Joni Pilgrim is the co-founder and director of sales and marketing for Nationwide Appraisal Network, an award-winning appraisal management company located in Tampa, Florida.

Marty Bell

John K. Lunde

Robert Sivori

Philip E. Lipp

Jeff Bush

Michael J. Weltman

Jeffrey M. Birdsell

Mark Draper

Joni Pilgrim


BEfoRE WE BEgin

ContributorsryAn Larose32 | where the Servicing Ends g Ryan LaRose is president and cOO of celink, an independent reverse mortgage subservicer. LaRose has more than 12 years of servicing experience and has worked exclusively in reverse mortgage servicing since 2005. In addition, he is an active member of the NRmLA servicing and technology committees.517.321.5491,celink.com

scott gordon34 | Embracing the New heCM g Scott Gordon is the founder and ceO of Open mortgage, LLc in Austin, Texas. Gordon is also a serial entrepreneur, investor, board member and author. Gordon is passionate about business mentoring, social media, mortgage marketing, senior finance and idea sharing.

otto KumBAr36 | the extreme summit g Otto Kumbar is the ceO of Liberty Home equity Solutions. Kumbar, who worked previously as business leader for Liberty, has been in the mortgage industry since 2001, working as Genworth’s managing director for Latin America, ceO of Australia and managing director for mortgage insurance in europe. Kumbar also worked for General electric, where he held various positions in Ge Plastics, Industrial Systems, Global exchange Services and Ge mortgage Insurance. Kumbar attended Rensselaer Polytechnic Institute.

richArd mAndeLL42 | 2013: the year ofChange g Richard mandell is ceO of One Reverse mortgage, LLc, and is responsible for the day-to-day operations of the country’s fastest-growing reverse mortgage company.

“By switching things up, HUD has created a new playing field for those in the reverse space. Originators who can master the new rules and develop an innovative business approach will succeed. Remember, the first to market always wins market share.” -Scott Gordon

comments we lovedpage 34

do you

have what

it takes?

be a part of the conversation.

Write for us!We are looking for new contributors.Share your thoughtful commentary with our readership today.email [email protected] to learn more.

Ryan LaRose

Scott gordon

otto Kumbar

Texans Vote “yes” to the hecM for Purchase All FHA reverSe mortgAge productS will now be AvAilAble in tHe “loAn” StAr StAte.

pg.11

Richard Mandell

FIND OUT HOW YOU CAN BE A PART OF THE INDUSTRY’S NEW PUBLIC RELATIONS CAMPAIGn PG.36

There’s no such thing as a stupid idea. What do you want us to write about? Tell us!

[email protected]

| TRR8


Call Today! 888-602-6626• Fully Dedicated Reverse Mortgage

Division• Social Media and Digital Marketing Tools • Strong Compensation Packages

Where Better Is Possible™We live our Mantra every day. Attitude, commitment to excellence, and cutting-edge technology delivers “Better.”

Visit Join.OpenMortgage.com and download my free e-book: Social Media for Loan Officers.

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W h e r e B e t t e r I s P o s s i b l e T M

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“Every great athlete has a great coach. We know how to help you grow your business.”

Scott Gordon, Founder and CEO of Open Mortgage

#9 Out of the Top 100

Reverse LendersSource: Reverse Mortgage

Insight, August 2013


Movers & Shakers

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].

ReverseVision Launches New Education Platform, Hires Rob Katz as EVP of Sales

Reverse mortgage technology provider ReverseVision has launched ReverseVision University (RVU), an online education platform designed to teach mortgage professionals about the reverse industry. In addition to teaching users how to better service Hecm borrowers, RVU will offer education credits from the Nationwide mortgage Licensing System and credits for NRmLA’s cRmP distinction. ReverseVision has also announced the hiring of Rob Katz, who will join the company as executive vice president of sales. Katz has more than 15 years of experience in mortgages and mortgage technology.

Urban Financial Group Expands its Wholesale TeamTulsa-based lender Urban Financial Group has added three new members to its wholesale team. Anneta Pope will join Urban as vice president, business development manager. Pope, who worked previously for Generation mortgage company, will manage the continued growth of Urban’s wholesale production and will work on increasing efficiencies across the company’s sales platform. dori Himes and Nicole Holman have joined Urban’s wholesale sales support team. “I’m very excited about the future of Urban Financial Group and our plans to grow and evolve our business,” said ceO Steve mcclellan. “We’re well-positioned

to capitalize on the significant opportunities in the reverse mortgage market, and to help

our wholesale and correspondent partners do the same.”

Generation Mortgage Company Continues Growth, Receives Award From Atlanta-area BBBGeneration mortgage company (Gmc) has continued its nationwide expansion by hiring new retail branch managers and loan officers across the U.S. GMC is also expanding its wholesale division, adding new partners who are seeking access to its nu62 software tool. In September, Gmc won two Torch Awards—one for marketplace ethics and another for community service—from the better business bureau serving metro Atlanta, Athens and Northwest Georgia. “At Generation mortgage, we are committed to having a positive impact on our industry, our customers and our community, and we are extremely proud to have our efforts acknowledged,” said Gmc President and ceO colin cushman.

Reverse Mortgage Funding Expands Operations, Opens New York Office

Reverse mortgage Funding LLc (RmF) has opened a second office in Melville, New York, which RmF President david Peskin will head. colleen Pirraglia, formerly an underwriting and fulfillment manager for MetLife, will head the fulfillment team, and michael mooney, also formerly of metLife, will lead the third-party origination sales team. “Right now, we have an incredible staff made up of many former colleagues. We’re currently accepting applications for additional sales and operations professionals,” said Peskin. “We are very happy with our growth and look forward to recruiting new members.” Interested candidates should send their credentials to Linda dellutri at [email protected].

Sharon Gleason Joins NCOA as Chief Development Officer

The National council on Aging

(NCOA), a nonprofit service and advocacy organization for older adults, has hired Sharon Gleason as chief development officer. In this role, Gleason will help NcOA enlist the support of corporate, foundation, and individual partners and donors to aid in the organization’s goal to improve the health and economic security of older Americans. Gleason has 18 years of experience managing and leading nonprofits and has helped raise more than $30 million for local, national and international nonprofits.

trr wants your company

news!

Send us your company’s

latest initiatives,

programs, hires,

acquisitions and more, and be a part of our

Movers & shakers column.

email jessica@reversereview.

com

Call Today! 888-602-6626• Fully Dedicated Reverse Mortgage

Division• Social Media and Digital Marketing Tools • Strong Compensation Packages

Where Better Is Possible™We live our Mantra every day. Attitude, commitment to excellence, and cutting-edge technology delivers “Better.”

Visit Join.OpenMortgage.com and download my free e-book: Social Media for Loan Officers.

NMLS#2975A+O p e n M o r t g a g e . c o m

W h e r e B e t t e r I s P o s s i b l e T M

The Best Place to

Grow YourReverse Mortgage

Business

“Every great athlete has a great coach. We know how to help you grow your business.”

Scott Gordon, Founder and CEO of Open Mortgage

#9 Out of the Top 100

Reverse LendersSource: Reverse Mortgage

Insight, August 2013

| TRR10


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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. fha to extend reverse mortgage financial assessment start date

hud will extend the implementation date for the financial assessment of reverse mortgage borrowers, Fha assistant secretary carol galante said in a speech delivered before attendees at nRMla’s annual meeting in new orleans. The length of the extension was not specified, but Galante’s remarks suggested that the start date will extend past the original January 13 deadline. hud is currently reviewing public comment on the financial assessment rule and a request for clarification from NRMLA. “We need to have some extension of time here to ensure the financial assessment piece can be implemented precisely and correctly,” galante said. “We will extend the time period. i can’t yet tell you how long. We were on furlough for two weeks. We’ve just gotten the comments and are looking at the changes. We want to ensure you have a little more time—but not a lot,” galante said.

// november 4, 2013

2. texas votes “yes” to allow reverse mortgage for purchase product

Texas residents have voted to change the state constitution to allow for all Fha reverse mortgage products under state rule. advocates have long campaigned for Prop 5, a measure that would allow for the hecM for Purchase in the state. Texas is the last state to approve the Purchase program. “Tonight was a clear and decisive victory for the industry,” said scott norman of austin’s sente Mortgage, who has worked with industry members as well as federal and state government toward the change. ”all the credit goes to nRMla and the Texas

Mortgage Bankers association for their tireless efforts.”

// november 6, 2013

3. cfpb launches tool to match consumers with reverse mortgage counselors

The cFPB has launched a tool designed to help consumers connect with local housing counseling agencies, including those who offer hecM counseling. The tool uses a search box and mapping function that allows consumers to view the 10 closest counseling agencies to their ziP code. in conjunction with the tool’s release, the bureau published guidance for lenders on how to provide mortgage applicants with a list of local homeownership counseling agencies.

// november 10, 2013

4. hud adapts foreclosure process for reverse mortgages

hud has updated the schedule of claimable attorney fees and reasonable diligence timeframes for imitating foreclosure on FHA-insured loans, including hecMs. announced via mortgagee letter on october 28, the changes will apply to all cases in which legal action to initiate foreclosure occurs on or after november 1, 2013. The changes limit the amount of fees attorneys can claim and require servicers to prosecute foreclosure within a specific timeframe.

