The Reverse Review February 2015

ARE BANKS STILL INVOLVED IN THE REVERSE MARKET? PG. 23WHAT TO KNOW WHEN YOUR CLIENT HAS A TRUST PG. 29+ MEGAN HAFENSTEIN SITS DOWN IN OUR HOT SEAT PG. 16

THE REVERSE REVIEW THE REVERSE REVIEW

THE REVERSE REVIEW

THE REVERSE REVIEW E REVERSE RE

VIEW

THE R

EVER

SE R

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W

INSIDEthis issue

Academic Research

Highlights the HECM

Ginnie Mae’s president talks about

his goals for the agency the FUTURE OF HECM-backed securities.

Ted Tozer

2 | TRR

The Reverse ReviewFebruary 2015

reversereview.com 8 TRR | 3

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4 | TRR


From the publisher

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REZA JAHANGIRI, SENIOR PUBLISHERShare your ideas with your colleagues and be a part of the solution.Reach out to us at [email protected].

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

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FIND US ON FACEBOOK AND LINKEDIN

Meet the TeamSENIOR PUBLISHERReza Jahangiri

PUBLISHERErik Richard

EDITOR-IN-CHIEFJessica Guerin

CREATIVE DIRECTORTraci Knight

COPY EDITORKersten Deck

MARKETING DIRECTORAlycia Greer

ARE BANKS STILL INVOLVED IN THE REVERSE MARKET? PG. 23WHAT TO KNOW WHEN YOUR CLIENT HAS A TRUST PG. 29+ MEGAN HAFENSTEIN SITS DOWN IN OUR HOT SEAT PG. 16

THE REVERSE REVIEW THE REVERSE REVIEW

THE REVERSE REVIEW

THE REVERSE REVIEW E REVERSE RE

VIEW

THE R

EVER

SE R

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W

INSIDEthis issue

Academic Research

Highlights the HECM

Ginnie Mae’s president talks about


Ted Tozer

FEB. 2015

COVER

TED TOZERRead about the

future of the HMBS program

from Ginnie Mae’s president.

A NOTE FROM REZA JAHANGIRI

An industry veteran with two decades of experience in private mortgage capital markets and five years serving as Ginnie Mae president, Ted Tozer eloquently describes how recent policy changes are helping to set the HECM loan program back on track. While the changes may create challenges for borrowers and lenders in the short term, the latest wave of reform strongly positions the product for a bright future.

We have heard time and time again that the future of our industry relies on the resolution of issues that have the potential to create sensationalized headlines or generate new headwinds on multiple other fronts. We’ve needed to address these issues head-on, and the good news is that much progress has been made in the past year.

The industry is currently working hard to train staff in preparation for the implementation of upcoming Financial Assessment guidelines. Once we make it through this last major policy change, the industry needs to work aggressively to ensure that our product is cutting its way though the noise and performing as it was intended to on a whole different scale. We’ve had too many years of low penetration, but now we have the tools in place to help us distribute the product on a much broader basis to help American seniors enhance and improve their lives.

I’d personally like to thank Ted Tozer for his efforts and commitment as a strong supporter of our industry. His thoughtful and timely action on the issue of partial-draw, fixed-rate products last year exemplifies his tireless dedication and determination to make the HECM program succeed. It’s refreshing to see someone in government understand the challenges of our business so well and take action to ensure its long-term sustainability.


table of contents

TRR 2.15IN THIS ISSUE...

16 MEGAN HAFENSTEINHot Seat

18 MICHAEL J. WELTMANOriginating

32DAVID JOHNSONSpotlight

09 | Industry NewsHeadlining stories of the past month

REVERSE MORTGAGE DAILY

10 | StatsThe industry’s latest stats and rankings

REVERSE MARKET INSIGHT

12 | NRMLA NewsRead about the association’s current initiatives.

MARTY BELL

15 | RoundupA collection of recent facts and surveys affecting the reverse market

20 | Originating Get Active

Let’s work together to push for change.

BURGESS KEGAN

23 | Originating

Are Banks Still Involved in the Reverse Mortgage Business? You Bet!

A look at how small banks are faring

ED O’CONNOR

24 | MarketingEngagement Is the Key to Social Media Success

How to expand your network and reach potential clients

BEN LAUBE

27 | Tech The Impact of Financial Assessment on Reverse Technology

How new processes will enhance efficiency

SETH HOOPER

29 | LegalUnderstanding the Basics of Trusts

What you should know about how trusts can impact a reverse loan

ALEXANDER J. CHAUDHRY

38 | Last WordThe Lessons I’ve Learned

After more than two decades in the business, I find there’s still more to learn about reverse mortgage lending.

SUSANA RHOADES

Want the online version?reversereview.com/magazine

34 | FeatureTed Tozer Ginnie Mae’s president talks about his goals for the agency and the future of HECM-backed securities. JESSICA GUERIN

“We’re getting to the point now where we’re seeing the HECM as really sustainable, and we’ve put the terms in place to make sure that it’s sustainable for FHA as well as for the borrower… The long-term perspective is pretty positive for HMBS.

FEATURE

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

DO YOU HAVE WHAT IT TAKES?

6 | TRR


contributors

John K. Lunde

Marty Bell

Megan Hafenstein

Michael J. Weltman

Burgess Kegan

Ed O’Connor

Ben Laube

Seth Hooper

Alexander J. Chaudhry

JOHN K. LUNDE10 | Stats gJohn K. Lunde is president and founder of Reverse Market Insight, Inc., a performance data analysis and consulting firm specializing in the reverse mortgage industry. RMI clients include eight of the top 10 reverse mortgage lenders, plus investors, servicers and vendors to the industry. 949.429.0452 rminsight.net

MARTY BELL12 | NRMLA News gMarty Bell is NRMLA’s senior vice president of communications and marketing. This is Bell’s professional Act III after careers in books, journalism and the Broadway theater. Bell is the author of two novels and four nonfiction books, and his writing has appeared in publications including Playboy and New York magazine. Bell wrote and produced the award-winning documentary film The Boys of Summer and produced 15 Broadway shows (including Ragtime, Fosse and Dirty Rotten Scoundrels) that won 27 Tony Awards.

MEGAN HAFENSTEIN16 | Hot Seat g Megan Hafenstein is the vice president of business development at Premier Reverse Closings (PRC), a national reverse mortgage title and settlement company based in Rocklin, California. Hafenstein manages accounts in 22 states from the company’s headquarters and works closely with operations to ensure that clients’ files are closed accurately. Prior to joining PRC six years ago, Hafenstein worked in the California Legislature after receiving her B.A. in political science from Cal Poly, San Luis Obispo.

MICHAEL J. WELTMAN18 | A Perfect Day in the Loan Origination Business gMichael J. Weltman is an area sales manager for AAG, supervising retail growth in Alabama, Georgia and Florida. He founded a Florida real estate CE school, where he teaches Realtors about reverse mortgages. Weltman has an MBA in finance and is on the board of directors of the Tallahassee, Florida, Mortgage Bankers Association. He holds a broker license and real estate instructor license, has a license with the Florida Department of Financial Services, and is SRES-, CAPS- and CSA-certified.

BURGESS KEGAN20 | Get Active gBurgess Kegan, CRMP, has more than 40 years of experience in the financial services industry. He is part of S1L’s Home Equity Retirement Specialist Group, working to educate the public and financial advisors about the proper use of home equity in retirement planning. A graduate of the University of Richmond, Kegan is VP of the Maryland Mortgage Bankers Association, which named him Mortgage Banker of the Year in 2012. A recognized expert on HECMs, he has testified before Maryland’s House and Senate committees.

ED O’CONNOR23 | Are Banks Still Involved in the Reverse Mortgage Business? You Bet! gEdward O’Connor, CRMP, is a reverse professional with more than 15 years of experience. He was previously the owner of Advanced Funding Solutions in Long Island, and prior to that he owned an accounting and tax practice. O’Connor maintains his status as a licensed IRS Enrolled Agent and is the co-founder of the Long Island chapter of the National Aging in Place Council. He has a finance degree from NYIT and is a retired Nassau County police [email protected]

BEN LAUBE25 | Engagement Is the Key to Social Media Success gBen Laube is president and founder of POLR Marketing, a growth marketing technology company. Through the use of content writing, pay-per-click, ethical SEO practices, Web design, development graphic design and strategic planning, POLR Marketing offers the services you need to help grow your business to the next level. 407.712.4836polrmarketing.com

SETH HOOPER27 | The Impact of Financial Assessment on Reverse Technology gSeth Hooper has more than 10 years of experience working in the reverse mortgage market and previously held the position of director of operations at First American Loan Production Solutions and director of reverse mortgage solutions at CoreLogic. He is currently the chair of MISMO’s reverse mortgage workgroup. He has a bachelor of arts in history from the University of Colorado.

ALEXANDER J. CHAUDHRY29 | Understanding the Basics of Trusts gAlexander J. Chaudhry is general counsel of FNC Title Services, a multistate title insurance agency. Chaudhry works on areas of real estate law that impact title insurance agencies with a specific focus on issues associated with HECMs. He is responsible for corporate and transactional matters, licensing, and regulatory and litigation concerns. He recently worked with state insurance enforcement officers on cyberthreat issues facing the title insurance industry.


contributors

Jessica Guerin

JESSICA GUERIN34 | Ted Tozer gJessica Guerin is the editor-in-chief of The Reverse Review. She has worked on the editorial teams of Chicago Home & Garden, Chicago magazine and Time Out Chicago. Prior to joining the magazine, Guerin managed the marketing efforts for a commodity brokerage firm in the Chicago Board of Trade. She has a master’s degree in magazine publishing from Northwestern University and a B.S. in journalism from Boston University.

SUSANA RHOADES38 | The Lessons I’ve Learned gSusana Rhoades is vice president of the senior lending division of Empire Financial, Mortgage Bankers. Having served in the mortgage industry for more than two decades, she is the founder of Pacific Coast Mortgage and has been a top account executive in the wholesale mortgage arena. Rhoades now dedicates her energy, passion and expertise to serving seniors and helping professionals who serve the senior community.

