Mortgage Professional America 8.04 by Key Media

KEITH MURRAY ON THE BAD DAY AT WORK THAT CONVINCED HIM TO CHANGE CAREERS

MPAMAG.COM ISSUE 8.4

LEAD GENERATION IN LEAN TIMES, A HEALTHY STREAM OF LEADS BECOMES VITAL

S R O T A N I G I R O

JEFFREY TAYLOR ON THE FUTURE OF THE REVERSE SPACE

G N E I H D T N E U L O Y R U G O N I Y V ARE TNERS GI E SERVICE? PAR T POSSIBL BES

N O S R E D N E L

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*Carrington will process any qualifying loan from the time a loan file is submitted to underwriting to the time it funds within 15 business days of appraisal receipt or the company will apply a closing cost credit of $500 to the loan once the loan closes. In order to receive the closing cost credit, any delay that causes the loan to close more than 15 days after appraisal receipt must be due to Carrington’s independent processes. If the delay is due to the broker, borrower’s or third party’s action or inaction or any other circumstances outside of Carrington’s control, the closing cost offer will be void. This offer excludes some loan programs, such as VA loans, USDA loans, 203K Loans Short Sales, New Construction loans, loans requiring property repairs, inspection, or re-inspection prior to closing, loans requiring condo approvals and flips. Offer is subject to revision or cancellation at any time. The appraisal received date is recorded in Pipeline Manager for all qualifying loans. Some loans may require additional information and be returned. Exclusions apply; contact your Account Executive for details. © Copyright 2007-2014 Carrington Mortgage Services, LLC headquartered at 1610 E. Saint Andrew Place, Suite B150, Santa Ana, CA 92705. Toll Free (800)561-4567. NMLS ID 2600. Nationwide Mortgage Licensing System (NMLS) Consumer Access Web Site: www.nmlsconsumeraccess.org. AZ: Mortgage Banker BK-0910745; 2159 McCulloch Blvd 4, Lake Havasu City, AZ 86403. CA: Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, File No. 413 0904. CO: Check the license status of your mortgage loan originator at http://www.dora.state.co.us/real-estate/index.htm. GA: Georgia Residential Mortgage Licensee 22721. IL: Illinois Residential Mortgage Licensee. MN: This is not an offer to enter into an interest rate lock agreement under Minnesota Law. MO: Residential Mortgage Broker License 09-1746-S. NH: Licensed by the New Hampshire Banking Department. NJ: Licensed by the N.J. Department of Banking and Insurance. NY: Licensed Mortgage Banker—NYS Department of Financial Services. New York Mortgage Banker License B500980/107664. OH: Ohio Mortgage Broker Act Mortgage Banker Exemption MBMB.850208.000 (FHA DE & VA Automatic loans only) OR: Mortgage Lender License ML-4886. PA: Licensed by the Department of Banking. RI: Rhode Island Licensed Lender, Lender License 20112809LL. VA: Licensed by the Virginia State Corporation Commission MC-5382. WA: Consumer Loan License CL-2600. Also licensed in AL, AR, CT, DE, DC, FL, ID, IN, ME, MD, MI, NM, NC, OK, SC, TN, TX, WV and WI. NOTICE: All loans are subject to credit, underwriting, and property approval guidelines. Offered loan products may vary by state. There is no guarantee that all borrowers will qualify. Restrictions may apply. This is not a commitment to lend. Terms, conditions, and programs are subject to change without notice. This information is for mortgage professionals only and is not intended for distribution to consumers. Carrington Mortgage Services is not acting on behalf of or at the direction of HUD/FHA or any office of the federal government. All rights reserved.

CONTENTS

MORTGAGEBROKERNEWS.CA

S R O T A N I G I R O ON RS18

E D N E L NEWS

BUSINESS STRATEGY 52 | The real cost of poor leadership Without strong leadership, your business will continue to sit atop a wealth of untapped potential

FEATURES

Alissa Prieto, Reverse Mortgage Funding

2 | AUGUST 2014

ORIGINATORS ON LENDERS Are you getting the best possible service from your lending partners?

8 | The data Must-read statistics for mortgage professionals 10 | News analysis Key trends affecting originators

COVER STORY

40 | Lead generation In lean times, a healthy stream of leads becomes vital FEATURES

REVERSE MORTGAGES The reverse mortgage market is lucrative, growing, and finding ways to help seniors when nothing else can. So why are some traditional originators wary of adding reverse mortgages to their product mix?

Don Currie, HighTechLending

Jonanathan Scarpati, Urban Financial of America

MORTGAGE INSIDERS 14 | Head to Head PCV Murcor’s Keith Murray didn’t start out as an entrepreneur – until a very bad day at work convinced him to follow his dreams 36 | Jeffrey Taylor An industry icon talks about his pioneering work in the reverse space and the future of the industry

PROFESSIONAL RESOURCES 32 | Reverse directory Looking for a reverse mortgage lender? Check out MPA’s comprehensive guide 44 | Branch networks MPA’s all-inclusive directory of branch networks

Josh Shein, Maverick Funding

Kimberly Smith, American Advisors Group

Rob Katz, ReverseVision

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EDITOR’S LETTER / 8.4

MPAMAG.COM

ORIGINATORS SOUND OFF Are your lenders providing you with the best possible service? We wanted to know what originators thought of their lenders, so we asked you to speak frankly about your experiences. In part one of a twopart series, we go beyond the marketing jargon and ask originators what’s really important to them when they’re looking for a lender. While almost every originator said things like product and pricing were important, we were surprised by some of the comments we received. To hear lenders tell it, turnaround time is an absolute deal-breaker to originators. But some of you don’t mind waiting a little longer for underwriting – as long as the lender is upfront with you about the timetable and sticks to it. Other originators say they’d rather have a lender who’s got strict underwriting standards – as long as they’re clearly spelled out – than one whose standards are more relaxed but might cause trouble down the line. And that’s just the beginning of our investigation into what brings originators and lenders together. In the coming weeks, we’ll be asking originators to rate their lenders’ performance in key areas. We’ll let you know which lenders made the grade in the next issue of MPA.

Ryan Smith, editor, MPA

COPY & FEATURES EDITOR Ryan Smith PRODUCTION EDITORS Moira Daniels, Richard Wood RESEARCHER Kendall Greenwood

ART & PRODUCTION SENIOR GRAPHIC DESIGNER Red Redrico DESIGN MANAGER Daniel Williams

SALES & MARKETING VICE PRESIDENT Cathy Masek NATIONAL SALES MANAGER Jack Burk COMMUNICATIONS MANAGER Lisa Narroway MARKETING EXECUTIVE Alex Carr

CORPORATE

CONNECT

Contact the editor: ryan.smith@ keymedia.com

CHIEF EXECUTIVE OFFICER Mike Shipley CHIEF OPERATING OFFICER George Walmsley MANAGING DIRECTOR Justin Kennedy CHIEF INFORMATION OFFICER Colin Chan HUMAN RESOURCES MANAGER Julia Bookallil Editorial inquiries Ryan Smith ryan.smith@keymedia.com Advertising inquiries Cathy Masek Cathy.Masek@keymedia.com Jack Burk jack.burk@keymedia.com Subscriptions subscriptions@keymedia.com Key Media 7807 E Peakview Ave Suite 115 Centennial CO 80111 United States of America tel: +1 720 316 0151 Offices in Sydney, Auckland, Toronto, Manila mpamag.com Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as MPA magazine can accept no responsibility for loss

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NEWS / FORUM FORCES

MPAMAG.COM

From House Republicans’ plan to repeal the Dodd-Frank Act to outrage over the Consumer Financial Protection Bureau’s rented headquarters, it’s been an interesting few weeks in the mortgage industry. And whatever the topic, MPA readers had an opinion. Below, participants in MPA’s online forum sound off on some of the issues affecting the industry DODD-FRANK

HENSARLING WANTS DODD-FRANK GONE This might be the only intelligent thing a Republican and especially Hensarling has said in the last few years. I’m pulling for them on this one. - Griff MPA online reader Griff reacts to chairman of the House Financial Services Committee Jeb Hensarling’s contention that the Dodd-Frank Act “enshrines ‘too big to fail’ into law.” I was hoping they were trying to repeal the entire act so the mortgage industry could get back on track and end the housing crisis once and for all! - Kevin Look out, maybe common sense is making a comeback! - Rick This is exactly what’s required to be done post haste because the Dodd-Frank Act is a complete failure. It is TRENDING government heavy-handed control that causes far more problems than it cures. The government wants to think for us and believes that they can make better decisions for us than we can. Big brother elitists thinking that they know what’s best for us. Please get out of our lives and our pockets with far less government control. Let the free market be free • Dodd-Frank without government interference... - Daniel M. White • Fannie and

Join the debate at mpamag.com/forum

6 | AUGUST 2014

Freddie • CFPB

WINDING DOWN

THE END OF FANNIE AND FREDDIE?

