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May 2009


REVERSE review

Short On Cash, But Plenty Of Time? Here’s The Secret Formula For Low Cost High Return Relationship Building Online….

Valerie VanBooven PAGE


“With the emergence of online social and business networking websites such as Facebook and LinkedIn, as well as blogging platforms such as Twitter, it’s easier than ever to make a name for yourself and get noticed within the industry. This month Valerie VanBooven highlights a few of her favorites and provides a step-by-step guide to marketing yourself on the Internet and setting yourself apart from your competition....So have you tweeted lately??”

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Mayy 20 M Ma 2009 09 09


Publisher Aman Makkar Editor-in-Chief Erica English Copy Editor Harpreet Makkar Production Jason Westbrook Layout & Design Guenthoer Design Printer The Ovid Bell Press

Advertising Information

Rates, specifications, and deadline information available. phone : 858.217.5332 e-mail :


REVERSE review

11440 West Bernardo Court Suite 220 San Diego, CA 92127

© 2009 The Reverse Review, LLC. All rights reserved. The Reverse Review, LLC is a California limited liability company and is the publisher of The Reverse Review magazine. 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, The Reverse Review, 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, 11440 W Bernardo Ct, Ste 220, San Diego, CA 92127

editor’s note


In the throes of this economic downturn we have to support one another. I want to make sure that The Reverse Review continues to highlight positive articles each month for each of you. I know sometimes our positive spirits are being challenged and tested, and when the dust settles, only the strong will survive.

ately I have been is it that I have been privileged to run what our audience tells us is the best reverse mortgage magazine? There is a call to the brightest, most motivated industry where people contribute on more levels than imagined. It’s clearly loud and urgent. As HECM volumes increase, new products emerge and new players make a name for themselves, it’s time to raise the bar and set new goals for the remainder of 2009. For the past year, The Reverse Review has challenged my team to create the best possible product to inspire you and celebrate such a wonderful industry.

Thank you for your support!

Erica English Editor-In-Chief

May Ma ay 20 2009 009 0



12 Simplexity - Making

The Complex Reverse Mortgage Simple To Understand Dennis Haber

16 So, You Want To Be A Top Dog...

Monte Rose


26 Jumping On The

Short On Cash, But Plenty Of Time?

Bandwagon… Sam Collins

Here’s The Secret Formula For Low Cost High Return Relationship Building Online….

Valerie VanBooven

22 And The Beat Goes On – HUD Issues ML 0910 & ML 09-11

28 Our New Loan Limit Of

$625,500 How Many Doors Does It Really Open? Michael Banner

Weiner Brodsky Sidman Kider, PC

ESSENTIALS 5 Note From the Editor 32 Ask the Servicer


7 Ask the Underwriter 33 Directory ser erev er evvie iew w

10 Industry Snapshot 34 The Last Word: The Perfect Storm

ask the underwriter

Mae Flowers Ralph Rosynek It’s mailbag time, and the internet has come alive with inquiries seeking reverse mortgage assistance for seniors experiencing difficulties due to economic impact. Many times the information received requires some thought and investigation prior to engaging the customer or their trusted advisor. While the interview component is key to the origination process, a few minutes of preparation time to develop a checklist of key areas to focus on prior to assembling the pages and pages of disclosures, figures and forms necessary to create the application package will be of particular benefit in most situations.

Dear Mr. Rosynek: I am writing to you as I live in California and am seeking your help to provide a reverse mortgage loan for my mother and her sister. My mother is getting more forgetful as the years pass by and she now requires more medical care than her funds will provide. My mother is 83 years old and was born in a small house on a farm in Alabama – I have never seen her birth certificate and the little town no longer exists. She has lived in her apartment for 43 years – my father Robert purchased the building right after they moved to Chicago and he died shortly after I was born. Her second husband William left her several years ago and my Aunt Mary was forced to move in with her to help out. Mary sees to her daily needs. She takes care of all on my mother’s banking and financial matters as mother can no longer do this on her own and she doesn’t leave her apartment. While the trust papers say that Mary can help her, my father wanted to make sure there was a little something for each of us three children as well as aunt Mary.

Sometimes we do not hear what our borrower(s) is telling us or miss the opportunity to request additional clarification or documentation at the application session.

There is a $65,000.00 mortgage on the property which I am not sure if they have been paying – mother keeps saying the taxman keeps sending letters. Part of the money was used to fix the roof and the heaters about 15 years ago. I do not know what the property is worth, however, I remember my mother telling me that one similar to it sold for about $235,000.00 two years ago.

Prepare yourself to meet Mae Flowers and her daughter for the first time.

I will be in Chicago on the 15th of this month and would like to meet with you if possible – please let me know what I need to do to begin the process. Thank you. So, here’s your chance. I am asking for your assistance to compose an e-mail response to Mae Flowers’ daughter giving her further direction and information – you may accept the appointment or defer based upon your assessment of the information provided. Next month, The Reverse Review will publish 3 responses for review by our readers. Address your e-mail response to We look forward to your comments. May Ma ay 20 2009 009 0


contributors Ralph Rosynek - Ask The Underwriter, page 7

Ralph Rosynek is President and CEO of 1st Reverse as well as a HECM DE Underwriter. Mr. Rosynek has been involved in mortgage lending for over 30 years with the last 5+ years exclusively providing reverse mortgage lending solutions. To contact Mr. Rosynek or to learn more about 1st Reverse Financial Services, Please visit or call 877.574.1000.

John Lunde - Reverse Market Snapshot, page 10

John Lunde is President and founder of Reverse Market Insight, the premier source for market intelligence and analytics services in the reverse mortgage industry. RMI clients include five of the top ten reverse mortgage originators, both lender and independent servicers, as well as some of the largest financial services firms in the world. Find out more at or call 949.281.6470.

Dennis Haber - Simplexity - Making The Complex Reverse Mortgage Simple To Understand, page 12 Dennis Haber, Esq. is EVP of Agency for Consumer Equity in New York. He is a prolific writer of provocative reverse mortgage articles and has been published in the prestigious New York Law Journal. His book, Piggy Bank Your Home; Tap into the Power of a Reverse Mortgage, has been recently updated and translated into Spanish. His blog (The Reverse Mortgage Blog) helps keep the industry informed. or 516.551.2189 Monte Rose - So, You Want To Be A ‘Top Dog’…, page 16

Monte Rose has helped hundreds of seniors obtain a reverse mortgage during the past 17 years. He is an accomplished speaker and widely quoted industry expert, appearing in financial publications and nationally syndicated media. He was head of national retail sales for Financial Freedom Senior Funding Corporation. Monte is a Certified Senior Advisor and a Certified strengths Coach with Gallup University. For more information, call 800.516.0545 or e-mail

Valerie VanBooven - Short On Cash, But Plenty Of Time? Here’s The Secret Formula

For Low Cost High Return Relationship Building Online, page 18 Valerie VanBooven RN BSN is a Senior Service Marketing Expert and the National Marketing Director for Next Generation Financial Services, a Division of 1st Mariner Bank. She is a professional speaker and the author of the books “Aging Answers” (2003) and “The Senior Solution” (2007). She can be reached at Please visit her website at

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contributors And The Beat Goes On – HUD Issues ML 09-10 & ML 09-11, page 22 - Joel Schiffman Joel Schiffman is a member with the law firm of Weiner Brodsky Sidman Kider, P.C. The firm serves as General Counsel to the National Reverse Mortgage Lenders Association and advisor to reverse mortgage lenders and industry participants throughout the nation. Mr. Schiffman can be reached at or by telephone at 949.798.5570. Jump On The Bandwagon, page 26 - Sam Collins Sam Collins is the President of Sam Collins Reverse Marketing, LLC and Founder of REMALO, the Reverse Mortgage Association for Loan Officers. REMALO is a web based National sales, marketing, training, and full service center, created exclusively for Reverse Mortgage Loan Officers, Correspondents, Branch Managers, and key executives, and brokers. or 877.262.7656 Our New Loan Limit of $625,500, How Many Doors Does It Really Open? - Michael Banner page 28 Founder of LoanWell America, Inc., Michael is one of few Reverse Mortgage professionals accredited to teach continued education classes to CFP’s, CPA’s, attorneys & insurance agents. Michael has been interviewed by the Wall Street Journal, Tampa Bay Business Journal &the Reverse Mortgage Wire. A member of NRMLA’s State & Local Issues Committee & sits on the Board of Directors of FPA of Tampa Bay. For more information: or 877.700.0555. Ask The Servicer, page 32 - Ryan LaRose Ryan LaRose is the Executive Vice President of Celink, an independent reverse mortgage subservicer. Ryan has over 12 years of servicing experience; exclusively in reverse mortgage servicing since 2005. In addition, Ryan is an active member of the NRMLA servicing and technology committees.

The Last Word: The Perfect Storm, page 34 - Shannon Hicks Shannon is a reverse mortgage originator & VP of Product Development at Reverse Fortunes, Inc. His past experience includes serving as a planned giving & fundraising manager for a non-profit, & as a financial services professional. He currently teaches reverse mortgage classes for both financial professionals and borrowers across Northern California. Shannon is also host of Reverse Fortunes Weekly, the nation’s first podcast for reverse mortgage originators. For more information call 1.866.592.2096. And The Beat Goes On – HUD Issues ML 09-10 & ML 09-11, page 22 - Fed Kamensky Fed Kamensky is an associate with the law firm of Weiner Brodsky Sidman Kider, P.C. The firm serves as General Counsel to the National Reverse Mortgage Lenders Association and advisor to reverse mortgage lenders and industry participants throughout the nation. Mr. Kamensky can be reached at or by telephone at 202.628.2000.