Susana Rhoades

IN MEMORY OF Bob Yeary

In early 2015, the reverse mortgage industry suffered a great loss with the passing of Robert D. Yeary following a battle with cancer. Yeary co-founded Reverse Mortgage Solutions in 2007, establishing himself as an industry leader as he propelled the company to top-lender status before selling RMS to Walter Investment Management Corporation in 2012.

Affectionately known to many in the industry as Uncle Bob or The General, Yeary was a beloved personality who not only attended NRMLA meetings to smartly discuss the

business at hand, but to build friendships and inspire laughter. As he told TRR in 2012, the most fascinating thing about the reverse mortgage industry is the people in it. “I have never seen the level of concern that the professionals in our industry have for the consumer. I can also say that I like almost all of my competitors… it’s one big, happy family.”

Yeary will be greatly missed by his reverse mortgage family. “Bob lived life to the fullest. His congeniality was contagious; he filled the room with his boisterous energy and positivity,” says Reza Jahangiri, CEO of AAG and a good friend of Yeary’s. “Bob was an excellent conversation starter; he would connect

with everyone in the room and make them feel important. He was one of the best relationship builders I’ve ever met. He was a great visionary and an amazing friend.”

Marc Helm, co-founder of RMS, echoes Jahangiri’s sentiments. “Bob Yeary was my mentor, business partner and friend, who was a sincere and credible advocate for the reverse mortgage industry,” Helm says. “He will be remembered for his many fine attributes, not the least of which were his enthusiasm, openness, his loving and caring nature, and his entrepreneurial spirit. He will be missed, but his contribution to our industry will never be forgotten.”

March 6, 1943 — January 4, 2015

(From left to right) Jahangiri and Fred Thompson with Yeary

8 | TRR


WE KNOCKOUT THECOMPETITION

TOLL FREE: (800) 542-4113 | www.PRClosings.com

Experience | Excellence | Commitment | Pride

PRC has been FIRST IN REVERSE 15 years running. We are proud to be the first national title and Settlement Company to specialize in reverse mortgages. Our dedicated team of professionals offers the experience and knowledge to smoothly close reverse transactions—correctly. Having closed more than 150,000 reverse mortgage loans, PRC understands the importance of comprehending all HUD and lender guidelines.


industry news

Feb. EditionAN UPDATE OF THIS PAST MONTH’S BREAKING NEWS

NEWS DIRECT TO YOU: The industry’s headlining stories at your fingertipsWANT EVEN MORE UP-TO-THE-MINUTE NEWS? Visit reversemortgagedaily.com

HEADLININGNEWS

1. FHA GIVES NEW OPTIONS FOR REVERSE MORTGAGE NON-BORROWING SPOUSESFHA has issued new guidance allowing HECM lenders the option to delay foreclosure of non-borrowing spouses. Now, lenders will have the option to pursue claim payments for qualifying HECMs with eligible surviving non-borrowing spouses and case numbers assigned before August 4, 2014. They may do so by allowing claim payment following the sale of the property by heirs or estate, foreclosing in accordance with the terms of the mortgage, and filing an insurance claim under the FHA insurance contract as endorsed. They may also elect to assign the HECM to HUD upon the death of the last surviving borrower, where the loan would not otherwise be assignable to FHA, also known as the Mortgage Optional Election Assignment. “FHA’s new guidance will allow reverse mortgage lenders to assign eligible HECMs to HUD upon the death of the last surviving borrowing spouse, thereby allowing eligible surviving spouses the opportunity to remain in the home despite their non-borrowing status,” FHA said in a statement.

//January 29, 2015

2. HUD CHIEF: REVERSE MORTGAGES A GOOD OPTION “IF DONE RIGHT”As more older Americans face retirement without adequate savings, HUD Secretary Julian Castro says a

reverse mortgage may provide the help they need. In response to an audience question during a fireside chat with Zillow Chief Economist Stan Humphries, Castro acknowledged that the HECM program has had challenges, but that it can provide a boost in retirement for aging Americans in certain situations. While the loan “doesn’t fit for everyone,” it can be a good option for those in the “right circumstances” trying to make it through retirement, he said. In discussing the loan with Castro, Humphries added that a reverse mortgage can also help older Americans age in place—a topic of concern for many, as those in the fastest-growing segment of the population (those age 65-plus) face the decision to downscale, renovate or move.

//January 21, 2015

3. NASDAQ: REVERSE MORTGAGE ATTRACTS GREATER POOL OF BORROWERSWhile recent rule changes have made reverse mortgages more difficult to get, they have also made them more attractive, writes Investor’s Business Daily in an article published by NASDAQ. “Seniors may want to tap their home’s equity for retirement cash flow,” the article says. “But selling the home might not be desirable or practical. One solution: a reverse mortgage.” Investor’s Business Daily explains reverse mortgage eligibility requirements, as well as recent changes that have offered borrowers more safeguards and flexibility. Recent changes, it says, may also encourage more married couples to seek HECMs. Because older borrowers can get more cash than younger ones, some married couples borrow only in the name of the

older spouse in order to increase the amount they’ll receive.

//January 12, 2015

4. FHA REVISES ANNUAL LENDER CERTIFICATION STATEMENTSFHA is making changes to its annual lender certification statements. Lenders that are FHA-approved must complete a recertification package annually, at the end of each fiscal year. That package must include from the lender, through a corporate officer, a series of certification statements that cover the lender’s compliance with FHA policies over the previous yearlong period. Any lenders unable to certify to the statements must submit a detailed explanation for each certification it is unable to complete, including documentation to support those explanations.

//January 11, 2015

5. FORMER SECURITY ONE EXEC LAUNCHES NEW REVERSE MORTGAGE COMPANYA former executive of Security One Lending has launched a new company, Retirement Funding Solutions, a division of Synergy One Lending. Torrey Larsen, who formerly led Security One’s retail lending division and served as company president, will lead the company. Retirement Funding Solutions plans to build its San Diego-based fulfillment center in the first quarter of 2015 with distribution channels, including a distributed retail channel, consumer direct channel and third-party originations.

//January 11, 2015

10 | TRR


stats

December 2014 Top Lenders Report

1 2 3 4 5American Advisors GroupEndorsement1,162

One Reverse MortgageEndorsement540

RMS/S1LEndorsement497

UFAEndorsement344

Liberty Home EquityEndorsement271

Lender EndorsementsREVERSE MORTGAGE FUNDING LLC 215 PROFICIO MORTGAGE VENTURES LLC 159 LIVE WELL FINANCIAL INC 133 MAVERICK FUNDING CORP 104 GENERATION MORTGAGE COMPANY 69 CHERRY CREEK MORTGAGE CO INC 67 UNITED NORTHERN MRTG BNKRS 61 PLAZA HOME MORTGAGE INC 55 HIGH TECH LENDING INC 55 FIRSTBANK 51 MONEY HOUSE INC 47 OPEN MORTGAGE LLC 44 SUN WEST MORTGAGE CO INC 42 NET EQUITY FINANCIAL INC 35 ADVISORS MORTGAGE GROUP LLC 35 M & T BANK 32 GMFS LLC 31 THE FEDERAL SAVINGS BANK 29 FIRSTAR BANK 27 AMERICAN PACIFIC MORTGAGE 26 UNITED SOUTHWEST MORTGAGE 26 PEOPLES BANK 23 THE MONEY STORE 22 TOWNEBANK 21 SENIOR MORTGAGE BANKERS INC 18 SUCCESS MORTGAGE PARTNERS 18 360 MORTGAGE GROUP 17 MCM HOLDINGS INC 17 NATIONWIDE EQUITIES CORPORATION 16 HOMEOWNERS MORTGAGE ENT 15

Lender Endorsements GUARANTEED RATE INC 15 TOP FLITE FINANCIAL INC 14 YADKIN VALLEY BANK AND TRUST 14 SUN AMERICAN MORTGAGE CO 12 AMERICAN NATIONWIDE MORTGAGE 12 BANC OF CALIFORNIA 11 GEORGETOWN MORTGAG 11 FULTON BANK 11 SOUTHERN TRUST MORTGAGE LLC 11 NORTH AMERICAN SAVINGS BANK 11 UNIVERSAL LENDING CORPORATION 10 LAND-HOME FINANCIAL SERVICES 10 CIRCLE MORTGAGE CORPORATION 10 DOLLAR BANK FSB 9 PACIFIC RESIDENTIAL MORTGAGE LLC 9 MAS ASSOCIATES LLC 8 RESIDENTIAL HOME FUNDING 8

Brought to you by:

LOOKING FOR MORE STATISTICS?Go to rmsinsight.net for all of the industry’s

latest stats and rankings.

% % % % %


INDUSTRY SUMMARY

Retail Endorsement Growth

-9.84%Wholesale Endorsement Growth

-8.23%Total Endorsement Growth

-9.15%* Figures Above Reflect Change

from Prior Month

6,000

4,000

2,000

08 10 1112 1 2 3 4 5 6 7

*Numbers Represent MonthsRetail Wholesale

9

121234567891011

TOT

UNITS CHG% UNITS CHG% UNITS CHG%

2,5942,7892,6142,3582,3622,6512,4132,3191,9442,2482,7732,500

-5.12%7.52%

-6.27%-9.79%0.17%

12.24%-8.98%-3.9%

-16.17%15.64%23.35%-9.84%

1,6292,2652,5452,2561,8061,8421,7471,7721,3061,5142,0781,907

-16.5%39.04%12.36%

-11.36%-19.95%

1.99%-5.16%1.43%

-26.3%15.93%37.25%-8.23%

4,2235,0545,1594,6144,1684,4934,1604,0913,2503,7624,8514,407

RETAIL WHOLESALE TOTAL

29,565 22,667 52,232

-9.86%19.68%2.08%

-10.56%-9.67%

7.8%-7.41%-1.66%

-20.56%15.75%28.95%-9.15%

stats

HECM Endorsement Stats Through November 2014

TRAILING TWELVE - MONTH ENDORSEMENTS

{ FIGURE }01

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70%

60%

50%

40%

30%

20%

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11/1

/12

12/1

/12

1/1/

13

2/1/

13

3/1/

13

4/1/

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5/1/

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6/1/

13

7/1/

13

8/1/

13

9/1/

13

10/1

/13

11/1

/13

12/1

/13

1/1/

14

2/1/

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3/1/

14

4/1/

14

5/1/

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6/1/

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7/1/

14

8/1/

14

9/1/

14

10/1

/14

11/1

/14

$1,200.0

$1,000.0

$800.0

$600.0

$400.0

$200.0

$0

11/1

/12

12/1

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1/1/

13

2/1/

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3/1/

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4/1/

13

5/1/

13

6/1/

13

7/1/

13

8/1/

13

9/1/

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10/1

/13

11/1

/13

12/1

/13

1/1/

14

2/1/

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3/1/

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4/1/

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5/1/

14

6/1/

14

7/1/

14

8/1/

14

9/1/

14

10/1

/14

11/1

/14

ARM FIXED

12 | TRR


nrmla news

IN THE PRESS: The Fox Fixation

Let’s begin with the good news: On January 4, an article appeared on the Fox Business

website by financial consultant and estate planning attorney Dan Caplinger, entitled,

“Reverse Mortgages: What Every Retiree Needs to Know.” It concluded:

“Reverse mortgages can be complicated, but they also offer a unique way to tap your home

equity in a way that’s consistent with the typical retiree’s lifestyle. As long as you’re aware of

the pitfalls, a reverse mortgage can be a great solution for your liquidity needs while letting

you stay in your home for as long as you like.”