Dear dazed and confused lawmakers, NEWSFLASH: Fannie Mae and Freddie Mac are posting record profits and the foreclosure rate for mortgages originated and closed from 1/1/12 to present is less than 1%. Please stop trying to make yourselves look good by introducing lame and inept legislation for a problem that has already been solved. Get a life and pay attention. - Charles Stidham

Charles isn’t happy with the plan – by a trio of house Democrats – to replace Fannie Mae and Freddie Mac. Truthfully the government can’t screw up enough. Fannie and Freddie are posting record profits. Do you think they will lose these records too? That way they don’t have to account to the American people. - Gary H. Way to smash the little guy again, federal government – just to make it seem like you are doing something. This is 100% a big bank idea being sold through the politicians they keep in their pocket with campaign contributions. I wonder how much cash those house reps got from the major banks last election? - G A Montigny CRMS OVER BUDGET

THE CFPB’S EXPENSIVE HOME Anyone else watching House of Cards? The CFPB can justify spending 1/4 billion dollars on the remodel of a rented building and we cannot charge a processing fee on a brokered mortgage. -G

G isn’t happy that the Consumer Financial Protection Bureau is over budget on the renovation of its rented headquarters by an estimated $120m. Seriously, we MUST do something... This corrupt agency is out of control and they hold the keys to our industry and pocketbooks... - Maureen

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NEWS ANALYSIS / THE DATA

REVERSE MORTGAGEES GETTING YOUNGER The minimum age to qualify for a reverse mortgage is 62, but seniors historically have been much older before considering them. That’s changed over the last few years, however. During the 1990s, the average age of reverse mortgage borrowers was between 75 and

77 years old. By 2010, that average age had fallen to 73, and the average homeowner who received reverse mortgage counseling was only 71 years old. In the first half of 2012, almost half the homeowners who received reverse mortgage counseling were under 70.

AVERAGE AGE OF A REVERSE MORTGAGE BORROWER 80 79 78 77 76 75 74 73 72 71 70

Source: HUD

1990

1995

2000

2005

2010

WHY ARE SENIORS GETTING REVERSE MORTGAGES? Unsurprisingly, reducing debt is one of the main reasons seniors consider a reverse mortgage. According to a MetLife study, 67% of seniors considering a reverse mortgage said they looked at it as a way to reduce debt. Of course, that’s not the only reason seniors consider reverse mortgages. Many seniors said they also planned to use a reverse mortgage to enhance their quality of life, increase their income or have cash on hand for emergencies. 8 | AUGUST 2014

REASONS FOR INTEREST IN A REVERSE MORTGAGE Source: MetLife 80%

70 %

UNDER 70 70 AND OLDER

60%

50 %

40 %

30 %

20 %

10 %

PAY OFF DEBT

INCREASE INCOME

ENHANCE QUALITY OF LIFE

PLAN AHEAD FOR EMERGENCIES

MPAMAG.COM

SENIORS DEEPER IN DEBT

NO DEBT

If reducing debt is the No. 1 reason seniors are considering reverse mortgages, it’s no surprise. Seniors today are carrying more debt than ever before, according to a recent report by the Consumer Financial Protection Bureau. “In general, older consumers are carrying more debt, including mortgage, credit card, and even student loan debt, into their retirement years than in previous decades,” the report stated. According to a MetLife study, 79% of seniors who went through reverse mortgage counseling are dealing with debt, although those over 70 are less likely to be indebted than younger seniors. Still, many look to reverse mortgages as a way to pay off other debts.

MORTGAGE DEBT ONLY

UNDER 70

NON-MORTGAGE DEBT ONLY

70 AND OLDER

BOTH MORTGAGE AND OTHER DEBT Source: MetLife

10%

20%

30%

40%

50%

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AUGUST 2014 | 9

NEWS / ANALYSIS

REAL ESTATE

PSST. WANNA BUY A CITY? So how rich are the super-rich, really? Bill Gates – the world’s richest person, according to Forbes – is worth an estimated $77.5 billion. But above a certain amount, wealth becomes hard for the average person to comprehend. So Redfin decided on a novel way to show just how wealthy the superwealthy are – by figuring out which cities they could afford to buy. Gates, for instance, could purchase all 114,212 homes in the city of Boston. That’s every single-family home, every condo, every townhouse. What’s more, he’d still have nearly a billion dollars left over. If the Koch brothers have an affection for the South, they might consider purchasing Atlanta. The oil barons could buy every home in the city and still have nearly $8 billion left over. And if the Walton family (owners of Wal-Mart) pooled their money, they could buy every home in Seattle and still have $43.3 billion for walkingaround money. All told, the 30 billionaires Redfin profiled could pool their resources to own 6% of all US home equity.

10 | AUGUST 2014

WHO COULD AFFORD YOUR TOWN? Seattle, WA WALTON FAMILY WAL-MART

241,450 homes ($111.5bn)

Commerce City, CO DONALD TRUMP REAL ESTATE

17,527 homes ($3.9bn)

Anaheim, CA MICHAEL BLOOMBERG BLOOMBERG LP

69,167 homes ($31.4bn)

Sun City West, AZ STEVEN SPIELBERG MOVIES

18,934 homes ($3.4bn)

Peoria, AZ

Forney, TX

RUPERT MURDOCH NEWS CORP.

MARK CUBAN ONLINE MEDIA

60,894 homes ($13.5bn)

13,286 homes ($2.6bn)

MPAMAG.COM

St. Paul, MN MARK ZUCKERBERG FACEBOOK

139,124 homes ($26.8bn)

Boston, MA BILL GATES MICROSOFT

114,212 homes ($76.6bn)

Mokena, IL OPRAH WINFREY TELEVISION

10,625 homes ($2.9bn)

Centreville, VA ELON MUSK TESLA MOTORS

Falls Church, VA PHIL KNIGHT NIKE

23,789 homes ($8.8bn)

37,838 homes ($18bn)

Atlanta, GA KOCH BROTHERS OIL

Charlotte, NC WARREN BUFFETT BERKSHIRE HATHAWAY

286,629 homes ($78.1bn)

280,214 homes ($56.1bn)

Homestead, FL GEORGE LUCAS MOVIES

44,400 homes ($5bn) Source: Redfin

AUGUST 2014 | 11

NEWS / ANALYSIS

MPAMAG.COM

MARKET TRENDS

ALL-CASH PURCHASES Cash purchases were still a big part of the marketplace in the first half of 2014. In 17 of the largest US cities, 32% of homes purchased in the first half of the year were paid for in cash, according to Redfin. All-cash purchases started spiking in 2007 as the housing market collapsed, and have been at 32% or higher since 2011. They’ve stayed high thanks to tighter mortgage credit, low inventory and investor purchases, Redfin reported. Of the country’s largest metro areas, Miami, Las Vegas, Chicago and Phoenix have the highest percentage of allcash purchases, while Washington, D.C., Denver, Baltimore and Portland have the lowest. Cash purchases are more common at the low and high ends of the price spectrum. Homes in the middle range aren’t purchased for cash quite as often as those on the low and high ends, according to Redfin. Homes between $200,000 and $600,000 account for more than 50% of home purchases, and those buyers are much less likely to face all-cash offers. Baltimore has the lowest percentage of cash buyers in the middle range at 14%, followed by Washington, D.C. (15%), Denver (16%), Portland, Ore. (18%) and Boston (20%).

PERCENTAGE OF ALL-CASH PURCHASES 2000-2014 Source: Redfin 35%

30 %

25%

20 %

15%

10 %

2000 2002 2004 2006 2008 2010 2012 2014

MORTGAGES MAKING A SLOW COMEBACK In 2000, there were about 800,000 homes purchased with a mortgage across the 17 biggest metro areas, according to Redfin. That number had nearly halved in 2011, and was only up to 520,000 in 2013. But financed purchases have been growing, however slowly, since 2011. Meanwhile, all-cash purchases have remained relatively flat in those years. If the trend continues, homebuyers purchasing with a mortgage may not see themselves competing with all-cash buyers as often in the future.

