The Reverse Review June 2013

THE REV

ERSE

RE

VIE

W T

HE

RE

VER

EW TH

E R

EV

ER

SE

RE

VIEW THE REVERSE REVIEW

Saving the HECM for Middle America

INSIDEthis issue

MARKETING TO THE CHILDREN OF POTENTIAL SENIOR BORROWERS PG. 27

ALICIA MUNNELL TALKS ABOUT THE HECM’S ROLE IN RETIREMENT PG. 35

+ COLIN CUSHMAN SITS DOWN IN OUR HOT SEAT PG. 16

J U N E 2 0 1 3

THE

reviewREVERSE

The

c o $ tof Compliance

UU

o oW

Reverse mortgage lenders grapple with mounting operational costs in a hyper-regulated world.

| TRR2

The ReveRse Review June 2013

is ��

to automate their lending process.

Do you know why?

919.834.0070 || www.reversevision.com || [email protected]

REVERSEVISION

REVERSEREVIEW.COM � TRR | 3

Making it happen.That’s Urban Financial Group. Sales and marketing support. Operational, industry, and

secondary market expertise. Training and underwriting services. In fact, all it really takes to

make success happen in Reverse Mortgage lending is choosing the right partner.

» Put the power of our wholesale lending division behind you. 888-777-3311 | www.reverseit.com

NMLS ID# 2285 For mortgage professional use only, not to distributed to the general public. Urban Financial Group Corporate O!ce: 8909 South Yale Avenue, Tulsa, OK 74137; Urban Financial Group, Inc. may do business under the name REVERSE IT!, which is a DBA, or division of Urban Financial Group, Inc. Copyright 2013 Urban Financial Group, Inc. All Rights Reserved.

Making it happen.That’s Urban Financial Group. Sales and marketing support. Operational, industry, and

secondary market expertise. Training and underwriting services. In fact, all it really takes to

make success happen in Reverse Mortgage lending is choosing the right partner.

» Put the power of our wholesale lending division behind you. 888-777-3311 | www.reverseit.com

NMLS ID# 2285 For mortgage professional use only, not to distributed to the general public. Urban Financial Group Corporate O!ce: 8909 South Yale Avenue, Tulsa, OK 74137; Urban Financial Group, Inc. may do business under the name REVERSE IT!, which is a DBA, or division of Urban Financial Group, Inc. Copyright 2013 Urban Financial Group, Inc. All Rights Reserved.

| TRR4


z

Meet the TeamSenior PublisherREZA JAHANGIRI

PublisherERIK RICHARD

Editor-in-ChiefJESSICA GUERIN

Creative DirectorTRACI KNIGHT

Copy EditorKERSTEN WEHDE

Marketing DirectorALYCIA COLACION

Printer The Ovid Bell Press

Advertising Informationphone : 630.207.3882

email : [email protected]

Subscriptions email : [email protected]

Editorial Contentemail : [email protected]

© 2013 Reverse Publishing, LLC. All rights reserved. Reproductions or distribution of any materials obtained in the publication without

written permission is expressly prohibited. The views, claims and opinions expressed in article

and advertisement herein are not necessarily those of The Reverse Review, its employees, agents or directors. This publication and any references to products or services are provided “as is” without any expressed or implied warranty or term of any kind. While effort is made to ensure accuracy in the content of the information presented herein, Reverse Publishing, LLC is not responsible for any errors, misprints, or misinformation. Any

legal information contained herein is not to be construed as legal advice and is provided for entertainment or educational purposes only.

Postmaster : Please send address changes to The Reverse Review, 3800 West Chapman Ave.,

Orange, CA 92868

From the Editor

While reverse mortgage professionals work diligently to connect with VHQLRUV�VHHNLQJ�ÀQDQFLDO�RSWLRQV�WR�VXSSRUW�UHWLUHPHQW��D�SDOSDEOH�VHQVH�RI�XQFHUWDLQW\�FRQWLQXHV�WR�ORRP�RYHU�WKH�LQGXVWU\��

/DWHO\��DOO�H\HV�KDYH�EHHQ�IRFXVHG�RQ�&DSLWRO�Hill as the FHA lobbies Congress for the DXWKRULW\�LW�QHHGV�WR�PDNH�PXFK�QHHGHG�FKDQJHV�WR�WKH�+(&0�SURJUDP��+8'�KDV�RXWOLQHG�VHYHUDO�SURSRVHG�DGMXVWPHQWV��LQFOXGLQJ�WKH�HVWDEOLVKPHQW�RI�VHW�DVLGHV�IRU�WD[HV�DQG�LQVXUDQFH�DQG�WKH�LQVWLWXWLRQ�RI�ÀQDQFLDO�DVVHVVPHQW�JXLGHOLQHV��7KH�DJHQF\�KDV�VDLG�LW·V�FRQÀGHQW�WKDW�VXFK�FKDQJHV�ZLOO�HQVXUH�WKH�+(&0·V�ORQJ�WHUP�YLDELOLW\��DQG�RXU�IULHQGV�DW�150/$�KDYH�EHHQ�KDUG�DW�ZRUN�WR�KHOS�PDNH�WKLV�KDSSHQ��SRXQGLQJ�the pavement in Washington to aid in the ÀJKW�IRU�OHJLVODWLYH�FRQWURO��

,Q�WKH�PHDQWLPH��WKH�LQGXVWU\�PXVW�FRQWLQXH�ZLWK�EXVLQHVV�DV�XVXDO³DVVHVVLQJ�PDUNHWLQJ�VWUDWHJLHV��DGDSWLQJ�EHWWHU�WHFK�VROXWLRQV��and originating mortgages for seniors who ZDQW�DFFHVV�WR�WKHLU�KDUG�HDUQHG�KRPH�HTXLW\��

1R�GRXEW��WKH�ZDLW�LV�IUXVWUDWLQJ��ZH�DUH�DOO�HDJHU�WR�VHH�WKH�SURGXFW�WDNH�LWV�ÀQDO�VKDSH��+RSHIXOO\�WKHQ�WKH�SXEOLF�ZLOO�HPEUDFH�WKH�UHYHUVH�PRUWJDJH�DV�WKH�YDOXDEOH�ÀQDQFLDO�WRRO�WKDW�LW�LV�DQG�WKH�LQGXVWU\�FDQ�VSHHG�SDVW�LWV��SHUFHQW�SHQHWUDWLRQ�UDWH�

%XW�DV�ZH�ZDLW�IRU�WKDW�GD\�FRPH��WKHUH·V�OLWWOH�WR�GR�RWKHU�WKDQ�UHPLQG�RXUVHOYHV�ZK\�WKH�SURGXFW�ZH�RIIHU�LV�VR�LPSRUWDQW��1DWLRQDO�VWDWLVWLFV�UHSHDWHGO\�H[SRXQG�WKH�fact that today’s generation of working $PHULFDQV�LV�ZRHIXOO\�XQSUHSDUHG�IRU�UHWLUHPHQW��0RVW�UHFHQWO\��D�VXUYH\�E\�Fidelity Investments reported that 28 percent RI�$PHULFDQ�KRXVHKROGV�KDYH�VHW�DVLGH�OHVV�WKDQ��IRU�UHWLUHPHQW��DQG�WKDW�IRXU�LQ��UHWLUHHV�GR�QRW�KDYH�HQRXJK�LQFRPH�WR�FRYHU�PRQWKO\�H[SHQVHV��

&OHDUO\��RXU�VHQLRUV�QHHG�RSWLRQV��DQG�FRQVLGHULQJ�WKDW�D�VXEVWDQWLDO�SRUWLRQ�RI�D�VHQLRU·V�QHW�ZRUWK�LV�WLHG�XS�LQ�KRPH�HTXLW\��D�+(&0�QHHGV�WR�EH�RQH�RI�WKHP�� (GLWRU�LQ�&KLHI{ Je s s i c a Gu e r i n }

A NOTE FROMJESSICA GUERIN

SIGN UP FOR THE NEWSLETTER AT REVERSEREVIEW.COM.

STAY

CONNECTED

-05+�<:�65!-(*,)662�(5+

3052,+05

GET THE LATEST ISSUE DELIVERED DIRECTLY TO YOUR INBOX!

Feedback is very important to us here at The Reverse Review. Send us your thoughts on past articles or something that is on your mind and we will publish it in this section. [email protected]

Feedback

Want to talk to Jessica?Reach her at [email protected].


UU

o oW

TRR 6.13

Lenders grapple with

compliance expenses.

JUNE 2013

COVER

;/

,�9,=,9:,

�9,=0,>�;/,�9,=,

9

,>�;/

,�9,=,9:,�9,=0,>

�;/,�9,=,9:,�9,=0,>

Saving [OL�/,*4 for Middle America

INSIDEthis issue

4(92,;05.�;6�;/,�*/03+9,5�6-�76;,5;0(3�:,5069�)6996>,9:�PG. 27

(30*0(�4<55,33�;(32:�()6<;�;/,�/,*4»:�963,�05�9,;09,4,5; PG. 35

��*6305�*<:/4(5�:0;:�+6>5�05�6<9�/6;�:,(;�PG. 16

1 < 5 , � � � � �

THE

reviewREVERSE

The


UU

o oW

Reverse mortgage lenders grapple with mounting operational costs in a hyper-regulated world

08 | Movers & ShakersThe latest developments in companies across the reverse space

09 | Industry UpdateHeadlining stories of the past monthReveRse MoRtgage Daily

11 | Top Lenders Report$SULO�\HDU�WR�GDWH�YROXPH�IRU�WRS�reverse lendersReveRse MaRket insight

12 | NRMLA News5HDG�DERXW�WKH�DVVRFLDWLRQ·V�FXUUHQW�LQLWLDWLYHV�MaRty Bell

“When it comes to compliance concerns, reverse mortgage companies are no different than other EXVLQHVVHV�LQ�WKH�EURDG�¿QDQFLDO�VHUYLFHV�VHFWRU��In this heightened regulatory environment, reverse lenders big and small are feeling the effects as they struggle to adjust to a new way of GRLQJ�EXVLQHVV�

38 | THE COST OF COMPLIANCE5HYHUVH�PRUWJDJH�OHQGHUV�JUDSSOH�ZLWK�PRXQWLQJ�RSHUDWLRQDO�FRVWV�LQ�D�K\SHU�UHJXODWHG�ZRUOG��Jessica gueRin & JiM Milano

Table of Contents

Want the online version?reversereview.com/magazine

@

IN THIS ISSUE...