Caplinger’s piece was picked up by Fox Business from the website named Motley Fool,

whose mission is “building the world’s greatest investment community.”

A week prior to the appearance of this article, an email was distributed by a non-member

of NRMLA suggesting that reverse mortgage professionals urge NRMLA to demand equal

time on Fox television to respond to a previous piece by Peter Bennett entitled “10 Reasons

Why You Shouldn’t Get a Reverse Mortgage.” Some people responded to the non-member’s

request and contacted us.

The writer of this negative piece, Peter Bennett, has drifted in and out of the financial services

industry for more than a decade, including a stint directing “B2B and B2C communicating

for retail banking” at Indymac in 2007-2008, when they owned Financial Freedom, which

was still originating reverse mortgages at the time. Bennett’s piece, which contains many

questionable arguments, first appeared on the small BankTracker website that offers

information about banking, then on the Motley Fool website. Only then was it picked up by

the Fox Business website. Our research shows no indication that Bennett’s viewpoint was

ever presented on Fox television.

The appearance of two such contrasting viewpoints of reverse mortgages on the Fox Business

website is consistent with their inconsistency. Researching recent reverse mortgage coverage

on both the site and Fox television news, you find stories that might irk you, followed by

some that you’ll respond to with a fist-bump. None of Fox’s website coverage of reverse

mortgages that we can find is original, by the way. It is all picked up from other publications.

In 2013, for instance, they picked up a

very positive story entitled “10 Things

You Need to Know About Reverse

Mortgages” from Zillow that advocated

using the product. Conversely, as early

as 2011, they ran a piece entitled “Why

Reverse Mortgages Are Not a Retirement

Option,” originally published by U.S.

News and World Report.

IN THE STATES: F2F COUNSELING REMAINS IN EFFECT IN MA

In January, the Massachusetts legislature failed to restore a two-year delay for mandatory face-to-face counseling.

An amendment postponing face-to-face counseling until August 1, 2016, was approved by the House of Representatives, but failed in the Senate. The vote occurred on the final day of Governor Deval Patrick’s administration.

Board member George Downey and Brett Kirkpatrick, both of Harbor Mortgage Solutions, Inc., issued a joint statement following the Senate vote: “We will be meeting shortly with key legislators, NRMLA leadership, and Rasky Baerlein (our government relations specialists) to assess the situation and plan a course of action for this year with the new legislature and the administration of Governor Baker. We are most grateful for your support, assistance, and participation in numerous meetings with legislators this past year to resolve this critical matter for MA seniors. And, we look forward to your continued help this year. We will keep you updated as developments occur.”

Until the matter is settled, current law requiring face-to-face counseling for borrowers who fall within the income threshold remains in effect.

In-person counseling requirements apply to “mortgagors,” which are defined as applicants for a reverse mortgage who at the time of application: (1) have a gross income of less than 50 percent of the area median income, as periodically determined by HUD; and (2) possess assets, excluding a primary residence, valued at less than $120,000.


Save the Dates—2015 Eastern and Western RegionalsAs members requested, NRMLA is headed back to the Big Apple for the 2015 Eastern Regional Meeting & Expo. For the third consecutive year, the event will take place at the member-favorite Intercontinental New York Times Square from March 26-27. NRMLA is returning to Southern California for the 2015 Western Regional Meeting & Expo. Join us at the Hyatt Regency Huntington Beach, May 12-13. Registration and sponsorship details will be announced in the coming weeks.

nrmla newsBROUGHT TO

YOU BY MARTY BELL: NATIONAL REVERSE

MORTGAGE LENDERS ASSOCIATION

NEW

S FR

OM

NRM

LA

Senior Home Equity Increases $94.6 BillionIn the third quarter of 2014, the NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI) that measures senior home equity rose to its highest level since the third quarter of 2007. The index finished the period at 183.87. A $94.6 billion increase in senior home equity in the third quarter was driven by an estimated $97.8 billion increase in the aggregate value of senior housing offset by a $3.2 billion increase in mortgage debt held by seniors. The third quarter of 2014 was the 10th consecutive quarter in which the index has risen, and the $3.84 trillion estimated aggregate value of home equity owned by seniors eligible for reverse mortgages is now just 4 percent below its peak level of $4 trillion in Q4 2006.

The current levels represent a 30 percent recovery since the post-recession trough reached in Q2 2011, when seniors’ equity levels had fallen to an estimated $3 trillion. The senior housing value estimate is based on the Federal Housing Finance Agency’s Q3 2014 all-transactions Indices, which showed quarter-over-quarter increases in housing values for 82 percent of the 412 metropolitan statistical areas covered by RiskSpan.

NRMLA member

In the Press: A Very Good Year // Focusing on Fox can only make you (or those around you) feel like you’re a manic depressive. But if you want to feel good about your business, you might focus on our overall press results for the past year: In August of 2013, as part of the Extreme Summit effort, we began logging all the reverse mortgage press coverage we could find. Our goal was to have a 3:1 ratio of positive press to negative press. In that first month, the ratio for our industry was 2.4:1 positive to negative. But due to changes in the HECM program, aggressive education of a wider audience and placement of valid stories, the results for 2014 (through November thus far) are 12 positive stories for every negative one.

NEW CRMPs

NRMLA congratulates Marshall Gallop of Reverse Mortgage Funding (Jacksonville Beach, Florida) and Rebecca Koontz of Frost Mortgage Banking Group (Albuquerque, New Mexico) for earning the Certified Reverse Mortgage Professional designation.

NEW MEMBERS

NRMLA welcomes the following new members:

• American Preferred Lending San Diego, California (Lender)

• Bank of Maumee Maumee, Ohio (Lender)

• Sullivan Financial Services, Inc. Oak Ridge, New Jersey (Lender)

• Synergy One Lending dba Retirement Funding Solutions San Diego, California (Lender)

3/26-27/2015

14 | TRR


Call today or email us for more information.

888.272.1214 [email protected]

Kick off your new year with

the right valuation partner!

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Seniors in all but one state lack the funds to retire.

roundupH e r e i s a l o o k a t t h e

N E W S A N D S TAT SAFFECTING THE MARKET.

THIS

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

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

Will boomers be forced to tap into their greatest asset?A new study suggests middle-income boomers may have to access their home equity to support retirement. A survey by the Bankers Life Center for a Secure Retirement questioned middle-income Americans age 50-68, revealing that more than half said they had $100,000 or more in home equity. Noting the fact that boomers are heavily invested in their homes, and that health care costs and life expectancy are rising, the study says that seniors “may be challenged to access their home equity as an asset given that nearly all (91percent) of them prefer to age in place.”

R E T I R E M E N T STATS

M O N E YM AT T E RS

Working-age people

worldwide face retirement concerns.

34% doubt they’ll have enough money to

retire.

69% are worried about

running out of money.

66%are worried about

having enough funds to live on day-

by-day.

23%say paying off

their mortgage is preventing them from adequately

preparing for retirement.

--HSBC’s “The Future of Retirement” series, which surveys

more than 16,000 people in 15 countries and territories, including

the U.S.

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

The projected number of seniorsage 65-plus inthe U.S. in 2060-The U.S. Census Bureau

I N T H E N E WS

The Economist addresses the retirement problem.A recent article in the renowned financial magazine outlines a variety of factors that have contributed to the growing retirement crises:

m The average retirement period has risen from 13 years in the 1960s to 20 years today.

m There is a 50 percent chance that one member of a retiring couple will live to 92.

m The average age of retirement is 64, lower than it was in the 1960s.

m Social Security, once intended as the main source of income for retirees, may run out in 2033.

The solution? According to the magazine, retirees are going to need to live on less, work more, or save more while working.

A recent study by financial security website interest.com revealed that retirees in 49 states do not have the recommended retirement income threshold of 70 percent of their pre-retirement income. Only in Nevada were households over 65 bringing in more than 70 percent of the earnings of their 45- to 65-year-old counterparts. According to the survey, the national average replacement income is just under 60 percent.

92m

Senior home equity increases yet again.In the third quarter of 2014, the NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI) has reached its highest level since 2007, rising for the 10th consecutive quarter. Now, the aggregate home equity belonging to Americans age 62 and older has grown to $3.84 trillion.

H O M E E Q U I T Y

16 | TRR


FEBRUARY 2015

From her favorite TV shows and her first job to her thoughts about the reverse mortgage market, we get the facts from Megan Hafenstein, the vice president of business development at PRC.

THE

REVERSEreview

THE

VP OF BUSINESSDEVELOPMENT

PRC

Megan

The most important thing seniors should understand about reverse mortgages is that it’s like any other mortgage, just with a different structure.


personal

> Ten years from now… this is horrifying to think about, but in 10 years I’ll be an empty nester!