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reverse mortgage industry snapshot Statistics Provided by Reverse Market Insight - March 2009

Top 10 Rankings by Region

10 Regions, ranked by HECM unit volume YTD. Including rank change from prior YTD, as well as growth rates. Also includes active lenders and growth

Lender Distribution by YTD Growth Rate

Lender distribution graph and table, showing number of lenders growing at various growth rates YTD vs. prior YTD, including volume attributable to each group of lenders. Client Notices 1)

Help improve data quality in the Reverse Mortgage industry. If you believe your company’s numbers on this report are inaccurate, please e-mail us ( and we will review your feedback promptly. Please include your name, company and contact information along with a thorough description of the suspected inaccuracy. Thanks!


If you received this report as a trial or sample and would like to purchase this report or future reports for your company, please visit:


If you’ve been looking for a source for Reverse Mortgage intelligence beyond MIC endorsement numbers, we’ve got just what you need. Find out more at

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24 Month Penetration and Unit Volume

2 year trend graph of monthly HECM unit volume and industry penetration against 62+ homeowner households nationally.

Appendix 1) All statistics based on retail originations from HUD’s Monthly HECM MIC reports 2) Loans are in unit volume, based on HUD reported mortgage insurance certificate issuance 3) Lenders are aggregated using HUD’s lender identification numbers and unique lender names, along with feedback from reporting lenders HUD Regions and Corresponding States/Territories Region 1 - New England Connecticut Maine Massachusetts New Hampshire Rhode Island Vermont

Region 3 - Mid-Atlantic Delaware District of Columbia Maryland Pennsylvania Virginia West Virginia

Region 5 - Midwest Illinois Indiana Michigan Minnesota Ohio Wisconsin

Region 7 - Great Plains Iowa Kansas Missouri Nebraska

Region 8 - Rocky Mountain Colorado Region 2 - New York/New Jersey Region 4 - Southeast/Caribbean Region 6 - Southwest Montana North Dakota New York Alabama Arkansas Louisiana South Dakota New Jersey Florida New Mexico Utah Georgia Wyoming Oklahoma Kentucky Texas Mississippi North Carolina Puerto Rico South Carolina Tennessee U.S. Virgin Islands

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Region 9 - Pacific/Hawaii Arizona California Federated States of Micronesia Hawaii Nevada Region 10 Northwest/Alaska Alaska Idaho Oregon Washington

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aradoxically, it has been suggested that compared to reverse mortgage professionals, doctors have it rather easy. The doctor is required to obtain the informed consent of the patient prior to performing a procedure/surgery. All they have to say is, “if you consent to this operation you will be like new and the risks are such and such but you will be able to do things you currently cannot do”. They do not describe every incision, every step, or every procedure. They don’t even describe how the anesthesia works.


However, those of us in the reverse mortgage program have to describe how everything works. Therefore, unlike the doctors, knowing that the ultimate result will be OK is simply not enough. We must be able to walk the borrower(s) through the minutia, while making it easy to understand. After all, an expert is one who can make difficult things understandable. This article assumes that the loan officer has both character and competence; integrity and knowledge and loves the business. Today the reverse mortgage loan officer is working under extremely challenging times and conditions. A reverse mortgage loan officer from years ago would find today’s landscape unrecognizable. The industry has changed from a static, simple, one size fits all model, where every lending institution offered the same set of programs with matching interest rates, indices and margins to an ever changing, fluid model, where the program menu differs from lender to lender. For example, some lenders may offer LIBOR index rate programs, while others may offer only CMT index rate programs. Yet some lenders may offer programs with either index. The margin offerings will be different as well. Maximizing profits and achieving that evanescent competitive advantage requires an ever-evolving game plan. This strategy now requires that the entire company including its loan officers execute the game plan flawlessly.

SimplexityMaking The Complex Reverse Mortgage Simple To Understand DENNIS HABER 12 12 ser erev er evvie iew w

These competing factors require that the loan officer have a greater comprehension of reverse mortgage nuances. At the same time, the reverse mortgage professional must master these nuances, so he/she can maintain equanimity in the face of a depreciating asset death spiral that has left so much emotional and economic detritus in its wake. More than ever seniors crave the delivery of simple and complete information. This is the one thing that the industry does not provide. Like many industries, this industry also suffers from the follow the leader syndrome. Everyone seems to copy what everyone else is doing. Therefore, there is a sameness about the commercials, the advertisements, and even the brochures. How many times have borrowers told you that they liked your marketing piece and it turned out that it was your competitor’s piece. This article will not explicitly cover or discuss the

recent vagaries of the secondary market; nor the actions of an intractable Fannie Mae. For the most part, each is outside the scope of this article. What is addressed is how the loan officer can take a complex program and make it simple to understand. The tour through “reverse mortgage land” first requires that the loan officer create an environment where trust can thrive. Sincere bonding and rapport needs to occur. Remember, people don’t care how much you know until they know how much you care about them. You cannot fake this. Once this happens it is there forever. A typical way that this will manifest itself is when your borrower receives 5 or 10 different mailings from other reverse mortgage companies and calls you for guidance. Or three or four years after meeting you, this same borrower calls you to tell you they are now ready to proceed. If examples like this have not happened to you, it is time to ask why. It is so important to be able to see things as your borrowers see them. This requires that you ask incisive questions. It is imperative that you set proper expectations for your borrowers. Presenting in a way that your borrowers can soak up your information like a sponge is also key and understanding that the real decision is not whether the borrowers obtain a reverse mortgage, rather who is chosen to assist the borrowers in obtaining same. Encouraging the borrower to ask questions, lots of questions along with a frank discussion about alternative actions is quite important as well as the relationship the loan officer chooses to have with borrower. For example, if the borrower is treated as a customer, the customer becomes another number and is typically told anything to get them to act. On the other hand, if the borrower is treated as a client, then the focus becomes what is best for the borrower. The two views couldn’t be more different. So how do you treat your borrowers? The only way is as a client. After providing an initial safe environment for your borrowers, you will be further judged by your ability to tell the reverse mortgage story using the comparison sheet, amortization schedule and TALC as your guide. The narration really begins with the comparison/estimate sheet. This document tells a rather intriguing story. Actually, when done right, it tells two stories. First, it introduces the listener (borrower) to the concepts and terms that form the linchpin of understanding. If you cannot make a complex topic easy to understand, your story will have no point. Second, this story will become magical when the comparison/estimate sheet simplicity is coalesced with your borrowers’ personal perspectives. Magic is achieved when your borrower can see himself/herself woven into the happily ever after part of the tale. Therefore, before the story can begin, the loan officer must also be intimately familiar with his/her borrowers’ concerns. The importance of seeing things through the eyes of your borrower becomes key. A story without all the facts cannot become magical and will not lead to a specific outcome. Furthermore, you cannot start the story unless and until you know what keeps your borrower up at night. Circumstance, wearing the black hat, has driven our elders into financial despair. Often one will hear, “If only I had known I would live so long, I would have done things differently.” Social Security became more than the intended safety net. For many, it became as important as the air that one breathes. An insufficient quantity causes life to cease. Many of our elders are on the brink of financial death. Even those that did what they were supposed to do were not speared by the black hat of circumstance. The effects of the mortgage debacle have left our elders speechless. Their options have shriveled like a grape on the vine that doesn’t get picked. So let’s cobble together the points that you will need to create your story. (Please note, I will discuss only a few of the salient points that must be discussed with your borrower) I believe that it is also important to repeat these points throughout the story. You cannot expect your borrower to take this all in hearing a point just once. May Ma ay 20 2009 009 0

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Prepare them for the different vocabulary they will encounter: Principal Limit, Expected Interest rate, and Service Set Aside

LENDING LIMIT This is also a poor name. A better name “The Magic Number”

Put them at ease: You must make the new vocabulary easy to understand.

• •

The COMPARISON SHEET - The beginning • • • •

• •

Point out that there are two interest rate columns and point out the differences in each: The initial rate or note rate will ultimately determine what gets paid back. The initial rate is composed of an index and margin. Taken together that equals the rate. The index could be the CMT (Constant Maturity Treasury) or LIBOR (London Inter Bank Offered Rate) Explain the type of loan: Adjustable or fixed. The adjustable version comes in 2 varieties- monthly or annual adjustments. Next note the margins that are available. Think of the margins as the lenders’ profit. The monthly statements clients receive will reflect the note rate. The Expected Interest Rate will help determine how much money your client will have access to. At the closing this rate will no longer exist because it served its function. It helped to determine the Principle Limit.




Service set aside. It represents a relatively small amount of equity that will not be converted into reverse mortgage proceeds, as determined by a present value calculation. (It is easier to describe its effect). It is an accounting transaction that takes into account the age and life expectancy of the youngest borrower. • Closing costs. • Mortgage(s) • Liens (judgments; unpaid taxes, etc) ____________________________________ Leaves net amount your borrower can enjoy & use (Dental work, home repairs/modernization, vacation-the variety of things is unlimited)

The lending limits have gone up. Since 2006 through October 2008, the lending limit was $362,790. On November of 2008, increased to $417,000. On February 24th 2009 in accordance with the American Recovery & Reinvestment Act, this “magic number” was further increased to $625,500.


