The Reverse Review May 2015 by The Reverse Review

EW THE

REVI

VERSE R EV E RE

W IE

INSIDE THIS ISSUE | Refining Your Strategy: Tips for Successfully Bringing a Loan to Close

Reverse experts offer their advice. E

THE

REVERSE review MAY 2015

The

BORROWER’S

Perspective Understanding the loan from the consumer’s vantage point

ATARE E. AGBAMU SITS DOWN IN OUR HOT SEAT PG. 16

HOW TO CONNECT WITH SENIOR CLIENTS PG. 18

THE HALLMARKS OF A PROFESSIONAL LOAN OFFICER PG. 20

UNDERWRITING YOUR COMPANY PG. 23

Reverse Loans. One Platform. All Connected. The Reverse Review May 2015

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*Since December 2011. Based on trailing 12 months’ endorsement volume. Source: Reverse Market Insight. UFA’s HomeSafe reverse mortgage is a proprietary product of Urban Financial of America, LLC, and is not affiliated with the Home Equity Conversion Mortgage (HECM) program. Currently available in AZ, CA, CO, CT, FL, HI, IL, NJ and TX. For business and professional use only. Not for consumer distribution. NMLS #2285 (www.nmlsconsumeraccess.org); Corporate Office: 8909 South Yale Avenue, Tulsa, OK 74137. Not all products and options are available in all states. Terms reversereview . com 8 TRR | 3 subject to change without notice. ©2015 Urban Financial of America, LLC. All Rights Reserved. CALIFORNIA BUSINESS NAME: URBAN FINANCIAL GROUP OF AMERICA, LLC. NEBRASKA BUSINESS NAME: REVERSE IT! LLC UFA193 [Exp 03/2016]

The Reverse Review May 2015

From the EDITOR RE

V IE

E R EVE W TH RS

EW THE

REVI

A NOTE FROM JESSICA GUERIN

Meet the Team

VERSE R EV E RE

Reverse experts offer their advice.

INSIDE THIS ISSUE | Refining Your Strategy: Tips for Successfully Bringing a Loan to Close

THE

REVERSE review MAY 2015

We often dedicate the pages of this

SENIOR PUBLISHER

magazine to commentary from reverse

Reza Jahangiri

mortgage professionals, but in this issue, we decided to reach out to the borrowers

The

BORROWER’S

themselves.

Perspective Understanding the loan from the consumer’s vantage point

EDITOR-IN-CHIEF

Through first-hand accounts from five consumers with varying backgrounds,

CREATIVE DIRECTOR

side of the kitchen table. While each of the PG. 16

HOW TO CONNECT WITH SENIOR CLIENTS PG. 18

THE HALLMARKS OF A PROFESSIONAL LOAN OFFICER PG. 20

UNDERWRITING YOUR COMPANY PG. 23

Erik Richard Jessica Guerin

we learn what it’s like to be on the other ATARE E. AGBAMU SITS DOWN IN OUR HOT SEAT

PUBLISHER

borrowers we spoke with had different reasons for pursuing a reverse mortgage, the end result for all of them was the same.

Traci Knight

COPY EDITOR

Kersten Deck MARKETING DIRECTOR

Alycia Greer

Each one detailed the tremendous sense of MAY 2015

COVER We talk to borrowers about their reverse mortgage experience.

relief they felt once the loan was complete and shared how it changed their lives for the better. Their stories serve as an important reminder of the power of a reverse mortgage to help those seeking financial security in their retirement years. As businesses adapt to a new market in the wake of policy change, it’s more important than ever that reverse professionals focus on the seniors whose lives could be drastically enhanced through the use of this unique financial tool.

JESSICA GUERIN Connect with me about how you can participate. Reach me at jessica@reversereview.com

Printer The Ovid Bell Press Advertising Information phone : 630.207.3882 email : jessica@reversereview.com Subscriptions email : information@reversereview.com Editorial Content email : jessica@reversereview.com © 2015 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 Review 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

Feedback Feedback is very important to us here at The Reverse Review. Send us your thoughts on this issue or comment online for a chance to see your perspective in print.

4 | TRR

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table of contents 27 | Tax Tip

TRR 5.15

Tracking Delinquency Why it’s more important than ever that lenders closely monitor borrower tax payments

IN THIS ISSUE... 20 JOAN HILLMAN Originating

AARON ANDERSON

28 | Servicing

Compliance: Moving Beyond the Rules to Real Opportunity Why cooperation between originators and servicers is essential to ensure regulatory adherence and borrower satisfaction DEBRA TAYLOR

30 | Spotlight 07 | Movers and Shakers

The latest developments in companies across the reverse space

15 | Roundup

A collection of recent facts and surveys affecting the reverse market

09 | Industry News

16 | Hot Seat

REVERSE MORTGAGE DAILY

Reverse mortgage author and reformer

10 | Stats

18 | Originating

Headlining stories of the past month

March Top Lenders and HECM endorsement stats through February REVERSE MARKET INSIGHT

12 | NRMLA News

Read about the association’s current initiatives.

Atare E. Agbamu

How to Connect With Senior Clients

23 RALPH ROSYNEK Underwriting

Refining Your Strategy: Tips for Successfully Bringing a Loan to Close Seasoned reverse professionals offer their advice on how to connect with prospective borrowers.

38 | Last Word

Serving Our Seniors While recent program change may present challenges, it also provides us with an opportunity to better serve the senior demographic.

25 JOHN BUTTON Tech

JOHN SMALDONE

The industry has been preoccupied with recent policy change, but now it’s time for us to refocus our attention on the needs of our clients. PATRICIA WHITLOCK

MARTY BELL

FEATURE

34 | Feature The Borrower’s Perspective Understanding the loan from the consumer’s vantage point JESSICA GUERIN

“For this month’s feature story, we reached out to five borrowers from around the country about their reverse mortgage experience. While each borrower’s story is unique (and each lender involved different), there were common elements among them.

YO DO U CAN IT!

There’s no such thing as a stupid idea. REACH OUT TO US ABOUT WRITING FOR TRR. INFO@REVERSEREVIEW.COM reversereview . com

8 TRR | 5

The Reverse Review May 2015

contributors JOHN K. LUNDE

MARTY BELL

ATARE E. AGBAMU

John K. Lunde is president and founder of Reverse Market Insight, Inc., a performance data analysis and consulting firm specializing in the reverse mortgage industry. RMI clients include eight of the top 10 reverse mortgage lenders, plus investors, servicers and vendors to the industry. 949.429.0452 rminsight.net

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

Atare Agbamu is author of Think Reverse and more than 140 articles on reverse mortgages. Since 2002, has written the column, “Forward on Reverse,” the first regular column on reverse mortgages in America’s mortgage media. thinkreverse.com

10 | Stats g

John K. Lunde

Marty Bell

Atare E. Agbamu PATRICIA WHITLOCK

18 | How to Connect With Senior Clients g

Patricia Whitlock

Joan Hillman

Ralph Rosynek

Patricia Whitlock is a CRMP with GuardHill Financial in New York. She served as a lieutenant in the U.S. Navy and taught English as a second language in Greece for 18 years. She serves on the board of directors of the Suffolk County Retired and Senior Volunteer Programs and is active in the Long Island Chapter of the National Aging in Place Council. Earlier this year, she spoke at the American Conference Institute’s Summit on Reverse Mortgages in Dallas. She is fluent in Greek.

Aaron Anderson

Debra Taylor 6 | TRR

JOAN HILLMAN

20 | The Hallmarks of a Professional Reverse Mortgage Loan Officer g

Joan Hillman, MBA, has specialized in reverse mortgages for more than 12 years. She is a reverse mortgage loan officer with Franklin-Funding Reverse Mortgages, located in Charleston, South Carolina.

JOHN BUTTON

AARON ANDERSON

John Button is the president of ReverseVision. He has more than 16 years of experience in developing and managing mortgage technology products and businesses. Button has led companies to sustained growth and introduced numerous origination, servicing and analysis products in the mortgage and bank risk management areas. He has taken part in company creation, executive consulting, mergers/acquisitions and product development in his 30-year-plus career in technology development.

Aaron Anderson is the CEO of Accumatch, a property tax servicing company dedicated to servicing tax portfolios through the use of automation. Since Anderson joined Accumatch in 2013, the company has rolled out multiple new products, including a tax lien tracking database, an online tax payment approval module and a tax certificate program. Anderson has spent his career focused on improving customer service, automation and accuracy-driven processes. aaron.anderson@accumatch.com

25 | HECM Helper g

John Button

12 | NRMLA News g

27 | Tracking Delinquency g

16 | Hot Seat g

RALPH ROSYNEK

23 | Underwrite Your Company g

Ralph Rosynek is the senior vice president of Money House U.S., responsible for sales and operations activities of the company’s HECM and forward mortgage national wholesale and correspondent business channels. Rosynek is a seasoned HECM DE underwriter and has written for The Reverse Review since the magazine’s launch as its underwriting expert. He has held many leadership roles in the reverse mortgage industry for the past 15 years. rrosynek@moneyhouseus.com DEBRA TAYLOR

28 | Compliance: Moving Beyond the Rules to Real Opportunity g

Debra Taylor serves as compliance manager for Celink, where she oversees state licensing, management of internal quality controls and compliance with servicing regulations. Taylor has worked in the financial industry for more than 30 years and has a background in compliance, customer service, and project and operations management. She brings a new perspective to Celink Compliance through experienced face-to-face interaction with clients and her experience in fast-paced and high-production operations.

contributors JESSICA GUERIN

JOHN SMALDONE

Jessica Guerin is the editor-in-chief of The Reverse Review. She has worked on the editorial teams of Chicago Home & Garden, Chicago magazine and Time Out Chicago. Prior to joining the magazine, Guerin managed the marketing efforts for a commodity brokerage firm in the Chicago Board of Trade. She has a master’s degree in magazine publishing from Northwestern University and a B.S. in journalism from Boston University.