> Something nobody knows about me is that I’m really good at walking on stilts.

> My favorite vacation was in college, when I went to Thailand and Australia over spring break to visit friends who were staying abroad. In those two weeks, I learned more about myself and the world than ever before.

> My favorite movie is The Sound of Music.

> I never miss an episode of Scandal (new) and Friends (old)—I can’t pass up a rerun if I flip to one!

> Every morning I read the newspaper with my coffee. The actual newspaper!

> I can’t go without my family’s Google calendar. It’s practically a full-time job trying to keep tabs of where everyone needs to be each day.

> I’ll never forget the morning of 9/11. My son was 1 week old and I was scared beyond belief at how the world would be different for him.

> My parents taught me how important it is to take your happiness and dreams into your own hands and not wait for others to create opportunities for you.

> My favorite time of the day is walking my daughter to school in the morning. I appreciate the one-on-one time, holding her hand and talking to her about anything. I love watching the neighborhood wake up and the

hustle and bustle of everyone starting their day.

> I always write things down. My lists keep me focused and on track.

> The best lesson I’ve ever learned was to find a career that allows me to be fulfilled professionally and personally. There are a lot of great jobs, but a great job means nothing if it doesn’t allow you to live your life and enjoy the people in it.

> The most memorable moment in my life was when I became a mom. My whole world changed in that moment, making everything before seem insignificant.

> For success I have sacrificed the ability to go on field trips and work in my kids’ classrooms.

professionAl

> People should seek a career in the reverse mortgage industry because it’s an unmatched feeling, changing the lives of seniors. They are so grateful and appreciative of this product!

> The most fascinating thing about the reverse mortgage industry is its small, close-knit community that supports and encourages each other.

> I entered this industry because I wanted a change and the industry was booming (in 2007). I immediately felt a connection to the people at PRC and made the jump. Even with the ups and downs over the past eight years, I’ve remained grateful for the opportunities this industry has given me.

factsfun

People should seek a career in the reverse mortgage industry

because it’s an unmatched feeling, changing the lives of seniors. They

are so grateful and appreciative of this

product!

My favorite movie is The Sound of

Music.

something nobody knows about me

is that I’m really good at walking on stilts.

I always write things

down. My lists keep me

focused and on track.

18 | TRR


ust before the end of the year, a friend of mine posted a note on Facebook announcing that

she had just closed her last loan of 2014, originating a grand total of 117 forward loans during the year. She thanked all of the friends, clients and referral partners who helped her along the way.

The post got me thinking. For all the hyper-producers in the reverse mortgage world, there are many folks out there who are closing just 20 loans a year and can’t seem to get back to the numbers of their former glory days. While it’s tough in today’s climate to reach the numbers of old, I do believe that there are things that you can do to help move the needle in the right direction—even just a little.

In my opinion, you can’t have your best year in reverse until you have

your best month in reverse, which starts with your best week, which can only take root and grow from your best day. If you don’t know how to have “a perfect day in the loan origination business,” how can you string together 365 days to create a successful year? So, let’s start small and focus on day one: the Perfect Day.

You arrive in your office at approximately 5:30 a.m. Maybe you just came from the gym. You’ve had some coffee and your head is clear. You are ready to hit the ground running. Your calendar is pretty full because you are a top performer, but you like to have some office time before you get out on the street, so you’ve arrived early.

First on the agenda is the morning marketing; I call it the “strive for five.” Reach out to your network in

five different ways—send a tweet, write an email, post a blog, compose a handwritten note or set up a meeting.

Before the sun rises, focus building your direct mail or direct email lists, calling list, LinkedIn network or Twitter feed.

My goal before the day is over is to:

+ Mail five letters or postcards.

8 Send 100 networking emails.

m Post industry news on LinkedIn or Twitter.

( Call on five offices.

- Arrange a meeting with a business partner.

m Make a plan to attend a networking event.

Completing all of this may be a lofty goal, but I figure it’s best to aim high. If I could get a portion of it done, I’d consider it a perfect day in the loan origination business.

J

ORIGINATINGThe Perfect Day in the Loan Origination BusinessBy Michael J. Weltman

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STRIVE

DIDYOU

KNOW

Thursday is the best day to prospect. Tuesday is the

worst day.

The most memorable part of a presentation is the last

five minutes.

50% of sales go to the first person to make contact

with a prospect.


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Letters and Office Visits

Each week, I pick a referral partner to connect with and focus on that partner’s target audience. Each Monday I ask myself, “Who am I going to see this week? How many types of referral partners can I name whom I might like to visit in my city or town?” Today, let’s say I am going to see property and casualty insurance agents who sell homeowners policies. I am going to try to sit down with each one individually and discuss how reverses can help pay a home’s taxes and insurance. This means that last week, I contacted five agents to introduce myself and set up meetings, and this week I will focus on another industry, contacting five trust attorneys for next week’s meetings. When reaching out, I like to include one article about reverses, my bio, and a personal note saying that I would like to stop by next week to say hello and introduce myself in person.

Direct Emails

In order to send 100 emails per day, you need to have a database of at least 2,000 referral partners. You might think this is a lot, but if you break it down, it might seem more feasible. Build a list of as many categories as you can. Aim for 20 (for the 20 business days in the month). Now, for each category, find 100 of them in your city, town and surrounding area, about a one- to two-hour drive from your home. In my city, for example, we have more than 100 builders, remodelers, and renovation companies, and more than 1,000 Realtors. By the time I add attorneys and insurance agents, I am already over 2,000. Some folks use Mail Chimp or Constant Contact, but there are lots of other great programs out there. Build a database based on referral type and then create a reverse newsletter with a couple of great stories, news and info about reverses, and your contact info. Hit the send button, and you have now just sent 100 emails to folks who need to know more about reverse and about you. Remember that all emails must

follow the approved opt-out format so that folks who don’t want to receive your monthly emails can discontinue their education.

Postcards and Phone Calls

In order to mail at least five postcards a day and make 10 phone calls to prospects, previous clients and referral partners, you will need to have a large list of contacts. My list is made up of do-not-call-scrubbed names, addresses and phone numbers of age-eligible potential borrowers who might need more information from a local reverse mortgage expert. You might also want to keep another list of all the folks you have already helped with a reverse mortgage, and anyone you have ever sent literature to who did not apply for a loan but requested more information. You can join any number of database management services (like salesgenie.com and infofree.com), which will allow you to search and either purchase a list or subscribe to their service so you can data-mine your area for prospects. Each day, take five to 10 names from the list and send a postcard with your contact information on it letting them know you are local and available to teach them about reverse mortgages. For past clients and fence sitters, your cards have a different skew: just saying hello and reminding them about your services should they know someone who might benefit. Keep the names of those you contacted and follow up with those folks by phone.

Networking and Events

Aside from making phone calls and sending letters, it’s also important to physically get out and meet people. Think about what events you can attend; consider every civic group in your city and town. Think about real estate-related groups, chamber groups and other organizations that might hold public meetings that would allow you to network. Your local newspaper

would be a great source of information about upcoming events, and various organizations will likely post their schedules online as well. Think about your list of referral categories and what groups those folks might belong to. Attend as many public meetings as you can. Talk to people so they will get to know who you are and what you do.

Lunch Meetings

With all of this networking, you are going to have one great visit now and then, connecting with someone who will become a true referral partner for you. That’s the person who you offer to take to lunch. So each day you are planning your calendar for next week or the week after, sending postcards, making phone calls, setting up meetings or stopping in for an office visit for a face-to-face introduction. When you connect with the right partner, have lunch to talk more about how you can work together to build their business and yours as you educate clients and prospects.

It is my belief that if you start your day early, make a plan, work your plan, and be consistent and deliberate each and every day, your mortgage production numbers will begin to soar. A perfect day in the loan origination business turns into two perfect days. Those two days build into a week, which turns into a month of perfect days. Before you know it, your phone is ringing with prospects to see, your calendar is full of opportunities to educate, and your database is full of new referral partners who want to work with you and send you business. If you focus on these goals, and try your hardest to be as productive as you can be, you can have the perfect day in the loan origination business. n

“It is my belief that if you start your day early, make a plan, work your plan, and be consistent and deliberate

each and every day, your mortgage production numbers will begin to soar.”

20 | TRR


t’s a new year and the opening of a new legislative season. Over the next few months, there may

be important legislation, proposed and ratified, that will have a major impact on our industry, our clients, our companies, and our ability to continue to make a living doing what we love to do. For me, that is working with seniors to help them age in place and fund their longevity as a reverse mortgage retirement specialist.

When gathered around the proverbial office water cooler, one often hears conversation about how “they” are ruining our industry, how “they” just put new regulations in place, how “they” are making it so difficult to do business today, how “they” are doing things to hurt our clients, and many other similar comments.

I am currently enjoying my 45th year in the financial services industry. During these years, I have witnessed many watercooler conversations. As far back as I can remember, when listening to these conversations (and sometimes ranting), I always wondered, “Why do ‘they’ have the power to do these things to the detriment of others? Who gave these people this ability to have such great influence over so many and so much? In fact, at times, over an entire industry?” I wondered, “Who are ‘they’?” Of course, I realized that “they” are different people or different groups of people, depending on what was being discussed. It could be a local councilman or a council that has just put in place a new zoning regulation, or it could be a local representative

from the House of Representatives or a state Senator who has proposed some distasteful legislation, or perhaps one of our congressmen who is proposing some federal legislation adverse to our views.

You know, I guess maybe I’m just slow, because it took me many years to realize that those people we refer to as “they” were actually just an extension of me—and you. These people are in office to represent me, my clients, my family, my industry and all of the things that are important to me. The same people are in office to represent you, your clients, your family, your companies and your industry. If we were too apathetic to vote, it is our fault for not taking action. If we did vote for these people to represent us and we have been too apathetic to follow up and communicate with them

to let them know what it is we want, then it is our fault that they have the ability to do things with which we disagree.

Too many people feel like there is nothing that they can do because they are only one person. These people look at the things going on around them and say things like, “I can’t change that, but my employer will certainly make things change for the better for me.” Or they say, “The National Reverse Mortgage Lenders Association will make things right.” Or, “The officials at HUD will certainly see that this is not fair and will make the proper changes.” These people think that something or someone else will always come to the rescue. That, my friends, is not the case.