18MARK BROWNINGOriginating

24 LAURIE DENKER MACNAUGHTONOriginating

32JOHN BUTTONTech

15 | RoundupA collection of recent facts and VXUYH\V�DIIHFWLQJ�WKH�UHYHUVH�PDUNHW

16 | Hot SeatColin CushmanPresident and CEO of Generation Mortgage Company

21 | Originating Working TogetherCollaborating with other SURIHVVLRQDOV�ZKR�VXSSRUW�DJLQJ�LQ�placeeD FRankel

22 | Originating The Gray Champion:K\�WKH�LQGXVWU\�QHHGV�D�OHDGHU�WR�JXLGH�XV�WKURXJK�D�FURVVURDGVJiM coRy

27 | MarketingMarketing to “Kids”+RZ�WR�UHDFK�WKH�DGXOW�FKLOGUHQ�RI�potential borrowerstiMothy M. DwyeR

29 | AppraisingThe Gap7KH�GLIÀFXOW\�ZLWK�ÀQGLQJ�QHZ�FRQVWUXFWLRQ�FRPSVchaRles gRess

31 | ServicingThe Unnatural Stress of a Natural DisasterThe challenging work of repair administration Ryan laRose & syDney goDBeheRe

33 | HMBSD.C. Is Where the Action Is The FHA vies for legislative DXWKRULW\�DaRRen stuMBeRgeR

35 | SpotlightTRR Talks to Alicia MunnellThe director of the Center for Retirement Research at Boston College reveals why she thinks the HECM will one day be FRPPRQSODFH��

42 | Last WordAdjusting to Business Without the Fixed-RateJohn sMalDone

FEATURE

| TRR6


JOHN K. LUNDE11 | Top Lenders Report J�John K. Lunde is presidentand founder of Reverse MarketInsight, Inc., a performancedata analysis and consultingÄYT�ZWLJPHSPaPUN�PU�[OL�YL]LYZLmortgage industry. RMI clientsinclude eight of the top 10reverse mortgage lenders, plusinvestors, servicers and vendorsto the industry.rminsight.net949.429.0452

MARTY BELL12 | NRMLA News J�Marty Bell is NRMLA’ssenior vice president of communications and marketing.This is Bell’s professional Act IIIafter careers in books, journalism and the Broadway theater. Bell is the author of two novels HUK�MV\Y�UVUÄJ[PVU�IVVRZ��HUK�his writing has appeared in publications including Playboyand New York magazine. Bellwrote and produced the award-^PUUPUN�KVJ\TLU[HY`�ÄST�The Boys of Summer and produced 15 Broadway shows (including Ragtime, Fosse and Dirty Rotten Scoundrels) that won 27 Tony Awards.

COLIN CUSHMAN16 | Hot Seat J�Colin Cushman is the president and CEO of Generation Mortgage Company and a member of the NRMLA board of directors. Prior to GMC, Cushman served as the FHA’s director of portfolio analysis and was responsible for developing valuation models to support product development, premium pricing, risk management and operations. He also led the design of the HECM Standard and Saver products.

Contributors

MARK BROWNING18 | The Upcoming HECM 9\SLZ�4\Z[�9LÅLJ[�[OL�Realities of Middle America J�Mark Browning is the founder VM�/VTL*OL_��H�ÄYT�IHZLK�in Rochester, New York, that has been exclusively devoted to managing housing wealth and reverse mortgages for the past 15 years. Browning has a background in lending administration, mortgage securitization and structured TVY[NHNL�ÄUHUJL��7YPVY�[V�becoming an entrepreneur, Browning was the president and CEO of the U.S. mortgage banking platform of a multinational bank. [email protected]

ED FRANKEL21 | Working Together to Help Seniors Age in Place JEd Frankel has been in the reverse mortgage business since 2003, when he began with Charter Funding in California. He currently works with Security One Lending near Portland, Oregon. In his previous work in the insurance and annuity business, Frankel founded United Economic Services Inc., a marketing company now owned by Metropolitan Life. Frankel is an active member of ZL]LYHS�UVUWYVÄ[�NYV\WZ�HUK�OHZ�degrees from NYU and the New York Institute of Finance.

JIM CORY22 | The Gray Champion JJim Cory is co-founder and CEOof Legacy Reverse Mortgage,a reverse mortgage originatorin San Diego, California. Corybegan his reverse mortgagecareer 13 years ago and heserves on the board of directorsfor the National ReverseMortgage Lenders Association.He has a bachelor of arts degreefrom the Pennsylvania StateUniversity.jcory@legacyreversemortgage.com800.991.4613Twitter:@LegacyJim

LAURIE DENKER MACNAUGHTON24 | The Picture – Yesterday, Today and Tomorrow J�Laurie Denker MacNaughton is a reverse mortgage specialist at Middleburg Bank. She studied in Europe, graduated with honors from Villanova University and attended graduate school at George Washington University. She is a freelance writer and a frequent speaker at elder law, OLHS[OJHYL�HUK�ÄUHUJPHS�WSHUUPUN�events. [email protected]

TIMOTHY M. DWYER27 | Marketing to “Kids” J�Timothy M. Dwyer is the founder and CEO of Entitle Direct Group, Inc., the parent company of EnTitle Insurance *VTWHU �̀�[OL�JV\U[Y`»Z�ÄYZ[�[P[SL�insurance underwriter to sell directly to consumers. Prior to founding the company in 2006, Dwyer worked in the insurance industry for more than two decades. Entitle Direct Group is headquartered in Stamford, Connecticut. [email protected]

CHARLES GRESS29 | The Gap J�Charles Gress is a senior review appraiser at Toledo-based Martin + Wood Appraisal Group LTD. With 17 years of experience in the appraisal industry, Gress is involved in the attraction, education and retention of appraisers, having trained more than 30. Gress was the keynote moderator for the Collateral Risk network in 2011.

Marty Bell

John K. Lunde

Mark Browning

Ed Frankel

Colin Cushman

Timothy M. Dwyer

Jim Cory

Laurie Denker MacNaughton

Charles Gress


ContributorsRYAN LAROSE31 | The Unnatural Stress of a Natural Disaster J�Ryan LaRose is president andCOO of Celink, an independentreverse mortgage subservicer.LaRose has more than 12 yearsof servicing experience and hasworked exclusively in reversemortgage servicing since 2005.In addition, he is an activemember of the NRMLA servicingand technology committees.celink.com517.321.5491

SYDNEY GODBEHERE 31 | The Unnatural Stress of a Natural Disaster J�Sydney Godbehere manages repair administration, loss draft and line-of-credit processing for Celink. She has worked at Celink for more than seven years and is passionate about providing the highest-caliber service to clients and borrowers. She credits her team and Celink’s mission, vision and values with inspiring her work every day.

JOHN BUTTON32 | A New Era of Interconnections J�John Button is the president of ReverseVision. He has more than 16 years of experience in developing and managing mortgage technology products and businesses. Button has led companies to sustained growth and introduced numerous origination, servicing and analysis products in the mortgage and bank risk management areas. He has held multiple senior-level management roles in technology businesses and has taken part in company creation, executive consulting, mergers/acquisitions and product development in his 30-year-plus career in technology development.

Ryan LaRose

Sydney Godbehere

DARREN STUMBERGER33 | D.C. Is Where the Action Is J�Darren Stumberger, managing director at Knight Capital Group, heads Agency MBS trading and is responsible for HMBS/HREMIC trading, distribution and risk management. Prior to Knight, Stumberger held mortgage trading HUK�ÄUHUJL�WVZP[PVUZ�H[�.VSKTHU�Sachs, Morgan Stanley, Merrill Lynch, Standard & Poor’s and KBC Group [email protected]

JESSICA GUERIN38 | The Cost of Compliance J�Jessica Guerin is the editor-in-chief of The Reverse Review. She has worked on the editorial teams of Chicago Home & Garden, Chicago magazine and Time Out Chicago. Prior to joining the magazine, Guerin managed the marketing efforts MVY�H�JVTTVKP[`�IYVRLYHNL�ÄYT�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.

JIM MILANO38 | The Cost of Compliance J�Jim Milano is a partner with [OL�SH^�ÄYT�VM�>LPULY�)YVKZR`�Kider. Milano’s practice focuses on regulatory compliance for [OL�ÄUHUJPHS�ZLY]PJLZ�PUK\Z[Y �̀�particularly with respect to reverse mortgage issues. Milano is nationally recognized as one of the leading lawyers in the area of reverse mortgage law, and is a frequent speaker on topics of interest to industry members at various trade association conferences and webinars.

Darren Stumberger

John Button

Be a part of the conversation.

Writ! for u"!W! ar! lookin# for new contributor".Share your thoughtful commentary with our readership today.Email [email protected] to learn more.

Jessica Guerin

“It is easy to make the HECM failsafe by excluding too many TXDOLÀHG�SURVSHFWV��SDUWLFXODUO\�LQ�WKH�PRGHUDWH�KRXVLQJ�SULFH�UDQJH��7KH�PRUH�GLIÀFXOW�HTXDWLRQ�LV�WR�PDNH�WKH�SURJUDP�equitable and inclusive while

EDODQFLQJ�DJDLQVW�H[FHVVLYH�ULVN��$PHULFD�KDV�D�VLJQLÀFDQW�FKDOOHQJH�ZLWK�UHVSHFW�WR�SURYLGLQJ�ERRPHUV�ZLWK�D�ZD\�WR�ÀQDQFH�UHWLUHPHQW��5HYHUVH�PRUWJDJHV�UHSUHVHQW�D�UHDO�FKDQFH�WR�LPSDFW�WKH�SUREOHP�µ�-Mark Browning

comments we lovedpage 20

Jim Milano

John Smaldone

JOHN SMALDONE42 | Adjusting to Business Without the Fixed-Rate J�John Smaldone is the executivevice president of HanoverFinancial Services, a consultingÄYT�[OH[�MVJ\ZLZ�WYPTHYPS`�VUthe reverse mortgage industry.Smaldone is the founder ofTaylor, Bean and Whitaker and isthe former senior vice presidentof TransLand Financial Services’reverse mortgage divisions. Withmore than 43 years of mortgagebanking experience and 12years in the reverse space,Smaldone intends to remain inthe reverse mortgage industry,taking on long-term consultingassignments.QVOU'OHUV]LYÄUHUJPHS�JVT

| TRR8


Movers & Shakers

Landmark Network Launches First Valuation Management App

AMC Landmark Network launched the ÄYZ[�]HS\H[PVU�THUHNLTLU[�HWW�MVY�P7OVUL�and iPad. Named “Landmark Network” and available through the Apple App store, the app gives users the ability to access and manage their appraisal orders on the go. After logging in to view their pipeline of active and completed appraisal orders, users can submit inquiries, request updates or provide order information to Landmark’s support staff. “We are very excited about the release of our mobile application and this version is only the beginning,” Landmark CEO Erik Richard said. “We are already working hard on additional features and updates, including developing a version for the Android platform, which we hope to release in the very near future.”

ReverseVision, Inc. Opens West Coast Support Center, Hires Fresco EllisReverse mortgage technology provider ReverseVision, Inc. has expanded its support center to the West Coast and hired industry veteran Fresco Ellis as its customer support specialist. Based in San Diego, California, Ellis has more than 10 years of industry experience and has worked for both One Reverse and Generation Mortgage. “Our customer service has helped build our company into the industry’s service and technology leader,” said President John Button. “This L_WHUZPVU�^PSS�IL�H�ILULÄ[�MVY�HSS�VM�V\Y�clients, especially those with operations on the West Coast.”

Texas Mortgage Bankers Association to Host 12th Annual Reverse Mortgage Day The Texas Mortgage Bankers Association will be hosting its 12th annual Reverse

Mortgage Day at the Driskill Hotel in Austin, Texas, on September 10. The event, which will include members of the nation’s leading reverse mortgage lenders, NV]LYUTLU[�VMÄJPHSZ��YLHS�LZ[H[L�H[[VYUL`Z�and title companies, will unite industry professionals from around the country to discuss the business of reverse mortgage lending. “With the lending landscape changing almost daily, those attending this conference will receive the most up-to-date information on everything from FHA reform to secondary market updates,” said Scott Norman of Sente Mortgage.

Open Mortgage Sets Up Reverse Mortgage Headquarters in Atlanta AreaTexas-based reverse mortgage lender Open Mortgage established a new headquarters in Douglasville, Georgia, near Atlanta. “The Atlanta area is a great banking hub to locate our infrastructure team for the underwriting, shipping and funding functions of our business,” Open CEO Joe Morris said. “The momentum of our team growth assures our valued senior clients the excellent customer service that they deserve in order to achieve their ÄUHUJPHS�ZVS\[PVUZ�MVY�[OL�ILZ[�[PTL�VM�[OLPY�lives, their golden years.”

Generation Mortgage Company Releases Trial Version of nu62 App

Generation Mortgage Company has released the trial version of its nu62 iPad app to its approved partners.