John Smaldone is the executive vice president of Hanover Financial Services, a consulting firm that focuses primarily on the reverse mortgage industry. Smaldone is the founder of Taylor, Bean and Whitaker and is the former senior vice president of TransLand Financial Services’ reverse mortgage divisions. With more than 46 years of mortgage banking experience and 16 years in the reverse space, Smaldone intends to remain in the reverse mortgage industry, taking on long-term consulting assignments. john@hanoverfinancial.com hanover-financial.com

34 | The Borrower's Perspective g

Jessica Guerin

John Smaldone

38 | Serving Our Seniors g

movers & shakers READ ABOUT THE LATEST DEVELOPMENTS in companies across the reverse space.

HAVE A COMPANY UPDATE YOU WOULD LIKE TO SEE PUBLISHED?

ReverseVision Adds New Operations Team to Enhance RV Exchange System Performance and Scale Software and technology provider ReverseVision has hired a new operations team, which will focus on product operations, system monitoring, capacity planning, backup, recovery, hosting management and product release. VP of Operations Tim O’Neal will lead the team, which includes David Perkins and Ron Potter. “ReverseVision is committed to providing the most powerful and reliable technology to support the RV Exchange system today and in the future,” says ReverseVision President John Button. “The addition of the operations team ensures we are best positioned for reliable growth to support our customer and the industry.”

Reverse Mortgage Funding Continues Team Growth Reverse Mortgage Funding has appointed Eric Ellsworth consumer direct sales channel leader, Michael

email it to jessica@reversereview.com

Seals director of digital marketing, and Laura Bihuniak Kennedy as Southeast regional account manager. In his role, Ellsworth will be responsible for managing and overseeing the continuous growth of RMF’s direct-toconsumer sales division, which operates from offices in Bloomfield, New Jersey; Melville, New York; and Folsom, California. Seals will be responsible for expanding the company’s Webbased lead acquisition programs and enhancing its Internet presence. And as Southeast regional account manager, Kennedy will work to support RMF’s third-party origination sales channel.

Maverick Funding Acquired by Home Point Financial Funding Maverick Funding Corp. has been acquired by Home Point Financial Corporation, a new mortgage banking and financial services company. Maverick will serve as Home Point Financial’s initial mortgage banking platform and will take its parent company’s name. With 30 retail

branches across 10 states and a national third-party lending operation, Maverick has originated more than $3 billion of residential mortgages since 2012. Its founders, Ralph Vitiello and Mike Petruccelli, will remain with the company and serve as senior executives focused on the continued growth of the origination network.

FirstBank’s Ed O’Connor Approved to Teach Continuing Education by New York State’s Bar Association FirstBank’s Ed O’Connor has been approved by New York State’s Bar Association to offer a class on reverse mortgages to attorneys as part of its Continuing Legal Education program. O’Connor’s course will grant three credits, helping attorneys achieve their biannual 24-credit requirement. A seasoned reverse mortgage professional, O’Connor is a sales and marketing manager with the HECM division of Tennessee-based FirstBank.

reversereview . com

8 TRR | 7

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industry news

May Edition AN UPDATE OF THIS PAST MONTH’S BREAKING NEWS

The industry’s headlining stories at your fingertips UP-TO-THE-MINUTE NEWS? Visit reversemortgagedaily.com

NEWS DIRECT TO YOU: WANT EVEN MORE

HEADLINING NEWS REVERSE MORTGAGE 1. SECURITIES ISSUANCE TOPS $2B IN FIRST QUARTER HECM-backed securities issuance has continued on a steady pace in 2015, totaling more than $2 billion in the first quarter, according to data by New View Advisors. The total includes a strong performance in March, as HMBS players issued more than $660 million in new pools. Total issuance in the first quarter is up 17 percent over the same period in 2014, when issuers totaled $1.7 billion in new pools. Certain factors have boosted the landscape for originators, and issuers in turn, though some will not last indefinitely. “Issuers continue to benefit from both the higher [principal limit factors] enacted in August 2014 and the relatively large borrower draws now rolling in as many loans reach their 13th month, when draw restrictions expire,” New View writes.

// April 6, 2015

2. HUD FUNDING GRANTS WILL SUPPORT REVERSE MORTGAGE COUNSELING HUD has awarded more than $36 million in grants to national, regional and local housing counseling organizations. While the grants are not allocated directly to reverse mortgage counseling, they will support counseling overall, with agencies responsible for allocating funding for their reverse mortgage operations. In 2013 the agency changed the way it allocates funds to include all counseling funding under a single grant rather than separating reverse mortgage counseling funds. More than $34 million of the total funding will directly

support the housing counseling services provided by 29 national and regional organizations, six multistate organizations, 20 State Housing Finance Agencies (SHFAs) and 215 local housing counseling agencies, according to HUD. In addition, HUD is awarding $2 million to three national organizations to train housing counselors.

// April 14, 2015

3. SUN WEST UNLOADS $1.8 BILLION REVERSE MORTGAGE SERVICING RIGHTS PORTFOLIO TO RMF Sun West Mortgage Company has sold its portfolio of reverse mortgage servicing rights to Reverse Mortgage Funding, according to data tracked by Ginnie Mae. Sun West, whose HMBS issuance dropped off after January 2015 when it issued $16.1 million worth of securities, reported no issuance for the months of February and March of this year. Since Sun West began issuing HMBS in September 2008, the company’s portfolio has totaled approximately $1.8 billion of reverse mortgage servicing rights through January 2015. RMF, which was founded in 2013, began issuing HMBS in March 2014, ranking among the top five HMBS issuers during the first quarter of 2015. In the first quarter, the company amassed an aggregate HMBS amount of approximately $260.6 million.

// April 21, 2015

4. KIPLINGER : REVERSE MORTGAGES PAY FOR AGINGIN-PLACE HOME REPAIRS There are a number of options available for those who wish to age in place, according to a recent article in Kiplinger, which lists among the possibilities retrofitting one’s home for accessibility and obtaining a reverse mortgage. Highlighting six

strategies to help seniors age in place, Kiplinger focuses mainly on the theme of home repairs and renovations to modify residences fit for aging inhabitants, and it details various ways homeowners can finance these projects. One solution is to utilize a reverse mortgage to unlock home equity and help cover costs, the article states. “If you have substantial equity in your home, you have multiple ways to pay for home improvements, such as a cashout refinance of your mortgage, a homeequity loan or line of credit, or a reverse mortgage,” Kiplinger writes.

// April 8, 2015

5. FICO PROGRAM GIVES CONSUMERS EASY ACCESS TO CREDIT INFO Following suggestions from the CFPB, millions of consumers will now have access to the FICO scores and credit reports that nonprofit credit counselors purchase on their behalf. The software company’s newly expanded FICO Score Open Access for Credit & Financial Counseling program will allow millions of people who receive nonprofit credit counseling, housing counseling and other services to receive a free copy of the FICO Score that these organizations have purchased. In addition, FICO has created content to help these consumers understand the key factors that influence their credit scores. At the same time, Experian, one of FICO’s credit bureau partners, has agreed to allow qualified credit counselors to share Experian credit reports with their clients, providing additional information to consumers who are struggling financially. Until now, counseling organizations have generally been prohibited by their contracts with the credit reporting agencies from giving the consumer the credit report or score that they have purchased on that consumer’s behalf.

// April 21, 2015 reversereview . com

8 TRR | 9

The Reverse Review May 2015

stats March 2015

Top Lenders Report

12345 American Advisors Group

One Reverse Mortgage

Liberty Home Equity

Endorsement

1,155

487

390

RMS/S1L

UFA

Endorsement

362

339

Lender Endorsements REVERSE MORTGAGE FUNDING LLC

142

Lender Endorsements GEORGETOWN MORTGAGE

HOME POINT FINANCIAL CORPORATION

139

GMFS LLC

LIVE WELL FINANCIAL INC

139

UNIVERSAL LENDING CORPORATION

PROFICIO MORTGAGE VENTURES LLC

119

SOUTHERN TRUST MORTGAGE LLC

HIGH TECH LENDING INC

BANK OF ENGLAND

OPEN MORTGAGE LLC

BROKER SOLUTIONS INC

UNITED NORTHERN MORTGAGE BANKERS LTD 58 MONEY HOUSE INC

AMERICA FIRST FEDERAL CREDIT UNION

TOP FLITE FINANCIAL INC

NET EQUITY FINANCIAL INC

US MORTGAGE CORPORATION

PLAZA HOME MORTGAGE INC

FULTON BANK

ADVISORS MORTGAGE GROUP LLC

MEADOWBROOK FINANCIAL MORTGAGE

CHERRY CREEK MORTGAGE CO INC

GATEWAY BANK MORTGAGE

M & T BANK

GATEWAY FUNDING DIVERSIFIED MORTGAGE 7

PEOPLES BANK

FIRST PRIORITY FINANCIAL INC

FIRSTBANK 30

GUARANTEED RATE INC

NATIONWIDE EQUITIES CORPORATION

BANK OF MAUMEE

SUN WEST MORTGAGE CO INC

UNITED SOUTHWEST MORTGAGE CORP

MCM HOLDINGS INC

THE FEDERAL SAVINGS BANK

SENIOR MORTGAGE BANKERS INC

THE MONEY STORE

SUN AMERICAN MORTGAGE CO

AMERICAN PACIFIC MORTGAGE

Brought to you by:

TOWNEBANK 17 NORTH AMERICAN SAVINGS BANK VANGUARD FUNDING LLC

HOMEOWNERS MORTGAGE ENTERPRISE

FIRSTAR BANK NA

SUCCESS MORTGAGE PARTNERS INC

WHOLESALE CAPITAL CORP

10 | TRR

%%%%% LOOKING FOR MORE STATISTICS? Go to rmsinsight.net for all of the industry’s latest stats and rankings.

stats HECM Endorsement Stats Through February 2015 INDUSTRY SUMMARY

MO. 3

2,358

-9.79%

2,256 -11.36%

4,614 -10.56%

Retail Endorsement Growth

2,362

0.17%

1,806 -19.95%

4,168

2,651 12.24%

1,842

1.99%

4,493

7.8%

2,413

-8.98%

1,747

-5.16%

4,160

-7.41%

2,319

-3.9%

1,772

1.43%

4,091

-1.66%

1,944 -16.17%

1,306

-26.3%

3,250 -20.56%

2,248 15.64%

1,514 15.93%

3,762 15.75%

2,773 23.35%

2,078 37.25%

4,851 28.95%

2,500

-9.84%

1,907

-8.23%

2,867 14.68%

2,073

8.7%

2,874

0.24%

2,062

-0.53%

4,936

-0.08%

2,557 -11.03%

2,159

4.7%

4,716

-4.46%

TRAILING TWELVE MONTH ENDORSEMENTS 5,000

3,000

Wholesale Endorsement Growth

4.7%

2,000 1,000

Total Endorsement Growth

-4.46%

Wholesale *Numbers Represent Months

TOT

UNITS CHG%

29,866

UNITS CHG%

-9.67%

4,407

-9.15%

4,940 12.09%

22,522

52,388

60% 50%

FIXED RATE PERCENTAGE

40% 30% 20%

2/1/15

1/1/15

12/1/14

11/1/14

10/1/14

6/1/14 6/1/14

9/1/14

5/1/14 5/1/14

8/1/14

4/1/14 4/1/14

7/1/14

3/1/14 3/1/14

1/1/14

12/1/13

11/1/13

8/1/13

7/1/13

2/1/14

ARM

{ FIGURE }

6/1/13

5/1/13

4/1/13

10% 2/1/13

HECM ENDORSEMENT TRENDS

* Figures Above Reflect Change from Prior Month

TOTAL

70%

{ FIGURE }

3/1/13

Retail

9/1/13

3 4 5 6 7 8 9 10 11 12 1 2

10/1/13

WHOLESALE

UNITS CHG%

-11.03%

4,000

RETAIL

FIXED

$1,200.0 $1,000.0

$400.0 $200.0

2/1/15

1/1/15

12/1/14

11/1/14

10/1/14

9/1/14

8/1/14

7/1/14

1/1/14

12/1/13

11/1/13

10/1/13

9/1/13

8/1/13

7/1/13

6/1/13

5/1/13

4/1/13

$0 3/1/13

IN THE MILLIONS

$600.0

2/1/13

HECM ENDORSEMENT

INITIAL PRINCIPAL LIMITS

$800.0

reversereview . com

8 TRR | 11

The Reverse Review May 2015

nrmla news Conferences Kindle New HECM Era

Optimism filled the meeting rooms at the Intercontinental New York Times Square Hotel in March as more than 270 NRMLA members ushered in a new era for the HECM program. “We are on the cusp of entering a new era of business,” said NRMLA President and CEO Peter Bell. “We are excited to get on with it. It’s a new chapter for the industry,” said Reza Jahangiri, AAG’s chief executive officer and NRMLA co-chair. Many of the sessions, including our Financial Assessment seminar, will be duplicated at NRMLA’s Western Regional meeting in Huntington Beach, California, May 11-13. With implementation of Financial Assessment for all potential borrowers on the threshold, almost two years of changes in the program based on observing borrower behavior should be complete. “Financial Assessment is the last leg to the structural changes to make the program sustainable,” said Joe DeMarkey, principal at Reverse Mortgage Funding and NRMLA co-chair. Sessions at NRMLA’s annual Eastern Regional meeting were characterized by a sense of relief that the changes would be in place, that they would eliminate much of the outside and often unfounded criticism of the product, and that they would provide additional security to borrowers and strengthen the FHA’s mortgage insurance fund. 12 | TRR

In an opening four-hour Financial Assessment training session, members reviewed new procedures and presented case studies to prepare lenders for different potential scenarios. Paul Fiore of AAG said that new requirements would let lenders look at the way borrowers are living today and how that would be changed with a reverse mortgage. “A reverse mortgage is not a Band-Aid,” he said. “It is to improve the quality of life over time.” Each session that followed contained good news and built confidence that the new HECM is a better HECM. Marketers presented creative approaches to educating an expanded group of younger borrowers most concerned with protecting their retirement assets. HUD staff illustrated projected increases in volume and the growth of the insurance fund reserve. Counselors hailed the availability of consumers’ financial statuses to help them provide a clearer understanding of a potential borrower’s options. And HMBS issuers welcomed a market of investors that is better educated, with a more avid interest in securitizations. “HMBS required a huge educational curve,” said Mike McCully of New View Advisors. “The investment community had to get its heads around it. That’s been accomplished over the last two to three years.” “The outside world sees more opportunities here,” Jahangiri said, summing up the optimism.

In the Press: Kiplinger’s Tackles Financial Assessment In the March issue of Kiplinger’s Retirement Report, reporter Rachel Sheedy provides an in-depth overview of the financial assessment process and what it means for consumers. Sheedy writes that lenders will have to look at all of the borrower’s income streams, such as Social Security and pensions, plus any additional resources, such as investments. Borrowers will have to provide documents, such as tax returns and bank account statements. Any credit trouble will have to be explained. The lender will determine whether the explanation qualifies as an “extenuating circumstance” in getting the loan approved. “There will be an adjustment period for everyone,” she wrote, quoting AAG’s Fiore.

Consumer Site Visits Surpass 35,000 Unique visits to NRMLA’s consumer site, reversemortgage.org, totaled 35,077 in March— the second-highest number ever. A record 36,249 unique visitors came to the site in January and traffic remained strong in February with 32,990 unique visits.

NRMLA member

Professionals Achieve CRMP Status NRMLA congratulates the following individuals for earning the Certified Reverse Mortgage Professional designation:

ON THE DOCKET: NRMLA Comments on MOE Policies

BROUGHT TO YOU BY MARTY BELL: NATIONAL REVERSE MORTGAGE LENDERS ASSOCIATION

• Shane Lester, Reverse Mortgages of Arkansas Little Rock, Arkansas

NRMLA submitted comments to the U.S. Department of Housing and Urban Development seeking clarification on several issues pertaining to the new Mortgagee Optional Election (MOE) Assignment option.

• Tony Miller, Credit Union Mortgage Association, Inc. Fairfax, Virginia

THE COMMENTS, compiled by the Servicing Committee with

• Bruce Simmons, American Liberty Mortgage, Inc. Denver, Colorado

INTO 10 CATEGORIES:

• Roberto Crespo, PS Financial Services Coral Gables, Florida

assistance from NRMLA’s outside legal counsel, ARE SEGREGATED 3Available Paths for Mortgagee Election to Claim Payment

Just Joined

3Definitions

NRMLA welcomes the following new members:

3The Ability to Purchase or Sell a HECM Property

• Consumer Education Services, Inc. Raleigh, North Carolina (Counseling agency)

3MOE Assignment Modification of Contract

• ENG Lending Denver, Colorado (Lender)

3Mortgagee Election 3Eligible HECM Loans for MOE Assignment

• Emery Financial Newport Beach, California (Lender)

3 Reinstatement of MOE Assignment Deferral Period and Foreclosure Timelines

• Foster Pepper PLLC Seattle, Washington (Law firm)

3MOE Assignment Calculating the PLF and Principal Limit Tests

• Fairway Independent Mortgage Corporation Marshfield, Wisconsin (Lender) • Lineage Lending, Carlsbad, California (Lender) • Springwater Capital Heber City, Utah (Lender)

NRMLA Seeks Regulatory Exemptions NRMLA submitted written comments to the CFPB this week seeking an explicit exemption for reverse mortgages from mortgage servicing rules that are being amended by the CFPB. The rules primarily impact forward mortgage servicers. In a few cases where the language applies to reverse mortgage servicers, NRMLA offered substitute language to make the rules less onerous.

3Impact to First Legal Due Date (FLDD) Timeline

NEWS FROM NRMLA

nrmla news

3General Bankruptcy Question

4 One hundred and four individuals have earned the CRMP

designation since mid-2010 and every one of them is prominently listed on the NRMLA consumer website,

REVERSEMORTGAGE.ORG.

The comments, compiled by the Servicing Committee with assistance from NRMLA’s outside legal counsel, are segregated into the following categories: (1) C hanges relating to successors in interest

(6) C hanges and modifications to loss mitigation requirements

(2) T he addition of a general definition of delinquency

(7) C larification of how servicers must treat periodic payments made by consumers who are performing under either temporary loss mitigation programs or permanent loan modifications

(3) C hanges regarding the manner in which a servicer must respond to requests for information asking for ownership information for GSE related loans in trust (4) C ertain amendments to disclosures when a servicer is required to forceplace insurance (5) C larification of the early intervention live contact obligations and written early intervention notice obligations

(8) C larification of certain periodic statement disclosure requirements for modified mortgage loans and consumers who have filed for bankruptcy protection (9) C hanging the small servicer exemption to exclude certain sellerfinanced transactions from being counted toward the 5,000-loan limit reversereview . com

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The Reverse Review May 2015

14 | TRR

roundup Here is a look at the

THIS MONTH

NEWS AND STATS

AFFECTING THE MARKET.

{

GET UP-TO-DATE retirement facts, home price stats, senior trends and HECM market developments in The Reverse Review’s monthly Roundup.