1, 400,000

FINANCED HOME PURCHASES 1, 2 00,000

ALL-CASH PURCHASES 1, 000,000

Source: Redfin

8 00,000

6 00,000

400,000

2 00,000

00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13

12 | AUGUST 2014

HEAD TO HEAD / KEITH MURRAY

14 | AUGUST 2014

MPAMAG.COM

A WILL TO

SUCCEED An encounter with a bank robber made Keith Murray decide he was in the wrong line of work. But for the founder of PCV Murcor and VRM Mortgage services, success didn’t just come in a flash of insight – it was the result of grit and determination On a Friday afternoon in 1981, Keith Murray had a very bad day at work. He was already working below his skill level; shortly after he’d been transferred to the appraisal department of the savings and loan where he’d worked since he was 14, market vicissitudes had forced the institution to reassign its loan origination staff. So now, having worked his way up from the mail room, the 21-year-old Murray was manning a teller window in a Los Angeles branch. And that’s when men with guns walked in. “I sort of characterize that moment as starting my career without a bang,” Murray says. “I was sitting at my window helping customers, and I saw these two gentlemen walk in and jump the line. I initially stood up to tell them to get to the back of the line. It didn’t occur to me that they were actually coming in to hold up the bank. One stopped at the opposite end from me and one stopped in front of my window.” Pointing a gun at Murray, the criminal made a very large withdrawal. And that’s when Murray decided he was in the wrong line of work. “He cleaned out my drawer, and they quickly dispatched themselves out the back door,” Murray says. “And it was at that moment that I decided that

if I had any other dreams – and one of my dreams was to be my own boss – it was time. Potentially tragic events sometimes get you very clear on what’s important in life. It was literally the next day that I turned in my resignation.”

Sometimes not having any choice in terms of your options can make you very determined … That work ethic paid off, because it resulted in high levels of service and responsiveness to my customers AUGUST 2014 | 15

HEAD TO HEAD / KEITH MURRAY

Murray left banking and founded PCV Murcor. In the last 30 years, it’s grown to be one of the mortgage industry’s premier real estate valuation firms – and its success spawned VRM Mortgage Services, a default services provider Murray founded in 2007. But back in 1981, PVC Murcor started small. “I left the bank at a time when it really wasn’t a good time to go into mortgage origination,” Murray says. “But as always, there were still some mortgages being originated, so I was able to start this little company, initially called Pacific Coast Valuation, in my bedroom. I went door to door, card in hand, and finally got a few opportunities with small mortgage companies in the Los Angeles market.” Murray jumped at those opportunities, and kept making more for himself. And over the years, PCV Murcor has become a leader in the industry. According to Murray, that success is no accident. “I’m a man of faith. When you seek the right source for whatever you do, that can make a way for you,” he says. “And sometimes not having any choice in terms of your options can make you very determined. I was 21 years old, and literally it was a sunup-to-sundown endeavor. But really, that work ethic paid off, because it resulted in high levels of service and responsiveness to my customers. Whether you’re a one-man shop or a shop of a few hundred people like we are now, customer service is really what distinguishes you. I realized that as long as I delivered, and delivered consistently, I’d continue to get new opportunities. I think that’s universal in terms of business. Whether you’re selling hamburgers at McDonald’s or delivering valuation and asset management services like we do at our companies, customers count on you to be consistent.” After building one company from the ground up, most people might think about taking a break. Murray, however, decided to build on the success of PCV Murcor, founding VRM Mortgage Services in 2007. “When you think about it, it’s really a logical extension of the valuation process,” Murray says. “As we say at VRM, it all starts with value. We represent corporate sellers of real estate and really try to maximize their recovery on a property that they’ve made a loan on that’s gone into default.” And because of the valuation expertise at PCV Murcor, VRM is able to bring something to the table many default services providers can’t. “We have the ability to independently evaluate these properties and see if what they’re being valued 16 | AUGUST 2014

MPAMAG.COM

We want to make sure we’re partnering with clients who have a communitycentric approach … but also partnering with local professionals in those markets who have a vested interest in marketing those properties in the best possible way at is reasonable, and will result in the highest rate of recovery for our clients,” Murray says. And like its predecessor, VRM has become one of the premier companies in its space. “We have the distinction of being the largest privately owned asset management company in the country,” Murray says. “We’ve just sold 500,000 properties throughout the US – in excess of $50 billion in real estate. We’re very proud of that, and of how we approach the business from a communitycentric perspective. We want to make sure we’re partnering with clients who have a communitycentric approach … but also partnering with local professionals in those markets who have a vested interest in marketing those properties in the best possible way. We try to look at it as a home rather than an asset or on a transactional level.” Murray has come a long way in the 33 years since a bad day at work changed his life. But that day just provided the impetus; Murray says running with an opportunity is the key. “It’s making sure you’re well prepared, and staying focused on customer service and consistency components,” he says. “As a professional, once you’re prepared, you can always remember that no matter what you do, you can do it consistently. That’s our recipe for success and longevity.”

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FEATURE / ORIGINATORS ON LENDERS

S R O T A N I G I OR

N O S R E D N E L ible s s o p t bes rtant e o h p t u m i o t ving y at was mos also told i g s r e hey partn inators wh T . g r n e i n d t n par orig ur le Are yo MPA asked for a lending d not so well ? g n service when lookin oing well – a Lenders like to tout their wide product range, their d lightning-fast turnaround times, their cutting-edge to them lenders are t technology. But what really matters to brokers? a h us w MPA asked originators to give their honest feedback on what they look for in a lender – and we chatted with two prominent originators about what they think most lenders do well – and not so well. “They all have their niches, and they’re not all good at the same things,” says Jodie Tanga, loan originator and director of business development for Pacific Rim Mortgage. “That’s why different originators will be attracted to different lenders.” Still, most brokers are looking for a few basic things when they consider new lenders. Unsurprisingly, most brokers consider pricing and product mix to be vital factors when considering lenders. They’re also concerned with service, communication and compliance support.

18 | AUGUST 2014

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WHAT DO YOU WANT IN A LENDER? We asked originators what considerations they valued most highly when looking for a lending partner. Here’s what they had to say:

SERVICE AND COMMUNICATION Product and pricing may be the No. 1 concern of most originators, but Marc Savitt says he’s more concerned with the service he gets from a lender. “The very first thing I look at is service, because most wholesale lenders are competitive in pricing,” says Marc Savitt, president of The Mortgage Center, a West Virginia brokerage. “That’s really not the issue. The issue is service, because we as brokers are only as good in providing service to our clients as our wholesalers are to us. That’s the number one issue right there. Now, we understand that sometimes they get busy or they get backed up. You understand those things, especially if you’ve been in the business a long time. But service is vital.” Tanga says her biggest concern is communication. Even turnaround time is negotiable, she says, as long as a lender clearly communicates how a loan’s status is progressing. “Communication is key. As long as they communicate the timeline so that we can set expectations and set our timelines correctly, there’s no issue,” Tanga says. “The problem is when there are certain expectations and they’re not met.” Part of communication, Tanga says, is having underwriters available to discuss loan scenarios before an originator moves forward on a loan. “We all probably work with hundreds of leads. Being able to answer a buyer or a potential refinance scenario in a certain time is very important,” she says. “I think that’s a huge piece that most lenders are missing. Let’s say you shoot out an email and say, ‘Hey, I have this awesome buyer, but there’s just one little hiccup and I want to make sure that’s okay.’ Then the answer’s delayed. Now for the referral partner who gave you that lead, you’re not coming through. Everyone wants timeline and everyone wants rates, but the pieces that are even more important than that are communication and scenarios like that. You can set expectations accordingly.” And communication doesn’t just mean a clear view of the big picture. It means getting down to the fine details as well. “Most lenders are good at talking about their great products, and educating us about what they can do, but you really have to get into the fine details like what the overlays are, and what’s going to be a catching point for a particular loan scenario,” Tanga

• Pricing and product

97%

Unsurprisingly, almost every originator we talked to said pricing and products were key factors in their decision about whether to work with a lender. • Execution/speed

94%

A loan’s processing may be out of the originator’s hands – but he’s left holding the bag if the turnaround time is too long. The vast majority of originators said turnaround time was incredibly important to them when choosing a lender. • Service & communication

91%

Like their consumers, top originators value a reliable and communicative service provider. They want quick answers to their questions – and when lenders make commitments, originators expect them to keep those commitments. • Technology

89.9%

Although fewer respondents chose technology as the major influencing factor when choosing a lender, those who did took it very seriously. • Compliance support

79%

Although compliance is a continuing issue for all originators, it has become less front of mind over the past year and fewer originators are looking to their lenders for support. • Training and education

73%

Many respondents agreed that education and training was essential for their business. Especially important to originators was continuing education on changes to lenders’ products and guidelines.