The reverse mortgage industry is a

I

The reverse mortgage industry is a very small industry. If you are like me, you depend on this industry for the welfare of your clients and for your livelihood. No one should be able to have any more influence on this industry and your livelihood than you. If we do not speak out and take the action necessary to preserve it, no one else will.

ACCORDING TO BURGESS

ORIGINATING

Get ActiveBy Burgess Kegan


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very small industry. If you are like me, you depend on this industry for the welfare of your clients and for your livelihood. No one should be able to have any more influence on this industry and your livelihood than you. If we do not speak out and take the action necessary to preserve it, no one else will.

I challenge you to see what a difference one person can make. Join and become active in the association that you have to represent your interests: NRMLA. Contact them and ask to be involved on the committee of your choice. Let Peter Bell and his staff know your thoughts on issues. Be a professional and earn your CRMP designation. Join your local mortgage bankers association and sit on one of their

committees. Write to your state

representatives

and senators, letting them know your opinion on matters having to do with your industry. It is your interests they are supposed to be protecting. I have been involved in the Maryland Mortgage Bankers Association’s legislative committee for a number of years. I, one person, have testified before House and Senate committees on industry matters many, many times. There are about 30 members on that MMBA legislative committee. Each one has a specialty. I am the only reverse mortgage expert in the whole group. I would suggest that you could be that person on your MBA legislative committee. Get active, go ask, go join, go do it. Your representatives would welcome your feedback and expertise. Much of the legislation that comes before them is complex. They will freely admit to you that they do not fully understand all of the issues and that they want and need industry

participants to educate them about what is best for their constituents. If we don’t do this for them, then they might listen to the wrong people, those who are not nearly as educated on reverse mortgage issues as you are and as I am.

I am writing this brief article in an effort to move you, one person, to take action this year and become involved. What I have done as one person can be Googled. See on Google what Scott Norman accomplished in Texas for this industry. Across the country, there are many examples of one person who has made a difference. I’ll be waiting for you to send me an email about what you, as one person, did in 2015.

Be active, my friends! n

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Want to connect with Burgess? Reach him at [email protected]

22 | TRR


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celink ad series--the value of--focus.indd 1 1/12/15 1:17 PM


ORIGINATING

Are Banks Still Involved in Reverse Mortgages? You Bet!By Ed O’Connor

hen Bank of America, Wells Fargo

and MetLife Bank left the reverse space, many people said it was because banks did not have the proper compassion or commitment to the industry.

I do not believe that was true. Those banks left the industry because of financial and logistical challenges; there were pressures brought on by the bigger picture based on profit and loss. I believe that big-bank players had the drive, experience and knowledge to succeed, but sometimes holding down the bottom line in a larger institution is too difficult when you are overshadowed by bigger business channels that are thriving.

At the NRMLA conference in Miami, a small meeting was held for banks in

the industry in order to share our perspectives and offer ideas. That meeting, hopefully not the last of its kind, was both interesting and productive. It presented the opportunity to hear about the challenges other institutional banks were facing. The group agreed that small banks

can still make their mark in this territory, but perhaps discussing our obstacles can help us all thrive in this space.

After all, a community bank is a trusted place where many people, especially those in rural areas, go to learn more about reverse mortgages. This is not to discount the value of mortgage brokers or mortgage bankers, but to shed light on the long-term relationships that have been built between families and institutions. All of us who are part of this same structure have to continue to do what is needed for the industry and the product while balancing the bank’s community image.

I have heard this comment from other bankers: It is difficult, reputation-wise, to offer a product that many think is substandard

or tainted. Public perception is an image-maker. Small community banks must constantly be very aware of this issue and we take great pains to show the positive aspects of this product. Unfortunately, the public still holds on to the many misconceptions we have heard over the years. We as an industry have not been able to overcome that yet. The “new reverse mortgage” may help over time. Individually, we spend a great deal of time training our loan officers and educating our clients, transforming these misrepresentations into facts.

The fact that banks are subject to different regulatory oversight presents unique day-to-day challenges. At FirstBank, our divisions are product-focused, which allows us to spend a significant amount of time and resources on our reverse division, without those efforts getting in the way of the bank’s other channels. I like to think that our reverse division is a separate endeavor that has had a very positive impact on our bank. For those in the reverse channel of a larger bank, it’s important to ask, “How do my efforts support and add to the overall success of my company?”

Our discussion at NRMLA gave rise to some ideas that might help small

banks in the reverse space. We thought some might consider leveraging their own branch systems and existing customer bases to help get the word out about the bank’s reverse division. Combined with outreach campaigns, statement stuffers and counter cards, you have the makings of a built-in resource for internal referrals. Training other staff members to converse about reverse mortgages in a positive way is also a great tool to implement.

FirstBank is a small community bank compared with some of the larger institutions with reverse channels. Our passion for helping our customers is what drives us to maintain our community status and put forth that extra effort. We are committed to this industry as a bank lender in this space, because the product truly helps people. Even though we have challenges as an FDIC-regulated entity, the benefit to the consumer outweighs the challenges because the product offers so much to the people who need it.

At our NRMLA meeting, I heard members of other banks express the same thing. We discovered that working groups like the one we created are a great way to share information and discuss challenges. For small banks in the reverse space, perhaps collaboration is the key to success. n

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MARKETINGRR RR

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Engagement Is the Key to Social Media SuccessBy Ben Laube

ocial media is a leading industry tool to bring brand awareness to the forefront of markets.

More than ever, your business’ online reputation weighs heavily on your success due to the unlimited availability of content published daily online. In the majority of marketing and advertising methods, communication is a one-way street from company to customer. However, social media is the most engaging two-way communication medium for customer relations. Because of this aspect, engaging your followers can make or break your brand’s reputation.

When you take the first step into social media, it’s a conscious effort and commitment to practice. Social media is a long-term investment due to the ever-changing and evolving world. Unlike a website, where you can technically set it up and leave it be (though you shouldn’t), social media has to be updated on a consistent basis to be successful and engage your audience. There’s nothing worse than researching a company on Facebook

and seeing that its last post was in 2012! Once the decision has been made to create a presence on social media, the next step is to build an audience to engage.

When launching one’s business on social media, everyone starts at zero. Fortunately, there are tactics to building an audience. Promoting the accounts to friends, contacts and other known sources can help organically kick-start a new profile into building an audience. From there, the profile can grow and bloom. A different tactic is to utilize paid advertisements to place the profiles before target demographics. This can help build the numbers, but building a quality audience does require time and patience.

There are several tips for social engagement that everyone should follow:

Quality vs. Quantity

While it’s important to post regularly, the quality of content will always trump a handful of meaningless

posts. Take the time to find content that provides benefits, insights and value to your audience to ensure engagement. By publishing quality and engaging content, an appropriate audience will be sure to follow.

FIVE TIPS TO QUALITY ENGAGEMENT:

1.

Engage your followers with contests, questions, comments, provoking thoughts, etc.

2.

Everyone likes a winner, so showcase where you and your fans are winning. This provides positive, encouraging content that everyone wants to see.

3.

Integrate your social media with your website and encourage participation.

4.

Give away free stuff! Providing a free product or service to your loyal customers who follow you on social media is a great way to get feedback and keep them loyal.

5.

Plan ahead. Strategize about your audience and create a long-term social media plan to make sure you stay on track with your goals. 8

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Share About Your Brand, And Others

While it technically is your page, no one wants to listen to “me, me, me” on a regular basis. Thinking of social media as a social gathering will greatly benefit your engagement and strategy. A healthy ratio for posting content is roughly 40 percent self-promotion (your products, services, events, news, etc.) and 60 percent interesting and engaging content from outside sources. Think of this scenario: If you’re at a cocktail party and you’re talking with a person who is solely talking about themselves, how interested and invested in the conversation are you? The answer is probably not at all!

Listening Is Key

It’s not enough to just post content out there and leave it. Monitoring the

posts, comments from users, and suggestions will decide the fate of a social profile. Customers love social media because it gives them a voice. But what good is that voice if no one is listening? Monitor your profiles and respond back to your followers.

Also, take their suggestions into consideration. Who knows? The next big idea to boost your company to the next level could come from a complete stranger who follows you on Twitter.

Personalize Interactions

When interacting with your followers, personalize your responses, rather than posting a canned response, so they know you care. This will create a closer bond between your brand and your followers. This personalization expresses gratitude and makes your brand appear more authentic to those who interact with you.

Engaging your audience and building a community is what it’s all about in the end. Too often, social media is treated as just another marketing outlet by businesses and left to dwindle. Don’t let that happen to yours! Take the time to foster your profiles— they’re essentially your brand’s face and personality online, so why not give a little nourishment to them? By engaging and listening to your audience and maintaining your profiles, you’ll have a social media presence that will lead to success. n

MARKETING

HAPPY

FROMMARDI GRAS

Fastest Turn Times in the Industry. That’s something to celebrate!

888-383-8885 | quickcert.org | [email protected]

“When you take the first step into social media, it’s a conscious effort and commitment to practice. Social media is a long-term investment due to the ever-changing and evolving world.”

26 | TRR


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TECHThe Impact of Financial Assessment on Reverse TechnologyBy Seth Hooper

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ADVANCE

he story goes that the very first reverse mortgage was granted in 1961. The loan, intended to

help a widow stay in her home, took advantage of the equity she and her husband had amassed over many years. The reverse mortgage product has evolved a great deal over 54 years, but after much experimentation (especially through the 2000s), reverse loans have more or less returned to their original intent of helping aging seniors stay in their homes.

With each changing regulation, originating reverse mortgages becomes more like granting a forward mortgage. Originally, lenders relied exclusively on collateral value, which seems logical, given that reverse mortgages are satisfied with one payment once the underlying property is sold.

Fast-forward to the 2000s, the reverse mortgage industry’s period of greatest experimentation. This is when the HECM fixed-rate product dominated. It provided borrowers with one lump-sum payment, though it did not leave a remainder for future property tax and insurance payments.

