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offering and felt confident about her application knowing that HUD and Fannie Mae supported the product. I believe that the mortgage loan application and closing process was a good experience for her. It just made sense to her. My experience as loan officer in the nation’s first FHA reverse mortgage was very positive. Before reverse mortgages, I worked with various “community-specific” mortgage loan products. As compliance agent for our community’s first-time homebuyer program, I worked closely and continuously with state housing organizations and bond issuers. From this background, I realized the importance of partnerships with local, state, and federal housing organizations for the overall success of this product. And I believe each community has a stake in the financial health of their senior homeowners, and they benefit from every closed reverse mortgage.
does. Here are some lessons I have learned about the market, seniors, and the business: No borrower should execute a reverse mortgage without careful consideration and counseling as to their own need and how the reverse mortgage would satisfy that need over time. The process of counseling and need assessment may be one of the last few opportunities a borrower and their family and advisors have to bring these very important issues to the table.
The senior homeowner has an expressed financial need and is faced with multiple economic, family and other social concerns, some occurring the same time. When a borrower first learns of the benefits of the product offering, he may not be at a point of executing an application. Some event on a future timeline may occur, triggering the need to apply. The experienced loan counselor understands this and recognizes the importance of the borrower’s timeline. A reverse mortgage is designed to meet the borrower’s financial needs on an immediate, short-term, and intermediate situation, as well as on a long-term basis. Even though the reverse mortgage can be used for
short-term borrowing, its benefits are usually best leveraged when considered for long-term borrowing needs. What are the prospects and the challenges you see in the industry and why? One of the biggest challenges facing today’s reverse mortgage retail market is property valuation. The reverse mortgage market is not immune to the nationwide decline in the housing prices and is deeply affected by declining markets resulting in lower than expected appraised values. To what extent property valuations will be influenced by the rise in both foreclosure and unemployment is yet to be determined. But it is clear that both challenge the continued on page 28
How did you find Ms. Mason or how did she find you? Ms. Mason was referred to me by the local Area Agency on Aging.
positioned to continue its prominence in the industry. Since we are a leading FHA endorsed direct leader, we offer in-house underwriting as well as the option to broker. This allows for faster approvals, common-sense underwriting and timely closings. We are actively seeking relationships with productive mortgage teams and entrepreneurial mortgage professionals.
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What are some lessons you have learned about seniors, the market, and the business? Reverse mortgages are unique in their design and purpose. No other loan product or financial tool provides for and addresses a borrower’s expressed financial needs like a reverse mortgage
Guaranteed, an established and well-funded Mortgage Banker since 1992, is
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How were HECMs underwritten? Close attention was given to the HUD manual in underwriting and closing early HECM loans, as well as file submission to HUD for endorsement and delivery to Fannie Mae. My colleagues in our closing and shipping departments and I were not strangers to new community-based loan programs. We worked together and learned collectively over time to create a “best practices” procedure. Underwriting the early HECM files involved both the creation of an orderly package of all the file documents, but equally important was the execution of “getting it right” for the borrower in terms of calculating the net principal limit and the matching of benefits to the individual borrower’s needs. For me, this became the most important aspect of underwriting.
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How was the HECM origination process in 1989? What were the required disclosures back then? For the first applications, I did not have use of an origination software. I made use of the HUD application and secured required disclosures from the HUD manual. Since the basic borrower qualifications are still in place today as they were in 1989, the application package included: Age verification of all borrowers, evidence of property ownership. Evidence of property insurance and a credit report was made part of the origination package. As to the required disclosures, I do not have access to the file.
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