// november 4, 2013

5. reuters: fha healthier than $1.7 billion treasury draw suggests

Fha is healthier than its recent $1.7 billion draw from the u.s. Treasury suggests, hud secretary shaun donovan said in a Reuters article. The infusion from the Treasury does not reflect the current health of FHA’s Mutual Mortgage insurance (MMi) Fund, donovan said, as the agency has worked to decrease

losses in its portfolio and housing has risen since the november 2012 actuarial review, which revealed the MMi fund had a $16.3 billion shortfall. “This was an accounting transfer that has not yet caught up with reality. it’s based on the housing market more than a year ago, and doesn’t reflect policy changes we’ve made since then,” donovan said during a conference sponsored by the Mortgage Bankers association.

// november 4, 2013

6. fha chief: following losses, agency on road to recovery

losses stemming largely from Fha’s reverse mortgage program sparked debate among house democrats and Republicans as Fha chief carol galante responded to questions on the agency’s capital position. Testifying before the house Financial services committee, galante spoke of the agency’s current position and projected stability due to its current loan portfolio and those made following the housing crisis. galante noted the past losses attributable to reverse mortgages but noted the positive position going forward.

// october 29, 2013

7. florida funds to help reverse mortgage borrowers cure defaults

Florida is gearing up to announce a new program designed to help reverse mortgage borrowers in the state who have defaulted on their loans after struggling to pay taxes and insurance. The Florida housing Finance corporation is reportedly introducing the elderly Mortgage assistance Program as part of its $1 billion hardest hit Fund. it’s designed to assist senior homeowners in the state facing foreclosure due to inability to pay taxes, insurance or association dues following the complete draw-down of home equity through a reverse mortgage.

// november 11, 2013

Brought to you by:

Industry Update

| TRR12


October 2013 Top Lenders Report

1 2 3 4 5American Advisors GroupEndorsement 801

S1L / RMSEndorsement 442

One Reverse Mortgage Endorsement 407

Urban Financial GroupEndorsement 308

Liberty Home EquityEndorsement 257

Report

Lender Endorsements Lender Endorsements

PROFICIO MORTGAGE VENTURES LLC 210

GENERATION MORTGAGE COMPANY 184

REVERSE MORTGAGE USA INC 100

OPEN MORTGAGE LLC 69

NATIONSTAR MORTGAGE LLC 62

SUN WEST MORTGAGE CO INC 57

MONEY HOUSE INC 52

HIGH TECH LENDING INC 52

GMFS LLC 51

PLAZA HOME MORTGAGE INC 47

ASSOCIATED MORTGAGE BANKERS INC 45

M & T BANK 38

MAVERICK FUNDING CORP 36

FIRSTBANK 31

PEOPLES BANK 29

UNITED SOUTHWEST MORTGAGE CORP 28

SUN AMERICAN MORTGAGE CO 27

UNITED NORTHERN MORTGAGE BANKE 27

FIRSTAR BANK 27

MCM HOLDINGS INC 26

TOWNEBANK 26

SENIOR MORTGAGE BANKERS INC 26

NEW DAY FINANCIAL LLC 23

NATIONWIDE EQUITIES CORPORATION 19

ASPIRE FINANCIAL INC 18

CHERRY CREEK MORTGAGE CO INC 17

UNIVERSAL LENDING CORPORATION 17

MORTGAGESHOP LLC 16

VAN DYK MORTGAGE CORPORATION 15

AMERICAN NATIONWIDE MORTGAGE CO 14

ADVISORS MORTGAGE GROUP LLC 13

SOUTHERN TRUST MORTGAGE LLC 12

6,000

4,000

2,000

08 10 11 12 1 2 3 4 5 6 7

*Numbers represent monthsRetail Wholesale

9

Aug

Sep

Oct

Nov

dec

Jan

Feb

mar

Apr

may

Jun

Jul

tOt

UNits ChG% UNits ChG% UNits ChG%

12.69%

-11.1%

4.61%

20.44%

-16.82%

34.8%

-7.09%

17.74%

-5.21%

-10.24%

6.34%

7.66%

1,705

1,536

1,498

1,724

1,656

2,151

2,017

2,494

2,568

2,498

2,335

2,511

0.06%

-9.91%

-2.47%

15.09%

-3.94%

29.89%

-6.23%

23.65%

2.97%

-2.73%

-6.53%

7.54%

5,804

5,584

4,644

4,653

4,567

5,161

5,417

4,374

4,593

4,427

5,182

3,847

RETAIL WHOLESALE TOTAL

33,134 24,693 57,827

7.1%

-10.61%

1.66%

18.3%

-11.81%

32.72%

-6.73%

20.21%

-1.7%

-6.86%

0.3%

7.61%*Figures above reflect change from

prior month

retail endorsement Growth

7.66%wholesale

endorsement Growth

7.54%total endorsement

Growth

7.61%

TRAILING TWELvE - MONTH ENDORSEMENTS

INDUSTRY SUMMARY

2,415

2,147

2,246

2,705

2,250

3,033

2,818

3,318

3,145

2,823

3,002

3,232

HECM Endorsement Stats Through July 2013


Report

80%

75%

70%

65%

60%

55%

50%

7/1

/11

8/1

/11

9/1

/11

10

/1/1

1

11

/1/1

1

12

/1/1

1

1/1

/12

2/1

/12

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4/1

/12

5/1

/12

6/1

/12

7/1

/12

8/1

/12

9/1

/12

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/1/1

2

11

/1/1

2

12

/1/1

2

1/1

/13

2/1

/13

3/1

/13

4/1

/13

5/1

/13

6/1

/13

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Reverse Market Insight - LogoOctober 9, 2009 3005C Process

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| TRR14


NRMLA News

you got MilkOne of the recurring questions we hear in

our industry is: Why don’t we do a “Got

milk?” campaign?

earlier this month, attendees at NRmLA’s

Annual meeting & expo heard a

presentation from Otto Kumbar, ceO of

Liberty Home equity Solutions, who has

devoted a good part of the past year

rallying our industry and outlining an effort

he has named the extreme Summit. The

plan has one basic goal: increase overall

volume from 50,000 to 300,000 loans per

year by 2018.

In February of this year, in conjunction with

a NRmLA board of directors meeting in

Washington, Kumbar gathered leaders

of the six currently highest-volume

lending companies (“I felt we needed

sizable checkbooks to begin to provide

momentum for everyone,” he says)

and presented a PowerPoint outlining

nine initiatives to alter the conversation,

including calling for a 3:1 ratio of positive

to negative press coverage, engaging

a force of identifiable thought leaders,

funding market research, and exploring

a national marketing and rebranding

campaign.

A comprehensive request for proposals

was prepared and submitted to a dozen

advertising and public relations agencies

of varying sizes from different parts of the

country. eight responded by memorial day

with their assessment of the industry’s

predicament and their strategic approach

to altering it. Four were chosen as finalists

and invited to prepare creative materials

and present their campaigns to the group.

In June, representatives from AAG,

Generation, Liberty, RmS, Urban and

the new RmF, as well as NRmLA senior

staff, gathered in a conference room at

NRmLA’s Washington headquarters as an

audience for the four presentations. It was

a head-spinning day of smart, creative

ideas. The approaches and themes that

seemed to run through the perceptions

of all the ad creators were closing the

misconception gap, shifting the focus from

a “needs-based” audience to a “want-

based” audience, and positioning the

product as a financial planning tool with

a laser focus on the promise of the future

rather than on aging persons’ limitations

and fears.

The next steps are

selecting an agency

and preparing a pilot

program in two to

three cities to test the

effort.

Members can

contribute to the

effort by:

. generating additional ideas on how

to increase volume

.. helping enhance the plan

... Participating in the use of the

materials provided to help execute the

plan

.... Providing what they can to

finance the Extreme Summit activities

learn more about the extreme summit on page 36.

REvERSEMORTGAGE.ORG

HITS A NEW HIGH…AGAIN!In the last issue of The Reverse Review, we were excited to report that our industry’s consumer information website, reversemortgage.org, which averaged more than 17,000 unique visitors per month over the past year, had achieved a new record of more than 23,000 hits in August. Little did we know that was just chump change. In September, more than 28,000 unique visitors spent time on the site, which contains listings of all lender/members.

save the Date—st. Paddy’s Day in NyC

For the third straight year, NRmLA will be returning to New York for its 2014 eastern Regional conference. Holding the conference in Gotham provides an annual opportunity to bring together the mutually dependent lending and investing communities.

We will return to the beautiful Intercontinental New York Times Square Hotel on march 17 and 18.


in committeesnRMla, with input from the risk and compliance committee, submitted a letter to Fha that offers suggestions on improving the agency’s Quality assurance Process (QaP). Fha published a notice in the Federal Register on July 9 seeking input from the lending community, consumer groups and the general public. comments were due on september 9. nRMla requested that any changes adopted through the solicitation first be published as a proposed rule, so that the industry has an opportunity to comment. The association also pointed out that HUD guidance can be difficult to discern or inconsistent with what is published in handbooks and regulations, and is sometimes

interpreted or applied differently among the four homeownership centers. “Thus, before Fha makes any changes in the QAP, it should first address what some perceive to be an area for improvement in Fha review of loan endorsements,” the letter says. The u.s. department of housing and urban development published a notice in the Federal Register on september 12 seeking public input on the benefits and costs associated with the Financial assessment. comments were due october 15, 2013. nRMla has convened a Financial Assessment working group that has been meeting regularly and preparing comments to submit.