The nu62 app is a cutting-edge tool that allows a partner to graphically demonstrate the options available through the use of a HECM, making it easy to compare multiple product options in a more engaging and interactive way.

Liberty Sponsors Texas Tech Study on HECMs and Retirement PlanningLiberty Home Equity Solutions is sponsoring a new research study from Texas Tech University researchers John Salter, Shaun Pfeiffer and Harold Evensky on how utilizing a HECM loan may contribute to the preservation of a retirement portfolio. The study will focus on the “safemax” withdrawal rate when using a “standby reverse mortgage portfolio protection strategy.” Liberty said its support of the project is part of the lender’s JVTTP[TLU[�[V�LK\JH[L�ÄUHUJPHS�HK]PZVYZ�on issues that impact senior clients and how a HECM loan may enhance a retiree’s ÄUHUJPHS�ZLJ\YP[ �̀�

One Reverse Mortgage Welcomes Amanda Clinton as Project ManagerAmanda Clinton has joined the One Reverse Mortgage business development team as a project manager. Clinton will be working on expanding One Reverse’s retail business and developing a wholesale channel. She has more than eight years of mortgage banking experience and worked previously as the operations manager at Net Equity Financial, Inc. Clinton also founded the Baltimore Chapter of the National Aging in Place Council.

Metro-West’s Greg Stephens Wins Valuation Visionary AwardGreg Stephens, SVP of appraisal operations and compliance at Metro-West Appraisal Company, has won the 2013 Valuation Visionary Award. Stephens is a recognized subject-matter expert in appraisal regulations and standards, and has provided qualifying and continuing education seminars around the country. Metro-West is the largest independent HWWYHPZHS�ÄYT�PU�[OL�<�:��^P[O��Z[HMM�appraisers located in 30 states.

HAVE A COMPANY UPDATE YOU WOULD LIKE TO SEE PUBLISHED?

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

EMAIL IT TO [email protected].


June Edition

NEWS DIRECT TO YOU: ;OL�PUK\Z[Y`»Z�OLHKSPUPUN�Z[VYPLZ�H[�`V\Y�ÄUNLY[PWZ

WANT EVEN MORE UP-TO-THE-MINUTE NEWS? Visit reversemortgagedaily.com.

AN UPDATE OF THIS PAST MONTH’S BREAKING NEWS

headlining news1. NRMLA PROPOSES REVERSE MORTGAGE FINANCIAL ASSESSMENT GUIDANCE TO HUD

The National Reverse Mortgage Lenders $VVRFLDWLRQ�VXEPLWWHG�JXLGDQFH�WR�+8'�UHJDUGLQJ�D�ÀQDQFLDO�DVVHVVPHQW�RI�UHYHUVH�PRUWJDJH�ERUURZHUV��7KH�DVVRFLDWLRQ·V�SROLF\�FRPPLWWHH�VWXGLHG�ERUURZHU�GDWD��LQFOXGLQJ�FUHGLW�SURÀOHV�DQG�WD[�DQG�LQVXUDQFH�KLVWRULHV��WR�determine if HECM borrowers are at risk RI�IDOOLQJ�LQWR�GHIDXOW�RQ�WKHLU�ORDQV�SULRU�WR�WDNLQJ�RQH�RXW��150/$�VDLG�LWV�JRDO�in developing the recommendations was WR�FRQVLGHU�FKDQJHV�WKDW�ZRXOG�PDNH�WKH�SURGXFW�PRUH�VXVWDLQDEOH�DQG�EHWWHU�HTXLSSHG�WR�VHUYH�LWV�LQWHQGHG�SXUSRVH�IRU�ERUURZHUV�WR�IXQG�ORQJHYLW\�UDWKHU�WKDQ�WKH�PRVW�UHFHQW�SULPDU\�XVH�RI�GUDZLQJ�DOO�SURFHHGV�DW�RQFH��&DSDFLW\�and willingness to pay ongoing property charges are considered in the proposal, ZKLFK�LQYROYHV�D�WHVW�IRU�HDFK��7KH�capacity test looks at income and capacity WR�SD\�SURSHUW\�WD[HV�DQG�LQVXUDQFH�charges, while the willingness test looks at whether borrowers have demonstrated they are willing to keep those payments FXUUHQW��

// May 14, 2013

2. TEXAS HOUSE VOTES IN FAVOR OF HECM FOR PURCHASE LOAN

7KH�7H[DV�+RXVH�RI�5HSUHVHQWDWLYHV�DSSURYHG�OHJLVODWLRQ�WKDW�ZRXOG�DXWKRUL]H�+(&0V�IRU�3XUFKDVH�LQ�WKH�VWDWH��5HYHUVH�mortgage advocates and other vested JURXSV�KDYH�ORQJ�EHHQ�ZRUNLQJ�ZLWK�WKH�VWDWH�OHJLVODWXUH�RQ�DPHQGLQJ�WKH�7H[DV�FRQVWLWXWLRQ�WR�DOORZ�IRU�WKH�3XUFKDVH�ORDQ��6HQDWH�-RLQW�5HVROXWLRQ��ZKLFK�ZRXOG�DSSURYH�WKH�+(&0�IRU�3XUFKDVH�

XQGHU�WKH�)+$·V�UHYHUVH�PRUWJDJH�SURJUDP��UHFHLYHG�D�YRWH�RI��LQ�WKH�+RXVH�DQG�ZLOO�QRZ�EH�SUHVHQWHG�WR�YRWHUV�LQ�WKH�VWDWH�RQ�1RYHPEHU��´7KLV�was a critical piece of legislation for homeowners in Texas,” Scott Norman of 6HQWH�5HYHUVH�0RUWJDJH�VDLG��´7RGD\·V�YRWH�E\�WKH�+RXVH�ZDV�FOHDUO\�VXSSRUWLYH�of reverse mortgage lending and the JRDO�WR�SURYLGH�HQKDQFHG�FRQVXPHU�GLVFORVXUHV�IRU�DOO�ERUURZHUV�µ

// May 17, 2013

3. MEMBERS OF CONGRESS PRESS FHA ON NEED FOR REVERSE MORTGAGE CHANGE

0HPEHUV�RI�&RQJUHVV�VFUXWLQL]HG�WKH�FHA’s reverse mortgage program while at least two congressmen expressed their VXSSRUW�IRU�JLYLQJ�+8'�WKH�DXWKRULW\�LW�VHHNV�WR�PDNH�FDOFXODWHG�FKDQJHV�WR�WKH�SURJUDP�LQ�RUGHU�WR�VKRUH�XS�WKH�0XWXDO�0RUWJDJH�,QVXUDQFH�)XQG��:LWKRXW�DXWKRULW\�JUDQWHG�E\�&RQJUHVV��+8'�LV�OLPLWHG�WR�PDNLQJ�FKDQJHV�WKDW�ZRXOG�EH�VXEMHFW�WR�D�OHQJWK\�UXOH�PDNLQJ�SURFHVV��RU�ZRXOG�UHVXOW�LQ�EOXQW�IRUFH�FKDQJHV�WR�WKH�SURJUDP��&KDUOHV�&RXOWHU��GHSXW\�DVVLVWDQW�VHFUHWDU\�IRU�VLQJOH�IDPLO\�KRXVLQJ�DW�+8'��WROG�PHPEHUV�of Congress that the FHA’s proposed OHJLVODWLRQ�ZRXOG�KHOS�LPSURYH�WKH�SURJUDP��´,�EHOLHYH�ZH�FDQ�SXW�WKLV�SURJUDP�RQ�D�SRVLWLYH�WUDFN�DQG�HQVXUH�it is providing service in the market,” &RXOWHU�VDLG��QRWLQJ�WKDW�WKH�SURSRVHG�FKDQJHV�LQFOXGH�OLPLWLQJ�WKH�DPRXQW�RI�WKH�DOORZDEOH�GUDZ��ZKHUH�DSSURSULDWH��PDQGDWLQJ�WKH�XVH�RI�HVFURZ�DFFRXQWV�RU�D�VHW�DVLGH�WR�HQVXUH�FRQWLQXHG�DQG�WLPHO\�SD\PHQW�RI�SURSHUW\�FKDUJHV�LQFOXGLQJ�WD[HV�DQG�LQVXUDQFH��DQG�UHTXLULQJ�WKH�XVH�RI�D�ÀQDQFLDO�DVVHVVPHQW�DV�SDUW�RI�WKH�ORDQ�RULJLQDWLRQ�SURFHVV�WR�HQVXUH�WKH�DSSURSULDWHQHVV�RI�+(&0�SURGXFWV�IRU�SRWHQWLDO�ERUURZHUV�

// May 16, 2013

4. HUD TO SELL 20,000 DISTRESSED LOANS TO DRIVE FHA RECOVERY

HUD said it will sell 20,000 distressed ORDQV�WKLV�VXPPHU�WKURXJK�LWV�'LVWUHVVHG�$VVHW�6WDELOL]DWLRQ�3URJUDP�LQ�DQ�HIIRUW�WR�KHOS�VKRUH�XS�WKH�)+$·V�LQVXUDQFH�IXQG��,Q�DGGLWLRQ�WR�EROVWHULQJ�WKH�IXQG·V�recovery, the sale of the distressed loans ZLOO�KHOS�UHGXFH�VKDGRZ�LQYHQWRU\�DQG�VKRXOG�VXSSRUW�RYHUDOO�KRXVLQJ�VWDELOL]DWLRQ�LQ�VRPH�RI�WKH�DUHDV�KLW�KDUGHVW�E\�WKH�KRXVLQJ�FULVLV��+8'�VDLG��

// May 3, 2013

5. CFPB TAKES TO YOUTUBE TO EXPLAIN NEW MORTGAGE RULES

The CFPB has released video presentations explaining new mortgage UXOHV�RQ�<RX7XEH��7KH�SOD\OLVW�LQFOXGHV�D��PLQXWH�RYHUYLHZ�RI�WKH��PRUWJDJH�UXOHV�WKDW�KDV�DOUHDG\�JDUQHUHG�PRUH�WKDQ��YLHZV��DQG�DOVR�LQFOXGHV�shorter presentations of six different UXOHV��&RQVXPHUV�FDQ�ZDWFK�WKH�YLGHRV�WR�OHDUQ�WKH�LQV�DQG�RXWV�RI�WKH�$ELOLW\�WR�5HSD\�DQG�4XDOLÀHG�0RUWJDJH�UXOH��+2(3$�UXOH��(&2$�9DOXDWLRQV�DQG�7,/$�+LJKHU�3ULFHG�0RUWJDJH�/RDQV�$SSUDLVDO�UXOHV��/RDQ�2ULJLQDWRU�&RPSHQVDWLRQ�UXOH��0RUWJDJH�6HUYLFLQJ�UXOHV��DQG�WKH�7,/$�(VFURZ�UXOH��´2XU�JRDO�ZLWK�WKHVH�LV�WR�SURYLGH�DQ�RYHUYLHZ�RI�WKH�UXOHV�LQ�D�SODLQ�ODQJXDJH�IRUPDW�WKDW�PDNHV�WKH�FRQWHQW�PRUH�DFFHVVLEOH�DQG�FRQVXPDEOH�IRU�D�EURDG�DUUD\�RI�LQGXVWU\�FRQVWLWXHQWV��HVSHFLDOO\�VPDOOHU�EXVLQHVVHV�ZLWK�OLPLWHG�legal and compliance staff,” the CFPB VDLG��

// May 15, 2013

Brought to you by:

Industry Update

| TRR10


Put Your Career on Track

“At Security One Lending our Success is Measured by your Success.”


LOOKING FOR MORE STATISTICS? GO TO RMINSIGHT.NET FOR ALL OF THE INDUSTRY’S LATEST STATS AND

RANKINGS.