Then came the crash following the events of 2007 and 2008. Reverse borrowers were affected, just as their forward-borrowing counterparts were. Seniors had fewer funds (or, in some cases, no funds) remaining to make tax and insurance payments. Estimates are that slightly less than 10 percent of reverse borrowers failed to do so. These failures became foreclosing events, which were poor outcomes for both borrowers and lenders.

Enter Financial Assessment. FHA lenders processing HECM loans must perform an evaluation of all prospective mortgagors on all HECM types. “All types” includes traditional, refinance and purchase.

For reverse mortgage lenders, using the “four Cs” of lending (credit, capacity, character and collateral)—as forward lenders do—may make more sense. The FA requirements raise a number of concerns that can be satisfied by using technologies similar to those used by forward lenders.

Forward mortgage technology can also help reverse lenders in several specific ways. The first is integration with credit providers. Best-in-class platforms pull both credit data and documents into systems and put them to work, including all liability account information and payment histories. Technology does the data input work so teams can concentrate on the analysis. Data integrity increases, and speeding up the process reduces the cost of loan origination.

Credit integration of this type opens the door for broader data capture. Advanced imaging technology, in addition to third-party integration, is another play reverse lenders can take from the forward lender’s book. Verifying and documenting income, liabilities, assets, property charges, extenuating circumstances and other related information is better handled through imaging platforms than through manual processes.

The best systems ingest documents, recognize and categorize them, stack them in pre-assigned orders

and trigger workflows based on the documents received. We know that imaging also increases data integrity and file integrity (both in the near and the long term), speeds up the process and reduces the cost of lending.

There is another critical advantage to leveraging technologies used by forward mortgage lenders: The best systems enable transparency, which aids collaboration with borrowers.

Both forward and reverse mortgage processes seem opaque when seen from the borrower’s perspective. Most borrowers will tell you they feel under-informed and powerless throughout the mortgage origination cycle. That feeling was understandable in the days before the Internet and the emergence of modern digital technologies. The best forward lenders keep their borrowers informed through a consumer portal that shows the progress of their loan and lets them view documents and ask questions. This has revolutionized forward borrower satisfaction. It can do the same for reverse lending, and could, in the longer run, increase acceptance and use of the product.

Reverse lending has come a long way in the last half-century. While the FA requirements may seem burdensome, they are also necessary. We have learned a lot as an industry from the financial and housing crises. One of the best lessons may be that the “Four Cs” of forward lending can also be useful in the reverse space. n

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The best systems ingest documents, recognize and categorize them, stack them in pre-assigned orders and trigger workflows based on the documents received. We know that imaging also increases data integrity and file integrity (both in the near and the long term), speeds up the process and reduces the cost of lending.

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LEARN

Understanding the Basics of TrustsBy Alexander J. Chaudhry

ue to the expense and complexity of probate and the uncertainty surrounding death

taxes, many senior citizens are creating revocable trusts to avoid these estate-planning concerns. It is quite common during the origination process to meet a client whose home is titled in their trust. Many senior citizens create their living trusts through estate planning services, or “trust kits,” without the full benefit of advice and instruction from an attorney and accountant. Often, the senior creator of the trust forgets that the trust has been created, misplaces the trust agreement, or is reluctant to provide a full copy of their trust document. When these types of issues arise, a reverse professional can help guide their clients to possible solutions by having a basic understanding of trusts.

Trusts are estate-planning tools that manage property during one’s life and can also replace or supplement the need for a last will and testament. An extremely common reason for establishing a trust is to transfer assets outside of a formal probate process after death. Probate is the legal process that takes place after someone dies that includes distributing the deceased person’s property according to their last will and testament or applicable state law. Probate can be costly, time consuming and may require attorneys.

However, if a home is titled in a trust, the home will not be included in the formal probate process and title to the home will pass outside of probate pursuant to the trust’s directions.

Unlike a corporation, a trust is not a legal entity and has no independent existence. However, a trust, if properly created, can hold title to real property with the same rights of possession and alienation as an individual. A trust is simply a relationship of “trust” between certain individuals. These individuals include the trust creator (the individual who creates the trust), the trustee (the individual who manages the trust) and the beneficiary (the individual who receives the

trust’s benefits.) The trust serves as the governing basis for their legal relationship with one another.

To create a trust, the creator (also known as the “trustor,” “grantor,” or “settlor”) transfers legal ownership of the property to a person or institution (the “trustee”) to manage the trust property for the benefit of another person (the “beneficiary”). The trustee is the person who acts on behalf of the creator and beneficiaries pursuant to the express authority and directions contained in the trust. Many clients will choose to serve as their own trustee and continue to manage their affairs for as long as they are able. Married couples 8

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

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LEGAL

often serve as co-trustees. When one spouse dies or becomes incapacitated, the surviving spouse can continue to manage their finances as the sole trustee. All trustees owe a fiduciary duty to the beneficiaries of the trust. As a fiduciary, the trustee is under a duty to act in the best interests of the beneficiaries when dealing with trust property and assets.

While there are various types of trusts, the most common and basic type of trust that one will encounter during a HECM origination is an inter vivos revocable trust,which an individual creates during their lifetime. Inter vivos is a Latin legal term that means “between the living,” and refers to a transfer or gift made during one’s lifetime, as opposed to a testamentary transfer, which is a gift that takes effect on death. Therefore, an inter vivos revocable trust is a trust that: an individual creates during their lifetime; becomes effective during its creator’s lifetime; and can be changed or canceled (revoked) by its creator at any time, for any reason, during the creator’s lifetime. The most important aspect of this type of trust is that it is revocable, meaning the creator of the trust reserves the power to change

all terms of the trust at any time without needing anyone’s consent or permission. Property, including the client’s home, can be delivered to or removed from this type of trust at any time by the trust creator.

Less common are irrevocable trusts. An irrevocable trust is a type of trust that cannot be easily changed, amended or canceled once it is set up without the consent of the beneficiary. When a senior client creates an irrevocable trust, they permanently give up ownership and control of the trust property. If a client’s home is titled in an irrevocable trust, they may still be able to change the terms of the irrevocable trust and remove their home from their trust by obtaining permission from the trust beneficiaries, a court or both. In order to do so, one must identify all interested parties to the trust and obtain their written consent to the transaction.

Fannie Mae’s Selling Guide B2-2-05 provides that a revocable trust must be established by one or more natural persons, solely or jointly. The primary beneficiary of the trust must be the individual(s) who established the trust. Contingent or future beneficiaries,

who receive no benefit from the trust nor have any control over trust assets until the beneficiary dies, do not have to be eligible borrowers. If the trust is established jointly, there may be more than one primary beneficiary as long as the income or assets of at least one of the individuals establishing the trust is used to qualify for the mortgage. Most importantly, the trustee must have the authority to borrow money and mortgage and encumber the real estate for the purpose of properly securing the property.

All current beneficiaries of the trust must receive HECM counseling by a HUD-approved housing counseling agency. Contingent or future beneficiaries do not have to receive counseling, although FHA strongly encourages and recommends counseling for all parties. Likewise, trustees do not have to receive counseling but reverse professionals should be aware that often the trustee may also be the current beneficiary as well as creator of the trust and must be counseled. Reverse professionals can consult HUD Mortgagee Letter 2006-25 for additional information on HECM counseling for those borrowers whose property is titled in a trust.

{ INTER VIVOS TRUST }A trust that is created and takes effect during the creator’s lifetime

{ TESTAMENTARY TRUST }A trust that is created by a will

and takes effect when the creator (testator) dies

{ IRREVOCABLE TRUST }A trust that cannot be changed or canceled once it is set up without

the consent of the beneficiary

{ TRUSTEE }One who, having legal title to the property, holds it on trust for the benefit of another and owes a

fiduciary duty to that beneficiary

{ BENEFICIARY }A person who is designated

to benefit as a result of a legal arrangement or instrument

{ CERTIFICATE OF TRUST }A condensed version of a

declaration of trust that provides statutory authority of the trustee to act but omits details of what property is held in the trust and the identity of the beneficiaries

ASK THE PROFESSIONAL helpful terms to know.


LEGAL

Missing Trust Document: Occasionally, one may encounter a home titled in a trust but the senior client does not have a copy of their trust document. These types of files may be problematic because there is no written evidence of the trustee’s authority to convey, sell or mortgage the home. If the senior has misplaced their trust instrument, it may be possible to obtain a copy by directly contacting the attorney or estate planning service that created the trust. Additionally, state law should be researched as it may confer to a person identified as a trustee certain powers as enumerated by applicable state law.

Reverse professionals should also determine if the state has a statute that authorizes the borrower to provide a trust certification, certificate or memorandum of trust that replaces the need to produce the entire trust document. Most states have statutes stating that if a certification of trust includes certain required information, institutions must accept the certification in lieu of the entire trust document. For instance, California law provides that someone who refuses to accept a valid certification of trust and demands the entire instrument may be liable for monetary damages suffered by the trust creator.

Moreover, and just as important, a valid trust certification given to a third party protects that party from their dealings with the trustee, even if a full copy of the trust is not provided. The trust certification, therefore, provides assurances to the settlement agent that the trustee has the power to execute deeds and mortgages conveying and encumbering the home. Under applicable state law, third parties can rely on this document to ensure the trustee’s authority to manage the property.

If the trust instrument cannot be located, one may also be able to look to the vesting deed that conveyed the property to the trust to establish the authority of the trustee to act. For instance, in Florida, if the vesting deed

contains language that confers on the trustee the power and authority either to protect, conserve and sell, or to lease, encumber, or otherwise manage and dispose of the real property described in the deed, the trustee has full rights of ownership over the real property. A recorded deed that contains trustee powers means that the trustee would have full power and authority to manage the real estate including the power to execute deeds and mortgages.

Private Trust Information: A trust is an estate-planning tool and may contain certain private information that a client may wish to keep private during the origination process. A primary reason trusts are selected by clients is for the privacy they provide. For instance, a client’s trust could contain provisions establishing transfers and distributions for certain beneficiaries that the client wants to keep confidential. If the entire trust document is turned over, those provisions are no longer private.