NRMLA News

NEW

S FR

OM

NRM

LA

brought to you by marty bell:

national reverse mortgage

lenders association

PrOFessiONALs AChieve CrMP stAtUs nRMla congratulates the following individuals for achieving the status of Certified Reverse Mortgage Professional (cRMP):

• Laurie Libby, Liberty Home Equity Solutions newport Beach, California

• Sue Milligan, Alpha Mortgage Metairie, Louisiana

• Jay Zayer, Aramco Mortgage Carlsbad, California

Sixty-seven individuals have earned the CRMP designation since mid-2010, and every one of them is prominently listed on the nRMla consumer website, reversemortgage.org.

New MeMBersnRMla welcomes the following companies, which recently joined the association:• A New Mexico Reverse Mortgage

Albuquerque, new Mexico• The Stone Hill Group, Inc. Atlanta, georgia• National Field Representatives Claremont,

new Hampshire• 1st California Home Loans Laguna Hills,

California• CBC National Bank Alpharetta, georgia• Integrity Home Loan of Central Florida

Lake Mary, florida

Pictured are Reps. denny Heck (d-

WA) and mike Fitzpatrick (R-PA) to

the right of President Obama, joining

HUd Secretary Shaun donovan,

NRmLA President Peter bell and HUd

deputy Secretary/FHA commissioner

Carol Galante in the Oval Office for

the signing of the Reverse mortgage

Stabilization Act of 2013.

“Frankly it was a bit surreal,” Heck

says. “On my way out, just to make

sure, I turned to one of the White

House staff people and asked, ‘Now

that was the actual, real Oval Office,

right?’”

Fitzpatrick’s staff, meanwhile, posted

on Facebook: “Only 22 bills have

made it to the desk

of President Obama for

signature and one of them

belongs to congressman mike

Fitzpatrick.”

The two congressmen who

sponsored the legislation in the

House of Representatives attended

an October meeting of the NRmLA

board of directors in Washington

and expressed great support for

the Hecm program, giddy pride in

getting the bipartisan bill passed in

the current political climate, and great

admiration for each other.

“It’s still possible to get things done in

Washington, d.c., if you’re willing to

reach across the aisle and focus on

the substance of issues,” Heck says.

| TRR16


888.272.1214 landmarknetwork.com

Follow us @LandmarkAMC

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team 2.indd 3 10/29/13 5:04 PM


Roundup

H O M E E q U I T Y F A C T S

Home equity for seniors reaches its highest level since the recession.

Americans 62 and older have more equity in their homes than at any time since 2008, according to data released by NRmLA. The NRmLA/RiskSpan Reverse mortgage market Index (RmmI) showed that in the second quarter of 2013, senior home equity rose for the fifth straight quarter, by 3.1 percent to $3.34 trillion. calculated quarterly, the RmmI analyzes trends in home equity, home values and mortgage debt for homeowners age 62 and older.

Here is a look at the latest N E W S A N D S TAT S

AFFeCtiNG the MArket.

I N T H E N E W S

The New York Times says many seniors who want to stay in their homes will need to take a reverse mortgage.

citing cFPb data that shows 30 percent of homeowners age 70 and older have mortgages to pay off and the fact that the senior population is expected to increase dramatically, a recent article in The New York Times predicted a spike in the demand for reverse mortgages in the coming decade. The article mentions a reverse mortgage study by Ohio State University’s Stephanie moulton that analyzes data from 32,000 people who sought reverse mortgage counseling. Initial results indicate that 60 percent of counselees got a reverse mortgage, and half had mortgage debt.

H E C M T R E N D S

Data from Reverse Market Insight reveals that the industry grew on a unit volume basis this year, totaling 15 percent growth as of July.

States with the largest endorsement growth:

Ca 5,466 25.2 %TX 3,255 12.9 %NY 2,481 1.4 %Fl 2,432 17.5 %PN 1,791 15.0 %

T H I SM O N T H { Get up-to-date retirement facts, home price stats,

senior trends and HECM market developments in The Reverse Review’s monthly Roundup.

T H E S E N I O R A G E N D A

Middle-income boomers say they would prefer to be cared for in their

homes as they age.My hoMe

indePendenT liVing coMMuniTy

nuRsing hoMe

child’s hoMe*

soMeWheRe else

*excludes respondents without children.Bankers Life and Casualty Company Center for a Secure Retirement, April 2013

M A R k E T U P D A T E

HECM Securities totals $7.1 billion.In the first three quarters of 2013, issuance of HECM mortgage-backed securities totaled $7.1 billion and included 757 pools from 11 issuers, according to data released by New View Advisors. The number of pools issued in the third quarter was nearly unchanged from the last, but the dollar volume dropped 13 percent; about 43 percent was fixed-rate.

Here is a list of the top issuers and their percentage of the market in Q3 2013:

No. 1 RmS 32.74%

No. 2 Urban 25.53%

No. 3 Live Well Financial 13.8%

No. 4 Generation mortgage 9.64%

No. 5 Nationstar 6.23%

N U M B E R C R U N C H

The number of adults age 65 and older in the U.S. is expected to rise substantially by 2013, according to 2011 data from the Administration on Aging.

13% 2010 19% 2030

1.

2.

3.

4.

5.

13% of the U.S. populationin 2010

19% of the U.S. populationin 2030

| TRR18


From his favorite movie and his favorite book to the craziest thing he’s ever

done, we get the personal and professional facts from Robert Sivori, chief

Operating Officer at Reverse mortgage Funding LLc, in this month’s edition of

The Hot Seat.

Robert

reverse mortgage funding llc

Chief Operating Officer

the

hotseat

THE

reviewREVERSE

NOv./DEC. 2013


P e R s o N a L

> ten years from now I would like to live

in various cities around the world for six

months at a time.

> something nobody knows about me is

that I was a varsity cheerleader in college.

> My favorite vacation was in the catskill

mountains, where we rented a small ski

house with two other families in the winters

of 2005 and 2006.

> My celebrity crush is Natalie Portman.

> if i were a professional athlete i would

be a skier.

> The craziest thing I’ve ever done was

skydive in 1979, and invest in a mortgage

company in 2007, which curiously elicited

the same feelings I experienced when free-

fall skydiving.

> if i had three wishes they would be to

be as wise as craig corn, as good-looking

as Reza Jahangiri, and to be able to

disclose the Hecm Origination Fee in box

2 on the “Good Faith estimate” because

it sure seems like it’s an interest rate-

dependent charge.

> If I could meet anyone, past or

present, it would be donald Rumsfeld on

September 10, 2001.

> My favorite movie is The Godfather Part

II, which is actually a management training

film.

> i never miss an episode of Glee… just

kidding. I never miss Shameless.

> I can’t go without chocolate.

> when i was a kid, I pictured my life

looking pretty close to how it is today.

> My favorite time of the day is the early

morning, when my home is quiet and I have

the newspaper all to myself.

> My iPod go-to is “days Like This” by Van

morrison, John mellencamp’s version of

“Wild Night” and The civil Wars’ version of

“billie Jean.”

> i always listen to National Public Radio.

And michele Zachensky. And Jean Noble.

> the best lesson i’ve ever learned was

stated by Randy Pauch in his book The

Last Lecture: “The brick walls are there for

a reason. The brick walls are not there to

keep us out. The brick walls are there to

give us a chance to show how badly we

want something… They’re there to stop

other people.”

> The best purchase I’ve ever made was

education for my children.

> My favorite book is The Alchemist by

Paulo coelho.

> If I could trade places with someone

for a day, i would be Leonardo dicaprio,

or HUd Secretary Shaun donovan, for

entirely different reasons.

> If I could time travel, I would go back

to 1998 so I could talk to my father and

grandparents. They were so much wiser

than I was aware of at the time.

P R o f e s s i o N a L

> The biggest challenge in the reverse

mortgage industry will be adjusting

origination business models to adapt to the

Hecm program changes that took effect

October 1.

> ten years from now, the reverse

mortgage industry will be balanced

with products provided through both

government and non-government

programs.

> The most important thing financial

advisors can learn about reverse

mortgages is that reverse mortgage

products can provide a dignified and

financially secure retirement for their clients.

i can’t go without chocolate.

My favorite movie is The Godfather

Part II, which is actually a

management training film.

teN yeaRs fRom Now i wouLd Like to Live iN

vaRious cities aRouNd the

woRLd foR six moNths at a

time.

| TRR20


remember the first time I heard the phrase, “less is more.” it made me stop and think. i don’t

recall where I heard it—if it was a low-tar cigarette commercial, a diet product advertisement or some art critic’s commentary—but i do remember trying to understand what it meant.

now, with the recent reduction in reverse mortgage loan products and loan amounts, we seem to have a new application for this slogan. in the new reverse mortgage lending environment, is less really more? We’re certainly left with less to work with, and proponents claim we’ll be better off in the long run. so by limiting the scope of the hecM product, did Fha open the door to more opportunity?

Maybe.