% % % % %

April 2013 Top Lenders Report

1 2 3 4 5Security One LendingEndorsement 754

Liberty Home EquityEndorsement 621

One Reverse Mortgage Endorsement 517

Urban Financial GroupEndorsement 486

American Advisors GroupEndorsement 444

Lender Endorsements Lender Endorsements

Report

352),&,2�0257*$*(�9(1785(6�//&� ��

*(1(5$7,21�0257*$*(�&203$1<� ��

0$9(5,&.�)81',1*�&253� � ��

5(9(56(�0257*$*(�86$�,1&� � ��

681�:(67�0257*$*(�&2�,1&� � ��

$662&,$7('�0257*$*(�%$1.(56��

*5((1/,*+7�),1$1&,$/�6(59,&(6� ��

&+(55<�&5((.�0257*$*(�&2�,1&� ��

1(:�'$<�),1$1&,$/�//&� � ��

0��7�%$1.� � � ��

*0)6�//&� � � � ��

1$7,21:,'(�(48,7,(6�&25325$7,21� ��

1(7�(48,7<�),1$1&,$/�,1&� � ��

23(1�0257*$*(�//&� � ��

72:1(%$1.� � � ��

+,*+�7(&+�/(1',1*�,1&� � ��

),567$5�%$1.��

),1$1&,$/�)5(('20�$&48,6,7,21� ��

$63,5(�),1$1&,$/�,1&� � ��

021(<�+286(�,1&� � � ��

5(9(56(�0257*$*(�62/87,216�,1&� ��

6287+(51�75867�0257*$*(�//&� ��

723�)/,7(�),1$1&,$/�,1&� � ��

81,7('�1257+(51�0257*$*(��

81,7('�6287+:(67�0257*$*(�&2��

52<$/�81,7('�0257*$*(�//&� � ��

/($'(5�21(�),1$1&,$/� � ��

$7/$17,&�%$<�0257*$*(�*5283��

3(23/(6�%$1.� � � ��

81,9(56$/�/(1',1*�&25325$7,21� ��

&+5,67(16(1�),1$1&,$/�,1&� � ��

),567%$1.� � � ��

$'9,6256�0257*$*(�*5283�//&� ��

0&0�+2/',1*6�,1&� � � ��

+20(675((7�%$1.� � � ��

&217,1(17$/�+20(�/2$16�,1&� � ��

*$7(:$<�)81',1*�',9(56,),('��

0257*$*(6+23�//&��

1(:�$0(5,&$1�0257*$*(�//&��

$0(5,&$1�3$&,),&�0257*$*(� � ��

&217285�0257*$*(�&25325$7,21� ��

67(5/,1*�6$9,1*6�%$1.� � ��

9,*�0257*$*(�&253� � ��

9$1�'<.�0257*$*(�&25325$7,21� ��

6(1,25�0257*$*(�%$1.(56�,1&� ��

35,0$5<�5(6,'(17,$/�0257*$*(�,1&� ��

0257*$*(�6(59,&(6�,,,�//&� � ��

*(56+0$1�,19(670(17�&253� � ��

&,5&/(�0257*$*(�&25325$7,21� ��

1(7:25.�)81',1*��

3$&,),&�5(6,'(17,$/�0257*$*(�//&� ��

3/$=$�+20(�0257*$*(�,1&� � ��

681�$0(5,&$1�0257*$*(�&2��

<$'.,1�9$//(<�%$1.�$1'�75867� ��

%$1.�2)�(1*/$1'� � � ��

Brought to you by:Reverse Market Insight - LogoOctober 9, 2009 3005C Process

Blk CPANTONE COLORS

R E V E R S E M A R K E TI N S I G H T

Y E A R - T O - D A T E E n D O R S E M E n T V O L U M E

| TRR12


NRMLA News

On the DocketTal$ Wit% th! O&cial"

Following the release of the President’s ÄZJHS��I\KNL[�PU�(WYPS��5943(�members took advantage of the opportunity to hear directly from HUD Deputy Assistant Secretary Charles Coulter and his staff during a webinar addressing concerns that the MMI Fund would require a $943 million draw on the Treasury.

“HUD does stand behind [the HECM] program and it’s obvious, looking at the demographics, that there is going to be ZPNUPÄJHU[�KLTHUK�MVY�P[�¹�*V\S[LY�ZHPK�during the webinar. “But the product as it exists today cannot stand on its own economically, and so changes need to be made.”

The April 12 phone conference was organized at Coulter’s request to NRMLA President and CEO Peter Bell, as he anticipated a negative press response to the issue. “What shows up—not explicitly but in communications—is that HECM does create a disproportionate negative effect on the insurance fund,” Coulter said.

The need for a positive subsidy (which is government terminology for a gap ÄSSLY�MYVT�[OL�;YLHZ\Y`�HUK�PZ�H�ULNH[P]L�occurrence) is a result of loans issued prior to 2009 at the time home values

crashed. HUD staff is focused on avoiding additional gaps going forward.

Karin Hill, HUD’s director of Single Family Program Development and the person who manages the HECM program day to day, reported that the changes being considered would address more recent knowledge of life expectancy coupled with a decrease in the average age of borrowers, as well as tax and insurance defaults. :WLJPÄJHSS �̀�/PSS�ZHPK�[OL�KLWHY[TLU[�PZ�considering:

��0UJVYWVYH[PUN�H�MVYT�VM�ÄUHUJPHS�assessment of borrowers in the origination process to determine PM�[OL�ZLUPVY»Z�JHZO�ÅV^�^P[O�[OL�/,*4�PUJS\KLK�PZ�Z\MÄJPLU[�[V�JYLH[L�ÄUHUJPHS�Z[HIPSP[`�MVY�IVYYV^LYZ�NVPUN�forward

Implementing “something like a set-aside or escrow” to protect borrowers who start to fall behind on tax and insurance payments

Limiting draws in some fashion at origination to make sure borrowers have access to cash for longer periods of time

In addition, HUD is exploring potential solutions to the predicament of the non-borrowing spouse who loses a

husband or wife and is obligated to pay off the loan or vacate the home. Among the options under consideration are requiring all borrowers who are a couple to both be over 62 or, in the event one is younger, determining the principal limit factor based on the youngest individual’s age.

As previously reported by NRMLA, HUD feels it needs legislative authority from Congress to make the necessary changes in a timely manner. “We want to be clear about what we are grappling with,” Coulter said in summation. “With congressional authority we can issue Mortgagee Letters that reiterate these ideas. That is what we would like to do. But without congressional authority, the only thing we can do is look at collapsing the ARM Standard into the (94�:H]LY�HZ�^L�KPK�^P[O�[OL�Ä_LK�YH[L�loans, or look at principal limit factors. Whatever we do must be effective by [OL�LUK�VM�[OPZ�ÄZJHS�`LHY�¹

In support of HUD’s preferred course of action, NRMLA staff has been engaging with senators and representatives from both parties who serve on the committees that would offer the desired legislation and urging them to provide HUD with the authority it needs.

NRMLA MEMBERS MUST DISCLOSE ALL AVAILABLE PRODUCTS

The Board of Directors unanimously approved Ethics Advisory Opinion 2013-01: Ethical Product Offerings, which requires all lender members to “offer and describe the full range of products and programs generally available in the marketplace that may provide H�IVUH�ÄKL�HK]HU[HNL�[V�

such consumers.” The advisory opinion is meant to protect consumers from being steered into products that are not necessarily the TVZ[�ILULÄJPHS�NP]LU�[OL�client’s circumstances.Members are instructed to have their legal counsels review the advisory opinion to determine what, if

any, changes need to be implemented as far as disclosing product offerings goes. If a lender does not offer a product that is otherwise available in the marketplace, then it must provide information to the consumer on that product to remain in compliance.


NRMLA Ethics Course RevisitedA group of reverse mortgage company trainers is working with NRMLA to improve the content and delivery of the ethics ZRUNVKRS�WKDW�DOO�DSSOLFDQWV�ZKR�DUH�SXUVXLQJ�WKH�&HUWLÀHG�Reverse Mortgage Professional (CRMP) designation must participate in prior to sitting for the exam.

Trainers Jud Lyman and Chuck Cox of Liberty Home Equity Solutions, Dan Hultquist of Generation Mortgage Company, Craig Barnes of Security One Lending, Lorraine Geraci of Urban Financial Group, and Ken Kanady of Wendover Consulting Services are developing a session focused on a wide spectrum of ethics issues, including advertising, lead generation, appraisals, counseling, product appropriateness, borrower competency and post-closing/servicing. NRMLA’s legal counsel, Jim Brodsky of Weiner Brodsky Kider, offers instruction on NRMLA’s Code of Ethics and Professional Responsibility and its applicability to the everyday workplace.

The group is hoping to facilitate expanded participation in the CRMP program by presenting the new workshop at NRMLA conferences and at various locations across the country throughout the year.

To learn more about the CRMP designation, visit nrmlaonline.org or contact Darryl Hicks at [email protected].

NRMLA News

NEW

S FR

OM

NRM

LA

BROUGHT TO YOU BY MARTY BELL:

REVERSE MORTGAGE LENDERS

ASSOCIATIONThe State and Local Issues Committee continues to work on CA AB 553.

The Servicing Committee has been addressing HUD’s recently published FAQs YLNHYKPUN�ÄYZ[�SLNHS�HJ[PVU�MVY�JHZLZ�[OH[�TV]L�[V�MVYLJSVZ\YL�

The Risk and Compliance Committee is working its ^H`�[OYV\NO�PZZ\LZ�YLSH[P]L�[V�/,*4�MVY�7\YJOHZL��Florida’s Mortgage Lender and Broker Act and the FTC online advertising rules.

The HUD Issues Committee has been working on WVSPJ`�Z\NNLZ[PVUZ�YLSH[P]L�[V�/,*4�MVY�7\YJOHZL�HUK�on originator issues with HERMIT.

The HMBS Issuer Committee is gathering data YLNHYKPUN�[OL�WV[LU[PHS�PTWHJ[�VM�.54(�4HUKH[VY`�Purchase events.

2012

2011

Does your title company leave you to fix their mistakes?

PRC GETS THE JOB DONE RIGHT.

=6;,+��VOTED THE

TITLE COMPANYBESTtoll-free: 800.542.4113www.PRClosings.com

NEW MEMBERS- Acrobat Financial Group, LLC

Scottsdale, Arizona

- Alpha Mortgage, LLC Mandeville, Louisiana

- Diamond Funding Corp Milford, Massachusetts

- Bank of England-Cleveland, Ohio branch Westlake, Ohio

- Residential Finance Corporation Columbus, Ohio

NEW CRMPS - Daniel Matthews, Direct

Finance Corporation Norwell,

Massachusetts

- Joe McParland, Direct Finance Corporation Norwell,

Massachusetts

- Bonnie Wallace, Citywide Home Loans, CHL Mortgage Provo, Utah

IN C

OM

MIT

TEE

S

| TRR14



Roundup

H E C M T R E N D S

Endorsemen' number" reac% their secon(-highes' leve) i* th! pas' year. HECM endorsements from March to April declined ��SHUFHQW��EXW�WKH��loan total was still the VHFRQG�KLJKHVW�OHYHO�LQ�WKH�SDVW�\HDU��:KLOH�UHJLRQDO�YROXPHV�ZHUH�PRVWO\�GRZQ��there were some interesting stats to note from April’s QXPEHUV�

��The top two regions, Southeast/Caribbean DQG�3DFLÀF�+DZDLL�both increased, each turning in their highest performance of the past 12 months.��Rocky Mountain and New England also increased, with the former also setting a 12-month high and the latter just missing.��Midwest declined the most, dropping 17.1 percent from March, but the region is up the most year-to-date at 20.9 percent.