“For the most part, the lenders have gotten better at communication. It used to be that sometimes you couldn’t find an account executive if you needed one – especially if there was an issue. But today they’re much better at that” Marc Savitt, president, The Mortgage Center AUGUST 2014 | 19

FEATURE / ORIGINATORS ON LENDERS

Savitt, however, thinks lenders and originators are communicating more effectively now than they have in the past. “For the most part, the lenders have gotten better at communication. It used to be that sometimes you couldn’t find an account executive if you needed one – especially if there was an issue,” he says. “But today they’re much better at that. They’re actually very good at responding when you need them. Communication has definitely improved.”

CLEAR AND THOROUGH

“They all have their niches, and they’re not all good at the same things. That’s why different originators will be attracted to different lenders” Jodie Tanga, loan originator and director of business development, Pacific Rim Mortgage says. “Another thing that will be really key is educating and updating on any changes to the guidelines. For a loan officer, it’s difficult to juggle all of the business and on top of that keeping up with changes to the guidelines. So when lenders can keep us updated, that’s really helpful because it keeps us up to date on what’s going on and what’s coming down the pipeline.”

20 | AUGUST 2014

A clear, consistent standard of underwriting is also vital, Savitt says – and with today’s tougher compliance standards, “more lenient” doesn’t necessarily equal “better.” Most importantly, underwriting needs to be thorough – first time, every time. “I do know there are some wholesalers out there who have even issued approval letters – have been down to the day of closing – and then found they made a mistake somewhere along the line,” Savitt says. “In other words, nothing has changed at the end with the loan, but they’ve made a mistake somewhere and ended up revoking the approval and denying the loan. It’s never happened to me, but if I were the consumer, I can only imagine – ‘Why am I just finding out about this now?’ It’s infrequent, but it does happen. “Most everybody follows the guidelines, but maybe not to the same extent. You can take five different wholesalers and they may have five different interpretations of the rules. So as a broker, you really want to know the rules yourself. If not, you could have one wholesaler who’s very strict on the rules and another who says, ‘Well, we have a different interpretation.’ Now, you may want to go along with that, but in the end it could come back and hurt you. If there’s time to do it over again, there’s sure as heck time to do it right the first time.” The difference in compliance protocols across the industry can be infuriating for brokers trying to keep track, Savitt says. “That’s something we as an industry need to work on, and I think that’s something the CFPB needs to do as well,” he says. “These lenders all have their own compliance attorneys, and they all talk to the CFPB. And it’s amazing how everybody can come away with a different interpretation. That’s something that needs work for everybody to be on the same page.”

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HOW DO YOU PICK A LENDER? CHECK OUT THE NEXT ISSUE OF MPA!

We’ll be conducting a massive survey of originators, asking you where your lenders excel – and where they fall short. We’ll be reporting the results in our next issue.

CAN’T WAIT?

Log onto mpamag.com and check out our forum. You can talk to colleagues about which lenders make the grade – and which to avoid.

STRICT SCRUTINY Above all, Tanga says, lenders need to remember that when the process doesn’t go smoothly, it’s the originator who has to face the customer. “I think a lot of lenders kind of mess up at the end, which is funding,” she says. “You can have a great process until you get the loan documents, but funding is the end piece, and it’s the last thing customers are going to remember.”

That’s why lenders need to know that responsible originators are going to be very picky when looking for a new lending partner, Savitt says. “You want to do your due diligence. They’re going to check you out as a broker and you’ve also got to check them out as a lender,” he says. “What we generally do when a new lender comes in is ask for a couple of references from other brokers that they’ve worked with. Then we’ll check with those individuals. Social media like Facebook can be very valuable for that. You also want to check them out with the attorney general in their home state to make sure there aren’t a lot of complaints. If that’s been a problem in the past, those problems could arise again and end up hurting us. So just like they check us out, we check them out.” But for the most part, Savitt says, lenders are staying on top of the fundamentals. “I would say in order to be in business today you’ve pretty much got to have your act together. There may be a few issues here and there – isolated issues – but that’s with any business today. For the most part, the folks that are around today are doing it right.

AUGUST 2014 | 21

SPECIAL REPORT / REVERSE MORTGAGE

THE REVERSE REVOLUTION

22 | AUGUST 2014

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The reverse mortgage market is lucrative, growing, and finding ways to help seniors when nothing else can. So why are some traditional originators wary of adding reverse mortgages to their product mix? MPA sat down with six reverse mortgage experts to talk about growing the industry, attracting new talent and tapping into a market of 10 million homeowners

AUGUST 2014 | 23â&#x20AC;&#x201A;â&#x20AC;&#x201A;

SPECIAL REPORT / REVERSE MORTGAGE

he reverse mortgage market has been around since 1989. It’s helped financially strapped seniors when nothing else could, and it’s extremely lucrative for originators. So, why are so many mortgage professionals hesitant about adding reverse mortgages to their product mix? MPA sat down with six reverse mortgage experts to ask them about attracting new talent, tapping into an ever-growing market, and where the industry as a whole is headed.

THE EXPERTS

SMALL BUT GROWING “Reverse mortgages are still just a blip on the radar – especially in comparison to the forward space. We’re still growing significantly, but we would really like to continue to grow this industry,” says Alissa Prieto, regional account manager for Reverse Mortgage Funding. “I think it’s very important for us to continue to educate senior homeowners – as well as all age groups – and realtors, brokers, lenders. It’s such a great program that we really need to do a better job of getting in front of everybody and making sure they understand the benefits of a reverse mortgage.” “I believe the stat is that 10,000 seniors turn 62 every day. So the market is growing,” says Kimberly Smith, senior vice president of

“I think what’s missing from the industry is more loan officers talking about the product and educating financial planners and accountants, getting more people talking about it to tap into that market.” Rob Katz, executive vice president, ReverseVision 24 | AUGUST 2014

Rob Katz Executive vice president of ReverseVision

Kimberly Smith Senior vice president of wholesale lending for American Advisors Group

Alissa Prieto Regional account manager for Reverse Mortgage Funding

Josh Shein Executive vice president of Maverick Funding’s Reverse Mortgage Network

Don Currie President of HighTechLending

Jonathan Scarpati Vice president of Urban Financial of America’s wholesale lending division

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wholesale lending for American Advisors Group. “Right now we have the Baby Boomers turning 62, which is the qualifying age for a reverse mortgage, and on top of that most of these seniors have an amazing amount of home equity they’ve built up over the last 30 years.” The issue, says ReverseVision executive vice president Rob Katz, isn’t a lack of qualified borrowers – it’s a lack of education. “Let’s say that 10 million homeowners over the age of 62 have lots of equity in their homes. Last year there were 50,000 (reverse) loans done. So it’s something like 0.003% of the marketplace that actually got a loan last year,” he says. “I think what’s missing from the industry is more loan officers talking about the product and educating financial planners and accountants, getting more people talking about it to tap into that market.” “We’re only at a 2% or 3% market penetration when it comes to reverse mortgages,” adds Don Currie, president of HighTechLending. “And the challenge for the industry continues to be educating the consumer – eliminating the fear that some consumers have from the misconceptions they have about the product – and educating forward originators,” says Josh Shein, executive vice president of Maverick Funding’s Reverse Mortgage Network. “Some of them have a fear about a new product, a product they’re not familiar with. So it’s getting them comfortable with this product, educating them about it, getting them comfortable with originating it and talking with their borrowers about it. That will help increase that penetration.” “We so often hear that it’s too good to be true,” Smith says. “That’s the education piece – it truly does offer an amazing financial tool. It’s just being educated on how it works.” “What’s interesting is that about 98% of people out there have now heard about reverse mortgages over the years,” says Jonathan Scarpati, executive vice president of Urban Financial of America’s wholesale lending division. “I think we’re doing a lot better job getting the word out. But there’s still only 30% that would actually consider one. I think the majority of those people that aren’t considering them have misconceptions about the way the product works. Because once you do truly understand how the product does work, it’s outstanding.” And Katz thinks that’s a shame because reverse mortgages aren’t only a boon to seniors – they can

“Reverse mortgages are still just a blip on the radar – especially in comparison to the forward space. We’re still growing significantly, but we would really like to continue to grow this industry.” Alissa Prieto, regional account manager, Reverse Mortgage Funding help originators replace lost business. “I think one of the most interesting things is that in the forward space right now, the refi market is dead. Rates have gone up and pretty much everyone who was going to refi has refied,” he says. “So if you’re an originator in the forward space, you’ve lost a huge chunk of your business. The purchase market is okay. It’s not as strong as we want it to be. Now compare that to the reverse side, where you’ve got millions of people who could use the loan. Even though it’s a small fraction of the total mortgages that are out there, it’s where the market should be looking.” Shein agrees. “Those originators who are trying to jump into the purchase market are realizing there’s not enough to replace all the refi activity AUGUST 2014 | 25

SPECIAL REPORT / REVERSE MORTGAGE

they’ve had over the past few years. This is a great avenue for them to jump into – understanding the differences, being educated on it and being patient with the sales cycle and the kind of borrower they’re working with. That’s a major, major point that they have to keep in mind when exploring reverse mortgages.”