For one thing, i believe that from a consumer’s point of view, it did just get a whole lot easier to understand reverse mortgages. There are just two programs now: the fixed- and the adjustable-rate. Borrowers just have to decide if they need more money at closing to cover debt and other expenses, or if they prefer to take less money upfront and save on closing costs. And for loan officers, it’s now easier to figure out rather quickly what’s best for your borrower: saving more versus borrowing more to pay for existing or looming needs.

i understand that hud’s intention was to ensure that the program would

be solvent and available for years to come. This is especially important because of the tens of millions of baby boomers who are expected to approach the retirement starting line in the next 15 to 18 years.

i admit, the changes were not easy to digest at first, but if you assume a long-term point of view, the benefits are a bit clearer. i believe that as a result of these amendments to the program, the Fha’s hecM will likely be utilized less as proprietary programs rush in to fill the void. Want to get a reverse at age 55? it’s been done before. have a condo that is not FHA-approved? You might still be able to get a loan if a proprietary market were to take shape. how many times have you explained to a borrower that they can’t take advantage of the equity in their homes because it is worth two or three times the current Fha maximum claim amount? Proprietary products would change this tune.

I

Less Is MorephiLip e. Lipp

OriGiNAtiNGASSeSS

“In the new reverse mortgage lending environment, is less really more? We’re certainly left with less to work with, and proponents claim we’ll be better off in the long run. So by limiting the scope of the HECM product, did FHA open the door to more opportunity? Maybe.”


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The question is not if but when will these programs burst forth onto the scene? generation Mortgage company was the early bird when it came out with a proprietary program not long ago, and i believe there will be more. no doubt, as more programs enter the market, the resulting competition will make this type of loan product better.

We have lived through what some considered the golden age of Fha’s hecM product, and now the industry will have to redouble its efforts to achieve solid results in this new environment. But we know the demographics are on our side. Baby boomers do not have a problem with borrowing on their homes; they just need a product that works for more of them.

Product differentiation will help fill in the huge gaps that have been created by the one-size-fits-all HECM.

Perhaps we became complacent as an industry, originating and closing enough loans to make a living but never managing to advance the product enough to get beyond the market’s abysmally low penetration rate. Maybe these changes were the motivation we needed, and down the road we’ll thank the Feds for pushing us out of our comfort zone. Perhaps these revisions will help catapult the hecM product into the mainstream.

i believe that 2014 will be a pivotal year for this industry. We’ll be working hard to get a handle on the new rules and underwriting

guidelines, and perhaps at the same time we’ll see the emersion of a burgeoning proprietary market. am i viewing the future through rose-colored glasses or partaking in a little wishful thinking? i don’t think so. capitalism works best when allowed to expand in a marketplace unhindered by government competition and restrictions. (at least one out of two isn’t bad.) i think investors will see opportunity in a scaled-back Fha program and will take steps to fill the void. Personally, i am looking forward to the day when i can offer a full line of programs, just like the forward side of the industry. Perhaps with the return of a proprietary market, that will be a possibility one day. x

OriGiNAtiNG

Perhaps we became complacent

as an industry, originating and closing enough loans to make a living but never

managing to advance the

product enough to get beyond the market’s abysmally

low penetration rate. Maybe these changes were the

motivation we needed, and down

the road we’ll thank the Feds for

pushing us out of our comfort zone. Perhaps these revisions

will help catapult the HECM

product into the mainstream.

According to phiLip

| TRR22


OriGiNAtiNG

he story goes something like this: you have a great client meeting, you get them

through counseling and you start a file of notes about your conversation and information about their home, including the value, mortgage payoff and other pertinent details to prepare for the application. Then you get that great email or fax from the hud counseling agency that includes their copy of the unsigned counseling certificate. At this point, I picture the beginning of a nascaR or indy race as the green light comes on, the flags start waving and the starting gun fires. and you’re off! To go write another loan…

in the days and weeks that follow, the onion is peeled back. The credit report

comes in, the title work comes in, and your processor or loan system alerts you that the appraised value has come in. in most cases, all the news is good and you are off to close another loan and help your client obtain a reverse mortgage.

But sometimes, as the onion is peeled back, a strong, pungent odor is revealed and your eyes begin to water. you have one of “those” loans. it’s a problem child, and it could be anything: survey encroachments, clouds on the title, probate issues, too much debt attached to the home, liens, repair issues, primary residence concerns, low value, etc. The list goes on and on. if you have been around the block for as many years as i have, you have seen it all.

When this happens, it’s easy to say, “Wow, that’s too bad,” move on to the next client and not try to take the challenging loan any further. or, while you’re looking for the next client, you can meet with the borrower with the troubled loan, tell them what you’ve uncovered and help them put together a plan of action. if they’re willing to work through their issues, it might be possible to keep the loan moving forward. let them know that certain documents, like those pertaining to the appraisal and counseling, will have to be readdressed, depending on the timeline for solving the problem. But help, don’t run. it will be good for you and good for them too.

My suggestion is to find a few great referral partners to work with who can assist such clients in solving the problems that are preventing them from obtaining a loan. here are a few ideas about the kinds of referral partners you could connect with:

Building and repair

} rOOFers Many times roof inspections are needed to certify that the roof is good for three years or more, and in some cases you can escrow for roof replacement.

} wOOD rOt rePAir This comes up a lot in Purchase transactions for resale homes in Florida, and probably in other areas near water. a quick wood rot repair that brings the property up to par saves trouble when the Wdo report comes back negative. your Realtor may have a list of these folks.

} strUCtUrAL eNGiNeers doublewide mobile homes need

T

The Good, the Bad and the UglymichAeL j. weLtmAn

You have one of “those” loans. It’s a problem child, and it could be anything: survey encroachments, clouds on the title, probate issues, too much debt attached to the home, liens, repair issues, primary residence concerns, low value, etc. The list goes on and on. If you have been around the block for as many years as I have, you have seen it all.

according to michael


OriGiNAtiNG

structural certifications to pass FHA guidelines, which includes checking the skirting, tie-downs and support devices to make sure the residence meets building codes.

} hANDyMeN These professionals can often complete simple or complex work on homes to bring them up to par. i recently hired a handyman to remove burglar bars from the windows of a home and install quick-release latches per Fha guidelines.

} PLUMBers Plumbers can come in handy in situations where a house has its own well or septic tank, which was likely installed before the city’s water supply was able to connect to the house. They can assess the work involved and their estimate can help deduce if connecting to the city’s water line is feasible.

i once worked with a client whose home repairs required a general contractor because the damage was so serious. Remember that escrowed repairs have a ceiling, but repairs on the HUD-1 do not, so you can do some repair work upfront and pay at closing, while the rest of the work can be saved for post-closing. Read the guidelines and check with your company on the specifics if you come across such a situation.

it’s the Law

} A trUst AttOrNey having a go-to trust attorney can be helpful. Recently, i closed a loan involving a revocable trust, which had to be reviewed for title. i worked with a law firm that has a title company on the ground floor, so we did all the title and law work in the same building. With the proper help, you can do reverses with trusts and life estates.

} A BANkrUPtCy AttOrNey you might even consider adding two or three bankruptcy attorneys to your Rolodex. Remember, it is possible to do a reverse just one day out of a Bk7. i have even done a reverse inside of a Bk13 to pay the trustee.

} A PrOBAte AttOrNey i worked on a loan for a client who had gotten a divorce just before her husband passed away before he had moved out of the home. he had children and she wanted a reverse mortgage, but we needed to probate the estate before i could do anything. she also had other liens on the home from creditors, and so she needed some help from a bankruptcy attorney and then a probate attorney before we could consider applying for the loan. she came back to see me in a year and we were able to close her loan.

} A DivOrCe AttOrNey i had more than one client who wanted a divorce but needed help paying the bills and also needed money to pay the departing spouse some of the equity they had in the marital home. i was able to help them with both and when the departing spouse got her settlement in the divorce, guess what? she needed another home, and the reverse for Purchase program was a great way to help her pay for her next place. Now tell me the ex-husband and ex-wife won’t love you once you help them split up, pay the settlement, pay the lawyer and get settled in separate residences. That’s a project worth undertaking—two loans, two happy single folks and one happy divorce lawyer.

also, consider connecting with your local legal services firm or legal aid. They can be helpful in certain situations. i had a client whose mom left him her house in her will, and the home had a mortgage on it. he went to legal services to figure out how to give the home up, because he did not have the money to pay off her mortgage or make payments. i met with them at the legal office. He was over 62 and

was renting an apartment. We talked to him about the possibility of keeping the home and getting a reverse mortgage, and in the end, he did.

Odds and ends

consider making contact with a survey company, as you’ll need to have surveys completed on Purchase loans. i once helped a client who did not get her land surveyed before she added a swimming pool, barn and a garage. guess what? she added some of those structures to her neighbor’s yard and encroached on his property line. i had another loan where the barn roof was so close to the property line that it hung over the neighbor’s yard. i brought in a surveyor to meet with both neighbors and we agreed to a land swap, where we cut equal parts from both pieces of land to remedy the situation.

an insurance agent who handles property and casualty, and flood and hazard insurance can also be helpful. I find quite a few borrowers without insurance.

in closing, when connecting with other professionals who may help solve some of the roadblocks your clients are facing, remember to collect two or three names for each referral group to avoid a situation that might be considered steering. you also don’t want to be held responsible if any issues arise with their services; make sure to check out these providers with the state licensing body and other professional boards, and ensure that their licensing and insurance requirements have been met. as one of my colleagues often says, this business is a social mission. don’t just take the easy, fast and clean loans. you need to learn how to fix and close the good, the bad and the ugly. x

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| TRR24


xpected rates have gone up and down each week over the last several years, yet

the principal limits have remained constant. The reason these rate changes have not affected principal limits is because hud’s principal limit factors (PlFs) top out at 5.06 percent and stay the same for all expected rates equal to, or lower than, that rate.