NUMBER CRUNCH

RETIREMENT STATS

HOUSING TRENDS

Boomers are active in the housing market.

New list ranks best states for retirement. Bankrate has released its annual

list of the best and worst

states for retirement, ranking all 50 states according to their cost of

living, crime rate, health care quality, tax burdens, personal well-being for seniors and weather. Here

IDAHO

are the top five:

A survey by the National Association of Realtors indicates that boomers young and old are actively participating in the housing market. While motivations for moving differ from older to younger boomers, the survey found that downsizing was a strong factor.

WYOMING

30 percent of boomers COLORADO

VIRGINIA

No. 1 Wyoming UTAH

No. 2 Colorado No. 3 Utah

{ 24 million people } have recently purchased a home

No. 4 Idaho No. 5 Virginia

43 percent of boomers { 33 million people } recently put their homes up for sale

HOME EQUITY

Senior home equity breaks records.

Aggregate SENIOR HOME EQUITY CONTINUES TO RISE, reaching $3.9 trillion in the fourth quarter of 2014, according to the NRMLA/ RiskSpan Reverse Mortgage Market Index (RMMI).

MOTIVATIONS: * Retirement * Job relocation * Downsizing * A desire to be closer to friends and relatives -The National Association of

72% of Americans over the age of 65 do not have a mortgage. -Bureau of Labor Statistics, 2013

THE SENIOR AGENDA

Seniors reveal plans to delay retirement. A CareerBuilder survey revealed that many

working Americans age 60 and older are delaying retirement, with most

citing the recession as the cause.

12% don’t think they will ever be able to retire 49% say that retirement is 5 years out

Realtors’ 2015 “Home Buyer and Seller Generational Trends” reversereview . com

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The Reverse Review May 2015

THE

REVERSE review

THE

MAY 2015

The important thing financial advisors can learn about reverse mortgages is that they are powerful, life-planning home loans for some of their clients, as several peer-reviewed studies have shown. Innovative thinkers among financial advisors are embracing this view.

Atare E. From his boyhood aspirations and his favorite books to his thoughts about AUTHOR Reverse Mortgage Reformer 16 | TRR

the reverse mortgage market, we get the facts from Atare E. Agbamu, author and reverse mortgage reformer.

personal >

is that service to others and to

Ten years from now I want

community is the crown of life.

grandchildren and more gray hair. >

If I were a professional athlete, I

living is impossible without the grace and knowledge of God.

If I could meet anyone, past or

present, it would be Jesus Christ. I’d also like to meet his spiritual

I love running, singing, dancing and

fun s

fact

My favorite time of day is the morning, early morning.

listening to music.

cousins: Lao-tzu, Moses, the Buddha, Mohammed and others.

The most memorable moment in my life was realizing that intelligent

would be a Kenyan marathoner. >

The best lesson I’ve ever learned

My favorite books are the ones I am reading at the moment: the Bible, the

My favorite charities are Books

Bhagavad Gita and the Tao Te Ching.

For Africa (BFA) and Little Brothers— Friends of the Elderly (LBFE). BFA seeks to end the book famine in Africa, while LBFE aims to end loneliness and isolation among elders. The St. Paul-based BFA has shipped

professionAl >

bright, but it could be even brighter if

more than 32 million books to more

money-center banks can be spurred

than 49 African countries since 1988.

to come back into the business, and if

With U.S. headquarters in Chicago

major private insurers or a consortium

since 1959, LBFE has a chapter

of private insurers can be encouraged

in Minneapolis/St. Paul that brings

to provide free-market competition on

friendship and practical services to

the HECM insurance side.

thousands of elders who are isolated and lonely in the Twin Cities. >

older consumers. Reverse mortgages

were to be a Catholic priest, a reggae

change lives, they give people hope

singer (and sing with Jimmy Cliff) and

and they give people peace of mind.

a soldier. I lived through the Nigerian

table loan officer.

strategic target because it produces

combat action. My boyhood eyes saw the madness of war. >

Every morning I give thanks for the

day’s blessings and trials, and I empty my mind. >

Reverse mortgage professionals

can best support the public image of reverse mortgages by doing what is right by their customers all the time, even if it hurts their

bottom line in the short term. Ethical and empathetic customer service across all operational functions is a

When I was a kid I wanted to see

superior competitive strategy. But it

my native country. My father used to

conventional industry wisdom.

the world beyond my hometown and say that traveling is a great source of education. He was right.

I lived through the Nigerian civil war, and my home state was a strategic target because it produces oil, Nigeria’s major revenue source.

I’ve seen it many times as a kitchen

civil war, and my home state was a

hometown, Warri, experienced some

I entered this industry because it presents an opportunity to serve

When I was a boy, my aspirations

oil, Nigeria’s major revenue source. My

The future of reverse mortgages is

involves painful unlearning of much

Before I entered the reverse mortgage industry I was a teacher at proprietary business schools in New York City and at SUNY’s Educational Opportunity Center in Queens. I also originated forward mortgages for more than three years before I stumbled on reverse mortgages and specialized in them. reversereview . com

8 TRR | 17

The Reverse Review May 2015

ORIGINATING

CHANGE

How to Connect With Senior Clients By Patricia Whitlock

Every loan originator loves when a trusted advisor brings a potential borrower into their office. We are introduced as “the person with the solution.” Sign here, no need to question the specifics. If that trusted advisor knows a thing or two about reverses (and we should be educating these referral sources above all others), most of our work is done for us.

The latest conversation among reverse originators concerns the news about policy change: Financial Assessment, non-borrowing spouse rules, new PLF tables, lower upfront MIPs and so on. What we sometimes forget is that to a potential borrower, the whole reverse mortgage idea is new—they really don’t need to know that MIPs have gone down or that principal limits have gone up. A borrower needs to know about the loan he will get today, not the loan he would have gotten last month.

Things can get more complicated when a referral comes from a colleague in the forward mortgage world. It’s great in a way—here is another trusted advisor— but they may be looking at a completely different solution to the same set of problems. Sometimes it is a borrower who has been trying to qualify for a standard HELOC, or it may be someone having trouble making her current mortgage payments. The forward originator and the client have already been talking about income, assets, rates, and now we need to start over and forget all that. There is a different set of questions to ask when we shift into reverse.

While it is essential for originators to keep up on the latest changes to the HECM program, it is vitally important to know our client. Does she already know the basics of a reverse? What problem can we help her solve? What are her goals? And when we have determined this, how can we best present information in a way that she sees the solution as plainly as we do?

Often the forward originator who brings a client to us to talk about a reverse already has a relationship with that client, a relationship that may or may not be the same as the one we want to establish. An established relationship is great, but we need to learn what it is. Is it Trusted advisor? Old friend? I-canget-you-the-best-deal? If your approach is not the same as the referrer, mistrust may sour your connection.

The industry has been preoccupied with recent policy change, but now it’s time for us to refocus our attention on the needs of our clients.

The objective of a reverse mortgage LO is to be a problem solver. Listen, ask questions and identify the problem.

A reverse mortgage may not just be different from a HELOC, it may be a better solution for your client. I came to reverse origination from a career in education, and I know that any curriculum can and must be adapted to the audience. It is probably best not to overwhelm any reverse borrower with too many numbers at first. I like to describe the program and answer general or conceptual questions before I open the folder with the proposal.

View our digital version...

Reverse Review articles (present and past) are available on our website. Access a wealth of content about the business of HECMs online. www.reversereview.com 18 | TRR

ORIGINATING I have found that the best approach may be for the referring partner to make the introduction in order to place us in the role of trusted advisor or expert, and then take a step back (literally or figuratively). It may now be easier to address the “But he told me...” comparisons or complaints. It is certainly better than to risk possible contradictions in information.

The older I get, the more my perception of “older” and “younger” changes. It is important to remember that a reverse mortgage borrower may or may not have had formal education, but they have certainly been around. They have the wisdom that comes from experience; they just don’t know what you know about reverse mortgages. n

TECH

Meeting in person is always preferable. I usually give my clients the option of meeting in their home or in my office. When the office is not practical, an attorney or title company that you know nearby might be amenable to your using an office space. Even the conference room at the public library can work (remember to reserve it in advance). I

Here is a tip for those cases when the application cannot be signed in person: Print out the package and number every page by hand. Add “sign here” stickers. Make yourself a copy or make note on your PDF copy how the pages are numbered. This makes it easy to go over the application page by page over the phone, or to answer specific questions on a disclosure or application item.

UNDERWRITING

Therefore, the first requirement for establishing a good connection with a reverse mortgage borrower is to be positioned as “the expert.” It does

Be likable. Find common ground without sounding forced, fake or ingratiating. This may be easier for more mature (read: older) loan originators, but not too difficult for younger LOs. You do not need to connect because of your gray hair, but perhaps you admire his garden, or notice his photo from his Army days. Be the person he can rely on to solve his problems and demonstrate reliability by answering calls and emails promptly.

find that a nice sweater and slacks can be less intimidating than your black pinstripe suit, unless your client is a professional as well.

ORIGINATING

Every originator learns the importance of being thoroughly versed in our product. Sometimes we are put on the spot with a question we can’t answer (“What exactly is the rate today?”) or doubly embarrassed by giving someone the wrong answer and having to go back and correct it. (“Sorry, I thought you could, but you can’t take all the money at closing to buy the condo in Vegas.”) Every reverse mortgage borrower needs to speak with an originator who really knows his stuff.

not hurt to tell someone during your first meeting how long you have been originating reverses, that you are a CRMP and that last year you helped 20 or 40 people find the right reverse program for them.