EXPANDING THE SPACE The biggest stumbling block to exponential growth in the reverse space, Scarpati says, is simply a

“Right now, when it comes to seniors – particularly seniors that are living on Social Security or maybe a pension – they can’t qualify for the traditional loans, and really the reverse mortgage is the only option for them.” Don Currie, president, HighTechLending 26 | AUGUST 2014

dearth of reverse originators. That’s why one of the industry’s top priorities is bringing more forward originators into the reverse fold. “This is an educational sale, and it’s really important to educate as many seniors as possible. The problem is that there aren’t nearly as many boots on the ground as there should be to really explain and drive home the benefits of reverse mortgages,” he says. “We need a lot more people to enter the space … It’s just a matter of educating more and more seniors out there.” “I feel like there’s a fear of the unknown out there for originators,” Shein says. “The originator that’s used to doing refinance, maybe some purchases as well, has a fear of the unknown with a reverse mortgage product: ‘How do I do it? The software’s different, the product’s different, the compensation’s different.’ They step back a bit, get a little nervous, don’t want to get into it. Once they learn about it, that makes a big difference. Then they say, ‘Okay, I do want to offer this product.’ But that’s a big challenge for all of us in the industry – finding people who are interested in this and spending the time training them on it, how it works, how it’s a great product for you as an originator – and certainly great for the consumer as well. All of us – and all of our companies as well – spend our days and nights trying to figure out how to attract more talent to the industry. Because it is needed, and it’ll make a big difference for everybody.” “I think our goal is to make ‘reverse mortgage’ a household term,” Prieto says. “Many of us have been in the industry a long time, and we’ve made leaps and bounds from where we originally started. But we want this to continue to grow, and we’ve been stuck at that 2% to 3% penetration. Our goal here is to continue to educate and make sure there aren’t misconceptions about the product, because it really is such a great program. It can assist so many senior homeowners. We do need more talented salespeople … We really do want to make sure this product is out there for everyone who needs it.” “I think ultimately … if we could get every forward mortgage shop adding this to their product mix, that’s going to be how we take this product to the masses,” Smith says.

WHY REVERSE? So the reverse space is always looking to grow. But why should a traditional originator add reverse mortgages to a product mix that’s already doing just fine? There are a lot of answers to that question,

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according to the experts – number one being that it’s simply important to offer borrowers as many options as possible. “I think it’s important for a forward originator to want to have access to and offer as many products as possible,” Shein says. “Whatever’s in the industry, they want to have in their bag of tricks – anything that their competitors are offering or that the consumer might be hearing about. I think adding this into your mix allows you to be a full-service provider to your customer. It helps your referral sources and makes sure you can provide the consumer with the best possible product. Maybe they are a better fit for a reverse. Maybe they’re a better fit for a traditional refinance. If you know all the products and have access to all the products, you’re in a better position to find the best fit for the consumer. So I think it’s essential for any originator to be able to offer all the products.” “I was a broker for 15 years and then on the banking side for the last 15 years, so about 30 years altogether,” Currie says. “And I think the philosophy has always been that when somebody sits down in front of you and there’s a loan in the industry to be offered to that person, you should be able to offer that loan. Right now, when it comes to seniors – particularly seniors that are living on Social Security or maybe a pension – they can’t qualify for the traditional loans, and really the reverse mortgage is the only option for them. As an originator, it’s really important that you’re able to place those seniors into the right loan for them. Back when there were stated-income loans, for instance, the industry really did a terrible disservice to seniors by putting them into stated-income loans when they really should have been giving them reverse mortgages. If they can’t qualify for a traditional loan, they should be getting a reverse mortgage.” Reverse mortgages are also less vulnerable to the vagaries of a volatile market, says Scarpati. “Reverse mortgages are a non-interest-ratesensitive product. Whether rates are up or down, people are always looking for reverse mortgages. And it’s a lot less competitive than the forward industry. You’re probably competing with hundreds of companies versus thousands and thousands of companies that offer traditional mortgages. With the number of seniors who are coming of age and the market that’s already of age, it’s a tremendous opportunity to grow your business and add an additional product. Not to mention that if you’re

“How do you build your business? How do you reach out to those borrowers? Education. Building relationships. … The bottom line is, whatever you’re comfortable doing as a forward LO, do that.” Josh Shein, executive vice president, Maverick Funding’s Reverse Mortgage Network already spending money in the forward market and you’re generating leads, I guarantee you there’s a tremendous amount of opportunity in the people you’re already talking to.” And of course, there’s the simple fact that reverse mortgages can bring in more money for originators than traditional loans. “It’s a lucrative loan program,” Smith says. “As a broker, you are going to earn a tremendous amount of money on these loans.” “You can close three loans and make the same amount of money you’d make closing six or seven loans on the forward side,” Prieto adds. For Currie, one of the biggest benefits of having reverse mortgages in his product mix is the emotional payoff of helping seniors in need. “I’m kind of a feel-good lender,” he says. “What I mean by that is that I really like it when we’re done AUGUST 2014 | 27

SPECIAL REPORT / REVERSE MORTGAGE

“Whether rates are up or down, people are always looking for reverse mortgages. And it’s a lot less competitive than the forward industry. ” Jonathan Scarpati, vice president of wholesale lending, Urban Financial of America

with a transaction and everybody shakes each other’s hands. When it comes to reverse mortgages, it’s amazing the emotion that happens at the closing table. You’ll have seniors who are literally crying, saying that you’ve saved their life, you’ve changed their life – as opposed to the forward side where they say, ‘Well, thank you for saving me $200 per month.’ This is really more of a life-changing, lifesaving deal. Not only do you get that emotional 28 | AUGUST 2014

reward, you get the financial reward also – which is just an amazing yield right now.” “Statistically, 97% of people who get reverse loans rave about them,” Katz adds. “Nowhere in any industry is there a 97% satisfaction rate. But people love this product, because when they get it, it saves them. It’s a very positive thing.”

TARGETING THE MARKET So how does an originator reach out to the evergrowing population eligible for reverse mortgages? “There are several different ways to target the population,” Smith says. “One of them is television. American Advisors Group does a lot of television advertisements. We actually do sell those leads, so that’s one way to generate business. Most brokers are out on the streets talking to people, financial planners. There’s also mail, social media – all kinds of different avenues. I would say that the same way you’re generating your forward leads, you can generate reverse leads as well.” “Mining the database is going to be key – going through that database of existing borrowers who didn’t get approved, couldn’t get approved, decided not to move forward,” Shein adds. “If they’re over the age of 62, they could be eligible for reverse mortgages. … The internet is a large growth area as well. There are a lot of leads being generated that way.” And seniors today are more comfortable with technology than ever before, Smith says. “The seniors are getting younger and much more tech-savvy, so we’re seeing a huge increase in lead generation online,” she says. “One of our most successful branches does payper-click – Google AdWords and such,” Currie adds. “What we’re finding is that whereas 10 years ago many seniors didn’t even have computers, now because the Baby Boomers are turning 62, they are going online. They’re shopping for reverse mortgages online, and they’re very intelligent and very savvy. For us at HighTechLending, that’s really something we’re focusing on.” But it’s not only seniors that reverse originators should be marketing to, Smith says – it’s also their children. “They’re what we call the sandwich generation; they’re still taking care of their kids, and now they’re helping their parents out as well,” she says. “So a reverse mortgage is a great tool for that generation to help their parents out.”

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SELECTING A STRATEGY But with so many marketing options, how do originators decide what will be most effective for them? The important thing, the experts say, isn’t so much the tools you have as how you use them. “The key to this industry is relationships. So when it comes to marketing reverse mortgages, I don’t think you can do just one thing,” Smith says. “I think you need to be doing a couple of different things, building those relationships with financial planners… as well as the consumer. I mean, there’s nothing more powerful than a testimonial from one of your senior borrowers.” “At HighTechLending, we use many different mediums of marketing, whether it’s direct mail or social media, and what we’ve found is that they all work,” Currie says. “Seniors take the message from different media in different ways, and we found that by going out to the house and actually meeting with the senior face to face, your chance of closing went up exponentially.” “It’s economies of scale,” Shein says. “How do you build your business? How do you reach out to those borrowers? Education. Building relationships. Whether it’s in person, which is an outstanding way to reach out to them on the product, or even if you’re on the phone. You can be successful that way. Many are successful doing it that way. You’ve just got to build that relationship and take that consultative approach to the sale … The bottom line is, whatever you’re comfortable doing as a forward LO, do that. With a pool of 10 million prospects, you’re going to get people that respond well over the phone, you’ll get people who respond well face to face. The market is so large that whatever you’re comfortable doing, do it.”