However, in the last six months, fixed and variable products with expected rates higher than 5.06 percent are starting to appear. so how do we know what to expect when expected rates change in a higher rate environment? To know the answer, we must first understand hud’s factor table.

using hud’s factor table, we match the youngest borrower’s age with the expected rate on the loan. This results in a factor, or percentage, that determines the principal limit available to the borrower when multiplied against the maximum claim amount. This factor table is broken down into expected rates from 3 to 10 percent in increments of one-eighth.

Each one-eighth of a percent has a list of factors for ages 62 through 99. Most factors top out at 90, so everyone 90 and older receives the same factor or principal limit. as expected rates climb higher than 5.06 percent, the factors for each age will start to drop lower. if expected rates were to climb higher than 10.06 percent, the factors and principal limits drop to zero.

now let’s examine how changes in the expected rate index cause a change in the principal limit. First is the obvious: it is rare for expected rates to be exactly equal to an even one-eighth of a percent, like 5.000, 5.125, 5.250 percent and so on, in hud’s factor table. so which factor column gets used for 5.56 or 5.57 percent? hud requires rounding the expected rate to the nearest eighth. For example, 5.56 percent would round to 5.50 percent so we use the 5.50 percent factors, and 5.57 percent is closer to 5.625 percent so we would use the 5.625 percent factors. although this sounds simple, it can still cause much confusion.

People have asked me, “how come the principal limit went down when the expected rate barely went up?” or they’ll say, “sometimes the expected rate has gone down a good amount and the principal limit doesn’t get any better.” The explanation lies in the rounded expected rates. That one basis point, or 1/100 of a percentage increase from 5.56 to 5.57 percent, caused the principal limit to go down because it was rounded to different factor columns. however, that same 5.56 percent expected rate would have to go down 13 basis points, or 13/100, in order to round down to the 5.375 percent factor column, which results in a higher principal limit. The opposite

E

What to Expect When You’re Expectingjeffrey m. BirdseLL

OriGiNAtiNG

Using HUd’s factor table, we match the youngest borrower’s age with the expected rate on the loan. This results in a factor, or percentage, that determines the principal limit available to the borrower when multiplied against the maximum claim amount.

going

to the

source


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OriGiNAtiNG

could be true as well. a small adjustment down could result in a higher principal limit and a larger adjustment up could still give you the same principal limit.

The expected rate is also found in two other formulas in a hecM loan. it is used to calculate tenure and term monthly payments, and is also used in the servicing fee set-aside formula. But in these formulas, the expected rate is noT rounded like it is to determine the principal limit. so how do changes in the expected rate affect these calculations? a higher expected rate actually produces a lower servicing fee set aside, which is good for the borrower, and when using the same amount of funds available for calculating a monthly payment, a higher expected rate produces a higher monthly payment, which is also better for the

borrower. To reiterate, you could see a change in the expected rate from one week to the next that would result in the same principal limit, but the tenure payment would still go up or down a little because that formula uses the unrounded expected rate.

so what should you expect when the expected rate changes? you may see possible alterations to the principal limit, since the rate change caused the expected rate to round to a different eighth, therefore putting it into a different factor column. every time the expected rate moves, you can also expect to see a change in the monthly tenure payment. also note that if an expected rate increase causes the principal limit to drop, in most cases (but not all), the tenure payment would drop as well because there are fewer funds available for the tenure payment.

i hope this explanation brings a little understanding to the often misunderstood expected rate and assists you when dealing with hecM loans. x

“SO WHAT SHOULD YOU ExPECT WHEN THE ExPECTED RATE CHANGES? YOU MAY SEE POSSIBLE ALTERATIONS TO THE PRINCIPAL LIMIT, SINCE THE RATE CHANGE CAUSED THE ExPECTED RATE TO ROUND TO A DIFFERENT EIGHTH, THEREFORE PUTTING IT INTO A DIFFERENT FACTOR COLUMN. EVERY TIME THE ExPECTED RATE MOVES, YOU CAN ALSO ExPECT TO SEE A CHANGE IN THE MONTHLY TENURE PAYMENT.

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A s i was getting ready for a garage sale recently, i came across a box that contained documents with reverse mortgage news from september 2008. it made for a

fascinating read, and here’s why: The headline was the Top 100 hecM lenders. Wow! can you believe there were once 100?

Top HECM Lenders September 2008

#1 Wells Fargo

#2 Financial Freedom

#3 Countrywide

#4 World Alliance Financial

#5 Bank of America

interestingly, Metlife was no. 98 at that time; it hadn’t climbed the ranks to no. 1 just yet before leaving the space in 2012. as for the status of today’s top lenders in 2008, aag was no. 29, security one lending was no. 66, urban Financial was no. 8 and generation Mortgage company came in at no. 11. considering aag recently ranked no. 1 on the most recent list of top lenders, much has changed in just five years. Many of the players from back then are still in the game, but now the total number of lenders has dropped to 61.

in september 2008 the monthly endorsement total that made Wells Fargo no. 1 was 1,858. The total number of endorsements industry-wide that month was 9,494. These high endorsement numbers in ’08 occurred in the height of the market’s meltdown, and the decline that has happened since then is obvious.

Why has industry volume declined in recent years? We all have our own opinions on that. after ’08, the industry rolled out the Saver, the fixed rate and, of course, the Standard, along with new counseling protocol. With all these changes, one might think the endorsements would increase, or at least remain strong, but they did not. also, with the number of lenders that have left the space, freeing up their portion of the market share, you would think the major players would have achieved higher endorsement rates. But that didn’t happen to any major extent either.

With 10,000 seniors turning 65 every day, there has to be

a tipping point for demand. But this tipping point has not happened yet and the decline has continued. We have not yet seen the effects of the changes implemented october 1, and we’ll also have to wait and see what the second wave of changes, those pertaining to Financial assessment, will bring in 2014. Will the decline in endorsements continue? Will they even out? Will the endorsements slowly increase as the product’s headline risk diminishes? Will the HECM finally become more mainstream? The answers to these questions remain to be seen.

Regardless, i know what i am hoping for, and what i am working toward. as a humble reverse mortgage advisor who hits the streets daily, i think the demographics indicate that there has to be an uptick in volume at some point, and i wholeheartedly believe that those originators who remain focused will reap the rewards. i believe the program will get stronger, and that it will eventually be embraced by consumers and their advisors. (and lucky for us reverse professionals, there are only two programs to explain now.) Let’s hope this recent set of changes is final so that we can get on with the business that we love. Hopefully, in five years, I’ll review top lender endorsement numbers december 2013 and reflect on how far the industry has come. x

Reflecting on the Reverse Industry: Past, Present and FuturemArK drAper

OriGiNAtiNG

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eniors who have to make a mortgage payment each month

are three times more likely to fund a reverse mortgage loan than seniors who don’t have an existing mortgage. The chart below shows senior homeowners age 62 and older who meet one of two sets of criteria: They have either paid off their homes in full or they have a mortgage balance between 10 and 55 percent

lTV. as you can see, the numbers are close: 3.5 million seniors own their homes free and clear, and 2.9 million seniors are still paying a mortgage under 55 percent lTV.

Many seniors work most of their lives with the goal of paying off the mortgage on their homes, and once they do, the chances of them taking out a reverse mortgage loan decline

greatly. of course, we have all done reverse mortgage loans for seniors who don’t have a mortgage, but they are few and far between. it does not make sense to spend your time and money marketing to this group because response and conversion rates are low.

in my experience, when it comes to direct mail marketing, response and

conversion is three times better when you focus your efforts on seniors with an existing mortgage loan. With this in mind, next time you launch a direct mail campaign, don’t target those with an lTV of 0 to 55 percent. Work with a direct mail specialist to target potential consumers with an lTV of 10 to 55 percent. This will cut your no-response rate in half. x

S

Upping Your Response Ratejeff Bush

MArketiNGcONNecT

AK 1,665AL 23,617AR 12,792AZ 81,946cA 491,201cO 73,903cT 56,487dc 2,966de 15,030FL 234,607GA 68,902HI 10,080IA 17,888Id 12,696IL 124,141IN 35,589KY 14,485

LA 10,236mA 117,853md 92,785me 5,987mI 85,927mN 34,378mO 43,934mS 5,577mT 7,425Nc 89,021Nd 2,609Ne 13,112NH 16,932NJ 142,020Nm 16,535NV 28,626NY 119,163

OH 133,782OK 22,446OR 43,271PA 132,969RI 14,852Sc 35,492Sd 14TN 58,460TX 168,949UT 22,012VA 77,804VT 7WA 73,119WI 38,308WV 944WY 2,306

$0-$15k

$15k+

AK 4,842AL 33,333AR 19,544AZ 115,373cA 435,367cO 71,765cT 52,348dc 9,701de 13,113FL 352,856GA 131,768HI 11,451IA 24,628Id 22,155IL 171,871IN 59,907KY 23,025

LA 21,053mA 75,550md 91,715me 5,318mI 138,633mN 38,604mO 74,035mS 6,780mT 9,727Nc 134,323Nd 4,555Ne 17,297NH 11,692NJ 104,729Nm 25,096NV 48,531NY 89,399

OH 197,734OK 25,853OR 60,268PA 130,865RI 19,014Sc 63,153Sd 25TN 89,901TX 230,357UT 27,898VA 87,717VT 10WA 98,279WI 39,438WV 1,744WY 2,466

Seniors With Mortgages - total 2,934,850state Record

Seniors Without Mortgages - total 3,524,806state Record

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For more information and to learn more about how we can help drive your business in 2014, contact Kimberly

Smith, Senior Vice President of Wholesale Lending.