PRINCIPAL LIMIT: Call it the starting Point or benefit amount Age of youngest borrower; value of home up to the “ lending limit” together with the Expected Interest rate will provide this key number. From the starting point certain things get deducted to ultimately give the net amount your borrower can actually use.

The lending limit- is not the amount your borrower can obtain. Instead it reflects how much of the home value is used to determine the Principal limit/ benefit amount. Today the lending limit is $625,500. (IF your borrower lives in a home that is worth $700,000, $625,500 of the $700,000 value would be counted toward this determination. If the value of the home was $450,000, all of the value would be so counted.

The Expected Interest Rate is based upon the bond market (yield on the 10 year or 5 year swap rate). Think of a sea saw. When one side goes up the other side goes down. Therefore, the higher the expected rate the lower the benefit amount. On the other hand, the lower the expected rate the higher the benefit amount (subject to the floor of 5.56%)

*Use the sea saw for inverse relationships Example: Expected interest rate and the principle limit/benefit amount. As the EIR goes up the PL/BA goes down. As the EIR goes down the PL/ BA goes up, subject to the floor of 5.56%. Example: Expected Interest Rate and the Service Set Aside. While the Principal limit factor will not increase below an expected interest rate of 5.56%, the service set aside will continue to increase as the expected interest rate continues to fall below the 5.56% floor. DIRECT Use the gas pedal for direct relationships •

A direct relationship exists between the expected interest rate and the tenure payment when the expected interest rate is below the floor.

Example: The tenure payment will increase as the expected interest rate will increase. When it is more important for the borrower to receive a higher monthly payment, you may want to choose the higher expected interest rate. •

When the expected interest rate is above the floor, the higher rate may not give a higher tenure payment. It depends upon the difference in the principle limit amounts. It is important to check the comparison sheet for each assumption.

THE AMORTIZATION SCHEDULE - A significant part of the story telling As you weave your story, your borrowers often will want to know what will happen when that day of reckoning comes.

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Equity Questions Answered • • • •

Will there be any equity left in the home? If so, how much? And will the children be responsible for paying back the amount owed if there is no equity or not enough equity left, when the house is sold? If the borrowers on the other hand wish to insure that there is equity left for the family after the loan becomes due, it is important to discover this in your questioning stage. You will have done your borrowers an injustice if hopes are high and then they are dashed because they did not ask the appropriate questions and you didn’t bring up this issue.

Strategically thinking...

What if Questions Answered • • • • • •

Show how long tenure payments will last Show how long the credit line and term payments will last Show the growth factor at work in the line of credit Show how the payment plans can be combined with use of the Comparison sheet Show different appreciation assumptions Make the unknowing future comprehensible

The Total Annual Loan Cost - Don’t let it get the better of you • • •

• • •

This is the average interest rate that would produce the amount owed based upon how the money is received. This calculation is limited by the non recourse feature of this loan. TALC rates are usually higher in the earlier years because the closing costs will represent a greater percentage of the outstanding balance. As time passes and more reverse mortgage proceeds are used, the closing costs will represent a smaller portion of this outstanding balance. A higher TALC rate usually means that there is more equity in the home as the borrower takes smaller amounts out of the reverse mortgage. (Use the sea-saw) A lower TALC rate usually means that the borrower is taking a larger chunk of money out in the beginning years. (Use the sea-saw) Should you find this brief explanation a challenge, consider this: It’s like buying an expensive suit/dress. If you wear it once, then it is expensive. If you get a lot of use out of it, then it becomes less expensive.

Reverse mortgage originators, in order to succeed, must be at the top of their game, everyday. Knowledge is one thing, however, being able to impart it in a simple and understandable way is another thing entirely. Having the ability and the confidence to withstand the onslaught of exacting questions from family and friends of prospects will to a certain degree, determine one’s success. However, the eponymous subprime crisis has left a deleterious mark on this industry. Fraud, along with its twin, deceit has found a home. A very facile decision process has turned into a thorny, arduous and laborious process. Delays are common as each appraisal is picked apart; occupancy issues have become ubiquitous; powers of attorney have become a pejorative; and even benign changes in title now raise questions. The loan officer must be able to set the appropriate borrower expectations while providing the underwriter with the documentation that will assuage the fears and concerns that have sadly become endemic. Today, older Americans have had their lives interrupted by a confluence of forces. When they were younger, they longed for a happy and peaceful retirement. They yearned for a “prosperity” that eluded their parents. Now many see the reverse mortgage as the answer to their needs. With program interest at a high and with industry change a constant; the loan officer must be able to navigate parallel responsibilities.

May Ma ay 20 2009 009 0

Strategically thinking companies rely on ReverseVision Freedom of Action ReverseVision is supported by more reverse mortgage lenders than any other software, giving customers maximum freedom of action.

Independence As an independent technology company ReverseVision gives its customers the highest flexibility and independence to grow their business.

ReverseVision Inc. 3310 Pollock Place • Raleigh, NC 27607 (919) 834 0070 •

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So, you want to be a

Top Dog ... Monte Rose

DOING TIP…Set a deadline. Tell yourself you only have 30 minutes to get your task done. Once you do, your brain takes over and finds a way to compress the time it used to take and get the job done. Psychologists call this the “time compression phenomenon”. Give it a try. #2 The ‘Big Dog’ Productivity Stage ‘Big Dogs’ fund 4-7 loans per month. They’ve mastered the “effectiveness” dimension of the reverse business and are now exploring opportunities for “efficiency”. They give valiant effort and have perfected the core competencies of their craft. calculated that employers in the US spend $759 b billion per year on salaries for which real work was expected, b but not actually performed.

The economics become much more favorable for salespersons in this category. Multiply your average take-home commission by 5, and what do you have …$5000 or $7500 or $10,000+? Become a ‘Big Dog’ and you’ll have money to market.

A American workers, on average, spend 45 hours a week at w work, but describe 16 of those hours as “unproductive,” aaccording to a study by Microsoft.

The success indicator for ‘Big Dogs’ is MOMENTUM. They have it. “The harder they work, the more they make.” More effort equals more productivity.


Marcus Buckingham, the Strengths guru, suggests a more startling statistic. He believes that American workers “do what they do best” only about 15% of the time. The corollary being, “You’re most productive, when you’re engaged in activities that harness your strengths”. Simple deduction tells us that there is tremendous waste; but also lift opportunity in the workforce at large and quite possibly among reverse mortgage industry professionals. I have observed hundreds of salespersons, and they fall into one of three categories: Puppies

Big Dog

Top Dog

The canine metaphor aside, these categories connote the three stages of productivity. If you want to get to the “next” level of productivity, read on.

‘Big Dog’ Productivity Key: Balance DOING and KNOWING One of the scariest decisions that I can recall from my LO days was the decision to focus on a niche. Rather than attempting to be all things to all people, I decided to focus on the professional advisor market. I channeled all of my B2B marketing energy toward Elder Law attorneys and Certified Financial Planners. The benefits were instant and obvious. I became well versed in the dialects of those two niches. I was able to ask insightful diagnostic questions and craft powerful “value added” components to my marketing calls. I became a “known quantity” among those niches. I wrote more business. BALANCE TIP…Ready, Aim, Shoot

#1 The ‘Puppy’ Productivity Stage Puppies are loan officers who complete 2-3 transactions per month. Their success indicator is SURVIVAL. They possess an awareness of “what they get paid to do”…originate loans, but struggle with the basic requirement of creating traction. The question, “How do I become more effective?” haunts them. Their goal is to meet the minimum performance standards of their firm, but don’t enjoy the perks of economic success. They’re “getting by.” For the record, some LO’s are very happy living life as a ‘Puppy’. There’s nothing wrong with being a Puppy.

Our industry has changed dramatically over the past 24 months. The days of “Ready, Shoot, Aim” are done. The “low hanging” fruit is gone. Big Dogs recognize the necessity and power of KNOWING….knowing themselves and their market. My success was built upon a foundation of “fit”. I have a fit mantra, which is… “If you don’t understand them when they speak, and they don’t listen to you when you speak, you’re not a fit.” Infuse focus and intensity to proper directional fit, and you’ll enjoy Big Dog performance.

‘Puppy’ Productivity Key: More DOING and Less KNOWING “Doing” activities for the “hunter” salesperson involve prospecting, while for the “gatherer” salesperson it’s follow-through. “Knowing” activities include the basic requirements of delivering a cogent sales presentation and proper completion of the application paperwork. If you’re stuck in ‘Puppy-hood,’ here’s my prescription for progress. “Give it the gas.” You must bring more energy to your business. Concentrate on “doing more” rather than “knowing everything”. Quit trying to “fix the company,” and hit the streets. Purchase a head-set and get on the phone. Who cares that you know all the answers, if you’re never able to share them with someone other than your wife, significant other, or mom? Want to get twice the work done in half the time? Who doesn’t? Let’s start with one simple thing you can do right now to get 2 hours worth of work done in 30 minutes. Here’s one “doing tip” that is awesome. 16 16

Big Dogs blend action and insight. Doing and Knowing.