TAX TIP SERVICING SPOTLIGHT

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ops@quickcert.org reversereview . com

8 TRR | 19

The Reverse Review May 2015

ORIGINATING

The Hallmarks of a Professional Reverse Mortgage Loan Officer By Joan Hillman

Providing added value through quality customer service Many of us in this industry have years of mortgage experience to guide us through this everchanging environment. This is not a career for someone adverse to change; those who could not deal, have left. Meanwhile, others have entered the business. For those who are new to the space, I admire your fortitude. The truth is, being a reverse mortgage loan officer is like riding on a roller coaster and never getting off. As actress Bette Davis once said, “Fasten your seat belts, it is going to be a bumpy night.” How true, except in our case, the rough nights have lasted for months. But the good news is that this product is a great one, and it has the tremendous ability to help thousands of seniors find financial security while allowing them to remain in their homes. A professional reverse mortgage loan officer has a unique job. It is vastly different from the work of forward loan officers, requiring an exceptional degree of compassion and tact. So what does it take to stand out as a professional reverse mortgage loan officer? Listen, Educate and Explain Explaining the loan in a clear, easyto-understand manner is a necessity, but professional loan officers go even further: They listen to the customer. They educate, answer questions, and make sure that the customer’s specific needs are being addressed. This loan is not a one-size-fits-all product. A good professional helps the customer understand the various options available to them and how those options might address their specific circumstances. If the customer is unsure 20 | TRR

“A good professional helps the customer understand the various options available to them and how those options might address their specific circumstances. If the customer is unsure or doesn’t understand the loan, they are encouraged to bring in a trusted person to be part of the process.”

or doesn’t understand the loan, they are encouraged to bring in a trusted person to be part of the process. Dig Deeper Gathering pertinent financial information from a homeowner and adding it to your system is also essential. This will be even more important in light of Financial Assessment. Professional loan officers should review the information to understand the customer’s situation. For example, if a senior requests funds to pay for medication, a professional will look at income to determine if they could qualify for help through Medicare Part D. Then, the professional will go a step further by referring the customer to knowledgeable resources for more answers on that process. A professional will dig deeper, always looking to see if there are other ways to help a customer. Be Patient Finally, while we all want to take

an application, a professional loan officer’s focus is to help the customer make an informed decision. If it is the right decision, the customer should be in control. Follow-up with a customer should be limited to whether the customer requests additional information or if there is a change that the customer needs to know. Repeatedly calling a customer to see if they have made a decision is badgering, and while it might be tempting, you may lose your client. A follow-up letter thanking them for the meeting may be appreciated, but a barrage of calls will likely not be welcome. Professional loan officers ask their clients for permission to call if there are any changes or if there is important information they need to know. They understand that the customer needs to make the decision on their own, without pressure from an impatient officer. Explore Alternative Solutions Professional loan officers understand their customers’ needs and have the

ORIGINATING

Go the Extra Mile

It is important to remember that we have a responsibility to evaluate our customersâ&#x20AC;&#x2122; needs so that we are truly doing what is best for them. The work we do will have a lasting impact on our customers and their families. If we do not go the extra mile, we are not doing them justice. The best way to help is to educate them on all of their options, take time to listen and answer their questions, and help them find a solution, whether or not it involves a reverse mortgage. A true professional cares not about closing a loan, but about helping their senior customers find financial security. n

Be a part of the conversation.

TECH

If a customer opts to move forward with the loan, professionals stay in touch to keep them informed about the status of their loan. They attend the closing and follow up afterward. Some criticism of our industry has derived from accusations that senior borrowers have not been fully informed. That simply would not happen if every loan officer agreed to operate under this professional code of conduct, staying

in touch and connected with the senior throughout the process to ensure that questions are answered and confusion alleviated.

UNDERWRITING

Professionals set themselves apart by bringing added value to the customer. They participate in senior organizations

and keep up with issues that affect customers. They know the rules about Medicare and Medicaid. They subscribe to discussion groups and resources that research and examine issues affecting the senior demographic. They have referral networks and work closely with other professionals. They are constantly striving to learn about new things that could benefit their customers. They do not view their role as a way to make moneyâ&#x20AC;&#x201D;they look at their career as a calling or mission. They describe themselves as professionals who help their customers find solutions.

ORIGINATING

ability to evaluate whether this loan would be a good fit for them. Financial Assessment is going to go a long way toward protecting those whose situations are not likely to be improved by a reverse mortgage. With Financial Assessment in place, our customers will have to take a hard look at their finances. It is not unusual to find someone who has been in denial, or who does not truly understand their financial situation. If a reverse mortgage is not an option, a professional loan officer should be in a position to suggest other options, such as downsizing, paying down debt and then applying for a reverse mortgage, or sitting down with a credit counselor at a nonprofit, HUDapproved agency. Providing options gives the customer hope that, whatever their circumstances, there is something that can be done to alleviate the stress. A professional accepts that sometimes the answer is not a reverse mortgage, but still tries to help.

Share your ideas with your colleagues and be a part of the solution. Reach out to us at info@reversereview.com. TAX TIP

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

240-864-4844

fnctitle.com reversereview . com

8 TRR | 21

SPOTLIGHT

A BETTER CHOICE!

SERVICING

A nationwide title and settlement company servicing the reverse mortgage industry.

The Reverse Review May 2015

The value of A STRONG ALLY:

INSIGHT.

In reverse mortgage servicing, you need to know what’s happening today—and tomorrow. Which is why you can rely on Celink to provide the insights you need on regulatory changes, HUD requirements, and GNMA processes. We’re here to help you chart a successful course into the future of reverse mortgages, so you can concentrate on origination—and trust us to ensure your superior service and peace of mind.

For more information, please contact Katie Kirkham, Director of Client Relations at (844) 228-2101. 22 | TRR

celink.com | (844) 228-2101

UNDERWRITING

ASSESS

Underwriting Your Company By Ralph Rosynek

(3) C an you prove they are

Perhaps the best starting point is to test the confidence of what you already have in place, even though your written policies, procedures and controls may look great in the folder or manual your company maintains.

requirements for the states you are licensed in? effective?

Answering these questions may prove to be a very detailed (and daunting) task. As a starting point, approach the task of making sure you have “the right stuff” by committing to a review plan before you rush to implement specific processes or changes. One of the best ways to organize and prepare for potential audits and examinations might just be utilizing a common mindset to what we do every day—why not underwrite your company for risk? There are numerous choices and resources to assist your company with compliance and risk. Each of these components provides added value to your overall efforts, however, at the end of the day, you need to own your risk and compliance process. A big part of the examination process is the determination that management has both the knowledge and skills to meet the challenges of originating mortgages.

4 Take the time to review the CFPB’s focus and process in the supervision and examination manual by area of focus. 4 Have your team develop a group checklist. First determine the largeticket items that the examination focuses upon. 4 Have your team members take ownership of the large categories you have defined on your developed company checklist of categories. 4 At your next meeting, overlay any additional categories or items of focus from the review of statespecific licensing examination manuals previously provided. 4 For your next meeting, review what you currently have in place with regard to policies, procedures and controls. Assign each of these documents or items to the respective large categories your team has identified from the examination manual review process. n reversereview . com

8 TRR | 23

SPOTLIGHT

Unfortunately, many small or mediumsized companies lack appropriate staff compliance personnel and may not have built sufficient budgets and financial resources to keep up with changing compliance and risk requirements. So how does a small or medium-sized mortgage broker or banker address the changing examination environment?

(2) Do they meet the

SERVICING

In the landscape of examination we are also seeing a redefinition of who and what we are— in many cases, your company is either labeled a “depository” or “non-depository” institution.

(1) Are they up-to-date?

4 At your initial meeting, review the CFPB examination manual, which can be downloaded from the bureau’s site (consumerfinance. gov/guidance/supervision/manual).

TAX TIP

Here are three basic questions you should be asking:

4 Begin by providing each manager with a copy of the company’s state examination manuals for the states you are currently licensed in. (Suggestion: Download the most current copy of each from your regulator’s website.)

TECH

No doubt recent media reporting of enforcement actions—which include significant penalties and sanctions— have signaled the change in the overall examination perspective. Increased legislative and regulatory efforts across this board to protect consumers is a large contributor to this changing focus.

4 Gather a small group of key team members together to commit and conduct your risk underwrite.

UNDERWRITING

Be prepared to address additional requests for information and verification of policies, procedures and controls on your next state mortgage origination examination. In addition to the previous examination requirements determining proper disclosure, underwriting standards and actions, quality control findings and originator licensing, today’s examiners are covering a much broader review of company activities, services and business dealings in the marketplace.

TO GET STARTED, WHY NOT: ORIGINATING

With examiners tightening standards, smaller companies should leverage their resources to assess internal processes.

The Reverse Review May 2015

Searching for more information on the recent financial assessment changes?

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24 | TRR

866-964-1109

TECH

ADVANCE

HECM Helper By John Button

What your loan originating system should do for you

Documents are the genetic material of any loan and they derive their DNA, so to speak, from data gathered in the LOS. If your LOS’ compliance is up-to-date, then fully compliant loan documents should follow.

It is also critical that your LOS assist in the sales processes by visually simplifying the loan when presenting the option to a borrower. Easy-to-understand graphics that visually represent the different loan options will help the borrower see the big picture and make the loan officer’s job easier. The HECM origination environment is more complex than it has ever been. To succeed in this ever-changing landscape, it is critical to have the right tools at your disposal to ensure compliance while maintaining efficiency and accuracy. n reversereview . com

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SPOTLIGHT

Furthermore, the single-platform environment streamlines productivity. Working between multiple programs to get a loan completed creates tremendous inefficiencies that can slow turn times and result in poor customer service. Re-keying data into multiple systems further slows down the process and creates inaccuracies that can affect compliance and loan performance. Giving all of the players in the transaction access to the data when they need it within one location not only improves turn times, but also prevents data errors and provides the customer with a better borrowing experience.