[email protected]

AAGwholesale.com

Reverse Mortgages have changed. Shouldn’t your business?AAG knows the ins and outs of the new reverse mortgage business landscape. Superior

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o ensure that the senior citizens who purchase reverse mortgages understand

the appraisal process, aMcs have begun to train and develop customer service teams that specialize in the product. if an appraisal management company can get that piece in place, the opportunity to capture this new channel of business may last for a couple of decades.

according to statistics from the cFPB, 32 million baby boomers, defined as people ranging in age from 48 to 66, own homes on which reverse mortgages could be originated. But just 2 to 3 percent of eligible homeowners have a reverse mortgage, and only 70,000 reverse mortgages are originated each year.

Providing high-quality customer service is critical to increasing this market. Reverse borrowers are senior citizens who have heard about the real estate bubble, have read about financial fraud or have seen the stories on the evening news. it’s no wonder they feel nervous, agitated or even fearful about the product.

To make matters worse, many

reverse mortgage borrowers have not participated in a mortgage transaction in years, and some not for decades. in the intervening years, the mortgage process has changed and it may not resemble the one they remember.

understandably, they tend to be a bit gun-shy and need to be treated like first-time borrowers, with patience, kindness and communication. That approach is already the norm in some forward-looking firms, because they provide formal training to employees on humanistic customer service.

Training is expensive but necessary, and ensures that customer service representatives understand reverse mortgages and can explain how the appraisal process works.

For instance, a reverse mortgage division team member will explain to the borrower that the inspection will take about 30 minutes, depending on the size of the home. The borrower wants to be assured that the appraiser is licensed and insured and also might want to go over the process of what happens after the inspection. once the borrower feels comfortable, the team member will schedule the appraisal.

so far, few aMcs have invested the resources required to train and develop a dedicated reverse mortgage customer service team. among those that have, most train customer service team members in one of three specialties:

Processors E They are the initial and single point of contact between the aMc and the borrower. Their job is to reach out to homeowners, answer questions, provide any requested information and collect the appraisal fee payment.

Account managers E They communicate with appraisers and schedule the appraisal. They understand that it is more important than ever to hire a local appraiser, one who has experience in reverse mortgages, because it makes the borrower feel confident and relaxed.

Client relations managers E They work with lenders and relay to the team any concerns or special requests, such as completing the appraisal and returning it to the lender a day earlier than normal.

in many cases, the notes the representatives make from their conversations are entered into the aMc’s technology platform and alerts are automatically sent to team members. although each team member has a specialty, everyone is cross-trained in each area.

The work a skilled, experienced, humanistic customer service representative performs to educate the borrower ensures that client timelines are met, and this builds a foundation for winning additional business in the future. The discussions between the representative and the borrower are an opportunity to bond, letting the client know that the aMc cares and, above all, representing the lender in a positive light. x

APPrAisiNGVALUe

Reverse Mortgage Customer Service Teamsjoni piLgrim

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’ve written about various maturity events that occur with a reverse mortgage and place a

loan in due and payable (d&P) status. Primary among those events are the death of the last surviving borrower, which, in my experience, accounts for approximately 60 percent of all d&P volume. The remaining 40 percent comprise the permanent vacancy of the property as the borrower’s principal residence and tax and insurance defaults.

as a result of hud guidelines regarding the deadline for the initiation of foreclosure proceedings, once a loan goes into d&P status, borrowers have approximately 60 days to satisfy the loan, cure the default or provide documentation that they are taking steps to satisfy the loan

before foreclosure must be initiated. Borrowers can cure the default by moving back into the property or repaying the delinquent tax or insurance advances, but in order to satisfy the loan, they would have to pay the loan in full (typically through the sale of the property), complete a short sale (per hud guidelines), sign a deed in lieu of foreclosure (deeding the property back to the investor), or simply let the loan go into foreclosure.

in the event that a loan is called d&P, servicers attempt to work with the borrower or their heirs and assist them in satisfying the outstanding balance

due on the mortgage. if the servicer is receiving regular communication and cooperation, and receives documentation that supports the efforts to sell the home and/or pay off the loan, then the servicer can request additional time extensions from hud. These extensions can provide borrowers with up to one year from the date of death or the date the loan was approved to be called d&P by hud. This does not mean, however, that every loan automatically receives these time extensions—they have to be individually reviewed and approved by hud.

serviCiNGLeARN

Where the Servicing Ends ryAn Larose

according to ryan“In the event that a loan is called d&P, servicers attempt to work with the borrower or their heirs and assist them in satisfying the outstanding balance due on the mortgage. If the servicer is receiving regular communication and cooperation, and receives documentation that supports the efforts to sell the home and/or pay off the loan, then the servicer can request additional time extensions from HUd.”

I

FACt: The number of loans moving into foreclosure has already dropped by more than 10 percentage points in 2013.


serviCiNG

In today’s complex regulatory maze, knowledgeable and trustworthy vendors are crucial to your success. Not sure which direction to take or where to go?

WE CAN LEAD THE WAY!

800.877.7557 ext 1222 www.mtginfo.com

Title - Settlement - Valuations

every action a servicer takes after a loan has gone into d&P status has to meet the strict and precise servicing requirements set forth by hud. it’s important to understand that hecM servicers have very little flexibility within these hud regulations outside of what is detailed above. hud sets forth a prescribed process and holds the servicers’ figurative feet to the fire if they violate those regulations.

To protect the product and our industry, loans cannot be originated that violate hud regulations, and as servicers, we can’t service a loan that is in violation of hud regulations. Most importantly, if a servicer were to disregard hud servicing regulations, its insurance fund could be compromised.

When all available time extensions granted by hud have expired, or the estate is uncooperative or unwilling to make an effort to satisfy the loan balance, then the servicer is required to

initiate foreclosure action by referring the loan to an attorney. it’s important to note that the loan can still be satisfied anytime up to the foreclosure sale date. The reverse mortgage foreclosure process follows a similar path to that of forward mortgage foreclosures. There are required notices, timelines and actions, and they vary from state to state. For example, in Michigan, it may take 90 to 120 days from the time the borrower’s file is referred to the attorney for the property to go to foreclosure sale. in sharp contrast, in new york or Florida, depending on the complexity of the estate and number of heirs, a foreclosure may take anywhere from 24 to 36 months (or more) to complete.

The national housing market appears to be on the upswing and that certainly bodes well for the reverse market. To get a feeling for the impact of how the housing crisis impacted servicing, in 2006, once a loan went

into d&P status, 25 percent of these loans resulted in a foreclosure sale, while 75 percent of them were paid in full. compare those numbers with the “high of the low” in 2011, when we saw 70 percent of loans facing foreclosure sale, and only 30 percent of them paid in full. From what we have seen, the number of loans moving into foreclosure has already dropped by more than 10 percentage points in 2013, and that positive trend shows every sign of continuing.

Where does the servicing end? it ends with the calm, sensitive and compliance-driven resolution of the loan and the protection of our product, our industry and our hud partners—and not a moment before. x

Author’s note: This article’s title is my homage to Where the sidewalk ends by Shel Silverstein and my two grade-school readers. it is also an attempt to bring a bit of levity to the topic of defaults and foreclosures—no one’s favorite subject!

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sPOtLiGht ArtiCLe

ontrary to what some might believe, if we embrace the new hecM as a marketing and

career opportunity, it may be possible to achieve success under the revised program. I told a loan officer that the other day, and he looked at me like i was crazy. But i believe programs will always evolve, and you need to be prepared to turn lemons into lemonade.

We have lived through enough changes this year, and now it’s time to embrace the new hecM, which will require more study, education, thought and evaluation. We have to know this loan inside out if we are to succeed at selling it.

The changes that come with this new loan are restrictive, but at least they are understandable. The new rules may not be comfortable for originators, but we can live with them. it’s also important to remember that for the hecM program to survive, changes were necessary. a friend of mine, Bob Wommack, who originated his first reverse mortgage in 1999, said, “The

changes are good for seniors who need to stretch out their equity over a number of years, and they will help hud protect the future of the hecM program. It’s a win-win.” I couldn’t agree more.

These changes to the hecM were inevitable, and they may even continue to evolve. To survive and prosper, we need to be open to learning and adapting. When things remain constant the routine might make life easier, but it’s also easier for our competition to catch up. By switching things up, hud has created a new playing field for those in the reverse space. originators who can master the new rules and develop an innovative business approach will succeed. Remember, the first to market always wins market share.

new loan programs and changing economies provide opportunities for loan originators who are able to best adapt. The ones who succeed are the ones who can understand the changes better and faster and who can understand the impact for the

borrower better and faster. if you can master this, you help your vendor partners understand the changes and you can be first to help seniors receive a loan under the revised program.

change is a marketing blessing. it gives you a reason to touch base with everyone in your network and meet with referral partners and renew those relationships. it gives you a way to add value. it inspires new topics for presentations to groups of all sizes, because people need to learn what you know about the changes. if you miss out on these marketing opportunities, you are missing a valuable opportunity to advance your career.