MAKING THE MOVE Let’s say you’re convinced. You want to add reverse mortgages to your product mix. But one problem remains, and it’s a biggie: You’ve spent your whole career originating traditional mortgages. How do you make the switch to reverse? “With the reverse, it’s fairly simple,” Shein says. “You just have to make sure your borrower is over 62, lives in the home and has sufficient equity in the home. That’s the main sum and substance of what you need to make sure that loan is going to come to closing. There are obviously some other details involved in the underwriting process, but that is the key.”

“The key to this industry is relationships. So when it comes to marketing reverse mortgages, I don’t think you can do just one thing. I think you need to be doing a couple of different things, building those relationships with financial planners as well as the consumer.” Kimberly Smith, senior vice president of wholesale lending, American Advisors Group “Ultimately it’s an FHA loan,” Smith adds. “So from an underwriting perspective, we’re following traditional FHA guidelines. Where we kind of separate is that there’s no monthly mortgage payment on these loans … What the clients are responsible for are their property taxes and insurance. The industry is working with FHA right now to ensure that a borrower is capable of paying AUGUST 2014 | 29

SPECIAL REPORT / REVERSE MORTGAGE

his taxes and insurance. So that’s an element that’s in transition right now, but ultimately you’re following traditional FHA rules. There is a learning curve, but ultimately I’d say it’s a short learning curve to get around.” Still, Currie says, when loan originators are dealing with seniors, they don’t want to just hope they know what they’re doing. “There’s always that conversation of, ‘How do we get forward mortgage people to do reverse mortgages?’ And we all know that there’s a big chasm between the two,” he says. “So at HighTechLending, what we’ve really focused on is coupling that naïve broker or loan officer up with a reverse specialist … Seniors are a very protected class, so we really don’t want people who don’t know how to do reverses out trying to do reverses. You don’t want to practice at this. I feel as an

30 | AUGUST 2014

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industry we really need to have professional reverse specialists partnering with the forward loan officer and really mentoring them through the entire process. And considering how eager for growth the reverse space is, finding that mentorship shouldn’t be a problem. “I think everyone at this table – and most people in the industry – really have their hands out to help forward loan officers,” Shein says. “Not only to educate, but really to walk them through every step of the process – the sales cycle, the origination, all the way to closing. So they don’t have to experiment or learn on the fly. They can really have someone at their side every single step of the way.” “As an industry, we’re not lacking in the training department,” Prieto says. “We just need more people to train.”

Reverse Mortgages: The right strategy for a well diversified business

Learn how to expand your business with the nation's #1 Reverse Mortgage Lender.

If Reverse Mortgages aren’t part of your product mix—or if you’re not working with the right Reverse Mortgage company—you may be missing an unprecedented opportunity to serve a rapidly growing customer base: homeowners age 62 and older. As leading experts in Reverse Mortgage financing, we can give you the resources you need to succeed with this vital product. If you are interested in learning more about Reverse Mortgage products and their income potential, call 855-77-URBAN (855-778-7226) or visit ufawholesale.com

*Since December 2011. Based on trailing 12 months’ endorsement volume. Source: Reverse Market Insight. For business and professional use only. Not for consumer distribution. NMLS #2285 (http://www.nmlsconsumeraccess.org/EntityDetails.aspx/COMPANY/2285); Corporate Office: 8909 South Yale Avenue, Tulsa, OK 74137. Not all products and options are available in all states. Terms subject to change without notice. ©2014 Urban Financial of America, LLC. All Rights Reserved. CALIFORNIA BUSINESS NAME: URBAN FINANCIAL GROUP OF AMERICA, LLC. NEBRASKA BUSINESS NAME: REVERSE IT! LLC. UFA109 [Exp 07/2015]

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1 2 AUGUST 2014 | 35

INDUSTRY ICONS / JEFFREY TAYLOR

If you went to apply today to get a home equity loan at a bank, they’re going to underwrite you, they’re going to look at a credit score, and they’re going to see that you have the ability to make the monthly payment … The reverse mortgage leverages (seniors’) own home equity. It allows them to age in place and access some of that cash without having to move

36 | AUGUST 2014

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REVERSE PIONEER When the Department of Housing and Urban Development first announced the reverse mortgage program back in 1989, Jeffrey Taylor knew he had to jump at the opportunity

Today, Jeffrey Taylor is on the board of directors of ReverseVision, the reverse mortgage industry’s leading provider of software and technology. But when the reverse mortgage program first burst on the scene 25 years ago, Taylor was doing the same thing everyone else in the industry was – originating traditional mortgages. But when the Department of Housing and Urban Development announced a pilot program for a new loan product, Taylor knew he had to get in on the ground floor. “Back in 1989 I was president of Wendover Funding,” Taylor says. “We were a large loan servicing organization and loan originator for the forward industry – and of course, that was the only industry we had before reverse. In 1989 I noticed that HUD was going to come out with a pilot program that was going to, by lottery, select 50 lenders to make 50 reverse mortgages each. I thought, ‘With the demographics of retirees, this really could be the next frontier for mortgage lending.’

“I wound up deciding that this would be a program that our company would definitely benefit from, so we made a commitment to the selectees in the lottery that we would subservice the loans that were made,” he says. “There were no servicing instructions; these loans had never been made. But we knew that in order to encourage these 50 lenders, there had to be some vehicle to do that, and we were successful. We signed up probably 95% of the lenders, and that’s how we got into the business.” But getting into the business didn’t happen overnight, Taylor says. Logistics – and the limitations of the era’s technology – meant that the reverse mortgage space took a few years to get off the ground. “Fifty lenders each got to make 50 loans, so that was 2,500 loans under the demonstration program. That probably took about three years to get to, because at this time there was no Microsoft Windows – everything was written in DOS,” he says. “There had to be counselors trained, because under the provisions of the law each senior had to receive counseling … There were so many things that had to be put in place, and we were the pioneers. “After we got through the demonstration program, HUD raised the limits that lenders could make. The primary lenders that got involved with this product were FHA-approved mortgage lenders, because you had to be to make an FHA loan. Typically banks were not FHA approved, so by and large most mortgage companies were the initial participants in the business. From 1990 to about 1994, we started seeing some interest from financial institutions. Some banks started showing interest and the AARP was very involved.”

AUGUST 2014 | 37

INDUSTRY ICONS / JEFFREY TAYLOR

But the program still needed quite a bit of finetuning. “One of the big drawbacks to the program was, because it was an FHA loan, the maximum lending limit was limited to the maximum limit of the county involved,” Taylor says. “About 80% of the counties in the United States at one point had a maximum lending limit of $47,000 or $48,000.” That fractured system, along with other issues, was hobbling the industry. So in the late 1990s, Taylor and others set out to change that, forming the National Reverse Mortgage Lenders Association. “In 1997, I was the founding chairman of our national trade organization, and we began to lobby HUD and congress to establish a national, single lending limit, and we were successful in doing that,” he says. “It went from a very fragmented lending limit throughout the country to a national lending limit of $417,000 – which was the same as Fannie Mae and Freddie Mac. Today it’s $625,500. “I testified in front of the Senate Housing Committee on this. Prior to that change, we could isolate a situation where if you had two 75-year-old widows, one in Dade County and one in Broward County, with home value, because of the inconsistency in maximum lending limits the one in Dade County could get more money than the one in Broward County.”

CRASH “The 90s were a pretty good growth period,” Taylor says. “Then we got into the 2000s. I retired out of Wendover and was recruited out of retirement by Wells Fargo. I started the Wells Fargo senior products group. We grew it from 40 loan officers to 1,200. When I retired in 2009 we had 25% or 26% of the market. We authored reverse mortgages in every branch that Wells Fargo had.” But events caught up to the growing industry. “Then we had the financial meltdown and Wells Fargo went back to its core products,” Taylor says. “And since reverse was still so small in respect to all the other products, they elected to exit the space.” As the economy crumbled, other big financial institutions like JPMorgan and MetLife also backed away from the reverse space. “That left the remainder of the reverse-only lenders – I’m thinking of American Advisors Group … Urban Financial, Generation, etc. That core group of lenders still remains,” Taylor said. With big banks exiting the space, reverse 38 | AUGUST 2014

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In 1989 I noticed that HUD was going to come out with a pilot program that was going to, by lottery, select 50 lenders to make 50 reverse mortgages each. I thought, ‘With the demographics of retirees, this really could be the next frontier for mortgage lending’

specialists now had a shot at the entire market – but challenges remain. “The thing that impacts the volume of reverse today is actually a combination of a couple of things,” Taylor says. “One is home values – no one ever thought home values were going to lose 40%. In a lot of retirement communities, those people who thought at one point that they might get a reverse mortgage – when their home values lost that much money (after the meltdown), the equity was just not there. Also, about three years ago, Fannie Mae ran into its problems. Fannie Mae was the primary investor for the FHA-insured reverse mortgage. When they closed their window, the only liquidity for the product became Ginnie Mae.”