#3 The ‘Top Dog’ Productivity Stage Top Dogs generate 8-10+ deals per month. They attend “incentive trips” and their spouse never asks, “When are you going to make some money?” They have figured out the business…moved up the “food chain”. Life is good. Top Dogs are few and far between. Don’t believe me? Ask around. “Everyone who is funding 10+ loans a month raise your hand.” My anecdotal estimate, based upon my experience and recent conversations among industry leaders, is that the Top Dog population is 5% of all LO’s. Very select company, wouldn’t you agree? But, definitely attainable.

Their most profound differentiator is their commitment to systems and process. It’s not that they have an assistant or a CRM. It’s what they do with the assistant and CRM. They possess a laser like market focus and commitment. And they are persons of response.

I recently spoke with Don Graves, a Top Dog at Financial Freedom, and invited him to listen in on a training webinar. In the session, I unpacked the “how to’s” of reaching the Realtor niche. Within two weeks, Don sent me a note announcing his participation at a Greater Philadelphia Realtor Expo. He was invited to be the reverse mortgage expert voice. Why? Because he took what I offered in my session, and immediately acted upon the insight. That is a classic Top Dog response. They KNOW when and how to respond to good input.

Operationally thinking...

The success indicator of Top Dogs is the PREDICTABILITY factor in their business. They enjoy a dimension of certainty every month because they employ processes consistently. It’s never a “one and done” type of approach. They have the resources to stay in the game; and they are creatures of good habits. What’s the most powerful success ingredient on the planet? Aristotle, Napoleon Hill, and Steven Covey would all agree. It’s habit. If you think about it, you’ll see that this is true. Brush your teeth every day and you’ll prevent most cavities. Don’t brush, and your teeth are likely to rot. You don’t think about brushing your teeth. Why not? Because, it’s a habit. KNOWING TIP = create better habits What if you could establish habits that virtually guarantee outrageous business success? It’s pretty obvious that you can - otherwise there wouldn’t be any millionaires or billionaires on the planet. The question is, are you? Whether you know it or not, you’ve already established a set of habits that are either making you richer or poorer, and the effects of those habits are felt by you every minute of every day. Remember Covey’s 7 Habits 1.

Be Proactive. Take responsibility for your attitudes and actions.


Begin with the end in mind. Start with a clear destination to understand where you are now, where you’re going and what you value most.


Put first things first. Manage yourself. Organize and execute around priorities. Things which matter most should never be at the mercy of things which matter least.


Think Win Win. This thinking begins with a commitment to explore all options until a mutually satisfactory solution is reached.


Seek first to understand, then to be understood. Understanding builds the skills of empathetic listening that inspire openness and trust.


Synergize. This is the habit of creative teamwork.


Sharpen the saw. This is the habit of self-renewal. Preserving and enhancing your greatest asset, yourself, by renewing the physical, social/ economic, mental and spiritual dimension of your nature.

Operationally thinking companies rely on ReverseVision Increased Productivity ReverseVision is a powerful collaborative software that increases productivity. Role-based business rules ensure quality and improve efficiency.

ROI (Return on Investment) ReverseVision fair pricing model guarantees a quick return on investment, increasing profitability.

Finally, Note the progression from Puppy to Big Dog to Top Dog. • • •

More Doing and Less Knowing Balance Doing and Knowing More Knowing and Less Doing

Apply a simple lens to your business, and accelerate your move to the next May 2009 level.

ReverseVision Inc. 3310 Pollock Place • Raleigh, NC 27607 (919) 834 0070 •

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Short on Cash, but Plenty of Time? Here’s the Secret Formula for Low Cost High Return Relationship Building Online…. Valerie VanBooven Most of us are probably not in a position to throw caution to the wind when it comes to our own marketing budget. Most of us want our marketing programs and strategies to work well the FIRST time we try them, and as we know, that’s always a gamble. Postcard mailings aren’t what they used to be and direct mail doesn’t have the same impact. Seminar and workshops are expensive when food is served, and there’s never a guaranteed ROI on any of it.


oday there are other ways to market to your local community without spending tons of money. I will be the first to say that “in person networking” can never be replaced. The handshake and the ability to look someone in the eye is still just as important as ever. However, with a little web savvy, you can start those conversations a lot sooner, and educate a lot faster than ever before. Your reach has been enhanced by the power of the internet. I’ve written about this before but the truth of the matter is that this method of marketing is not only the latest trend, but it is one that I expect will last. If you aren’t on this bandwagon yet, get on fast. The important part of understanding today’s marketing techniques is that total transparency and relationship building with your target market is the key to success. Long gone are the days when we could hide behind our websites. Transparency does not mean writing on Facebook, Twitter, or your blog about the latest fight you have with your spouse, or what the neighbor’s bad kids are up to. What it does mean is that you are willing to share enough about yourself and your value system to build a level of trust with your local community that is unmatched. The more “accessible” you are online, the more accessible your prospects will be and the more credibility you will gain. Talk about yourself as the owner, add a picture, talk about your personal experiences that lead you to this business, or to want to work with seniors. Be real. Be honest. Depending on who is reading this I would suggest that most seniors have lived longer than you. They have made more important decisions about their lives than you have, and most can spot dishonesty or half-truths a mile away. Transparency means earning the trust of a skeptical customer.

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Social media marketing is free, and it works if done correctly. Plain and simple. More baby-boomers and seniors are on the internet than ever before. Suddenly there are tons of articles out there talking about Grandpa on Facebook and MySpace. You need to be where your target market hangs out!

I’m about to give away my secret formula that will transform your business into a marketing machine. Yes, it takes a little time, sort of like a weekend painting project, but once it’s done, the time you spend updating your information takes just a couple of hours a week. (But you will be addicted to it, so I know you will spend more time than just 2 hours a week!) Equipment The equipment needed for a project like this is minimal- you might want to invest in a good headset with a microphone for your computer so that you can record audio or video if you like. carries a wide variety of headsets at a reasonable price.

Step 1: (The longest step in the process) Setting up your online accounts may take a bit of time, but are well worth the investment.

Here are the initial accounts I recommend for the fastest and most sustainable results: • Facebook Personal Account (using your own name, your picture, etc, no logos). Connections on Facebook personal are “friends” • Facebook Business Page (this is where you use your logo and other business related items. Connections on your Facebook business page are “fans”. • Your Blog. Use to create a fast and easy blog that lets you get the message out about your area of expertise. Be sure to use their tutorials to learn how to use categories and tags to your advantage. Remember, when you post on your blog use titles that identify your location and your product or service. For instance, instead of a title like “April Events”, use “April Reverse Mortgage Seminars in Miami, FL”. See the difference? The search engines will play their hand in your favor with the second title. Set up your Account. I know, you aren’t really • sure WHY you need twitter, but believe me some amazing deals go down every day because of good Twitter Posts (called tweets). Once you have your account set up, go to and type in a search for people in your area. Start connecting with your local community by “Following” people in your town. They will follow you back. • LinkedIn is next- This is an important website for professionals because unlike Facebook, Twitter, and other places, LinkedIn is for the true business to business networking. Many connections that you make on LinkedIn will turn into in-person meetings down the road. Use it to your advantage. Be sure you use the “Wordpress” feature to add your blog posts directly to your LinkedIn profile instantly. (Automation at it’s finest!) • Use to link everything together. FriendFeed ties all of your accounts together. Once you connect your accounts to FriendFeed, you will notice that when you make a blog post, it automatically shows up on Facebook, Twitter, Squidoo, and many other sites. This is another great lesson in automation. Once this step is completed your BLOG becomes the center HUB for all of your information that you want to share. • Squidoo ( is important because it serves as another “web page” about you and your business. You can link Twitter, Facebook, and your blog to your Squidoo page for extra backlinking and content. • Scribd ( is an odd little site that pulls a lot of punch.

Turn all of your print marketing material into online material that works in your favor. Anything you have in your marketing arsenal that can be scanned or uploaded to Scribd is worth taking the time to load. When you place a document on Scribd be sure to title it the same way you would a blog post- make sure your business (Reverse Mortgages) and your location (St. Louis, MO) is in the headline or title area. MerchantCircle - one of my current favorites! www.merchantcircle. com This group has done a really good job of creating a system that gets you noticed by the search engines FAST. Open a free account. They try to upsell you at every turn, but I dare say you can do just as well with a free account. The key to MerchantCircle is to make sure the name of your company portion is filled in with your line of business and your location. So instead of “Tom’s Financial Services and Loans”, a better business listing would be simply, “Reverse Mortgages, Findlay OH”. Another tip on MerchantCircle is to make sure that you put your blog posts on from your main blog right on to your MerchantCircle blog. The more content you have the faster you move up website page ranks. is a website where you can post articles about your niche. There is no waiting time for approval. Keep the same rules in mind- article titles should reference your location and your line of business. is a similar story. Post your articles, make sure they are over 500 words. Check for spelling errors etc. The Senior List - This website is well optimized, and is going to be a much bigger player over the next 2 years. Get your free listing, or upgrade to paid. I recommend paid in this case, because it’s so cheap! Finally, type in the words that you would use to search for a Reverse Mortgage provider in your area on . Who comes up first? What websites are showing on the first page and can you get listed on those? If so, go for it.