The biggest challenge in social media is coming up with something worthwhile to talk about. a change like the new hecM provides originators with lots of valued material to share. it presents a great opportunity to build your social media presence and your online authority at the same time. study and learn, then share what you know!

so, will this newfound opportunity be easy? of course not; it’s loan origination, not order-taking. Great opportunities usually boil down to an opportunity to work more, not less. But remember the famous saying, once erroneously attributed to Thomas Jefferson but actually written by F.l. emerson and published in Reader’s Digest in 1947: “i’m a great believer in luck. The harder i work, the more of it i seem to have.”

The good news is some of your competition will not understand that this is an opportunity. some will not put in the time to actually understand the changes and therefore they won’t understand what the changes really mean to the consumer or how to sell the new program. it also means they will miss marketing opportunities and

Embracing the New HECMs C O t t G O r D O N

hoW to cReate oPPoRtunity fRoM change

w


sPOtLiGht ArtiCLe

have fewer leads. eventually, they may decide to retire, and the survivors will get their market share. you can be that survivor; you can take their slice of the pie.

so are you ready to survive and thrive? The first thing you need to do is create a plan. i still value the adage, “Plan your work and work your plan,” because i believe that’s what successful people do. start with the simple plan below, and fill in your own details. The more you think through the details, the better results you will have.

Understand the new program for borrowers.

3 Who will the program work for?

3 How does it work for borrowers, and what are the benefits?

Understand the program for you.

3 How will you be paid, and what borrowers should you target?

3 What is your messaging, and how do you sell the loan?

Create a marketing plan.

3 What channels or lead source will you use?

3 What referral partners and vendors will you use?

3 What is your messaging to the partners and vendors?

3 What is your messaging to borrowers?

3 create the materials you need.

roll out your plan.

3 contact referral and vendor partners.

3 Reaffirm that you are “the HECM expert” in your sphere of influence.

3 Create a schedule and start filling it with presentations and meetings.

3 Start making presentations.

Track your results.

3 Track the vendors, partners and borrowers you contact. Know your results.

3 Write down the results of each presentation, large or small.

3 Ask for referrals from everyone you meet.

3 At large presentations, ask where else you can present.

Lather, rinse and repeat.

3 Analyze your results and make changes.

3 Improve your targeting, messages and presentations.

3 expand your reach and hit it again.

if you work a plan like this, you should rake in new business. it won’t be the business you had; that business is gone. But it will be the business of today and tomorrow. you will be helping people, maybe more than ever before, and the hecM program will be on better footing, more likely to be a solution for aging consumers down the road. x

Have loans that need rescuing?

PRC WILL SAVE THEM!

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20122011

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inety-nine percent of the opportunity is in front of us. By most estimates, there are 20 million to 25 million senior households that are age-, property- and equity-qualified. This year will

likely see around 50,000 reverse mortgages written, giving the industry 0.2 percent penetration into its target market. While this can seem depressing at times, it really means we have an incredible opportunity to help more seniors.

The extreme summit is the industry’s name for a five-year initiative to increase volume and penetration. it’s built on the difference between how customers and non-customers perceive the product. according to most

surveys i’ve seen, seniors who have gotten a reverse mortgage score a 90 percent-plus satisfaction rate. That’s in stark contrast to non-customers, more than 80 percent of whom say they have an unfavorable impression of the product, partly because they don’t fully understand it. We need to fix these education and perception issues.

nRMla members brainstormed the challenges and solutions in san antonio at the end of last year. Through surveys of industry participants, the list was boiled down to the nine most impactful ideas. Teams then developed each idea into a plan and presented it to some forward-thinking firms for funding.

Some of the industry’s leading firms made almost $2 million in voluntary contributions to fund pilots of the highest payoff ideas. if these ideas work through the pilot, the fully scaled initiative will be an investment of $30 million or more in industry growth.

The three initiatives are all focused on increasing volume.

everyone in the industry now has the opportunity to benefit from and help drive the pilot programs. Brokers, lenders, suppliers, influencers, counselors, senior advocates and regulators can help make sure that seniors thoroughly understand the product, which i believe will lead to many more seniors accessing their equity over time.

N90%

of the opportunity is in front of us.

By Otto Kumbar


Three Simple iNiTiaTiveS

geo-targeting is literally identifying the geographic areas where sales and marketing dollars are likely to have the most success.

John lunde from Reverse Mortgage insight has

developed a model that identifies the industry’s best opportunities. as volume drops due to Fha program changes, becoming more efficient will be critical. Geo-targeting has a second benefit, because the data shows that as you increase the penetration of reverse mortgages in an area, volume increases and costs go down. it makes sense that if more people know about a terrific product, they’re more likely to tell their friends and neighbors. The next sale is a little easier and less expensive than the last.

We believe we can increase volume and penetration by concentrating resources market by market. early next year, we’ll be sharing this data with all firms participating in this initiative. The firms can make their own decision on resource allocation, but i suspect we’ll see many choose to deploy in the target areas, driving up understanding and accelerating the education process.

Next we need to drive “3:1 positive” impressions. this is all about resources: people and content, putting an

offense into the game. nRMla has always

tracked stories published about reverses, and has recently started to track impressions: how people actually see the stories.

Proactive weekly brainstorming sessions will generate ideas that will be slotted into a marketing calendar for everyone’s benefit. NRMLA is asking industry firms to step up their testimonial gathering, not only from people who needed the product, but especially from those who used a HECM as a smart financial planning tool. The best stories and press releases, however, are built on new

and compelling research. The extreme Summit will be funding a significantly expanded research effort. columbia university’s chris Mayer is helping the industry identify the most pressing and interesting research topics and partner with universities interested in doing the research. This initiative should produce a stream of new insights landing about every other month throughout 2014.

Finally, we need to rebrand. While it would be prohibitively expensive to rename the product, many

industry leaders feel a rebrand is necessary.

Thanks in part to the recent Fha changes, there’s an opportunity to reintroduce the reverse mortgage product to consumers as new.

Many of the negative views about reverse mortgages refer to a product that no longer exists. There used to be high loan origination fees (loF), but today many consumers get the zero loF product. The upfront mortgage insurance premium paid to Fha used to be 2 percent, and now it’s 0.5 percent for draws below 60 percent of the principal limit for the first year.

Most importantly, financial and retirement research now shows that seniors should consider how a reverse mortgage could improve their retirement plans. Taken together, these product improvements lower costs and new research is leaving the “product of last resort” myth in the past. Many seniors use the product today as originally intended: a tool to release equity over time.

Call To aCTioN

Your participation is necessary for the success of this initiative. early

on, we discovered that no single firm could tackle this challenge. We need to leverage all the resources we have available in the industry. This starts with the fabulous and caring people who work locally in their market. This is a “ground game.”

First, strongly consider stepping up your outreach in the identified geo-target markets during the pilot periods. Your efforts will be magnified by others doing the same: increased seminars, more local advertising, increased local press and increased influencer discussions should all result in increased interest. Remember, these local markets were chosen because they already have the best return on investment (Roi) for your efforts.

Second, for the rebrand pilot markets, distribute and take advantage of the new marketing materials. These markets will see an increase in attention accompanied by significant TV advertising that will further raise

the visibility of the product. The new brand (with the same name) should start to make it easier for seniors to understand the product and for you to help them decide if a reverse fits into their retirement plans.

Finally, take advantage of nrmlA’s increased pr efforts in all markets. you’ll have access to reprints of some significant and positive articles. you’ve already seen the start of this effort with positive pieces in the Wall Street Journal and The new York Times. you’ll have access to nRMla’s marketing calendar along with more testimonials and educational materials on nRMla’s site.

WiNNiNg The BaTTle

every great product in history had to battle and overcome obstacles to become widely adopted. even utilities that we take for granted, such as electricity, 8

(Fact)financial and retirement research now shows that seniors should consider how a reverse mortgage could improve their retirement plans. taken together, these product improvements lower costs and new research is leaving the “product of last resort” myth in the past. Many seniors use the product today as originally intended: a tool to release equity over time.

| TRR38



were at one time maligned and discouraged. Marketing, advertising and gritty determination for folks who wanted a better life ultimately overcame these challenges.

it’s our turn to take on this challenge for one of the greatest products ever invented and help seniors live a more secure retirement. The reverse mortgage is not right in every situation, but it can help many more people than we’re helping today. Many seniors i speak with simply want to retire in their homes and not worry about losing their homes. Reverse mortgages are tailor-made for this situation, and when originated properly to the right consumers who maintain their tax, insurance and repair obligations, there is no better alternative.

We will need to overcome many obstacles, including perception and education issues. Many of the hecMs that have been sold have been to “needs-based consumers.” The industry’s sales and marketing efforts are largely targeted toward people whose other options have run out. We should be proud of these loans. Many homes were saved from foreclosure and hundreds of thousands of seniors are living a more secure retirement.

Refocusing some of our efforts on the “planning consumer” will target the larger market opportunity. These individuals may not need the money today, but including a reverse mortgage may strengthen their financial plans. Unfortunately, some are turned off by the product’s “government guarantee,” seeing it as a handout, and by the industry’s strong direct-sales approach. We need

to introduce them to the new reverse mortgage.

We need to recruit local allies (Realtors, financial planners, etc.) for this effort. Many of these individuals will be perceived as more credible, but this is early in the process; we just need the arms and legs to get the message out. some of the extreme summit was modeled on the “got Milk” campaign. in that effort, they attempted to include everyone with an interest in the product, including cookie companies and health advocates.