LOOKING TOWARD THE FUTURE Despite the challenges facing the industry, Taylor says good things are on the horizon. “If I look in my crystal ball, I’m very optimistic,” he says. “It’s predicted that 80% of the real estate markets in the United States will see an uptick in value. I think we’ve seen that with banks being more willing to revisit home equity lending. In its simplest form, the FHA reverse mortgage is just a home equity loan that doesn’t require monthly payments.” And he’s still a big believer in the benefits reverse mortgages provide to senior citizens. “One of the great features of the program (is) that if you went to apply today to get a home equity loan at a bank, they’re going to underwrite you, they’re going to look at a credit score, and they’re going to see that you have the ability to make the monthly payment,” he says. “With the FHA reverse mortgage, you’re not evaluated on your ability to make a monthly payment, but you are evaluated on your ability to continue to pay your ongoing annual taxes and insurance. The reverse mortgage leverages (seniors’) own home equity. It allows them to age in place and access some of that cash without having to move.” Reverse mortgages, in other words, aren’t just a convenience. For thousands of senior citizens, they’re life-changing. “(Without a reverse mortgage) a retiree in today’s market would often have no option other than selling their house at a loss, moving in with family – but repeatedly, 80% of retirees say they would prefer to age in place,” Taylor says. “It’s not right for all, not all seniors need it, but I think that financial planners are realizing it can be used in a very strategic way. I’ll probably at some point look to leverage the benefits of a reverse mortgage myself.”

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FEATURE / LEAD GENERATION

TAKING THE LEAD

Leads are the lifeblood of successful mortgage companies, and figuring out how to generate them can almost be a full-time job in itself. But not all lead generation strategies are created equal It doesn’t get much simpler than this: If you have no customers, you have no business. And if you have no leads, you have no new customers. If you want to grow your business and keep new customers coming through the door, you’ve got to have a rock-solid lead-generation strategy. But the lead-generation game is changing. Originators used to be able to rely on direct mail, radio advertisements and the like. But as technology takes a bigger and bigger role in the industry,

40 | AUGUST 2014

originators are adding websites and social media to their lead-gen efforts. Keeping up with the industry’s tech trends is vital – but, according to Lead Gen Concepts co-founder Paul Johnston, that doesn’t mean the tried-and-true strategies don’t work, too.

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POUNDING THE PAVEMENT “Leads come in from you doing something. You have to pick up the phone. You have to create some kind of worth for yourself so people want to work with you,” Johnston says. “You really just need to ask. You need to get out there and do it.” There are a lot of lead-generation strategies, ranging from low- to high-tech. And yes, an online presence is important. But the way to start, Johnston says, is to get out there and do some good oldfashioned pavement pounding. “If you want to generate your own leads, you need to start with marketing to local realtors, marketing to specific demographics in various forms,” he says. “Networking to title companies and doing presentations for their realtors – even offering some kind of strategy session on how they can generate their own leads. I could go on and on, but that would be a couple of good places to start.”

KEYS TO SUCCESSFUL LEAD GENERATION • Authority Choose a niche to own • Buyer empathy Understand the needs and wants of your target audience • Marketing Drive qualified traffic to your website through search engine optimization, pay-per-click advertising, press releases, content marketing and online networks • Sales management Invest in a good lead-management system and keep a close eye on the results Source: Mark Madsen, Best Rate Referrals

LEAD GENERATION BY THE NUMBERS: WHAT ORIGINATORS NEED TO KNOW Hot tips

Calls

391%: Leads

5 minutes:

16%: Leads that are

called with 60 seconds have a 391% better chance of converting

138%: Attempting

contact at least six times can increase the contract rate by 138%

3 or more texts:

Sending three or more purposeful text messages after contact has been made with a prospect can increase the conversion rate by 328%

Calling a lead within five minutes increases the contact rate by 500%, compared to calling after 10 minutes

76%: Up to 76% of

high-quality leads contacted within three minutes are immediately qualified

100 times: Calling a

50%: More than 50%

lead within five minutes makes you 100 times more likely to reach the lead than if you called after 30 minutes

60%: Nearly 60% of

2 calls: Making two

of aged leads are still interested in buying 30 days after inquiry salespeople make less than six contact attempts

78%: of buyers close

with the company that contacted them first

calls instead of one increases the chance of contacting a lead by 87%

2.8 calls: Lenders

averaged 2.8 calls per lead

Source: Velocify

Follow-up

sent email messages in between phone contact attempts have a 16% higher chance of being contacted by phone

3.5 times: Leads that receive email nurturing have a 3.5-times higher conversion rate

53%: An average 53%

conversion gain can be achieved with the recommended email timing

Less than 1: Lenders averaged less than one email per lead

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58%: of lenders sent email within 24 hours

391%: Response

within one minute = 391% improvement in conversion rate

47% of lenders failed

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21%: Only 21% of

lenders attempted to call leads within 24 hours

9 out of 19: Nine out

of 19 lenders failed to contact all leads

AUGUST 2014 | 41

FEATURE / LEAD GENERATION

TRUST THE PROS Social media can be a powerful tool, Johnston says. And it seems simple enough – but unless you’re an expert, you might want to consider farming out your Facebook presence. “(You get leads from) realtors, insurance brokers, financial planners, title companies, and anyone you’ve worked with in the past,” Johnston says. “Those would be your top five. And you can throw in Facebook – if you know what you’re doing. It takes practice. If you’re going to go out and use social media to try and generate their leads, you need to find someone specific who knows what they’re doing. That can be a company, an individual – somebody who specializes in that.

“Leads come in from you doing something. You have to pick up the phone. You have to create some kind of worth for yourself so people want to work with you. You really just need to ask. You need to get out there and do it.” Paul Johnston, co-founder, Lead Gen Concepts “If you’re going to specialize in mortgage, that’s what you need to specialize in just that – mortgage,” he adds. “It’s very complicated. I would say delegate the lead-generation part of your social media.”

BUYER BEWARE What about buying leads? Well, the biggest buyers of leads are large companies like Quicken Loans – but they have the manpower to follow them up. Johnston warns that while buying leads may seem like a timesaver, it’s really no substitute for generating them yourself. “There’s a lot of companies out there that 42 | AUGUST 2014

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BUILDING A BETTER WEBSITE • Know what people are searching for Google’s keyword tool can tell you the search volume for particular keywords • Build pages for those specific keywords Put the keyword in the page title, description, header, content – even the image tags • Provide links Link to your site in press releases, Yelp reviews, YouTube – anywhere it makes sense • Use analytics Track how many people come to you – and from where • Hire a pro A lot of people say they know how to build websites. Make sure you find one who can do it the right way Source: Sexton & Co.

advertise their leads, their databases, that kind of thing. But one, most of them aren’t worth anything,” he says. “And two, it takes a very specific kind of loan officer – really, a pushy salesperson – when you’re buying leads. You really want (your customers) coming to you on a recommendation instead of you trying to chase them down. “I know people do well buying leads – not everyone – but unless you’re a pushy salesperson, you’re probably not into buying leads,” he adds. “Learn to generate your own leads, and people will come to you. You’ll do a lot better.” If you do think purchased leads are the way to go, Johnston says, don’t just hand your credit card over to the first company you find online. Not all lead companies are created equal, and a wise originator will do plenty of research before purchasing a single lead. “If you’re looking to buy leads, you need to speak to the company that’s trying to sell them,” Johnston says. “Ask them for three current clients who are doing so well with their leads that you can call and get an honest opinion. If someone is generating business with company leads, they should be more than happy to tell somebody else that it’s working.” Ultimately, Johnston says, you have to evolve a strategy that works for you, and keep at it. “You would have no business otherwise,” he says. “It’s pretty simple.”