Step 2: This step is super important. I’ve written about this before. If your website is homegrown, old, outdated, and has no “call to action”, then you will never have good lead conversion results. Spend the money or the time to update your website. •

What is a “call to action”? A call to action means giving the viewer of your webpage one simple task that he or she must complete in order to get free information from you. “Enter Your Name and Email Address HERE to Access our Free Video Series on Reverse Mortgage Pros and Cons”

What free information? Free information like a short video series on Reverse Mortgages, a free report, a free DVD, a free audio CD, or downloadable MP3. Anything tangible will work. Eliminate FREE CONSULTATION from your vocabulary online and offline. Everyone gives a free consultation, this is not an attention grabber.

Look at your keywords, descriptions, and meta tags on your website. Make sure they reflect what you do and what you provide. If your website’s home page is labeled “Home” in your web browser, it’s not a wonder that your website isn’t getting any traffic. If this information seems like a foreign language, hire someone to help you. You need “SEO” for your website. (Search Engine Optimization) Without it, your website sucks.

Take off links to other websites that have nothing to do with you and links that don’t make you any money. Link to your own blog, Facebook, Twitter, etc. Placing a link to a local Senior Center is thoughtful, but ultimately stuff like this is cluttery and strips you of Page Rank. Link to your own ads, your own pages, and your own content. Don’t link to places that don’t make you money!

Step 3: Content: How often, How much? All of your sites need to be updated with some amount of regularity. The question becomes, how often, and how much? Where do I find content?

Where to find content. You probably have some of your own content to begin with- look at your brochures, flyers, booklets etc. Plenty of content to get you started! However, most of us need to “borrow” content from someone else from time to time. There’s nothing wrong with that as long as you follow some basic rules. Copying and pasting an article from the NYT or WSJ is illegal. You • can’t just put other people’s copyright protected content on your website without their permissions. Getting permission can take forever and can be very expensive. So, the work-around for that is this: Post some thoughts on your blog about an article that you read online. Maybe you thought it was very timely and you want to share it with your community. Put some personal thoughts about it in your blog post and then copy and paste a LINK to that article. That way, readers will be directed straight to the NYT or WSJ website to read more. Posting your opinion is fine, and then a link. Posting the article itself is not ok. (unless you have permission) • Another strategy is to use other authors’ content legally. On websites like their terms of service state that you can use any article on their website as long as you don’t change it, and always credit the author the way they do. The only restriction is that you can’t take a bunch of articles, put them in an ebook or free report and try to SELL that as a product. Other places to find content ideas are and •

How often should you update? I would recommend updating your blog no less than once a week. Articles can be written once a month or once every two months. Search engines like fresh content, and so do consumers, so keep it current and relevant. Places like Scribd, Squidoo, and other websites can be updated every few months. In the past I have posted an article on Scribd with great keywords in the title, and it shows up for over a year on the first page of for my keyword selection. How much content? Most article submission sites require that an article be at least 400 words, and although that’s not a requirement for your blog, you certainly don’t want your posts to be too short either. 400 words is often the length of a long paragraph. You can do it. What kind of content? In the Reverse Mortgage industry the best type of content is on Reverse Mortgages, but that can get old. Mix it up. Talk about Medicare, retirement issues, senior living, senior housing, prescription drug costs, traveling to visit grandkids, economic issues affecting seniors and more. You get the point. Be a good steward of your informational resources and share that content with purpose. Tell Stories. Seniors like stories that explain how other people in their situation or their age group made a decision that changed their lives for the better. If you have stories that meet those criteria, tell them! If you have testimonials, show them off! If you have “evangelists”(Evangelists are people who believe in you, and talk about how wonderful you are) out there who love your work, ask them to participate on your blog, or on Facebook. Interview them and use the audio or video to your advantage (with permission of course). Get the word out and let other people toot your horn. No one knows the trouble you have seen in and client’s eyes, only to have them smile on the day of closing, knowing that their problems are solved. You owe it to your community to tell stories like that. Who knows how many other people you might help along the way!

In summary, now is the time. Actually the time was a year ago, but it’s not too late to start building an online presence. Moving forward, this cost effective form of marketing will save you thousands in hard marketing costs. Companies that don’t have a Social Media Strategy or roadmap in place now, will most likely fall behind by Q3 or Q4 of this year. I can think of few things more expensive than having to play catch-up, especially in the social media category. You can’t “buy” relationships on the social web. I have two favorite quotes that might help some of you understand the value of investing your time and energy into building a following online. 1. 2.

“I work extremely hard doing what I love, mainly to ensure that I don’t have to work extremely hard doing what I hate.” -Hugh Mcleod “Impact is not created by big budgets, impact is created by great marketing strategies that last have a lasting result.”- Me

FREE! Try it foro to Just g ortun ReverseFywebsite m


And the Beat Goes On – HUD Issues ML 09-10 & ML 09-11 Weiner Brodsky Sidman Kider, PC

As you are no doubt aware, the Housing and Economic Recovery Act of 2008 (or “HERA”) was enacted on July 30, 2008, and was designed primarily to address the subprime mortgage crisis. However, in addition to authorizing the guarantee of up to $300 billion in new fixed-rate mortgages for subprime markets, HERA also mandated a number of changes in the Home Equity Conversion Mortgage (“HECM”) program. HERA has clearly kept the Department of Housing and Urban Development (“HUD”) busy preparing mortgagee letters and drafting regulations to implement and clarify the various changes to the HECM program. In fact, HERA has kept HUD so busy we are considering referring to HERA by a new name – the “HUD Employee Retention Act.” Well, perhaps not. In this article, we are happy to share with you the latest missives from HUD arising from HERA, namely, Mortgagee Letters 2009-10 and 2009-11 (or ML-09-10 and ML 09-11), both of which were issued on March 27, 2009. ML 09-10, in addition to plowing some new ground, is a useful compilation of prior HUD guidance from various sources on borrower counseling requirements. ML 09-11 is the definitive statement on implementing the HECM for purchase program, a topic that was the subject of our article entitled, “What the HECM – Reverse Mortgages Can Be Used to Buy a Home!” featured in the February 2009 issue of The Reverse Review. As Sonny and Cher made famous in their 60’s era hit, “The Beat Goes On,” melodically highlighting how “drums keep pounding a rhythm to the brain,” so goes HUD as their mortgagee letters have certainly been frequent enough of late to pound a rhythm into the collective consciousness of the industry. We invite you to get into the “groove” and learn these latest HUD policy developments as we help you “drum” the new requirements into your own policies, procedures and practices. ML 09-10 HERA amended section 255 of the National Housing Act to require that counseling must be provided by an independent third party that is not, either directly or indirectly, associated with or compensated by any party involved in originating, servicing or funding the HECM loan, or involved in the sale of annuities, investments, long-term care insurance, or any other type of financial or insurance products. ML 09-10 clarifies, and provides some further insight to, this policy by requiring prospective HECM borrowers to initiate contact with the counseling agency on their own, without any pressure, or even assistance, from the lender. Contrary to what might ordinarily be viewed simply as good customer service, lenders and originators are precluded from assisting a senior in scheduling the counseling session. For instance, as an example, and not by way of limitation, according to ML 09-10, a mortgagee may not dial a counseling agency’s phone number and hand the phone to the borrower, nor may the lender or originator enter the borrower’s contact information into a web-based system that automatically puts the borrower’s name in a queue to be called by a counselor. ML 09-10 also clarified that lenders and originators must provide to every prospective HECM borrower a list of no fewer than 10 counseling agencies. As under previous HECM guidance, ML 09-10 states the list must include 5 agencies in the local area and/or state of the prospective HECM borrower, with at least one agency located within a reasonable driving distance in order to provide face-to-face counseling if the senior elects face-to-face counseling. In addition to the 5 local agencies, the list must also include the following agencies that are permitted to provide telephonic counseling on a nationwide basis:

National Foundation for Credit Counseling, Money Management International, Consumer Credit Counseling Service of Atlanta, the AARP and the National Council on Aging. The list provided must include the toll-free telephone numbers for these nationwide agencies.

a compilation of guidance previously issued under ML 08-33 and new guidance for the HECM for Purchase program. HUD expressly provides in ML 09-11 that it is intended to supersede ML 08-33.

Section 255 of the National Housing Act requires that HECM counselors discuss with the prospective HECM borrower, among other things, options other than the HECM loan that are available to the borrower. Significantly, ML 09-10 clarifies that the counselor must conduct a budget analysis during the counseling session in order to meet this requirement. According to ML 09-10, HECM counselors must review the prospective borrower’s financial situation during the HECM counseling session. In doing this, counselors must document the senior’s budget based on financial information provided by the senior, including income, assets, debts and monthly expenses.

As previously provided in ML 08-33, HECM for Purchase borrowers must occupy the property as a principal residence within 60 days from the date of closing. Lenders must ensure the borrower complies with this requirement. ML 09-11 clarifies that HECM borrowers may have only one principal residence at any one time. Therefore, current HECM borrowers that plan to sell their existing residence and buy a new principal residence using the HECM for Purchase program must pay off their existing FHA-insured mortgage before FHA will insure the new HECM for Purchase loan. If prospective borrowers wish to keep their existing home as rental property, the lender must ensure the borrower has sufficient income to: (i) maintain the costs associated with the new home (i.e., real estate taxes, home owners insurance and property maintenance); (ii) satisfy the required monetary investment for the HECM for Purchase transaction; and (iii) continue to make the mortgage payment and tax and insurance payments on the existing mortgage presumably, such existing mortgage is a non-HECM “forward” loan that requires the borrower to make regular installment monthly repayments). With this guidance, HUD intends to prevent the practice non-euphemistically known as “buy and bail”, where the borrower purchases a new home with the intent to default on the mortgage securing his/her prior home. Note that this guidance applies only if the borrower vacates a principal residence to adopt a new principal residence, and would not apply to the borrower’s existing rental properties.