In these types of situations, a trust certificate may be used to avoid providing the private information. Properly executed trust certificates do not disclose the identity of the beneficiaries of the trust. A valid trust certificate would, among other things, identify: the powers of the trustee; whether the trust is revocable or irrevocable; and who and how many trustees are required to sign on behalf of the trust. It would contain a statement that the trust has not been revoked, modified or amended in any manner that would cause the representations contained in the certificate to be incorrect. The certificate is signed by the trustee in the presence of a notary public under penalty of perjury. Most states have enacted laws that set forth the requirements for a valid certification of trust. If the certificate meets the state’s requirements, institutions must accept the certificate or face potential liability.

Multiple or Incapacitated Trustees: In some instances, there may be more

than one named trustee, or the named trustee may be incapacitated, have resigned or is otherwise no longer serving. If more than one trustee has been named, the conveyance language in the vesting deed and the trust should be examined to determine if the trustees are identified jointly or severally. For instance, many senior married couples will name themselves as co-trustees of their living trust and expressly provide that either spouse may act independently of each other as trustee. Alternatively, the trust language may have been drafted in such a manner as to require both trustees to act jointly in order to act on behalf of the trust.

If a trustee has resigned or has become incapacitated, then one should examine the trust to determine if a successor trustee has been properly identified. The trust may contain instructions for determining the original trustee’s incapacity. For instance, the trust may require one or more medical doctors to certify in writing that the trustee is not physically or mentally able to handle his or her financial affairs before the successor trustee can act.

When the original trustee no longer serves as trustee, the trust documents generally will identify an individual or institution to act as the successor trustee. Typically, several successor trustees are named in succession in case one or more cannot act. Sometimes two or more adult children are named to act together. Sometimes an institutional trustee (bank or trust company) is named.

In today’s world of crowded and expensive probate courts and a desire for privacy, trusts have become a popular manner of holding title to real property. Reverse professionals will often encounter clients whose home is titled in their living trust. Those professionals who understand trusts, and the reasons their senior client placed their home in a trust, are better equipped to offer solutions that meet their client’s needs. n

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SPOTLIGHT

IN THIS MONTH’S EDITIO

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ONE ACADEMIC EXPLAINS HIS MISSION TO SPREAD THE

WORD.

Research Prompts Retirees to Rethink Reverse Mortgages BY JESSICA GUERIN

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See them at reversereview.com.

WANT TO SEE MORE ARTICLES LIKE THIS?

s the reverse mortgage product continues to evolve, so too does the academic

research examining its use as a financial tool in retirement. Last spring, David Johnson and Zamira Simkins from the University of Wisconsin–Superior joined the ranks of those studying the HECM’s effectiveness with an article exploring its use in the Journal of Financial Planning.

The article, “Retirement Trends, Current Monetary Policy and the Reverse Mortgage Market,” examines demographic and economic trends impacting America’s retirees.

“Current and future retirees face a series of challenges that will have a significant impact on their life in retirement,” the article states. “The recent recession negatively affected the value of their investment portfolios and the bursting of the housing bubble diminished the value of their homes. The aging of the baby boomer generation, increased life expectancy, and deteriorating dependency ratios are putting upward pressure on the government’s implicit liabilities and debt…

Furthermore, lack of planning and unrealistic expectations about future costs of basic health care and long-term care will place many retirees in an untenable financial position. Therefore, identifying and using alternative sources of retirement income has become critical for current and future retirees.”

One viable alternative resource, the article concludes, is a reverse mortgage. The authors suggest that retirees re-examine their views on reverse mortgages and consider implementing one as part of their retirement plan in order to better prepare for the challenges ahead.

Johnson, an associate professor of finance, was once a reverse mortgage originator himself, giving him a unique perspective on the loan and its abilities. He worked for Financial Freedom for five years and then Generation Mortgage for three before the housing market took a downturn, prompting him to return to the world of academics.

Now, in addition to teaching, Johnson focuses his research on financial literacy and

reverse mortgages. He says his time in the industry prompted him to conduct research on the HECM’s potential. “When I was in the reverse mortgage industry, I would constantly read all these negative stories in the news or someone would say something [negative] on a news program, and as an originator I was always trying to correct that misinformation,” he says. “When I got back into academics, I thought, ‘Well, the first thing I want to do is try to set the record straight, to get some correct information out there, because it is such a great product, and so many people still don’t understand it.’”

Johnson says part of the problem is that a stigma surrounds the idea of accessing one’s home equity, even though it can be tremendously beneficial when done properly. “I have seen so many people benefit from a reverse mortgage… I’ve never heard a single person complain about the fact that they did one. In fact, when I would run into [former clients] later, without a doubt, they would all say, ‘I wish I had done it earlier,’ because it had changed their lives. People did it for all different kinds of reasons, but they were all happy with it.”

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SPOTLIGHT

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Johnson says research like the work he and co-author Simkins published is part of an effort to break down this stigma and educate not only the public, but financial planners as well. He says embracing the benefits of a reverse mortgage is increasingly important as more boomers enter retirement age. “Even if people were diligent—saved for retirement, made good investments—they are going to outlive their assets,” he says. “We are living much, much longer than we ever anticipated.”

In order for the HECM market to truly grow, though, Johnson says the housing market needs to rebound.

“The biggest help for the industry right now would be a rise in home values, because the benefits have shrunk quite a bit, especially in certain areas,” he admits. “A lot of people overextended themselves, so now if they want to do a reverse mortgage, there’s just not enough equity there.”

Johnson says that for this to happen, banks need to loosen their lending requirements. “I think the banks suffered when the housing crisis occurred—there were foreclosures, they lost quite a bit of money—so they have kind of gone overboard… they have become overly conservative. I think that’s starting to change a little bit now; it just hasn’t happened as quickly as I thought it would.” In the meantime, he says, promoting research that explores the benefits of reverse mortgages can help propel the industry forward. “I think highlighting academic research is certainly going to help, because most academics don’t have any skin in the game and they are going to give an unbiased opinion. If there’s

something wrong, they are going to say it.”

“I’m happy the industry is starting to look toward academics and I think it has even supported some research, which is great, because the more they do that, the more information will get out there. Hopefully, we’ll get to the point where this is no different from a forward mortgage. People are going to understand how it works, and they’ll be able to make a decision if it’s best for them or not, and they won’t be misled by the misinformation that’s out there.”

Johnson also says positive coverage in the mainstream press will help. While the media is beginning to write more positive stories, he says it’s the negative articles that gain a lot of the traction. Reverse professionals, he says, need to get creative about how they are helping to spread the word. “People who have been in the business for a long time need to retool and remake themselves to try to determine how to get the message through,” he says. “We can’t keep trying to do the same thing over and over again. Whatever worked in the past might not work in the future.”

Johnson says he hopes to continue to publish research on the benefits of the HECM. “These are things that I think about all the time,” he says. “I’m trying to come up with some way to break that wall down, because I really believe in this product and I want everybody to understand it, and then they can make an informed decision.” n

David Johnson, Ph.D., is an associate professor of finance at the University of Wisconsin–Superior. He has taught at the University of Tennessee, UW-Eau Claire and the University of Northern Colorado. He holds a doctorate in finance from the University of Tennessee an undergraduate degree in economics from San Jose State University.

“Nearly 80 million baby boomers are expected to retire over the next 18 years. Unfortunately, the recent recession has eroded their retirement portfolio values, increasing retirees’ dependence on Social Security. The long-term solvency of the Social Security system, however, is uncertain. Thus, having alternative sources of retirement income is important. Reverse mortgages are one possible alternative.”

“Surveys show that Americans tend to store more than two-thirds of their wealth in their homes, which implies that housing, as a retirement asset, will grow in importance in the future.”

80m

“Retirement Trends, CurrentMonetary Policy and the

Reverse Mortgage Market”

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innie Mae President Ted Tozer has been leading the only securitization platform for HECMs in the world for five years. In this time, Tozer has worked hard to transform the organization, loosening the standard bureaucratic red tape and taking strides to create a customer-centric environment in the hopes of bringing more issuers—and more capital—into the program.

While issuance for HECM mortgage-backed securities took a downturn in 2014, Tozer remains optimistic about the program’s future. As Ginnie Mae’s new policies encourage participant success and the HECM program regains its footing following recent regulatory changes, Tozer says the future of HMBS looks bright.

The Government National Mortgage Association

As a federally owned corporation operating within HUD, Ginnie Mae (once known as the Government National Mortgage Association—its name is derived from the abbreviation GNMA) is designed to channel funds into the U.S. housing market by guaranteeing bonds sold by mortgage lenders to allow them to obtain the most advantageous funds in the capital market. By ensuring liquidity, Ginnie Mae gives lenders the ability to continue to issue new mortgage loans to consumers at the most advantageous terms possible.

Ginnie Mae issued its first HECM-backed security in 2007, back when Fannie Mae dominated the landscape. Just three years later, the agency achieved a record high with $11 billion guarantees of MBS and Fannie exited the space to focus on other channels.

While the agency hasn’t achieved such remarkable highs in recent years, Tozer says he is doing all he can to help advance its programs. He says that when he joined Ginnie in 2010, his main goal was to create an environment that produced solutions for the lenders and investors with whom they do business.

“I didn’t want it to be a typical government agency. My goal was to try to get the people at Ginnie Mae to take the tack that at the end of the day, people should [evaluate] how we are doing from a customer-service perspective,” Tozer says. “They shouldn’t view us as a government agency, but as a partner. They should put us on the same level as a private-sector company.”

Instituting Change

Tozer says, ultimately, the goal is to bring in more lenders. Upon joining the agency, one of the first things he did was expand its multiple lender programs, changing the participant requirements from three loans per pool to just one.

“We tried to reduce the barriers for small lenders who wanted to do business with us by getting it down to that one loan for full capacity, and that extended our base,” he says.

“Since I got here, my goal has been to try to make sure that any organization that could be a success in our program had the opportunity to be an issuer and not have to go through a third party, to have direct access to the capital market themselves. And it’s worked.”