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FEATURE / BRANCH DIRECTORY

Shawn Sirko

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FEATURE / BRANCH DIRECTORY

IN-HOUSE PRICING ENGINE

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Brian McKinney

www.openmortgage.com

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AUGUST 2014 | 51

BUSINESS STRATEGY / LEADERSHIP

INSPIRED ORDINARY

THE REAL COST OF POOR LEADERSHIP

Without strong leadership, your business will continue to sit on top of a wealth of untapped potential. Karen Gately reveals how to inspire the best in your staff – not just aim for ‘ordinary’

52 | AUGUST 2014

Read any research on employee engagement and you are likely to find a similar story. Global statistics show only 30% of people are actively engaged at work. Active engagement means that people feel a sense of emotional ownership and are committed to achieving the objectives of their role. The remaining 70% fit somewhere between somewhat engaged to actively disengaged. The actively disengaged are those deliberately looking for ways to minimise their contribution and even sabotage success. These statistics show the vastness of the untapped potential sitting in most organizations. The unfortunate reality is that at the heart of the issue is poor leadership. Through recruitment decisions, leadership development and employee engagement strategies, there is much you can do to inspire far more than ordinary. The most important

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things you can do to inspire your own team and support business leaders to do the same are explored through the remainder of this article.

STRIVE FOR EXTRAORDINARY Leaders who bring an uninspired, lethargic, conservative or cautious approach undermine the ambition and confidence of their team. Hesitant and reserved leadership diminishes the belief people have in their own potential and drains the team of vital energy needed to succeed. Without confidence and energy people are unlikely to strive. Thriving people and teams are ambitious and push beyond safe boundaries to give new or challenging things a go. They work hard to achieve results and take the opportunities that come along. Leaders who accept the mediocre fail to inspire other people to reach beyond ordinary standards of performance. Equally they struggle to inspire people to be committed to the organization and excited about their future. Aiming for easily achievable goals is only ever likely to inspire ordinary levels of engagement and outcomes. The real cost of this approach to leadership can be seen in sub-optimal operational performance, customer satisfaction, staff loyalty and engagement.

PLAN TO SUCCEED The starting point of any successful endeavor is understanding and articulating the specific outcomes you want to achieve. Laying out your plans and what you need from each person is fundamental to your ability to leverage the talent and energy of your team to drive optimal results. However, the hectic pace at which so many managers and teams operate makes achieving this clarity and focus difficult at times. With our minds occupied with here-and-now priorities there is often little energy and space created for reflecting on future possibilities. Consider planning as essential and forge the time needed to do it well. Engage your team by not only sharing insight to your own thinking but by also allowing them to contribute. Allow people to be a part of the process you work through to determine where you are heading and how you plan to get there. Ask the people on your team to work with you to define the strategies, values, behaviors and capabilities needed to achieve more than ordinary outcomes. Don’t underestimate the quality of contribution people can make irrespective of the seniority of their position in your team.

CREATE AN INSPIRING VISION OF THE FUTURE Every leader I have observed achieving extraordinary results has done so by first creating an inspiring vision of the future that people believed in. These managers have won buy-in through encouraging belief in exciting possibilities and in the team’s ability to succeed. However, all too often I meet leaders who know what they want the future to hold but fail to share their dreams with anyone else. Other leaders I meet struggle to create a clear picture in their own mind and therefore fail to lay down the path for their team to follow.

Hesitant and reserved leadership diminishes the belief people have in their own potential and drains the team of vital energy needed to succeed. Without confidence and energy people are unlikely to strive Paint a picture of what you are aiming to achieve as well as the contribution you need each person on your team to make. Ensure vision isn’t limited to the ‘big picture’ view of your organization’s ambitions; the vision each team has of their own future matters just as much in inspiring people to strive. Influence your team’s confidence that big things can happen but also inspire in them a passionate desire to strive to get there.

THINK BEYOND CONVENTIONAL WISDOM To achieve the best possible outcomes it’s essential that your team challenge conventional wisdom. Limiting dreaming to within the boundaries of what is commonly understood or accepted is likely to lead to at best ordinary results. Being a leader in any industry takes a willingness and ability to think beyond what is typical – to have the courage to take the road less traveled, or even one that has never been traveled at all. Our history is rich with examples of the achievements of people who dared to think differently and give new things a go. By promoting a creative culture you are more likely to continue to expand your own vision and realm of possibilities over time, and it is these AUGUST 2014 | 53

BUSINESS STRATEGY / LEADERSHIP

expanded possibilities that will empower you and your team to reach the highest peaks of your potential. Your own ability to conceive of a bigger and brighter future matters, but so too does your ability to inspire that belief in others. Challenge limiting beliefs and make it OK for people to suggest and try things that haven’t been done before.

Aiming for easily achievable goals is only ever likely to inspire ordinary levels of engagement and outcomes. The real cost of this approach to leadership can be seen in suboptimal operational performance, customer satisfaction, staff loyalty and engagement

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TOP 8 REASONS WHY PEOPLE QUIT Forbes has listed the top reasons why your best employees leave. As the saying goes, ‘people quit their bosses, not their jobs’: 1. You’ve overloaded your best people with too many responsibilities 2. You’re a micro-manager 3. You’re never around 4. You’re not in touch with how some of your hires or promotions are driving your best people nuts 5. You’ve never given your people a sense of where they can go with their careers 6. You run terrible meetings 7. You communicate that you care more about yourself than the team 8. You’ve never given them the big-picture vision of where your group is heading or you are constantly changing the big picture Source: Forbes.com

KEEP DREAMING

Karen Gately is a leadership and people-management expert and a founder of Ryan Gately, a specialist HR consultancy practice. She is also the author of The People Manager’s Toolkit: A Practical guide to getting the best from people and The Corporate Dojo: Driving extraordinary results through spirited people. For more information, visit www. karengately.com.au or contact info@ karengately.com.au

54 | AUGUST 2014

Visioning is neither a one-off nor a once-a-year event. Looking into the future, dreaming about what might be possible and imagining the places you would like to go are crucial if a business or team is to achieve their full potential over time. Our ability to continuously grow and evolve depends on curiosity and the desire to keep exploring new and better options or approaches. Leaders who lack imagination and are happy to evolve slowly will struggle to inspire other people to strive for excellence. Plodding along doing what you have always done is not necessarily going to serve you well in the future. Organizations that ‘stick to their knitting’ and fail to innovate are those most likely to be adversely impacted by change. Unless you inspire people to challenge what they do and how they do it you are unlikely to keep pace with the rapidly changing world in which all businesses operate. No matter the competitive advantage your organization may have today, it can change quickly and you are wise to be ready to respond.

UPHOLD STANDARDS AND DEAL WITH POOR PERFORMANCE Inspiring a team to strive for excellence requires that leaders hold people accountable for the standard of contribution they make. It’s essential

that immediate steps be taken to address mediocre through to inadequate performance. As poor performers drag down a team’s results, those who are making a positive contribution begin to lose motivation. Failing to deal with the issue will eventually lead others to give up, resigned to the fact that only ordinary is possible. Among the most commonly reported reasons people leave an organization is because they are unhappy with their manager. While it’s common for complaints to relate to the manager’s style, just as often people express frustration with their manager’s failure to deal with the poor performance or behavior of their colleagues. Often when strong performers feel held back by their manager’s failure to hold some people accountable, they choose to move on.

IN SUMMARY Expect more than ordinary and you will have taken the first step toward inspiring people to give more than ordinary. Lead by example and showcase what it means to strive to achieve the heights of what is possible. Bring energy to your own role and hold people accountable for doing the same. Give people something to strive for and keep them informed about how your team is progressing toward turning your dreams into reality.

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SOCIAL / GIVING BACK

Golfers spent a day on the links for a worthy cause recently when Academy Mortgage Corporation held its charity golf tournament in Evergreen, Colo on June 11. The tournament benefitted the Academy Foundation for the Future, which provides financial support, labor and materials for families and communities in need of improvements in infrastructure, education and housing. MPA was on hand to catch a few moments on camera.

Academy Mortgage Corporation loan officer Tucker Cusick, left, is dressed for success with partners Chuck Harrison, Skylar Haskell and Tony Marquis as the foursome prepares for Academy’s charity golf tournament.

Golfers sign in for Academy Mortgage Corporation’s charity golf tournament in Evergreen, Colorado.

Academy Mortgage Corporation president Adam Kessler, left, and executive vice-president of marketing Mike Jensen prepare to compete in the company’s charity golf tournament. Academy Mortgage loan officer Brian Heiser gets in some practice before competing in the company’s charity golf tournament.

Ryan Bent hits some iron shots on the practice range before he tees off in the corporate charity golf tournament.

56 | AUGUST 2014

Academy Mortgage Corporation employees Kim Christensen (left) and Denill Zigarich hand out raffle tickets at the company’s charity golf tournament.

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