Senior Occupancy; Principal Residence; More Than One Home

Finally, ML 09-10 mandated a revised form of HECM Counseling Certificate, which provides spaces to record the method of payment of the fee for the counseling session, which may be either “Upfront Fee for Counseling Session” or “Financed Fee for Counseling Session.” The revised HECM Counseling Certificate also includes a box to check if the counseling fee has been waived. ML 09-11 As discussed in great detail in our article entitled, “What the HECM – Reverse Mortgages Can Be Used to Buy a Home!” featured in the February 2009 issue of The Reverse Review, FHA issued Mortgagee Letter 08-33 on October 8, 2008, implementing HERA provisions authorizing the HECM for Purchase program. ML 09-11 provides

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ML 09-11 also confirmed a significant change in HUD’s policy concerning calculation of the maximum claim amount for HECM purchase loans (the maximum claim amount is used to determine the HECM principal limit and the amount of the mortgage insurance premium). With respect to HECM for Purchase loans only, the maximum claim amount must be calculated as the lesser of: (1) the property appraised value; (2) purchase price; or (3) FHA mortgage limit. Neither the estimate of closing costs nor the initial mortgage insurance premium is used in the calculation of the maximum claim amount. We are pleased this important policy change was published in a more prominent fashion, since it had previously been communicated in the HECM for Purchase Frequently Asked Questions (FAQs) page published on HUD’s web site. As a practice point, it is worth noting that HUD periodically updates its FAQs and, at times, important policy issues are first addressed on this web page.

In addition, a withdrawal from the borrower’s insurance policy or retirement plan is an acceptable funding source. However, seller concessions, the use of loan discount points, interest rate buy downs, closing cost down payment assistance, builder incentives, gifts or personal property given by the seller, or any other party involved in the transaction, are not permitted. Further, as previously provided in ML 08-33, seniors may not obtain a bridge loan (or so called “gap financing”) or employ other interim financing techniques to meet the down payment requirements or funding of closing costs in connection with the HECM for Purchase transaction. This restriction includes subordinate liens, personal loans, cash withdrawals from credit cards, seller financing and any other lending commitments that cannot be satisfied at closing. Lenders must verify funding sources prior to closing, and must include in the case file supporting documentation as specified in Section 2-10 of HUD Handbook 4155, REV-5. The failure to provide the necessary documentation may result in a notice of rejection, delay of endorsement and/or administrative action.

Repairs; Property Charges


ML 09-11 also provided further guidance on property repairs and repair set asides. According to ML 09-11, all repairs of “major property deficiencies” that threaten the health and safety of the homeowner and/or jeopardize the soundness and security of the property must be completed by the seller prior to loan closing. Examples of major property deficiencies are: (a) no running water; (b) leaking roof, (c) no primary heating source, (d) inadequate electrical systems (including lighting), (e) inoperable doors and windows (inhibited ingress and egress), and (f) state or local code violations. Thus, in the case of a HECM purchase loan, and at least with regard to these major deficiencies, it would appear all repairs must be completed by the seller prior to closing, instead of through the use of a repair set aside. As with “traditional” refinance HECMs, after loan closing, the HECM for Purchase borrower can elect to have the lender pay for property charges such as ground rent, homeowner association fees, taxes, hazard insurance, etc., by setting aside funds from the borrower’s monthly payments or line of credit.

ML 09-11 suggests that in most cases purchase money HECM loans are not rescindable under the federal Truth-in-Lending Act (TILA) and Regulation Z. However, there may be instances when the loan would be rescindable, such as, if the mortgagor intends to finance a balloon payment due under a land sale contract, the three day right of rescission would be applicable. In any event, ML 09-11 reiterates that HUD is not responsible to interpret the right of rescission under TILA and Regulation Z, and strongly encourages lenders to seek an outside counsel’s assistance in this area. As discussed in the February 2009 issue of The Reverse Review, although purchase money transactions generally are exempt from rescission rights under TILA, subsequent advances of credit after closing may not be exempt unless a right of rescission is offered to the consumer at the outset of the transaction. Lenders should consider proving seniors with a customized notice of the right of rescission.

Senior’s Monetary Investment; Verification of Funds

ML 09-11 reinforces the guidance provided in ML 08-33 that a HECM for Purchase transaction must be secured by real estate held in fee simple, or on a leasehold under a lease for not less than 99 years which is renewable, or under a lease having a remaining period of not less than 50 years beyond the date of the 100th birthday of the youngest mortgagor. Only properties where construction is completed, as defined in Mortgagee Letter 2007-06, and a certificate of occupancy, or its equivalent, has been issued are eligible for FHA insurance under the HECM for Purchase program. Certain types of properties are ineligible for FHA insurance under the HECM for Purchase program, including (i) co-ops; (ii) newly constructed principal residences where a certificate of occupancy or its equivalent has not been issued; (iii) existing manufactured homes built before June 15, 1976; or, existing manufactured homes built after June 15, 1976 that fail to conform to the Manufactured Home Construction Safety Standards. ML 09-11 also outlines FHA’s long-standing policy that manufactured homes that were previously installed or occupied at another site or location are not eligible for FHA insurance, including insurance under the HECM for Purchase program.

Maximum Claim Amount

At closing, seniors must provide the required monetary investment to consummate the HECM for Purchase transaction, which will be applied to satisfy the difference between the principal limit of the HECM loan and the sale price for the property, plus any HECM loan related fees that are not financed into the loan, minus the amount of the earnest deposit. As stated in the previous ML 08-33, seniors may choose to provide a larger investment amount in order to retain a portion of the available HECM proceeds for future draws. In the attachment to ML 09-11, the FHA included several examples of the calculation of the required monetary investment that the senior borrower must make in HECM for Purchase transactions. According to ML 09-11, HECM for Purchase borrowers can provide the necessary monetary investment to consummate the transaction by using cash on hand or cash from the sale of other assets, or through the use of funding sources approved under HUD Handbook 4155.1, REV-5, section 2-10, except: (i) sweat equity, (ii) trade equity, (iii) rent credit, or (iv) cash from the following parties: (a) a seller or any other person or entity that financially benefits from the transaction, or (b) any third party or entity that is reimbursed, directly or indirectly, by the seller or any other person or entity that financially benefits from the transaction. This guidance appears to permit certain gift funds from acceptable FHA sources, such as an outright gift from a borrower’s relative.

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Types of Property

Counseling; Mortgage Fraud and Property Flipping; First Lien ML 09-11 reiterates that seniors must receive enhanced counseling on all topics covered in the mortgagee letter, as well as other counseling issuances. ML 09-11 also provides HUD’s cautionary guidance against mortgage fraud and property flipping schemes, ser erev er evvie iew w

including coercing the senior to purchase a distressed home in need of substantial repairs when the home is sold at, or above, market rate as well as schemes involving temporary rental arrangements. Lenders must take steps to ensure that: (i) only current owners of record sell properties that will be financed; (ii) any resale of a property may not occur 90 or fewer days from the last sale; and (iii) for resales that occur between 91 and 180 days where the new sale price exceeds 100% of the previous sales price, FHA will require additional documentation validating the property’s value. In addition, lenders must ensure the HECM for Purchase liens will be in first and second lien position, and that no other liens against the property exist at closing. Banned Parties; Data Entry ML 09-11 provides that lenders must examine the Limited Denial of Participation List (LDP) and the General Services Administration’s (GSA) Excluded Parties List System maintained by HUD to determine if the seller, real estate agent, builder, or any other party to the transaction appears on either list. The reverse mortgage will not be eligible for mortgage insurance if the name of any party to the transaction appears on either list. The mortgagee letter further outlines several data entry changes that have been made on FHA Connection to accommodate the HECM for Purchase program.


Loan Documents As the prior ML 08-33, ML 09-11 generally does not provide detailed guidance regarding HECM for Purchase loan documents. According to ML 09-11, lenders must determine whether a particular HECM loan is structured as open or closed-end credit. ML 09-11 also indicates that HUD will issue new guidance describing the required HECM pre-endorsement documents, which will be provided in a separate instruction. In the meantime, lenders should consider reviewing their loan documents to be used for HECM for Purchase transactions to ensure that they meet HUD’s requirements, including the requirements described in this article. ********************


At the risk of overdoing a bad clichĂŠ, the beat does go on. As surely as “boys will keep chasing girls to get a kiss,â€? HUD will continue publishing mortgagee letters, regulations and frequently asked questions. In turn, reverse mortgage industry participants, with the help of their legal and compliance advisors, will continue to learn the latest rhyme, conduct their businesses ethically, in compliance with applicable law, and strive to provide our senior customers with solutions that best meet their needs. By Joel Schiman and Fed Kamensky, of the law firm of Weiner Brodsky Sidman Kider, P.C. The law firm serves as General Counsel to the National Reverse Mortgage Lenders Association and advisor to reverse mortgage lenders and industry participants throughout the nation. The firm has oďŹƒces in Washington, D.C., Newport Beach and Dallas. Additional information can be found at or by telephone at 202.628.2000. Messrs. Schiman and Kamensky can be reached at schi and, respectively. This article provides only an overview of some of the federal and state laws and regulations that may aect reverse mortgage lending and finance matters. Although the practice of Weiner Brodsky Sidman Kider P.C. is national in scope, attorneys within our firm do not actively practice law in all jurisdictions, and these materials are not intended to and do not provide legal advice. Because of the generality of this article, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. May Ma ay 20 2009 009 0