SERVICING

Overall, your LOS should serve as a platform that connects you to the entire reverse mortgage industry. When all of the moving parts are working from a dataset appropriately shared with your partners in a single platform, you ensure the integrity of the data and eliminate a significant potential for compliance errors.

TAX TIP

There are some major systems in the forward mortgage space that ensure their users are in compliance, but the HECMspecific loan origination system has become the de facto compliance system for reverse lenders. Therefore, it is critical that your system of choice guides you through a compliant HECM origination process and alerts you to potential issues. In addition, your LOS provider should continuously update the system to keep pace with compliance changes as they occur. There are a tremendous number of factors in play that affect how much equity a borrower will be able to tap, what happens when they pass away, how to assess the loan if they have a younger spouse, and what they need to do to qualify for the loan. Trying to navigate these loans without a guide that connects you to industry regulation would surely lead you off-course.

TECH

One of the biggest areas in which a HECM loan origination system (LOS) contributes to a lender’s success is compliance. There have been tremendous regulatory changes to the HECM program over the last few years, including the most recent installment, Financial Assessment. While it is an undeniable fact that FA has made the HECM product safer, many lenders feel apprehensive about their ability to maintain compliance not only with FA, but also with all the regulatory changes that came along with it.

UNDERWRITING

Moreover, it’s an important time for reverse lenders to think bigger about this complex and ever-changing industry and what is needed for it to thrive and be recognized as a legitimate financial planning tool. Origination technology has played a major role in HECM lenders’ success strategies. Technology helps lenders stay compliant, keep up with industry changes and track the success of their loan officers, processors and underwriters.

ORIGINATING

It’s a brave new world for today’s reverse mortgage lender. Once upon a time, HECMs were a little-known, often misunderstood product in which few lenders chose to dabble. Things certainly have changed in the past few years, particularly in the past several months. HECMs are no longer just a niche product, but rather a legitimate financial planning tool for retirement-minded seniors and an excellent revenue source for lenders. With these changes in play, the mortgage industry’s perception of reverse mortgages is shifting from a minor component to a significant product in the larger mortgage market.

The Reverse Review May 2015

26 | TRR

TAX TIP

INITIATE

Tracking Delinquency By Aaron Anderson

Why it’s more important than ever for lenders to closely monitor borrower tax payments

REVERSE REVIEW READERS HELP THOUSANDS OF SENIORS FIND FINANCIAL SECURITY. LET’S TALK ABOUT HOW WE CAN HELP THOUSANDS MORE.

Get involved. info@reversereview.com YOUR MONTHLY PUBLICATION FOR REVERSE MORTGAGE NEWS reversereview . com

8 TRR | 27

SPOTLIGHT

Considering the intense scrutiny lenders now face, it is more critical than ever that reverse mortgage providers do due diligence when it comes to their client’s tax payments. By closely monitoring the situation and staying ahead of the curve, lenders can help ensure that their borrowers have a satisfying loan experience. n

SERVICING

After several phone calls to check on the payment status of outstanding taxes, the collector is going to know you are interested in making sure that the taxes are paid. If you nurture that relationship, the collector may become your best ally when it comes to protecting the lien position on your collateral.

TAX TIP

Many states allow deferred taxes or installment plans for senior homeowners. The taxes are usually shown as unpaid, even though that is not exactly the case. Conducting a simple annual search with an immediate delinquent letter will surely lend itself to a rather strong and negative reaction from the homeowner. Who needs those headaches? There are reliable and trustworthy tax service vendors that will perform these monthly searches and provide specific codes on reports that indicate when a homeowner is participating in a deferral or installment program. Along with these monthly tax record reports, you could consider launching a letter campaign that begins with an initial friendly reminder of the homeowner’s responsibility—or, even better, a friendly phone call to see how your customer is doing, both financially and otherwise.

Sure, there is a cost associated with knowing the status of outstanding taxes. But what is the cost of not knowing? What are the potential repercussions of not knowing that a delinquency even exists, not knowing what the next critical event dates are in that particular jurisdiction, or not knowing that your borrower is deferring their taxes and still taking equity out of their house?

TECH

In today’s climate, I recommend a more proactive approach. Consider moving to a monthly delinquency search that would enable your servicing staff to monitor the nonpayment of property taxes on a more consistent basis and allow them to strengthen their connection with their borrowers.

“IN TODAY’S CLIMATE, I RECOMMEND A MORE PROACTIVE APPROACH. Consider moving to a monthly delinquency search that would enable your servicing staff to monitor the nonpayment of property taxes on a more consistent basis and allow them to strengthen their connection with their borrowers.”

UNDERWRITING

Historically, property tax delinquency searches were done (and often still are) on an annual basis only. Once a delinquent property tax was determined, the follow-up correspondence was rather harsh and, more often than not, misunderstood by elderly homeowners. This environment has created a disconnect between the servicing department and their customers, increasing incoming calls to a lender’s call center and adding undue stress to its workplace.

ORIGINATING

The landscape has changed in the HECM business: Complex servicing compliance issues are being enforced by the CFPB; internal and external auditors may require both positive and negative tax verification reporting; and a heightened sensitivity has arisen regarding the ability of senior homeowners to meet the obligations of the reverse mortgage program. Because of all this, now is the time to consider changing the way you handle your annual non-escrow delinquency searches for unpaid property taxes.

The Reverse Review May 2015

SERVICING

COMPLY

Compliance: Moving Beyond the Rules to Real Opportunity By Debra Taylor

be even more complex, as regulations are typically written using forward mortgage rules as their mainframe. In some ways, it’s up to reverse mortgage companies to interpret forward mortgage guidelines for the HECM world.

Why cooperation between originators and servicers is essential to ensure regulatory adherence and borrower satisfaction The dictionary defines compliance as “the means in which a business meets the accepted and standard set of practices or regulations.” It also means conforming to a rule, policy, standard or law. Compliance is the aspirational goal of every regulated business, as it is essential to stand in accordance with relevant laws and industry policies in all of their efforts. In business contexts, compliance can mean many things depending on a person’s viewpoint, knowledge and training within a company. A manager’s view will differ from a staff member’s, and a sales manager may have a different focus than an operations manager. Although points of view may vary, it takes every individual within the company, regardless of their role, to ensure that the business maintains its objective to remain in compliance. It is also important for every team member to understand how compliance will negatively or positively impact a borrower’s experience with the company. Financial institutions, including lenders, are highly regulated by the government, internal processes, vendors and customer advocacy groups such as the CFPB. Reverse mortgages may 28 | TRR

Let’s take a look at loss mitigation options as an example. Reverse mortgages may or may not fall directly under the guidelines outlined by certain regulators. Since HECMs are non-recourse loans, the terminology “loss mitigation” may not apply. A modification cannot be created for a reverse mortgage, but a short sale or a deed in lieu may be completed. There are many different opinions within the industry and the legal community as to whether certain regulatory definitions of “loss mitigation” apply to HECMs. And this is just one example of several! It becomes incumbent upon each company to interpret regulations to the best of their ability and then apply these regulations to the processes and services it performs. Loans can fall out of compliance when the servicer is not diligent in its follow-through, misinterprets the regulations, is inconsistent or unfair with its servicing standards, or has a lack of control throughout the life of the loan. Misinterpretation of the guidelines and non-compliance with those regulations may result in large financial penalties, possible prosecution or, at the very least, reputational risk. The compliance process essentially protects the borrower and the servicer from harm. As an example, the borrower may have been misinformed when the loan was originated or during the servicing of the loan, resulting in the borrower or servicer making a decision that is unfavorable to the borrower. This is one of the crises today regarding nonborrowing spouses or a spouse that was removed from title at the time of origination for various reasons. The nonborrowing spouse could claim that this has caused them hardship. On the other hand, the company is protected from prosecution and from borrower statements of unfair treatment when we adhere to the applicable regulations and provide fair and consistent treatment to the borrower. Following regulations and guidelines protects the company from harm

SERVICING “Compliance begins on the day the borrower first inquires about taking an application for a reverse mortgage. An originations compliance officer balances the adherence of processes and regulations to the borrower’s needs and desires, just as the operations compliance officer balances the adherence within the servicing arena.” and, more importantly, ensures the borrower is safe from any mishandling of their loan.

TECH

In Part II, we’ll explore how...

UNDERWRITING

compliance presents an opportunity to strengthen and grow the relationship between origination and servicing.

TAX TIP

It’s easy to say we’ll work together, but at times it is very hard to do. As originators and servicers, we are in the business of assisting real and potential borrowers obtain their dream of owning a home, refinancing their debt or, in the case of a reverse mortgage, assisting with future living expenses by utilizing the house as a revenue stream in the later years of life. We all want the same thing, but our focus can vary significantly.

ORIGINATING

Compliance begins on the day the borrower first inquires about taking an application for a reverse mortgage. An originations compliance officer balances the adherence of processes and regulations to the borrower’s needs and desires, just as the operations compliance officer balances the adherence within the servicing arena. As Celink’s compliance manager, it is my task to evaluate the applicable regulations and test those guidelines against the processes through auditing, new policy recommendations or by reviewing upcoming operational changes that may negatively impact our compliance goal. My job is made harder if I don’t understand the implications for the originator or how those implications may affect servicing.