Tozer says that the agency has nearly doubled the amount of issuers it was doing business with. “Just on the 8

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Ted Tozer&Ginnie Mae’s president talks about


By Jessica Guerin


“I DIDN’T WANT IT TO BE A TYPICAL GOVERNMENT AGENCY. My goal was to try to get the people at Ginnie Mae to

take the tack that at the end of the day, people should [evaluate] how we are doing from a customer-service perspective. They

shouldn’t view us as a government agency, but as a partner.”

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single-family side, when I got here, the top 10 issuers made up approximately 85 percent of our business. In 2014, the top 10 only did about 55 percent of our business,” he says. “So we have seriously deconsolidated our issuer base by not only doing things like the single loan per pool to encourage small lenders to get involved, but also by working with the lenders that do business with us [to ensure] they have the expertise to be able to succeed.”

Tozer says working with smaller lenders that don’t have access to the liquidity of larger banks did give rise to a unique set of challenges. To ensure success, the agency instituted a policy that would allow issuers to pledge their Ginnie Mae servicing as collateral with commercial banks to get a line of credit.

“We know that it is challenging to survive in all economic cycles in our industry, so we thought it important to support the pledge of servicing, since servicing rights is mortgage brokers’ largest single asset,” Tozer says, calling the move “monumental” because it encouraged Fannie and Freddie to “seriously start taking a similar path with their servicers about letting them pledge their servicing.”

Tozer says initiatives like that one have helped propel the agency forward. “We want Ginnie Mae to be a leader in this industry instead of a follower.”

Work to Be Done

But Tozer says his work is far from over, and that Ginnie Mae has lots of goals on the agenda for 2015 and beyond. Moving forward, he says he’d like the agency to work more closely with issuers in an advisory capacity to help prevent those struggling from defaulting.

“I want to get to the point where we have an infrastructure, the reporting and staffing in place, where we can see when an issuer is starting to have some challenges, and we can get in front of it to help navigate those challenges, so that at the end of the day, we never have to shut down another issuer,” he says. “That’s what we are looking forward to: getting to this point where we can really be proactive with our customers.”

Ginnie Mae has also announced a number of official goals for the year ahead. At its annual summit in September, it released a list of five new initiatives designed to stimulate nationwide mortgage lending. Among them is an increase in issuer net worth and liquidity requirements.

“We’ve been working with a number of commercial lenders, reverse mortgage lenders, to have the funding to buy the loans out at 98 percent,

“I WANT TO GET TO THE POINT WHERE WE HAVE AN INFRASTRUCTURE, the reporting and staffing in place, where we

can see when an issuer is starting to have some challenges, and we can get in front of it to help navigate those challenges, so that at the end of

the day, we never have to shut down another issuer.”

and that’s what we’re worried about,” Tozer says. “That’s the biggest challenge for the reverse mortgage issuer.”

Tozer says Ginnie’s old requirements were outdated because they revolved around net worth instead of liquidity. “The key is liquidity. Every issuer we’ve had to shut down since I came here five years ago has been due to liquidity. None of them have been insolvent. They had plenty of capital, but they didn’t have the cash to make the required bond payments.”

Tozer says the policy change is intended to ensure that those who are in the program can succeed in the program. “It was an opportunity for us for the first time to really be realistic about what it takes in terms of financial resources to be successful in our program, because at the end of the day, I want everyone who is in the program—who wants to be in the program—to succeed in the program.”

HMBS Success

In recent years, HMBS volume overall has taken a significant downturn. According to New View Advisors, 2014 saw the lowest issuance since 2008, when Ginnie Mae had just entered the space. Issuers sold $6.6 billion in new pools last year, a 31 percent drop from the year before. New View did point out, however,


“I HAVE BEEN REALLY DISAPPOINTED THAT we have not been able to find a way to enable the HMBS issuers to get sale treatment. Eventually we’ll get it resolved; it’s just so difficult for us to maintain the integrity of our program and do that.”

HMBS Issuer Aggregate Amount Pools % of Total REVERSE MORTGAGE SOLUTIONS $1,480,084,610 144 22.4%URBAN FINANCIAL OF AMERICA $1,193,363,231 200 18.0%AMERICAN ADVISORS GROUP $1,173,105,569 116 17.7%LIBERTY HOME EQUITY SOLUTIONS $783,021,798 91 11.8%LIVE WELL FINANCIAL $470,431,298 83 7.1%NATIONSTAR MORTGAGE $452,771,450 172 6.8%GENERATION MORTGAGE COMPANY $395,757,124 76 6.0%REVERSE MORTGAGE FUNDING $357,744,061 53 5.4%SUNWEST MORTGAGE COMPANY $171,518,240 42 2.6%PLAZA HOME MORTGAGE $65,068,318 20 1.0%BANK OF AMERICA $57,519,164 14 0.9%ONEWEST BANK $16,646,450 13 0.3%SILVERGATE BANK $4,730,447 2 0.1%

Total $6,621,761,760 1,026 100.0%

2015 HMBSIssuance

that 2014 saw the most pools ever issued, a total of 1,026—three more than the previous year’s record.

Recently, Ginnie Mae demonstrated its vigilance in protecting the interests of those involved in its HMBS program when it placed a ban on fixed-rate, partial-draw products from its pools.

In the past year, a handful of lenders introduced a loan option that offered borrowers a fixed rate on proceeds one

year after the loan’s initial disbursement following the release of HECM policy changes in the fall of 2013. Not long after, Ginnie Mae reacted, announcing it would not allow fixed-rate variations in its pools because it deemed them to be too high-risk.

“My concern when we started doing a partial-draw product on a fixed rate was the substantial interest-rate risk on the issuers. I want to make sure the issuers

are around for the long haul, and make sure the program is around for the long haul, and I just felt taking on the interest-rate risk was contrary to the long-term interests of all the participants in the program. So that’s why we moved so quickly,” he says. “We just felt that this may be a positive in the short run, but in the long run, if we allowed it, it would have come back to haunt the industry and the borrowers themselves.”

Tozer also says there is more work to

be done to advance HMBS, namely resolving the true sale issue. “I have been really disappointed that we have not been able to find a way to enable the HMBS issuers to get sale treatment. Eventually we’ll get it resolved; it’s just so difficult for us to maintain the integrity of our program and do that.” He says Ginnie Mae will continue to take ideas to the industry and encourage conversation among all participants in

order to find a solution.

Tozer’s confidence in the program is unwavering. “We’re hoping that once the industry adjusts to FHA’s changes and any uncertainty [is resolved], HMBS production will pick back up. We think that with the baby boomers retiring, the ability to tap into your equity is something that is going to be needed.”

He calls the recent wave of regulatory change a step in the right direction. “I think these are things they probably should have put in the initial HECM when they rolled it out years ago. A senior citizen needs to be able to keep their house in repair, needs to be able to pay their taxes and insurance, and to make the assumption that that would naturally happen was probably too rosy,” he says. “We’re getting to the point now where we’re seeing the HECM as really sustainable, and we’ve put the terms in place to make sure that it’s sustainable for FHA as well as for the borrower.”

He admits that it may take some time for the industry to rebound in the wake of policy change. “These changes were relatively dramatic in a short period of time, though they were very much needed. We think the industry needs to work through those,” he says, “but the long-term perspective is pretty positive for HMBS.” n

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have been in this business for more than 25 years, but even with decades of experience, I still find

that there are lessons to be learned.

Early in my career, I was a co-owner and broker of a mortgage company. My partners and I worked hard to provide a high level of service to our customers and Realtor partners. In the 15 years we were open, I learned a lot about what it took to keep our doors open and came to see firsthand how we where improving people’s lives. My partners and I did well, but we weren’t exposed to thoughts and ideas other than our own. I took a leap of faith and moved into the wholesale side of the industry.

So began a decade-long chapter in my career as an account executive. I worked for a few very large wholesale lenders. As an account executive, I was afforded the unique opportunity to see how many mortgage originators ran their businesses. I saw that some very smart and talented people consistently survived and thrived while equally smart and talented originators never stopped struggling, despite the fact that they were selling the same product. These are my takeaways:

The ability to adapt quickly is key.

I worked through some of the most volatile times in our market. Consistently, I saw top performers quickly change course to take advantage of a positive change or lessen the impact and damage of the negative currents coming their way. The people who struggled the most tied themselves up in a

micromanaging knot, over-evaluated and failed to seize an opportunity, or just couldn’t get past a bump in the road. Top performers took the necessary time to look up, evaluate and quickly adjust their trajectory.

Exposure to new ideas is necessary.

The biggest mistake many owners and originators make is not taking time to learn about new ideas that could help improve the way they do their job. No one can possibly know all there is to know about their business, and it is easy to get caught up in day-to-day concerns and feel that it is impossible to step back for a moment. The best performers place high value on exposure to new ideas and meeting others who are excelling in their field. The one nugget of information you take away from a seminar or connection made at an event could be the turning point between getting the same old results and soaring to new heights. Change will not find you tethered to your desk.

Know what feeds your passion and devote your time to it.

What if you could free up two or

three hours every day and use that time to connect with your clients, learn more about your business and build deeper relationships with your referral partners? What would your business look like? Would you find your job more rewarding? Would your deepened relationships produce a higher quality and volume of referral business? I, like many reverse mortgage originators, feel my job is also a calling. Let your team members have a chance to step up and take over the tasks that pull you away from your true calling. Mastering delegation and taming the urge to be involved in every aspect of your business is the only way to grow, and it gives others the chance to shine.

“Whether you think you can or you think you can’t, you’re right.” –Henry Ford

In the average day as an account executive, I would visit anywhere from three to five accounts. Some were thriving and bustling with energy. Others were worried about making next month’s payroll. Yet they all sold basically the same product and faced the same challenges. What was so different? It came down to this basic principle: The successful believed they would persevere. Often, the people who thrive share the characteristic belief that will find a way to overcome every obstacle. Because they were looking for a solution, they found one.

I still enjoy this industry, but know it can be tough to bring your best to the table every day. By taking the time to assess your attitude, your business and the passion that drives you, it’s possible to deliver better service to your clients and keep the spark that will not only help you survive, but thrive. n

The Lessons I’ve Learned By Susana Rhoades

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The Reverse Review February 2015

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Transcript of The Reverse Review February 2015