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Traveling down some roads can lead you nowhere, unless you have a plan to get you there. No longer is a map good enough, you need a GPS. The world has become a diďŹƒcult place to maneuver. I recently visited Boston with my son to view colleges. While there I used my GPS, (tom-tom) to get around in the city. If you’ve never been to Boston or a novelist to their multi-plex interchanges, you will soon find yourself lost. Thank goodness for technology. The whole idea led me to think about how our senior prospects must think about our world today. Their heads must be spinning with all the ruckus created by an ailing economy, declining 401K’s, home values dropping, tax increases, increased medical costs and fraudulent financial schemes just to name a few. Now when you couple all the latter challenges for our seniors, it is no wonder that our seniors may become a little confused, cautious, hesitant and drag their feet before making a decision to do a reverse mortgage. When our clients finally make up their minds, you then tell them they must undergo a third party counseling. Most seem OK with the HUD counseling, but many are stressed out and concerned. Not to mention the added cost for the counseling. Next, you provide them with a list of 10 counselors and they have to choose one and you cannot give them any guidance on whom to choose. Here comes the even scarier part, they might soon have to take a test!

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Jumping On The Bandwagon Sam Collins

What happened to the good old days? It seemed things were easier not long ago, for both our seniors and for reverse mortgage originators. Has our industry retrenched, rather than move forward? Have the laws of unintended consequences taken over? Mandatory pricing and increased margins are adding more fuel to the fire and adding more confusion to the reverse process and threatening the integrity of our industry. I remain optimistic. I am positive that with patience and diligence we will survive and prevail. We must, we have no choice. Your choice is simple. You must stay involved, focused, educated, and up to date on changes taking place within the reverse mortgage industry, to include Governmental changes, lender policies, programs and general underwriting and disclosures. Make a habit of a weekly check on the HUD site for new mortgagee letters; you can find them here: Keep reading chronicles and magazines like The Reverse Review or consider joining a member organization like REMALO. But, you must continue to hone your sales skills and techniques. You must learn to adapt to the new changes in technology, also referred to by many as Web 2.0. To stay connected with your senior clients you must adapt to the new landscape. You must learn how to blog, have a web site; sign up for Facebook and other social networking sites. However, don’t forget the good old days. The best tried and true method is finding ways to get in front of your senior clients, through organizations, seminars, and direct response mailings. Remember the word “Trust”. The trust word is alive and well. Trust is still the most important word in our senior’s vocabulary and this will never change regardless of the media. Quite frankly, nothing in marketing has changed, only new forms and methods to spread the word. Your job is to spread the word using your two most valuable resources; time and money. Leveraging both your time and money is your biggest asset and your biggest challenge. Think about it, when you spend a minute, an hour, or a day to do some task, that time is lost and never to be recovered. The same thing is true for money. When your dollar is gone it is gone forever and will fall into the jaws of “Never Land” only to appear as debt if not used wisely. Your challenges -> use both your time and money wisely, as if it were your last day on this earth. Leverage your knowledge to do the most good for you and your senior client. Hop on the bandwagon and ride as if your life depended on it.

May Ma ay 20 2009 009 0

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Our New Loan Limit Of

$625,500 How Many Doors Does it Really Open? MICHAEL BANNER For at least the last ten years I heard it was “for sure” that this would be the year FHA was going to raise its loan limits to match Fannie and Freddie. The years came and went. I heard it for so long that I actually stopped paying attention. When it finally happened I almost didn’t believe it. Low & behold, at the end of 2008, we had an FHA loan limit of $417,000. Being an old FHA guy (and I use the term old very loosely) I was very happy. Being that my chosen career for the last several years was reverse mortgages, suddenly my happiness turned into elation.

...frankly I was tired of hearing that ‘reverse mortgages were just for poor people’ or that ‘it was a product of last resort’.

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In Florida, the state where my company does its primary business, the average FHA county loan limit was slightly above $200,000. This new limit represented a 100% increase and frankly I was tired of hearing that “reverse mortgages were just for poor people” or that “it was a product of last resort.” The new $417,000 loan limit immediately opened doors for my entire company.


Then after waiting for more than ten years for this new loan limit, to have it increased again within ninety days to $625,500, was just too much…my elation now turned to euphoria! The Reverse Mortgage is just for poor people…I don’t think so! The new loan limit of $625,500 brings this product to a whole new level. And at that new level is a totally new set of demographics. As I have written in past articles, one of my favorite referral sources for reverse mortgages is financial planners. In most cases, a financial planner’s client has a larger asset base and maintains a higher quality of life than your typical reverse mortgage client. So many times I have heard from these financial planners, and other trusted financial advisors, “my client lives in a free & clear million dollar home” and “his portfolio is doing very well.” How about this one? “At this point in my client’s life why would they want to tie up a million dollar asset (their home) and only access a couple of hundred thousand dollars?” You know, that’s a good a question. And at this point in time, we have a great answer. Guess what Mr. Financial Planner? Your client’s million dollar home is now worth $650-700 thousand dollars, if they are lucky. And, their portfolio has probably decreased approximately 40% since last year. Thanks to our new higher loan limits maybe a reverse mortgage is the best option for your senior client base to maintain their higher than average quality of life. Let’s look at these illustrations below:

Go Sell. Go Serve. In my many years of building sales teams, I believe that Monte Rose has written the definitive sales book for the reverse mortgage business. He provides a pathway for a succesful career in selling to the senior market. Michael Anderson - Founder, BMA Financial Associates

Age of Youngest Borrower

Home Value

Funds Available

65 70

$625,500 or above


$625,500 or above



$625,500 or above


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* Above figures are based on the HECM Fix Closed End The truth of the matter is a tremendous amount of homes, above the value of $625,500, are owned in this country by seniors. May Ma ay 20 2009 009 0

17100 Gillette Ave., Suite 131, Irvine, CA 92614 800-516-0545 •

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With seniors depleting their savings at a record pace and the most volatile investment environment we have experienced in decades decreasing their once lucrative retirement accounts, it certainly appears the funds available from a reverse mortgage are an option for the upper income sector. With the total absence of a jumbo product, this could have such far reaching affects on our emerging industry. Let’s look at a few other examples of how we can change the lives of the upper income senior: Present value of their home $750,000, age 65, and present mortgage balance of $350,000 with a present mortgage payment of $1,987.26. (Based on 5.5% fixed 30 year rate) Based on the above illustration a reverse mortgage could payoff their existing mortgage. The end result, we have given the client an extra $1,987.26 in disposable income per month. If this client were retired and living on $100,000 per year, the reverse mortgage just increased his/her income by 24%! But reverse mortgages are just for poor people….. Here are two more examples, my company facilitated, of how the upper income senior client used a reverse mortgage:

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A 67 year old borrower, who did not consider himself old or retired, obtained a $300,000 reverse mortgage and purchased two waterfront condos @ $150,000 each. Just about 18 months ago these condos were selling for $250,000+ each. When I asked the client why he used the reverse mortgage for this purpose he stated “there is no better investment than real estate right now and how else could he purchase waterfront property with no monthly debt service?” He continued, “in several years I will sell these units for twice what I paid for them, payoff the reverse mortgage and be hundreds of thousands of dollars ahead.” But reverse mortgages are just for poor people… When we still had a jumbo program we facilitated this transaction: A borrower obtained a $750,000 reverse mortgage. He purchased a 15 unit apartment complex that appraised then for $950,000. The units were throwing off $12,000 per month in rental income. This 62 year old entrepreneur created an additional $144,000 per year in income purchased an asset $200,000 below appraised value and secured financing that comes with no ser erev er evvie iew w

obligation to be repaid in his life time! And let’s not forget, the apartment complex is free & clear.

lived in that home for many years and it is either free & clear or has a relatively small mortgage remaining.

But reverse mortgages are just for poor people…

Instead of using all of the profits of the sale of their present home to purchase their retirement home why aren’t we, as an industry, suggesting to these seniors they place 50% of their proceeds down on their new home and obtain a reverse mortgage for the rest?

Every senior plans to live a life of comfort and quality in their retirement years. Certainly we all want this for our parents and one day for ourselves. Undoubtedly, a free & clear home is part of that retirement plan. But is having the house free & clear the real goal or is having no house payment in their retirement years the real goal?

The result; they have no house payments during their retirement phase of their lives and they have tens or in many cases hundreds of thousands of dollars in additional liquidity. These additional funds can be used to fund their retirement years in many ways. Quite possibly, these extra funds may allow them to eliminate that part time job they had thought was necessary to maintain a strong quality of life.

The real truth is a combination of longer lifespan, forced early retirements for our seniors in today’s market place, and dwindling investment accounts has totally redefined the “retirement years.” Many seniors are actually planning on having that “part time job” well into their 70s. The Purchase HECM, with the new increased loan amount, can and will change this situation if professionals like us make the effort to do so. Here is a pretty common example. A senior couple sells their home and is ready for their retirement years. Even in today’s environment the odds are still extremely strong that they

A pretty incredible thought for an industry that is in its infancy… a pretty incredible thought that the reverse mortgage could have this type of affect on so many aspects of our society…a pretty incredible thought that you & I are a part of it. Have a great month. Make a difference in as many seniors’ lives as you can.