In many ways, sales and servicing are on opposite ends of the spectrum. Sales is a revenue stream and servicing is a cost factor. Originators assess the borrower’s desires, factor in age and property value, and provide funds to the borrower to make their dream a reality. Servicers may, at times, be assessing the ability to repay the tax and insurance default, working on collecting the signed yearly occupancy certification, or dealing with a remaining spouse or estate due to the death of the borrower. Originators work with the happy borrower who is looking forward to utilizing some of their hard-earned money from their home. At times, servicers must work with a borrower who is confused about the process, may be unable to pay their taxes and are worried about losing their home. Both the originators and servicers, however, are instrumental in creating a good or bad experience for the borrower. n

SERVICING SPOTLIGHT

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The Reverse Review May 2015

SPOTLIGHT

REFINING YOUR STRATEGY: Tips for Successfully Bringing a Loan to Close M O NT

H’

ITION

WE TALK SALES TIPS WITH SEASONED REVERSE PROFESSIONALS.

IS TH

B Y J ES S I C A G U ER I N

05 / 2015

WANT TO SEE MORE ARTICLES LIKE THIS?

See them at reversereview.com.

everse mortgage specialists work to educate seniors about a unique financial product that could help them achieve a more secure retirement. It’s a sensitive subject for many seniors, and HECM professionals must display tact, patience and compassion when talking with a prospective borrower. It’s a job that requires a special set of skills. So we’ve reached out to a handful of professionals across the country to ask them what they do to connect with their clients. From helping a reluctant borrower to building a relationship rooted in trust, these professionals share their tips for success.

Mike Suits

Capital Mortgage Services of Texas I have found that the main hurdle for many borrowers is the legacy issue. Their home is their greatest asset, so it is understandable that borrowers would be concerned about how a reverse mortgage might affect it. To address these concerns, FIRST make sure you have a clear understanding of what the borrower wants to achieve through a reverse mortgage. It’s important to complete a pre-application Q&A. Through this process, you will get all the information you need to help the borrower decide whether the loan is the right fit for them. SECOND, it’s very important that you outline the loan’s benefits. Highlight the non-recourse clause and how it will protect their spouse or heirs in the event the loan is called due because of their death or displacement 30 | TRR

from the property. This is a common hang-up for many borrowers. THIRD, walk them through the amortization chart. Use this chart to help visually explain the growth of their debt compared with the growth of their remaining equity. I would start with two to three years in the future, and then focus on 10 years out. FINALLY, try to convert those borrowers who are truly reluctant by letting them talk to people who have taken out reverse mortgages. The ability to have a few past clients available for reference calls is priceless. The client will be able to learn firsthand how a reverse mortgage has helped others.

SPOTLIGHT

STEVE SLESS Bayshore Mortgage

R A N DY D AV I S - D O L L A R B A N K Our job is to investigate and educate, helping the client find

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SPOTLIGHT

reversereview . com

SERVICING

Keep it simple. Remember to give them the time they need and don’t get bogged down in the technical details. Stick to the emotion and, above all, put on an English accent. 8

TAX TIP

When I am trying to connect with a client, it’s essential that I understand them. I listen to everything they say and touch on it in later conversations to show them I was listening, interested and paying attention. I engage them in the process and always let them know they have a solution and I am there for them. If a client is reluctant, my strategy is simple: Wash, rinse, repeat. Address their concerns head-on. Keep it plain and simple, keep it friendly, don’t oversell. Agree, agree, agree—then point out the benefits again and again, until they realize they need the program for their own financial well-being. I do this for however long it takes— hours, days, weeks, months. If you’re having trouble closing, reevaluate your first impression: Everything from your greeting to your goodbye: how you look, how you sound, how you smell, what you leave them to read. Is it organized and in an-easyto-follow format, a simple step-by-step process? Or have you left them a job to do, with 100 sheets of paper, DVDs, charts and graphs bursting out of a folder?

TECH

Mark Draper - iReverse Home Loans

UNDERWRITING

the right solution to fit their needs. Show them how a reverse mortgage fits into their own personal financial plan and how the loan could enhance their retirement years. If the loan is a good long-term, sustainable fit for the customer—and if you have done your job in gaining their trust and addressing their fears and misconceptions—your client will make the decision on their own. For clients who are reluctant, reassure them that it is common and normal to feel that way. I usually give a brief history of the program and then go over how insurance will protect them and their

estate. We then discuss why they sometimes see a bad article in the paper. Also, even during a face-to-face meeting to sign the application, I let them know that by signing today, they are not obligated to close on the loan. I tell them that after we go over the program and benefits, if they are not comfortable signing today, we can get together again when they are ready and it is not a problem to do so. I point out that even after the actual closing, they have a three-day right of rescission to change their mind. The bottom line is just be yourself, be honest and be helpful. Listen to their story and see if a reverse mortgage will truly help them.

ORIGINATING

When trying to connect with a client, you must convey your passion. Be genuine, be dynamic. If you are able to transmit your passion over the phone, your borrower’s guard will come down, allowing you to establish a trusting relationship. Be sure to listen. In a successful conversation, the client should be doing 75 percent of the talking. Remember that it’s all about patience and trust. In order to successfully move past a client’s initial reluctance, there must be trust, first and foremost. Trust is built by truly getting to know your client. I like to get off the topic of reverse mortgages and try to get to know them better—share stories, find out what is important to them in life, find out what keeps them up at night, their hobbies, grandchildren’s names. This is a relationship business. Without a relationship, you are just another salesperson. If you truly care, your client will be able to tell. Once you build trust, begin the education process. Teach them how our product can be used to positively impact their lives, how it can give them peace of mind. This requires a great deal of patience. Cultivating a relationship doesn’t happen overnight. Recently, I closed a loan with a client whom I first started talking with more than two years ago.

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Following up on leads and referrals is not rocket science. It’s important to maintain good information sheets including any particulars that may strike a chord with the prospect—family illness, ages of grandchildren, deceased spouse’s name, home improvements, university attended, companies worked for, etc. I also keep a file with email addresses of prior contacts. I stay in touch using various methods such as Outbound Engine, letters with pertinent information on reverse mortgages and follow-up emails. While the telephone call is one of our best sources, I find most prospects prefer to see the proposal rather than hear about it. I email most of my proposals and also mail them, just in case. Bottom line: perseverance. Never throw away a lead that doesn’t pan out. Stay in touch; you never know. reversereview . com

8 TRR | 33

SPOTLIGHT

Collaboration becomes the natural result of this conversation. You can determine and agree upon the best course of action as partners. Everyone wins!

SERVICING

(3) Do you feel the reverse mortgage solution is your best option?

TAX TIP

(2) If you do nothing, could your situation get worse?

With Financial Assessment now established as the requisite process in originating HECMs, industry professionals can benefit by keeping two points in mind. FIRST, it is more essential than ever that loan officers first build rapport and not focus on product knowledge. A deeper level of trust and understanding must be built prior to delving into the prospective borrower’s financial history and assets. These are highly personal matters that require a personal and empathetic approach. SECONDLY, just as with traditional mortgages, some borrowers may seem surprised at the level of information required to determine if they are eligible for the loan. Don’t confuse the prospect’s initial reluctance with a refusal, but rather a request for more reassurance and rapport. Some loan officers have trouble closing or getting a commitment. The surprising truth is that most salespeople never ask for the sale itself! THE GOAL IS TO MAKE SEVERAL SMALLER SALES LEADING TO THE ULTIMATE SALE OF A SIGNED APPLICATION. Work on getting smaller commitments to receive a proposal, a phone meeting or face-to-face meeting, HECM counseling and a signed application. Explain that each is a natural step in the process to determine their eligibility.

TECH

(1) If you do nothing, will your situation get better?

Reverse Focus

UNDERWRITING

So, if the prospect becomes paralyzed and unable to make a decision, gracefully ask the following:

Shannon Hicks

ORIGINATING

Don’t attempt to close or ask for a commitment before building a solutionoriented partnership through collaboration. If the sales conversation is properly guided, an atmosphere of trust prevails. One objective is to lead the prospect into a “teachable moment.” Such a moment occurs when the pain of staying the same is greater than the pain of change.

If I get a name from one of my professional referral partners, I call the prospective client and put them at ease by mentioning the referral’s name. I also open the conversation by asking about the issues that led to the referral. Then I just listen to their story, letting them dominate the conversation. That gives them the opportunity to get their concerns off their chest and gives me chance to understand the reasons they need my help. There is plenty of time for detailed discussion about my products later; their story helps me immensely by giving me the background I need to structure a recommendation designed to meet their needs.

The Reverse Review May 2015

The

BORROWER’S

Perspective

By Jessica Guerin

Understanding the loan from the consumer’s vantage point

s a magazine dedicated to those who work in the reverse mortgage industry, we often examine the loan process from the professional’s perspective. We outline policy change, offer sales tips, break down underwriting procedures. But while we write every month about a financial product designed for senior borrowers, we have yet to speak to the borrowers themselves. So for this month’s feature story, we reached out to five borrowers from around the country about their reverse mortgage experience. They shared the circumstances that led them to consider the loan and revealed their initial concerns about utilizing their home equity. They spoke about their family’s reaction, the steps they took to research the loan, and the connection they felt with their reverse mortgage specialist. While each borrower’s story is unique (and each lender involved different), there were common elements among them. Perhaps by learning more about the loan process from the borrower’s perspective, HECM specialists can fine-tune their approach, enabling them to better understand the customers they serve.

34 | TRR

ach of the five borrowers we spoke with had different reasons for pursuing the loan. (Interestingly enough, most of them said they were prompted to look into reverse mortgages by ads they saw on TV.)

I ran it by him and got his opinion on it. In other words, I tried to cover all my bases,” she says, adding that she also relied heavily on her daughter’s guidance. “She’s my financial advisor,” Hopper jokes.

George Young, a retired Nassau County police officer, decided to take a reverse mortgage to supplement his pension and ensure his wife’s financial security.

Marcus also went online to learn more. “I did a lot of computer research even before I went ahead and called. It helped me see what the ups and the downs were.”