There are detractors of the old product, and we have an opportunity to win them over with the new product. Many of the issues identified by the product’s critics have been solved by Fha and industry efforts over the past year. Regulations and industry efforts over the past two years have made significant improvements to disclosures, steering and product cost. I’m confident the industry will keep working with Fha to continue these improvements. even while that’s occurring, we need to be more vocal about how dramatically the product has changed and how much better it is for the consumer.

WhaT iT iS

The extreme summit is all about increasing volume. There are many paths and activities to get there, but it’s our litmus test for every effort and every investment. We get ideas from anywhere, encourage our critics to help us make the ideas into robust plans, investing in the highest payoff ideas in the shortest amount of time.

admitting “we don’t know what we don’t know,” the entire program is built on experimentation. While only the best ideas get funded, they’re all turned into pilot programs with

specific goals and measurements. We will either succeed (deliver volume) or learn significantly from the pilot, or both.

We let the best idea win and have a brutal process for selection—it’s the “will you spend your own money on this?” test. outstanding ideas have been set aside because better ones proved to be more promising. even when a plan is fully fleshed out, we ask people to find something better. only once we fail do we declare an idea “the best for now” and proceed.

The extreme summit is incredibly bold in declaring a goal to grow industry volume to 300,000 by 2018. While this is only 1 percent of the available market, we don’t know if we’ll achieve it. declaring a bold goal forces us to think above and beyond what individual companies are able to accomplish today on their own.

We anticipate this to be a multiyear, multimillion-dollar effort. If the pilots succeed, we’ll need an increased and sustained effort to win over the country. even our success will uncover new challenges and obstacles. By design, however, the initiative was constructed so that success will create the resources to reach the next step. every journey, including a mountain climb, starts by putting one foot in front of the other and repeating.

WhaT iT iSN’T

Defining the Extreme Summit is also about what it isn’t. anytime there’s a new initiative with momentum, companies (or politicians) try to attach additional items or divert some of the funds. getting ground rules about what something isn’t can help minimize this distraction. 8

(our Goal)the extreme summit is incredibly bold in declaring a goal to grow industry volume to 300,000 by 2018. While this is only 1 percent of the available market, we don’t know if we’ll achieve it. Declaring a bold goal forces us to think above and beyond what individual companies are able to accomplish today on their own.

reFoCUSFrom the needs-based consumer

To the planning consumer

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The extreme summit won’t duplicate any existing nRMla initiatives or other industry efforts. There are many wonderful things being done by NRMLA and industry firms. These should all continue as appropriate with the current budget and spending. We will coordinate wherever appropriate, but never divert or get in the way. We won’t reprioritize existing resources or efforts underway at PR and other committees. This is an incremental effort.

The extreme summit won’t fund other industry initiatives; it is strictly about generating incremental volume through education. There are many pressing needs at nRMla and within the industry. if the last couple of years have taught us anything, it is that we can expect significant change. We’ll need to muster other resources if required to manage these situations.

The extreme summit won’t exclude anyone. While the initial program was kicked off by a handful of large firms, we want all nRMla members to participate and benefit from the effort. We also hope non-NRMLA members join the organization to take advantage of this and other resources.

The Extreme Summit isn’t a lead-generation campaign. companies (and whole industries) often think about marketing in terms of “brand” and “direct response.” Industry firms are doing a great job with direct response, and some even spend resources on improving the brand. To use a farming analogy, this isn’t about harvesting the corn; it’s about preparing the soil and

nurturing the environment.

hoW We goT here

This all started with an 8 a.m. brainstorming session at nRMla’s annual conference in san antonio in the fall of 2012. Much to my surprise, we had a packed house with 60 people not only attending, but vocalizing their views on our problems and presenting creative solutions. We brainstormed for more than 90 minutes on two simple questions: “Why is volume decreasing?” and “How can we fix it?”

The perception/reputation issue quickly bubbled up as a main issue. There were many other issues indentified, including lack of distribution, no remaining household names and product complexity. But as the participants debated, it appeared that many of those issues also had a root in the perception issue. We were later able to quantify this perception issue with the surveys of customers and non-customers.

We then moved on to solutions and ended up with literally dozens of great ideas. it became clear that there were multiple solutions to the problem, so we reached out to industry participants with surveys to get a sense of which ones had the greatest support.

some of the top industry ceos got together to see if there was an appetite to fund an industry initiative focused on growth. We laid out the data, the proposed initiative and ground rules for the extreme summit. one of the

ground rules was “vote with your dollars.” in other words, we would only go forward if the ceos thought the investment was worth it. near the end, we conducted a secret ballot of how much the ceos would invest and ended up with a five-year initiative with funding between $30 million and $150 million.

From the surveys, we plucked nine topics and recruited project teams to develop each idea in detail. a plan was developed for each, including cost and expected payback. in many cases, they needed to tap outside experts and develop new materials. Specifically for the “rewrap” effort, the team issued a request for proposal to 10 ad agencies, PR firms and image turnaround experts.

We then ranked every idea on a classic “four-block” matrix. On the x-axis was the return on investment, and on the y-axis was the cost. The investment took into account not only the dollar spend required, but also whether or not the initiative could leverage the assets we have in the industry (local brokers/lenders, fabulous consumer reviews, etc.). We let the best ideas float to the top.

in June 2013, the ceos did a pulse check on the ideas and asked the teams to develop detailed plans. They also reviewed presentations from four ad agencies on how to turn around the product’s reputation. and as always, we pulsed to make sure we were still willing to make the size investment. The teams were asked to keep going for a September “go/no-go” decision.

Jean Noble

Urban Financial Group

Marty Bell

NRMLA

Mary Smith

Liberty Home Equity Solutions

Teague McGrath

AAG

1 2 3 4

These four

i N D U s t r y M A r k e t i N G G U r U s have been instrumental in shaping the Extreme Summit.


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The team ultimately chose RadarWorks to develop the rebranding campaign. RadarWorks is famous in the tech space for working with Microsoft, acer computer, Star Trek into Darkness and others. They brought “product turnaround” technical expertise and a deep passion to help more seniors.

The moment of truth came just before nRMla when aag, generation, liberty, oneReverse, RMs, and urban decided to fund the initiative. They each made a $200,000 commitment to the rewrap pilot and an $8,000 monthly commitment to the intensified PR effort. Since NRMLA’s annual meeting in new orleans, other firms have expressed interest in joining, and nationstar has already made a commitment.

NexT STepS

RadarWorks will be developing the TV ads, marketing campaigns and sample materials for all industry participants. We’ll finalize our pilot markets over the next couple of months and plan to have a rollout of the rebranding

campaign at the end of the first quarter of 2014.

NRMLA and the industry firms that funded the initial effort will be communicating the geo-targeting and other pilot information to their industry partners. While we want everyone to be involved, a brand must have a consistent message and feel. anyone using the campaign will need to follow rules necessary to maintain campaign integrity.

The extreme summit will monitor progress and adjust the program in real time as needed. We anticipate some things won’t work as expected and will adjust accordingly. This is all data-based; our efforts must show up in applications and loans.

Please let us know if you’d like to be involved in the effort, we’ll have mailing lists to get you information in real time. We will also have public updates in various industry news outlets, and will continue to solicit broad input. Thanks in advance for your help on this important effort. x

These reverse mortgage lenders have generously

provided the initial funding for:

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hange. That is the overwhelming theme for 2013, and did we ever have change in our industry this year.

change isn’t always bad, even when it is somewhat drastic, as it has been with our industry. This year, hud made significant adjustments to the HECM program with the hopes of ensuring the future viability of reverse mortgages. These changes have made us all more nimble and ready to help meet the needs of seniors across the country.

One of the first hurdles we had to overcome this year is the removal of the Standard fixed loan option. This change removed the ability for seniors to take a very large equity draw, which hud believed resulted in complications with insurance and tax payments later into the life of the loans. The belief is that this modification will strengthen the program, so we must forge a new path without this loan option.

as the year progressed, there were more changes and new requirements. The signing of the Reverse Mortgage stabilization act brought many updates to the program, including smaller loans, first-year limits, Financial

assessment and fee changes. While many may see these changes as restrictive, there are still many seniors who will benefit from a reverse mortgage long after their initial draw.

While much has happened to the reverse mortgage program this year, one thing is clear: our industry must remain flexible and adaptable. Remember that our goal is simple: doing everything in our power to ensure the financial well-being of our clients. anything short of that is failure.

Financial assessment will start January 13, 2014, and while we know this will restrict some clients from obtaining a reverse mortgage, we have to adapt. our clients deserve to know that when they get a hecM, it is the best option for them. assessing a client’s ability to pay their obligations after taking a reverse mortgage gives them a better chance for success in the future.

With all of the changes in 2013 and those yet to come in the new year, we will be able to bring a stronger product to our clients. The changes will help bring stability to the program and protect not only the borrower, but also the lender.

it is important for us in the industry to embrace change. For those of you who may not think the changes are positive, or if you are not able to adapt quickly, remember these words from Theodore Roosevelt: “nothing in the world is worth having or worth doing unless it means effort, pain and difficulty.” x

2013: The Year of ChangerichArd mAndeLL

LAst wOrDReFLecT

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

C

ACCORdIngTO RICHARd

While much has happened to the reverse mortgage program this year, one thing is clear: Our industry must remain flexible and adaptable. Remember that our goal is simple: doing everything in our power to ensure the financial well-being of our clients. Anything short of that is failure.


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