Here’s Your Chance to Be in the Same Room With FHA, FDIC, OCC, FTC and Other Important Regulators. NRMLA 2009 WASHINGTON, DC POLICY CONFERENCE June 18-19

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Gain an in-depth understanding of the key regulatory, compliance, and legislative issues facing the Reverse Mortgage industry. Here’s your chance to interact with key regulators as well as others who help shape the policies which affect our business.

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May Ma ay 20 2009 009 0

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ask the servicer

Ryan LaRose

The reverse mortgage is considered to be a “non-recourse” loan. This means that the only collateral on the loan is the property itself. If the estate elects to complete a deed in lieu, short sale, or have the servicer initiate foreclosure, there is no negative financial impact on the borrower’s heirs or the estate.

In “forward” mortgages, provisions in the loan documents for the death of the borrower are not often utilized. Given that the reverse mortgage product is designed exclusively for older adults, it’s imperative that reverse mortgage industry professionals are familiar with the standard processes of what occurs once the last surviving borrower passes away. This topic is inevitable when discussing the unique servicing requirements of these loans and the death of a reverse mortgage borrower is an ultra-sensitive issue that servicers are required to face on a daily basis. Whenever death enters the reverse mortgage servicing process, the servicer must work very closely, and sensitively, with the estate or heirs. It requires the servicer to exhibit a delicate balance between empathy for the heirs of the lost loved one, and the requirements of the servicer under the HUD guidelines. This month I received a question on this topic from a reader of The Reverse Review, and will answer it in two parts below. How do servicers know when a borrower has passed away? In order to keep the data in their servicing platforms fresh and upto-date, as well as to remain in compliance with HUD guidelines, servicers typically subscribe to a monthly “death audit” service. These third-party companies compare borrower information to a variety of database sources, ultimately producing a final report of any new matches to the servicer. Death information is generally obtained from the social security death index, but service providers also utilize a variety of proprietary sources for this information as well. Servicers are typically made aware of a borrower’s death through the results of this monthly audit, but occasionally an heir or family member will contact the servicer directly to pass along the information. In either case, once the servicer has confirmed that the last surviving borrower has died, a series of HUD-required actions are set into motion. What happens to a reverse mortgage once the last surviving borrower has died? Once the servicer has confirmed the death of the borrower, a Condolence Letter is sent to all known heirs. (To see the required language that must be present in the letter, please refer to the HUD Handbook 4330.1, 13.33.) This letter provides invaluable information to the heirs and/or estate about the options available to them under the HECM program for satisfying the loan balance, and these options are: • •

Pay the loan balance in full; Complete a short sale of the property (in which the estate is able to sell the property to an unrelated third party for 95% of a current HUD appraised value, less any customary closing costs and realtor commissions); Walk away from the home (which would result in a foreclosure action by the servicer); or

Complete a deed in lieu of foreclosure (where the estate signs documents titling the property back to the investor).

Servicers typically receive this question from the heirs upon receipt of the Condolence Letter: “How much time does the estate have to pay the loan off after the borrower passes away?” The ambiguous answer is… it depends! The variable factor is the extent and frequency of the communication efforts of the estate. As long as the estate remains in regular communication and they have provided the documentation required by the servicer (a letter detailing their intentions with the property, copy of the real estate listing, etc.), HUD guidelines allow them time extensions for up to one year from the date of death. The actual HUD language regarding the time extensions available to the estate can be found in the HUD Handbook 4330.1, 13.34: If the mortgagor or the mortgagor’s estate fails to repay the outstanding balance on a due and payable mortgage or if the mortgagor fails to deed the property to the mortgagee within the prescribed time, the mortgagee must begin foreclosure proceedings… …If the estate is making a reasonable effort to sell the property, extensions should be granted in 3-month intervals with the entire period not to exceed 12 months. It should be noted that if the estate is uncooperative or unresponsive to requests for information, the servicer does not have to wait the entire 12 months to begin foreclosure proceedings. In certain cases, the estate may be upside-down on the property and servicers are asked by the heirs to initiate immediate foreclosure, as there is no equity remaining for them to sell the home. If the estate is unable to pay the loan off, or is unwilling or unable to complete a deed in lieu within the 12 month period, then the servicer is required to initiate foreclosure in an effort to gain title of the property for the investor. I recall one particular situation where a borrower’s daughter was thrown into complete and devastating grief over the sudden loss of her mother. She was emotionally paralyzed for months; although almost daily she was faced with the daunting task of dealing with the loss of her mother, and undertaking the necessary actions to finalize her estate. We worked closely with the daughter, counseling her through the entire process until she was able to sell the home and pay off the reverse mortgage balance. Reverse mortgage servicers spend a great deal of important and extended time with these grieving family members as they coach them through this process. I look forward to receiving your servicing inquiries at: Please remember: there is no such thing as a stupid question! No doubt, the question you ask will have been in the minds of other readers as well. If you wish to remain anonymous for my response, just let me know.









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the last word The Perfect Storm

First, we are one of the only federally-supervised and guaranteed loan programs that is a negative amortization loan in it’s purest sense with an increasing loan balance and decreasing equity. Second, we are heirs for others bad behavior presently inheriting legislation and protections resulting from the abuses of sub-prime loans and predatory lending now that the proverbial horse is already out of the barn. Third, we are bearing the brunt of pent up frustration and anger of regulators for an industry that failed some of its borrowers. In addition, we are working with a protected class, the senior citizen. The Outlook Now is the time to look beyond our current challenges and ask the question, what’s on the horizon for the reverse mortgage industry? Will it be smooth sailing or do treacherous waters remain to be navigated? I would venture to say both.

Shannon Hicks The Perfect Storm, A sequence of rare and unusual events that individually would be less devastating in their impact, but taken together create unforeseen results. Much like the crew of the Andrea Gail in Sebastian Junger’s 1997 bestseller, The Perfect Storm, seemingly disconnected events have combined creating historical changes and sweeping regulation for the reverse mortgage industry. A term once only used by meteorologists is now part of the American lexicon describing the current state of our economy, regulation and banking system. Where did this begin and what can we as reverse mortgage originators do to ride out stormy waters in the future? Storm Clouds Unheeded One could pen volumes describing the origins of this economic storm. Risky lending practices, artificial tinkering with interest rates by the Fed inflating housing values, the reckless avarice of both lenders and consumers in the last ten years, are where we should have seen the storm clouds beginning to form. Ironically for those who’ve been in the reverse business for some time we could refer to that same period as the “salad days” of reverse mortgages with increasing property values, HECM refinances, steady margins and reasonable interest rate changes and little if any revisions in the rules of the road. It was a time of simplicity and idealism. If you’ve been originating and breathing in the last year you know those days are behind us like the shoreline of a distant country. Now the headwinds of a recent patchwork of seemingly “goodintentioned” but draconian state legislation and monthly changes to the rules for HECMs press against us. However, before we curse the wind we must be mindful of why lawmakers are scrutinizing reverse mortgages and also admit we as an industry are somewhat culpable having failed to police our own effectively.

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Once property values have stabilized and lawmakers have satisfied themselves that borrowers are sufficiently protected, we may return to some sense of normalcy. In addition, we have the first wave of baby-boomers hitting the shore who are either ill prepared or injured by the markets and are prime candidates for the HECM. I cannot overstate the demographic potential that lies ahead for our industry and some of this potential will be diminished by the continuing pressures of falling property values and interest rates that must increase in the future. The American public is beginning to see their home as a “retirement asset” and how a reverse mortgage can tap into a wealth of assets. Must we navigate through treacherous waters in the future? In short yes. The reverse mortgage industry must look forward to make sure our actions today do not jeopardize the viability of the program in the future. How so? We have a considerable problem lying just under the water of HECMs originated in 2005-2007. A larger percentage of these loans will result in claims against the FHA insurance fund as home values plummet and interest rates increase. With this in mind I am glad FHA did not decrease their upfront or monthly charges. Sometimes the captain is better to be right than popular. Better to pay now than lose in the end. In addition we must demonstrate our ability to police our own industry or continue to suffer endless protective legislation that in the end will hurt the senior borrower. Weathering The Storm Don’t be a victim, be informed, become a student of the business. Plug into news and media sources such as The Reverse Review, Reverse Mortgage Daily and NRMLA. Embrace the professional designation for a reverse originator and seek to broaden your expertise of retirement and financial issues. Market smarter to communities least affected by falling home values, seek out referral partners relentlessly, keep marketing and don’t hunker down in the safety of the harbor waiting for the storm to blow over. In one of my favorite scenes in the movie Forrest Gump, Forrest decides to push out to catch shrimp risking it all during a storm, than to tie down his boat with the competing vessels in the relative safety of the harbor. He and Lieutenant Dan ride out the gale while their competitors find themselves destroyed in the process. Guess who had a record season that year? Those who endure to the end will reap the rewards. Surround yourself with positive people, make your voice heard in the industry and run your business like the captain of a ship with unwavering confidence and deliberate calculation. If you’ve found yourself in the harbor, now is the time to push out again for open waters though they may be stormy for years to come. ser erev er evvie iew w

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The Reverse Review May 2009  

The May issue of The Reverse Review

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