�5HYHUVH�0DUNHW�,QVLJKW

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

M+' of Americ, i" optimisti- abou' th! .tur! of hom! price".

51%RI�$PHULFDQV�VXUYH\HG�E\�*DOOXS�DQWLFLSDWH�WKH�DYHUDJH�home price in their local areas WR�LQFUHDVH�RYHU�WKH�QH[W�\HDU��7KLV�LV�WKH�ÀUVW�WLPH�LQ�VL[�\HDUV�WKDW�WKLV�QXPEHU�KDV�ULVHQ�DERYH��SHUFHQW�

Here is a look at the latest N E W S A N D S TAT S

AFFECTING THE MARKET.

M A R K E T U P D A T E

A quarterl/ repor' b/ New View Advisor" reveal" th! top player" i* th! HMBS progra0.

No��(�RMS 63 pools with approximately $905 million

No��(�Urban Financial Group64 pools with approximately $682

No��(�Live Well Financial 19 pools with approximately ��PLOOLRQ

No��(�Generation Mortgage Company 29 pools with approximately $244 million

R E T I R E M E N T S T A T S

A 1delit/ Investment" stud/ show" tha' bab/ boomer" ar! woe.ll/ unprepare( for retiremen', revealin# tha':

1HDUO\��LQ��UHWLUHH�KRXVHKROGV�GR�QRW�KDYH�HQRXJK�LQFRPH�WR�FRYHU�PRQWKO\�H[SHQVHV�

More than 50 percent of Americans have saved less than ��QRW�FRXQWLQJ�WKH�YDOXH�RI�WKHLU�KRPHV�RU�SHQVLRQ�SODQV��

28 percent have set aside less WKDQ��IRU�UHWLUHPHQW�

-U.S. News & World Report

T H I SM O N T H { *(7�83�72�'$7( retirement facts, home price stats,

senior trends and HECM market developments in The Reverse Review’s monthly Roundup.

O R I G I N A T O R O P I N I O N S

Hammerhous!’" Originator Opinio* Surve/ reveal" tha' regulator/ uncertaint/ i" , chief concer*.1DWLRQDO�UHFUXLWLQJ�ÀUP�+DPPHUKRXVH�VXUYH\HG��ORDQ�RULJLQDWRUV�IRU�LWV�DQQXDO�2ULJLQDWRU�2SLQLRQ�VXUYH\��ZKLFK�GHWHUPLQHG�WKDW�D�VHFRQG�SKDVH�RI�UHJXODWLRQ�ZDV�WKH�FKLHI�FRQFHUQ�IRU�WKRVH�LQ�WKH�PRUWJDJH�SURIHVVLRQ��2WKHU�FRQFHUQV�LQFOXGHG�ULVLQJ�LQWHUHVW�UDWHV�DQG�WKH�DELOLW\�RI�ELJ�EDQNV�WR�DWWDFN�WKH�SXUFKDVH�PDUNHW�ZLWK�WKLQ�PDUJLQV��'HVSLWH�VXFK�FRQFHUQV��SHUFHQW�RI�UHVSRQGHQWV�VDLG�WKH\�H[SHFW�DQ�LQFUHDVH�IURP��OHYHOV��ZKLOH��SHUFHQW�VDLG�WKH\�H[SHFW�YROXPH�WR�UHPDLQ�XQFKDQJHG�LQ�WKH�FRPLQJ�\HDU�

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

A new surve/ shed" ligh' o* th! top state" for retiremen'.

$�UHFHQW�VXUYH\�E\�%DQNUDWH�WRRN�D�GLIIHUHQW�DSSURDFK�WR�FDOFXODWLQJ�WKH�EHVW�FLWLHV�IRU�

UHWLUHPHQW��FRQVLGHULQJ�IDFWRUV�VXFK�DV�WKH�QXPEHU�RI�GRFWRUV�SHU��SRSXODWLRQ��VWDWH�DQG�ORFDO�WD[�EXUGHQV��FRVW�RI�OLYLQJ�DYHUDJHV��DQG�FULPH�DQG�KHDOWK�FDUH�VWDWLVWLFV��+HUH�DUH�WKH�WRS�ÀYH�VWDWHV�

considered most accommodating for retirees:

TennesseeLouisianaSouth DakotaKentuckyMississippi

TN

SD

ky

ms

la

| TRR16


THEHOTSEATthings you need to know or may have been wonderingJUNE 2013

the hot seat

From his favorite vacation and his first job to his thoughts about the future of the reverse mortgage

market, we get the personal and professional facts from Colin Cushman, president and CEO of

Generation Mortgage Company, in our monthly edition of The Hot Seat.


ColinP E R S O N A L

> You can’t always be an extrovert.

> Ten years from now I will be trying to parent two teenage boys.

> Something nobody knows about me is that I can speak, read and write Thai.

> My favorite vacation was backpacking around the world with my wife for 11

months.

> If I were a professional athlete I would be a�ÄYZ[�IHZLTHU�MVY�[OL�9LK�:V_�

> The craziest thing I’ve ever done was the world’s highest bungee jump from a

bridge in South Africa.

> My favorite website is economist.com.

> Every morning I get woken up by my 3-year-old son.

> I can’t go without�ÅPW�ÅVWZ�

> When I was a kid I practiced boxing for months with my dad to execute a plan to

beat up the town bully.

> 4`�ÄYZ[�QVI�^HZ working on an assembly line, adding coupon inserts into

newspapers.

> My favorite time of the day is breakfast with my boys.

> I’ve never failed to deliver on a promise.

> The best lesson I’ve ever learned was from my dad, who taught me to be

humble, hungry and curious at the same time.

P R O F E S S I O N A L

> The biggest challenge in the reverse mortgage industry is moving beyond

the public perception that a reverse mortgage is only for seniors in desperate

circumstances to one where the product is seen as a smart retirement planning tool.

> The future of reverse mortgages is�HIZVS\[LS`�[LYYPÄJ��(WWYV_PTH[LS`��WLYJLU[�

of seniors say they want to age in place, and about half are considering using their

home equity to help fund retirement. At this point, there are 24 million households

with residents age 62 or older, and half of those hold more than 50 percent of their

net worth in home equity. In short, the market is enormous, and the future is ours.

> The most fascinating thing about the reverse mortgage industry is the wide

range of options we have to help seniors age in place.

GENERATION MORTGAGE COMPANYPRESIDENT AND CEO

THE CRAZIEST THING I’VE EVER DONE WAS THE

WORLD’S HIGHEST BUNGEE JUMP

FROM A BRIDGE IN SOUTH AFRICA.

my favorite time of the day is

breakfast with my boys.

| TRR18


ORIGINATINGTHINK

$176,900 // According to the National Association of Realtors (NAR), this ÀJXUH�UHSUHVHQWV�WKH��QDWLRQDO�PHGLDQ�VDOHV�SULFH�IRU�H[LVWLQJ�VLQJOH�IDPLO\�KRPHV��6LQFH�WKH�PHGLDQ�LV�WKH�middle, this means that half the homes WKDW�VROG�LQ��ZHUH�KLJKHU�LQ�YDOXH�DQG�KDOI�WKH�KRPHV�ZHUH�ORZHU��,W�LV�a representative proxy for the middle JURXQG�RI�WKH�$PHULFDQ�KRXVLQJ�VFHQH�

$110,000 // 7KLV�ÀJXUH�UHSUHVHQWV�WKH�DSSUR[LPDWH�QHW�DPRXQW�DYDLODEOH�WR�D��\HDU�ROG�ERUURZHU�RQ�D�QDWLRQDO�PHGLDQ�YDOXH�KRPH��7KH�+(&0�6DYHU��WKH�PRUH�FRVW�HIIHFWLYH�FRQVXPHU�option, generates approximately ��$V�D�IXQFWLRQ�RI�WRGD\·V�low interest rates, this is the highest OHYHO�RI�SURFHHGV�SRVVLEOH�XQGHU�WKH�+(&0�SURJUDP��:KHQ�LQWHUHVW�UDWHV�QRUPDOL]H��SURFHHGV�ZLOO�GHFOLQH�FRQVLGHUDEO\��$�PRGHVW��SHUFHQW�ULVH�LQ�ORQJ�WHUP�LQWHUHVW�UDWHV�ZLOO�FXW�SURFHHGV�E\�QHDUO\�RQH�WKLUG�

%XW�WKH�QDWLRQDO�PHGLDQ�VDOHV�SULFH�GRHV�QRW�UHÁHFW�WKH�FRPSOHWH�SLFWXUH��Of the 153 metropolitan statistical areas that contained data in NAR’s fourth-quarter 2012 report, two-thirds reported median

KRPH�YDOXHV�VLJQLÀFDQWO\�EHORZ�the national level. The median value among these communities is approximately $139,000. This means that proceeds from Standard and 6DYHU�+(&0V�ZRXOG�EH��DQG��UHVSHFWLYHO\��7KHVH�DUH�ODUJH�FRPPXQLWLHV�OLNH�&KLFDJR��+RXVWRQ��Atlanta, Minneapolis, Phoenix, Dallas DQG�1HZ�2UOHDQV��7KH\�DUH�DOVR�PLGVL]HG�FRPPXQLWLHV�OLNH�&OHYHODQG��&KDUORWWH��,QGLDQDSROLV��6W��/RXLV��.DQVDV�&LW\�DQG�%XIIDOR��7KHQ�RI�FRXUVH��WKHUH�DUH�VPDOOHU�FRPPXQLWLHV�like Lincoln, Charleston, Cedar Rapids, $ELOHQH�DQG�)ORUHQFH��,Q�VKRUW��WKHVH�FRPPXQLWLHV�DUH�D�FURVV�VHFWLRQ�RI�$PHULFD��

14 Years //�7KLV�ÀJXUH�UHSUHVHQWV�WKH�approximate life expectancy of the W\SLFDO��\HDU�ROG�+(&0�XVHU��7KLV��FRXSOHG�ZLWK�0LGGOH�$PHULFD·V�KRPH�YDOXHV��LV�D�VREHULQJ�VWDWLVWLF�ZKHQ�VHWWLQJ�WKH�H[SHFWDWLRQV�IRU�D�+(&0�

The HECM reverse mortgage program LV�DW�DQ�LQWHUVHFWLRQ�LQ�LWV�HYROXWLRQ��7KH�PRGHOV�WKDW�+8'�XVHV�IRU�IRUHFDVWLQJ�DQG�EXGJHWLQJ�SURMHFW�WKH�+(&0�ERRN�RI�EXVLQHVV�WR�EH�ORVLQJ�PRQH\��DQG�WKDW�UHVXOW�LV�VLPSO\�QRW�

DFFHSWDEOH�LQ�WKH�FXUUHQW�:DVKLQJWRQ�FOLPDWH�

The reasons for the projected losses stem mainly from the housing bubble and fall into three general categories:

��Geographic concentrations of risk and the impact of home price appreciation assumptions

� High principal use by consumers (coupled with other risks)

��Higher-than-expected tax, insurance and property charge delinquencies

The FHA has responded to this FKDOOHQJH�ZLWK�D�WZR�SURQJHG�VWUDWHJ\��The preferred method is to write new UXOHV�WKDW�ZLOO�TXDOLI\�KRPHRZQHUV�RQ�WKHLU�DELOLW\�WR�SD\�IXWXUH�SURSHUW\�FKDUJHV��HVWDEOLVK�VHW�DVLGHV�RU�HVFURZV�for property charge payments, and limit the ability of the homeowner to PDNH�GLVFUHWLRQDU\�GUDZV��+RZHYHU��WR�PDNH�WKHVH�FKDQJHV��+8'�ÀUVW�KDV�WR�REWDLQ�WKH�DXWKRULW\�WKURXJK�OHJLVODWLYH�DFWLRQ��,Q�WKH�DEVHQFH�RI�DXWKRUL]LQJ�OHJLVODWLRQ��WKH�)+$�KDV�VDLG�LW�ZLOO�UHGXFH�SULQFLSDO�OLPLW�IDFWRUV��

7KH�8SFRPLQJ�+(&0�5XOHV�0XVW�5HÀHFW�WKH�5HDOLWLHV�RI�0LGGOH�$PHULFDMARK BROWNING

Alicia MunnellDirector of the Center for Retirement Research at Boston College

“Reverse mortgages, which allow homeowners to tap their home equity, are instruments that many Americans are going [V�ULLK�PU�VYKLY�[V�OH]L�HU`�JOHUJL�VM�H�decent retirement.” Market Watch - August 7, 2012


ORIGINATING

As all of this is going on, it is essential WR�NHHS�D�IRFXV�RQ�WKH�FRUH�REMHFWLYHV�RI�WKH�SURJUDP��,W�LV�ZHOO�NQRZQ�WKDW�PXFK�RI�WKH�$PHULFDQ�PLGGOH�FODVV�LV�ZRHIXOO\�XQGHUIXQGHG�IRU�UHWLUHPHQW��$FFHVV�WR�KRXVLQJ�ZHDOWK��RQH�RI�WKH�largest assets of many in the middle class, is an essential element of the VROXWLRQ��,Q�D�'HFHPEHU��UHSRUW��WKH�6RFLHW\�RI�$FWXDULHV�UHSRUWHG�WKDW�DQ�DVWRXQGLQJ��SHUFHQW�RI�WKH�QHW�ZRUWK�RI�0LGGOH�0DVV�+RXVHKROGV��WK�²��WK�GHFLOHV��FDPH�IURP�QRQ�ÀQDQFLDO�DVVHWV³PDLQO\�KRXVLQJ�

+RZHYHU��DV�WKH�KRPH�YDOXH�ÀJXUHV�plainly reveal, a HECM on a home WKDW�UHSUHVHQWV�D�W\SLFDO�YDOXH�LQ�America can not always be expected WR�SURYLGH�WKH�HQWLUH�ÀQDQFLDO�VROXWLRQ�IRU�D�OLIHWLPH��7KH�LGHD�WKDW�D�+(&0�FDQ�EH�D�OLIHORQJ�VROXWLRQ�IRU�HYHU\�KRPHRZQHU�LV�D�UHFHQW��EXW�XQUHDOLVWLF��DVSLUDWLRQ��7KH�UHDOL]DWLRQ�WKDW�LW�PD\�QRW�EH�D�IDLOVDIH�OLIHWLPH�VROXWLRQ�VKRXOG�QRW�H[FOXGH�PLGGOH�FODVV�homeowners and families from Middle America from accessing a tool that SURYLGHV�VLJQLÀFDQW�EXW�LPSHUIHFW�TXDOLW\�RI�OLIH�LPSURYHPHQWV��$�HECM can greatly prolong a senior’s capacity to comfortably stay at home DQG�SURYLGH�PHDQLQJIXO�EHQHÀW��Aging in place is the overwhelming SUHIHUHQFH�RI�VHQLRU�KRPHRZQHUV��,I�the HECM is to help solve the crisis facing the middle class, its design and H[SHFWDWLRQV�PXVW�UHÁHFW�WKH�ÀQDQFLDO�UHDOLWLHV�RI�0LGGOH�$PHULFD��

Geographic Distribution of the HECM

$252,000 // According to the FHA’s ´6QDSVKRWµ�UHSRUW��WKLV�ÀJXUH�LV�WKH�DYHUDJH�YDOXH�RI�D�KRPH�VHFXULQJ�D�+(&0�RULJLQDWHG�LQ�IHGHUDO�ÀVFDO�\HDU��7KLV�LV�D�GLIIHUHQW�ÀJXUH�WKDQ�WKH�QDWLRQDO�KRXVLQJ�PDUNHW��The difference can be partly explained E\�WKH�KLVWRU\�RI�WKH�+(&0��:KLOH�LQGXVWU\�ORUH�KDV�LW�WKDW�WKH�ÀUVW�+(&0�ZDV�RULJLQDWHG�E\�-DPHV�%��1XWWHU��Company in the heartland, the HECM PDUNHW�ODUJHO\�HYROYHG�LQ�WKH�PDMRU�PHWURSROLWDQ�DUHDV�DORQJ�WKH�FRDVWV��As recently as 2006, nearly 50 percent

of all HECMs were originated in California, Florida and parts of New <RUN�

7KH�IXQGDPHQWDO�FKDOOHQJH�WR�+(&0�SURÀWDELOLW\�VWHPV�IURP�WKH�KRXVLQJ�SULFH�EXEEOH��)URP��WKURXJK��RQH�WKLUG�RI�DOO�+(&0V�RULJLQDWHG�QDWLRQDOO\�ZHUH�FRQFHQWUDWHG�LQ�MXVW�WZR�VWDWHV��&DOLIRUQLD�DQG�)ORULGD��Magnifying the impact, the years 2006 to 2009 were among the largest SURGXFWLRQ�\HDUV�IRU�WKH�+(&0��UHVXOWLQJ�LQ�ODUJH�ERRNV�RI�EXVLQHVV�FRPSDUHG�WR�WKH�HQWLUH�SRSXODWLRQ�RI�+(&0V��8QIRUWXQDWHO\��WKHVH�WZR�states were also among the worst KLW�E\�WKH�KRXVLQJ�FULVLV��)URP��WR��KRPH�YDOXHV�LQ�&DOLIRUQLD�DQG�)ORULGD�LQFUHDVHG�E\��DQG��SHUFHQW�UHVSHFWLYHO\��)URP��WR�2010, both states lost their entire JDLQV��0HDQZKLOH��+(&0V�were originated in these two states at XQVWDEOH�YDOXHV��

In 2012, HECM originations in these WZR�VWDWHV�UHWXUQHG�WR�OHYHOV�WKDW�ZHUH�UHSUHVHQWDWLYH�RI�WKH�QXPEHU�RI��SOXV�VHQLRUV�LQ�HDFK�VWDWH��ZLWK��percent for California and 8 percent IRU�)ORULGD��,Q�IDFW��IRU�WKH�ÀUVW�WLPH�in the history of the HECM program, +(&0�RULJLQDWLRQ�YROXPHV�E\�VWDWH�DUH�SURSRUWLRQDO�WR�WKH�SRSXODWLRQV�RI�QHDUO\�HYHU\�VWDWH��7KLV�UHSUHVHQWV�D�PDMRU�PLOHVWRQH�WKDW�PDUNV�WKH�

QRUPDOL]DWLRQ�RI�JHRJUDSKLF�ULVN�IRU�WKH�SURJUDP��8SFRPLQJ�SURJUDP�FKDQJHV�PXVW�QRW�XQGR�WKLV�SURJUHVV�

Utilization

$�VHFRQG��UHODWHG�´SUREOHPµ�ZLWK�WKH�+(&0�LV�WKDW�FRQVXPHUV�DUH�XVLQJ�LW��7KH�DPRXQW�RI�IXQGV�GUDZQ�LQ�WKH�initial year has been increasing for \HDUV³ZHOO�EHIRUH�WKH�DGYHQW�RI�WKH�FORVHG�HQG��À[HG�UDWH�SURGXFW��,Q�LWV�-XQH��UHSRUW��WKH�&)3%�VWDWHG�WKDW�WKH�PHGLDQ�+(&0�XVHU�EHWZHHQ��DQG��GUHZ�EHWZHHQ��DQG��SHUFHQW�RI�WKHLU�DYDLODEOH�OLQH�GXULQJ�WKH�ÀUVW�\HDU��

7KH�IXOO�GUDZ��À[HG�UDWH�SURGXFW�ZDV�LQWURGXFHG�LQ��DQG�UHSUHVHQWHG�VOLJKWO\�OHVV�WKDQ��SHUFHQW�RI�HECM originations when the Standard version of the�SURGXFW�ZDV�GLVFRQWLQXHG�LQ�$SULO��&RXSOHG�ZLWK�EDG�KRXVLQJ�PDUNHWV��KLJK�XWLOL]DWLRQ�UDWHV�DPRXQW�WR�D�WRXJK�SUREOHP�

Tax and Insurance Delinquencies

$�WKLUG��PRUH�PDQDJHDEOH�VLWXDWLRQ�has emerged with rising homeowner WD[�DQG�LQVXUDQFH�GHOLQTXHQFLHV��7D[��LQVXUDQFH�DQG�SURSHUW\�FKDUJH�GHOLQTXHQFLHV�DUH�QRZ�RFFXUULQJ�RQ�DSSUR[LPDWHO\��SHUFHQW�RI�DFWLYH�ORDQV��7KH�GHOLQTXHQF\�UDWHV�DUH�EDODQFHG�EHWZHHQ�LQVXUDQFH��WD[HV��

oR

igin

at

ing

Ma

Rk

et

ing

ap

pR

ais

ing

se

Rv

icin

gt

ec

hh

MB

s

*

sp

ot

lig

ht

| TRR20


ORIGINATING

DQG�ERWK��+8'�GDWD�DOVR�VKRZV�that the period from origination to tax RU�LQVXUDQFH�GHIDXOW�EHFDPH�VKRUWHU�HDFK�\HDU�WKURXJK��EXW�WKH�ODVW�WZR�\HDUV�KDYH�VKRZQ�LPSURYHPHQW��6RPH�RI�WKH�ULVH�LQ�GHOLQTXHQF\�LV�OLNHO\�DWWULEXWDEOH�WR�WKH�H[WUHPHO\�GLIÀFXOW�HFRQRPLF�HQYLURQPHQW�RI�WKH�SDVW�VHYHUDO�\HDUV��$QRWKHU�SRUWLRQ�LV�DWWULEXWDEOH�WR�WKH�VRDULQJ�FRVWV�DQG�limited availability of homeowner’s LQVXUDQFH�LQ�WKH�*XOI�VWDWHV�IROORZLQJ�WKH�GHYDVWDWLQJ�KXUULFDQH�VHDVRQV�RI��DQG��&KDQJLQJ�ÀQDQFLDO�FLUFXPVWDQFHV�DQG�RWKHU�FRPSOLFDWLRQV�RI�DQ�DJLQJ�FRQVWLWXHQF\�VXUHO\�DFFRXQW�IRU�PRUH��$FFRUGLQJ�WR�8�6��&HQVXV�GDWD��DSSUR[LPDWHO\�RQH�third of married females entering into a HECM loan will be widowed within 10 years (16 percent for males) WULJJHULQJ�PDMRU�LQFRPH�DQG�OLIH�FKDQJHV��%XW��XQGRXEWHGO\��WKHUH�is a portion of borrowers whose SURSHQVLW\�QRW�WR�SD\��RU�D�QHDU�WHUP�LQDELOLW\�WR�SD\��FRXOG�KDYH�EHHQ�detected at origination with a more WKRURXJK�ÀQDQFLDO�DVVHVVPHQW�RI�WKH�KRPHRZQHUV��

7KH�)+$�KDV�FRQFOXGHG�WKDW�WKH�OLNHOLKRRG�RI�SURSHUW\�FKDUJH�GHIDXOW�LQFUHDVHV�IRU�WKH�ÀUVW�IRXU�\HDUV�DQG�WKHQ�GHFOLQHV�JUDGXDOO\�WKHUHDIWHU��This strongly indicates that the critical IDFWRU�LV�WKH�HYDOXDWLRQ�RI�SURSHQVLW\��FUHGLW�DQG�WD[�LQVXUDQFH�KLVWRU\��DQG�QHDU�WHUP�FDSDFLW\��YHUVXV�OLIHWLPH�VXVWDLQDELOLW\��3URWHFWLRQV�DJDLQVW�adverse selection at origination DUH�HVVHQWLDO��EXW�H[FOXGLQJ�ODUJH�SRSXODWLRQV�RI�XVHUV�ZKR�KDYH�QR�intention of staying in the home for a OLIHWLPH�LV�H[FHVVLYH�DQG�SXQLWLYH��

Merging of Issues

$V�WKH�PHGLD�DQG�WKH�LQGXVWU\�KDYH�SLFNHG�XS�RQ�WKHVH�IDFWV��WZR�separate and distinct challenges have EHHQ�EXQGOHG�LQWR�RQH��*HRJUDSKLF�concentrations of HECM originations in bad markets are combined with SURSHUW\�FKDUJH�GHIDXOWV��+RZHYHU��WKDW�LV�VLPSO\�QRW�DQ�DFFXUDWH�UHÁHFWLRQ�RI�WKH�IDFWV��WKH�WZR�DUH�LQGHSHQGHQW�

VLWXDWLRQV��)RU�H[DPSOH��&DOLIRUQLD�VLJQLÀFDQWO\�RXWSHUIRUPV�WKH�QDWLRQ�RQ�WKH�WD[�DQG�LQVXUDQFH�PDWWHU��EXW�KDV�D�EDG�KDQJRYHU�RQ�FROODWHUDO�YDOXH��%\�EXQGOLQJ�WKH�LVVXHV��ZH�DUH�PLVOHG�WR�EHOLHYH�WKDW�WKH�PDMRU�SUREOHP�IDFLQJ�+(&0�ÀQDQFHV�DUH�WKH�DGPLQLVWUDWLYH�PDWWHUV�RI�ÀQDQFLDO�DVVHVVPHQW��property charge escrows and high FRQVXPHU�XWLOL]DWLRQ��

:KLOH�WD[HV�DQG�LQVXUDQFH�DUH�LPSRUWDQW�DQG�UHTXLUH�SURPSW�attention, geography and home SULFH�GHFOLQHV�DUH�WKH�PDMRU�KHDGZLQG�FRQIURQWLQJ�WKH�+(&0��Concentrations of risk are managed at the macro policy level, not the loan OHYHO��:H�VKRXOG�EH�FDUHIXO�QRW�WR�RYHUVWDWH�WKH�VLJQLÀFDQFH�RI�ÀQDQFLDO�DVVHVVPHQW��,W�FDQ�OHDG�WR�WKH�ZURQJ�FRQFOXVLRQV�DQG�RYHUUHDFWLRQV�

The Law of Unintended Consequences

Social scientists and economists have ORQJ�UHFRJQL]HG��DQG�RIWHQ�LJQRUHG��WKH�ODZ�RI�XQLQWHQGHG�FRQVHTXHQFHV��This is the recognition that the actions of people and especially governments DOZD\V�KDYH�FRQVHTXHQFHV�WKDW�ZHUH�QRW�DQWLFLSDWHG��,W�LV�D�SRZHUIXO�rationale for taking restrained and LQFUHPHQWDO�DFWLRQV��WKHQ�HYDOXDWLQJ�WKH�UHVXOWV�EHIRUH�GRLQJ�PRUH��7KH�)+$�LV�GLVFXVVLQJ�PDNLQJ�VLPXOWDQHRXV��KLJK�LPSDFW�FKDQJHV�WR�the HECM program involving three LQWHUGHSHQGHQW�IDFWRUV��FRQVXPHU�TXDOLÀFDWLRQ�FULWHULD��FRQVXPHU�LPSRXQGV�DQG�VHW�DVLGHV��DQG�FRQVXPHU�XVDJH�UHVWULFWLRQV��&OHDUO\��doing all of this at the same time will UHVXOW�LQ�XQDQWLFLSDWHG�FRQVHTXHQFHV��SDUWLFXODUO\�LI�WKH�FKDQJHV�DUH�PDMRU��

Here are some of the risks:

� Raise barriers and impediments that cause the HECM to be less appealing as a planning tool (i.e., a component of a comprehensive YL[PYLTLU[�ÄUHUJPHS�WSHU�

� Reinforce the marginalization of the HECM as a “loan of last resort,” which carries adverse implications for user diversity

� Incent high levels of existing indebtedness entering into a HECM

� Advantage high-cost coastal markets with a higher amount of proceeds and a lower tax-to-house price ratio

� Disadvantage broad geographies with modest median home values with a lower amount of proceeds and a higher tax-to-house price ratio

� Skew toward the more expensive Standard product versus the consumer-friendly Saver product

� Skew against consumers with short (lower risk) holding time expectations

It is easy to make the HECM failsafe E\�H[FOXGLQJ�WRR�PDQ\�TXDOLÀHG�SURVSHFWV��SDUWLFXODUO\�LQ�WKH�PRGHUDWH�KRXVLQJ�SULFH�UDQJH��7KH�PRUH�GLIÀFXOW�HTXDWLRQ�LV�WR�PDNH�WKH�SURJUDP�HTXLWDEOH�DQG�LQFOXVLYH�ZKLOH�EDODQFLQJ�DJDLQVW�H[FHVVLYH�ULVN��$PHULFD�KDV�D�VLJQLÀFDQW�FKDOOHQJH�with respect to providing boomers ZLWK�D�ZD\�WR�ÀQDQFH�UHWLUHPHQW��Reverse mortgages represent a real FKDQFH�WR�LPSDFW�WKH�SUREOHP��7KH�FRQVHTXHQFHV�RI�PLVMXGJLQJ�WKH�LPSDFWV�RI�FRQFXUUHQW�SURJUDP�DGMXVWPHQWV�RQ�FRQVXPHUV�ZLWK�IHZ�RWKHU�RSWLRQV�DUH�LPSRVVLEOH�WR�UHYHUVH��$Q�RUGHUO\�VHTXHQFH�RI�VLQJOH�FKDQJH��PHDVXUH��DGMXVW��FRQWLQXH�ZRXOG�VHHP�PRVW�SUXGHQW��$�FRQVXPHU�IRFXV�DQG�D�PLQGVHW�RI�UHWLUHPHQW�ÀQDQFH�YHUVXV�transactional mortgage banking will DOVR�SURGXFH�UHVXOWV�WKDW�DOLJQ�ZLWK�WKH�critical importance of getting it right IRU�PLGGOH�FODVV�KRXVHKROGV��$IWHU�DOO��it is the middle American people that DUH�WKH�IRFXV«�ULJKW"�x


ORIGINATING

ore and more people DUH�GLVFXVVLQJ�WKH�XQSUHFHGHQWHG�QXPEHU�

of baby boomers expected to enter UHWLUHPHQW�LQ�WKH�FRPLQJ�\HDUV��7KLV�VR�FDOOHG�´6LOYHU�7VXQDPLµ�LV�IUHTXHQWO\�PHQWLRQHG�RQ�WHOHYLVLRQ��in the newspapers and on the DLUZDYHV��$V�D�UHYHUVH�PRUWJDJH�SURIHVVLRQDO��ZKDW�DUH�\RX�JRLQJ�WR�GR�WR�FDSLWDOL]H�RQ�WKHVH�IDYRUDEOH�GHPRJUDSKLFV"�

/HW·V�DQDO\]H�WKLV�VLWXDWLRQ�IURP�D�VWDWLVWLFDO�SURVSHFWLYH��(DFK�GD\��LQGLYLGXDOV�DUH�UHDFKLQJ��\HDUV�RI�DJH��DGGLQJ�WR�WKH�SRSXODWLRQ�RI��

million American seniors, and this WUHQG�LV�H[SHFWHG�WR�FRQWLQXH�IRU�WKH�QH[W��\HDUV�DQRWKHU�DV�WKH�ERRPHU�JHQHUDWLRQ�DJHV��

People are living longer than they did 100 years ago, when the average OLIH�H[SHFWDQF\�ZDV�MXVW��%XW�OLYLQJ�longer doesn’t necessarily mean OLYLQJ�EHWWHU��0RUH�WKDQ��SHUFHQW�RI�WKLV�SRSXODWLRQ�LV�LQÁHFWHG�ZLWK�D�SK\VLFDO�LPSDLUPHQW�WKDW�UHTXLUHV�some form of remodeling to make their OLYLQJ�H[SHULHQFH�PRUH�SDODWDEOH��)RU�many American seniors who wish to UHPDLQ�LQ�WKHLU�KRPHV��WKLV�UHTXLUHV�FRQVWUXFWLRQ�WR�WKHLU�KRPHV�LQ�RUGHU�WR�

accommodate limited mobility as they DJH�LQ�SODFH��7R�DGGUHVV�WKHVH�QHHGV��WKH�SXEOLF�VHFWRU�KDV�FUHDWHG�WDVN�IRUFHV�XQGHU�IHGHUDO��VWDWH�DQG�ORFDO�PXQLFLSDOLW\�FRPPLVVLRQV�WR�VWXG\�and implement new programs and initiatives that provide services for the DJLQJ�SRSXODWLRQ��$W�WKH�VDPH�WLPH��the private sector has implemented initiatives to assist this demographic, giving rise to a new designation in WKH�FRQVWUXFWLRQ�LQGXVWU\��D�&HUWLÀHG�$JLQJ�LQ�3ODFH�6SHFLDOLVW��&$36��

As reverse mortgage professionals, LW�ZRXOG�EH�H[WUHPHO\�EHQHÀFLDO�to connect with members of the FRQVWUXFWLRQ�EXVLQHVV�ZKR�VSHFLDOL]H�in assisting seniors with the UHPRGHOLQJ�RI�WKHLU�KRPHV��:KHQ�LW�comes down to it, HECM originators and contractors with the CAPS designation both aim to help seniors DJH�LQ�SODFH�

1RZ�WKDW�ZH�KDYH�LGHQWLÀHG�WKLV�QHZ�&$36�JURXS��ZH�QHHG�WR�ÀQG�D�ZD\�WR�DSSURDFK�WKHP�WR�GLVFXVV�D�SRWHQWLDO�FROODERUDWLRQ��)LUVW��,�UHFRPPHQG�ÀQGLQJ�WKH�FRQVWUXFWLRQ�LQGXVWU\�DVVRFLDWLRQ�LQ�\RXU�FRPPXQLW\�DQG�LQWURGXFLQJ�\RXUVHOI�DV�D�SHUVRQ�ZKR�KHOSV�VHQLRUV�DFFHVV�WKH�ÀQDQFLDO�WRROV�WKH\�QHHG�WR�VXSSRUW�WKHLU�GHVLUH�WR�DJH�LQ�SODFH��7KLV�PD\�UHTXLUH�\RX�WR�EXLOG�D�UDSSRUW�DQG�SHUKDSV�EHFRPH�D�PHPEHU�RI�WKH�RUJDQL]DWLRQ��2QFH�\RX�KDYH�LQJUDWLDWHG�\RXUVHOI��DVN�WR�KRVW�D�PHPEHU�SUHVHQWDWLRQ�DERXW�KRZ�VHQLRUV�FDQ�XWLOL]H�UHYHUVH�PRUWJDJHV�to pay for home renovations and UHSDLUV��3UHSDUH�D�QHZVOHWWHU�DUWLFOH�DQQRXQFLQJ�WKH�HYHQW�DQG�IROORZ�XS�ZLWK�DQRWKHU�DUWLFOH�DIWHU�WKH�SUHVHQWDWLRQ�WR�PDLQWDLQ�\RXU�YLVLELOLW\��$V�EXVLQHVV�SHRSOH�ZLWK�D�common goal to assist seniors looking WR�UHPDLQ�LQ�WKHLU�KRPHV��\RX�PD\�ÀQG�WKDW�WKHVH�GHVLJQDWHG�FRQWUDFWRUV�are open to establishing a referral QHWZRUN�WKDW�FDQ�EHQHÀW�\RX�ERWK��x