“My wife is five and a half years younger than I am, and when I leave this world, she might still be around. When my pension stops, all she would have is Social Security,” Young says, adding that with the reverse mortgage, she also won’t have to worry about losing the house.

When deciding on a lender, the borrowers varied in their methods. For Young, a personal connection trumped working with a larger bank. At first he reached out to Wells Fargo because the bank held his mortgage at the time, but then he remembered that he knew someone in the business.

Seeking a Solution

Marjorie Marcus and her husband looked into the loan after “It dawned on me that Ed O’Connor worked in reverse home renovations exceeded their budget. “We relocated from mortgages. I got my copy of the [Nassau County Patrolmen’s Minnesota to Kentucky last year and purchased a home that Benevolent Association] newsletter—he has an ad in there needed a lot of updates and repairs,” every time,” Young says. “He came she says. “We ended up spending over, sat down with us, went over a little more of our reserve than we everything.” All I had was Social Security had planned initially, so we were at Powers took a different route. He a standstill as to what we were going and some annuities that I had went online to lendingtree.com and to do. I just happened to notice Fred gotten through my 401(k). I submitted his information to connect Thompson on the television and I wound up running out of money with a lender. Within minutes, he had heard about a reverse mortgage before the end of the month, was contacted by Steve Sless, who through a friend of mine who had it. now works for Bayshore Mortgage. and I knew that if I did not have I didn’t know how it worked, but I Although others reached out to him, knew it worked well for her.” that mortgage payment, it says he immediately felt would just make things so much Powers George Hadres sought a reverse comfortable with Sless. easier.” - Georgia Hopper mortgage for his 93-year-old mother, “I connected with him kind of on a who at the time needed funds to pay personal level,” he says. “I’m still in for in-home care. His interest piqued touch with him now, a year later. I had lots of calls from other by television commercials, Hadres visited his local bank to people, and I basically just said, ‘I’ve got my guy.’” learn more. Although they did not do reverse mortgages, they were able to refer him to a former employee who did. Some borrowers, like Hopper, say their family had questions, but once they were answered, they supported the decision to Mark Powers, a 66-year-old retired sales rep from California, move forward. also saw TV ads and decided to find out how the loan could supplement his retirement income. “I thought, well, maybe “All of my children have told me, ‘We don’t want your house.’ this is something I need to learn more about.” They are all married, they all have their own homes. They are established where they are,” she says. “They were quite Georgia Hopper, a retired flight attendant who lives in [supportive]. Their main concern was whether they were Florida, researched the loan when money became tight after going to be responsible for any finances where my house her husband passed. “All I had was Social Security and some is concerned after I pass away, and I was able to get every annuities that I had gotten through my 401(k),” she says. “I question answered.” wound up running out of money before the end of the month, and I knew that if I did not have that mortgage payment, it Hopper says Nicole Blane, the reverse specialist at Urban would just make things so much easier.” Financial of America who helped her refinance her loan, was sensitive to her children’s concerns. “Nicole told me, ‘If your Doing Research and Finding Guidance children have any questions whatsoever, please tell them to lthough most of these borrowers sent away for the free call me and I will be more than happy to answer any questions literature and DVDs advertised on TV, many went online and take as much time as they need.’” to do their own research and sought advice from friends Powers says he initially had a lot of questions. “I needed a and family before choosing a lender. lot of clarification. How are you getting a loan that you never Hopper says she conducted a thorough investigation. “I did have to pay back?” he says. “It sounded too good to be a lot of research myself online. I talked with two friends who true.” 8 are in the real estate business and I spoke with friends of mine who are very smart business-wise. I talked with my tax man;

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8 TRR | 35

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Both my brother and I were selfsufficient, so there wasn’t any concern there. This was my mom and dad’s house, so it was theirs to do what they wanted with. Her wishes were to die in her home, and that’s what she did.” - George Hadres

“I wasn’t desperate for the money, so that was a good thing [that worked] in my favor, because I had enough time to research and get help… I consulted with my niece, who was in real estate,” he says, adding that his niece contacted Sless a few times with questions as well. When it comes to the required counseling, most borrowers say they found the session to be beneficial. “It helped a great deal because they did present us with other options and they helped us to see which one would be the best,” Marcus says. “They also felt that this was a good thing for us, in our situation.”

Hopper took two counseling sessions, one when she originally took the loan in 2013, and another when she refinanced earlier this year. While she says the first session was basic, the second was extremely helpful. “That lady was absolutely wonderful. She knew what she was talking about. She answered all kinds of questions, gave me information that I didn’t even know I should have. She spent a good 45 minutes on the phone with me and it was really just absolutely wonderful.” Hadres says he didn’t learn anything new during the session, but that that fact in itself was a plus. “It didn’t provide me any information that I didn’t already know, but I think it confirmed my understanding about the obligations of the lender to us in the event that we wanted to repay the loan,” he says.

me. Just send me an email every once in a while if you want to follow up.’ He really allowed me to make up my mind without any pressure whatsoever. He just answered my questions,” he says, adding that it took him about three to five months to mull it over before deciding to move ahead with the loan. “He was patient with me. He left me to make my own decision.” Hopper also commented on the importance of patience, praising Blane for taking the time to address all of her concerns. “I asked her a million questions, and some of them I asked more than once just in different ways, and she never got impatient. And if she did not know an answer, she would find out the answer and call me right back. She was just so patient. She really made me feel completely comfortable and I had complete trust in her to advise me correctly,” she says. “She became like a friend to me before it was all over, and I told her, ‘I’m going to miss getting to talk to you!’” Hadres, who took the loan on behalf of his mother, worked with Linda Weilert, a reverse specialist for Open Mortgage. He says Weilert took steps to ensure he was comfortable with the decision. “Linda put us very much at ease, and I’ve referred her to several people since then,” he says. “Linda is very sensitive to the needs of the elderly and makes sure that the elderly are being represented properly by their families.”

Following Through and Looking Back

Establishing a Connection

very borrower we spoke with commented in some way that a connection to their reverse specialist was essential to their comfort level. Most came to the table with questions and concerns, and each one described how their contact took the time to address these issues and make sure they truly felt the loan was the right fit. Powers says Sless’ patience and willingness to give him space helped him feel comfortable. “I asked him, ‘Please don’t call

hile some thought the loan process to be a bit laborious, others did not. Overall, most said it took about one to three months to close.

Powers, who closed his loan in June 2014, says he encountered unexpected issues along the way, from home repairs to missing paperwork. “It was arduous… You sign a million papers—an inch, inch and a half of papers.” Young, who closed on his loan seven years ago, says it was a simple process. “Nothing was unexpected. I had seen the ads, I had gotten the literature, I figured out that this was a good thing for us.” But even if the process was tedious at times for some, every single borrower we spoke with said that they felt that taking a reverse mortgage was the right decision in hindsight. Each one had a story about how it had changed their lives to a significant degree. “It was most definitely a positive decision,” Hadres says. “Both my brother and I were self-sufficient, so there wasn’t any concern there. This was my mom and dad’s house, so it was theirs to do what they wanted with. Her wishes were to die in her home, and that’s what she did.” “It was really just an answer to prayer for me,” says Hopper. “I don’t have to worry about running out of money before the end of the month… It’s peace of mind and freedom from worry.” Marcus echoes that sentiment. “It just relieved a lot of headache and stress and worry. It helped us have the peace of mind that we were going to be able to pay our bills and keep the house.” n reversereview . com

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The Reverse Review May 2015

LAST WORD

ASSIST

Serving Our Seniors By John Smaldone

“The job of a reverse mortgage originator comes with a unique reward: the ability to assist a senior in need of your financial guidance. There is nothing more concerning than a lack of financial insecurity, and having the tools to help someone free themselves of this burden is a tremendous thing.”

Recent program change presents challenges, but also the opportunity to better serve the client. It’s been a tumultuous few years in the reverse mortgage industry, but it appears FHA’s HECM revamp is coming to a close. What does this mean? It means we will have to accept the program’s new shape and learn how to work with it. We will need to work closely with our senior clients and help them determine if this loan is truly a good fit for them. While recent program change may present challenges, it also provides us with an opportunity to better serve the senior demographic. I believe the future is bright for the reverse mortgage industry. Don’t forget, there are 8,000 seniors turning 62 daily, and this trend is expected to continue for the next 15 to 19 years. Furthermore, the amount of equity many seniors have in their homes is growing daily. There is still tremendous potential to help thousands of seniors find a financial security in retirement. Now, we just have to approach our clients differently, assessing the totality 38 | TRR

of their situation before knowing if this product is the right fit for them. While the more financially savvy may come to see the value in this product, there is still room for those who need to leverage their equity in order to pay medical bills or pay for daily living expenses. In effect, the new rules give us the opportunity to be of greater service to these clients. Under Financial Assessment, a borrower’s willingness to pay their debts is going to be a

major underwriting factor, and this will require us to spend more time with our borrowers, working through their financial status and history and talking about potential solutions that can address their specific problems. Originators will need to drill down to the details with their clients, asking: Have you made your personal debt payments on time? Have you made your existing mortgage payments and property charges on time? Is your total income sufficient to meet the obligations of the loan and still have some funds left over? Will a reverse mortgage positively impact your entire financial position? These are factors that will force us to really consider a client’s situation and what kind of solution would be best for them. The job of a reverse mortgage originator comes with a unique reward: the ability to assist a senior in need of your financial guidance. There is nothing more concerning than a lack of financial insecurity, and having the tools to help someone free themselves of this burden is a tremendous thing. Whether you help save their home from foreclosure or assist them in finding a way to pay off an existing lien on their home, you can substantially improve their way of life. Today, originators have an opportunity to provide a greater degree of service for their senior clients by helping them find a solution that works best for them. n

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