M

:RUNLQJ�7RJHWKHU�WR�+HOS�6HQLRUV�$JH�LQ�3ODFHED FRANKEL

³$V�UHYHUVH�PRUWJDJH�SURIHVVLRQDOV��LW�ZRXOG�EH�H[WUHPHO\�EHQH¿FLDO�WR�FRQQHFW�ZLWK�PHPEHUV�RI�WKH�FRQVWUXFWLRQ�EXVLQHVV�ZKR�VSHFLDOL]H�LQ�DVVLVWLQJ�VHQLRUV�ZLWK�WKH�UHPRGHOLQJ�RI�WKHLU�KRPHV��:KHQ�LW�FRPHV�GRZQ�WR�LW��+(&0�RULJLQDWRUV�DQG�FRQWUDFWRUV�ZLWK�WKH�&$36�GHVLJQDWLRQ�ERWK�DLP�WR�KHOS�VHQLRUV�DJH�LQ�SODFH�

oR

igin

at

ing

Ma

Rk

et

ing

ap

pR

ais

ing

se

Rv

icin

gt

ec

hh

MB

s

*

sp

ot

lig

ht

| TRR22


ORIGINATING

KH�UHYHUVH�PRUWJDJH�LQGXVWU\�LV�DW�D�FURVVURDGV��/LNH�DQ\�LQGXVWU\��ZH�ZLOO�JR�WKURXJK�

cycles, and right now we’re coming to WKH�HQG�RI�RXU�ÀUVW�F\FOH��$V�WKLV�F\FOH�FRPHV�WR�D�FORVH��ZH�ÀQG�RXUVHOYHV�working with a new generation of FXVWRPHUV�DQG�GHDOLQJ�ZLWK�VRPH�VLJQLÀFDQW�LVVXHV�WKDW�WKUHDWHQ�RXU�LQGXVWU\�

For some time I have been enamored with the idea of generational cycles, DQG�,�ÀQG�WKLV�FRQFHSW�WR�EH�YHU\�SHUWLQHQW�WR�RXU�EXVLQHVV��0\�PRVW�recent and detailed foray into the WKHRU\�RI�JHQHUDWLRQV�ZDV�WKURXJK�The Fourth Turning��D�ERRN�ZULWWHQ�LQ��E\�:LOOLDP�6WUDXVV�DQG�1HLO�+RZH��accepted worldwide as the premier JHQHUDWLRQDOLVWV��

The basic premise of The Fourth Turning is that generations, which each last DSSUR[LPDWHO\�RQH�TXDUWHU�RI�WKH�OHQJWK�RI�D�ORQJ�OLYLQJ�SHUVRQ·V�OLIH��UHSHDW�WKHPVHOYHV�LQ�F\FOHV��$FFRUGLQJ�WR�WKH�ERRN��HDFK�F\FOH�KDV�IRXU�VHDVRQV��RU�WXUQLQJV��ZLWK�WKH�VDPH�IRXU�generational archetypes appearing in WKH�VDPH�H[DFW�RUGHU�WKURXJKRXW�KLVWRU\��(DFK�JURXS�DFWV�VRPHZKDW�VLPLODU��QRW�EHFDXVH�RI�VRPH�IDQFLIXO�FRQFHSW��EXW�UDWKHU�EHFDXVH�RI�WKHLU�SODFH�LQ�WKH�F\FOH�RI�XS�DQG�GRZQ��RI�DZDNHQLQJV�DQG�FULVHV��(DFK�JHQHUDWLRQ�DFWV�D�certain way and tackles the world with a different view that correlates to its SODFH�LQ�WKH�F\FOH��7KH�PDMRU�F\FOH�LV�WKH�RQH�PDUNHG�E\�FULVLV��WKLV�LV�WKH�IRXUWK�WXUQLQJ�

Like any cycle, there are marked SKDVHV�WKDW�RQH�FDQ�WUDFN��7KH�UHYHUVH�PRUWJDJH�LQGXVWU\�LV�QR�GLIIHUHQW��After two initial phases of growth DQG�SURVSHULW\��RXU�LQGXVWU\�HQWHUHG�D�PLGOLIH�XQUDYHOLQJ�ZKHUH�LWV�IRXQGLQJ�LGHDOV�ZHUH�JUDGXDOO\�SXVKHG�DVLGH�DV�SURVSHULW\�KHLJKWHQHG��7KH�HQG�RI�WKLV�SKDVH�PDUNV�WKH�LQGXVWU\·V�HQWUDQFH�LQWR�DGXOWKRRG��DQG�QRZ�ZH�ÀQG�RXUVHOYHV�

DW�D�FURVVURDGV³RU�D�FULVLV��DV�VRPH�ZRXOG�FDOO�LW��:KHWKHU�ZH�DUH�EHDWHQ�E\�WKH�SUHVVXUHV�DJDLQVW�XV�RU�ZKHWKHU�ZH�ascend to new heights and begin a new F\FOH��WZR�WKLQJV�DUH�FHUWDLQ��)LUVW��WKHUH�will be dramatic change, and second, we ZLOO�QHHG�VWURQJ�OHDGHUVKLS�WR�HQVXUH�WKDW�ZH�FRPH�RXW�RI�WKLV�VWURQJHU�WKDQ�HYHU��+LVWRULFDOO\��DIWHU�D�WXPXOWXRXV�FULVLV�D�OHDGHU�ZLOO�HPHUJH�WR�JXLGH�WKH�SRSXODWLRQ�WRZDUG�D�EHWWHU�HQG��7KLV�OHDGHU�LV�UHIHUUHG�WR�DV�WKH�´*UD\�Champion,” the elder statesman who VKHSKHUGV�\RXQJHU�JHQHUDWLRQV�DQG�FRQTXHUV�WKH�FKDOOHQJHV�LPSRVHG�E\�WKH�FULVLV�

)RU�DOO�LQWHQWV�DQG�SXUSRVHV��RXU�EXVLQHVV�ZDV�ERUQ�LQ��ZKHQ�President Ronald Reagan, perhaps the *UD\�&KDPSLRQ�RI�RXU�WLPH��VLJQHG�WKH�DFW�WKDW�PDGH�WKH�)+$�LQVXUHG�UHYHUVH�PRUWJDJH�D�SLORW�SURJUDP��)RU�WKH�QH[W�VHYHUDO�\HDUV��RXU�EXVLQHVV�JUHZ�OLNH�QHZ�JUHHQ�VKRRWV�LQ�VSULQJWLPH��7KH�LQGXVWU\�UHPDLQHG�YHU\�VPDOO��XQNQRZQ�WR�PRVW�RXWVLGHUV�ZKLOH�ZH�JUHZ�LQWR�\RXQJ�DGXOWKRRG�

<RXQJ�DGXOWKRRG�WKHQ�EHJDQ�ZLWK�the creation of the National Reverse 0RUWJDJH�/HQGHUV�$VVRFLDWLRQ�LQ��7KLV�ZDV�RXU�DZDNHQLQJ��D�WLPH�ZKHQ�ZH�OHDUQHG�DQG�FRQWLQXHG�WR�JURZ��7KLV�ZDV�RXU�VXPPHU��D�WLPH�ZKHQ�SHRSOH�FRPH�WRJHWKHU��IRUP�EXVLQHVVHV�DQG�

PDNH�OLIHORQJ�IULHQGVKLSV��7LPHV�ZHUH�JRRG�

,Q��ZH�VDZ�ELJJHU�LQVWLWXWLRQV�MRLQ�the fray and we witnessed a shift from the old, simple secondary market of )DQQLH�0DH·V�ZKROH�ORDQ�SXUFKDVHV�WXUQ�to a new world of big lenders, bigger banks and even bigger investment EDQNV��:H�GLG�PRUH�ORDQV�WKDQ�HYHU�before and made money like never EHIRUH��7KLV�ZDV�RXU�DXWXPQ��DQG�ZH�were bringing in the harvest developed RYHU�PDQ\�\HDUV�RI�OHDUQLQJ�DQG�WRLO��%XW�DV�UHVSOHQGHQW�DQG�OXFUDWLYH�DV�DOO�RI�WKLV�ZDV��WKH�ROG�LQVWLWXWLRQV�RI�RXU�EXVLQHVV��RQFH�WKRXJKW�VDFUHG��ZHUH�XQUDYHOLQJ��&KDQJH�ZDV�FRPLQJ��EXW�IRU�PRVW�LW�ZDV�DFFHSWHG��LI�QRW�RXWULJKW�ZHOFRPHG��ZLWK�RSHQ�DUPV�

$�VLJQLÀFDQW�SDUW�RI�WKLV�XQUDYHOLQJ�ZDV�D�FKDQJH�LQ�RXU�FXVWRPHUV��7KH�ÀUVW�RI�WKH�EDE\�ERRPHUV��ZLGHO\�accepted as being born in 1943 or 1944, EHJDQ�WXUQLQJ��DQG�TXLFNO\�EHFDPH�RXU�QHZHVW�DQG�ODUJHVW�FXVWRPHU�EDVH��:KHWKHU�\RX�DFFHSW�WKH�6WUDXVV�+RZH�view of generations or not, there can EH�QR�GHQ\LQJ�WKDW�WKLV�QHZ�JURXS�RI�FXVWRPHUV�DFWV�IDU�GLIIHUHQW�WKDQ�RXU�SUHYLRXV�VHW�RI�FXVWRPHUV��:LWK�PRUH�ORDQ�SURGXFWLRQ��PRUH�PRQH\�DQG�D�KXJH�JURXS�RI�QHZ�FXVWRPHUV��RXU�LQGXVWU\�KDG�VHHPLQJO\�XQOLPLWHG�SURPLVH�

T

7KH�*UD\�&KDPSLRQJIM CORY


ORIGINATING

7KH�WRWDO�LPSDFW�RI�WKH�KRXVLQJ�FULVLV�hadn’t hit the reverse mortgage LQGXVWU\��EXW�LW�ZDV�VWDUWLQJ�WR�KDYH�D�GHOHWHULRXV�HIIHFW�RQ�WKH�QXPEHU�RI�ORDQV�ZHUH�ZH�GRLQJ��7KHQ�PLGZD\�WKURXJK��%DQN�RI�$PHULFD��ZKLFK�became one of the largest and most UHVSHFWHG�PHPEHUV�RI�RXU�LQGXVWU\�ZKHQ�LW�SXUFKDVHG�6HDWWOH�0RUWJDJH��VXGGHQO\�TXLW�WKH�EXVLQHVV��2XWVLGH�RI�RXU�QLFKH��WKH�ZRUOG�KDG�EHHQ�VWUXJJOLQJ�ZLWK�WKH�ELJJHVW�FULVLV�VLQFH�WKH�*UHDW�'HSUHVVLRQ��2XU�LQGXVWU\�EHJDQ�WR�XQUDYHO�DV�LW�VWUXJJOHG�ZLWK�LWV�RZQ�OLWWOH�FULVLV�DV�RQH�PDMRU�UHYHUVH�mortgage participant after another GURSSHG�RXW�RYHU�WKH�QH[W�WZR�\HDUV�

:KLOH�WKHVH�ODUJH�OHQGHUV�H[LWHG�RXU�EXVLQHVV��WKH�ZRUOGZLGH�KRXVLQJ�FULVLV�UHIXVHG�WR�UHERXQG�DQG�WKH�8�6��HFRQRP\�IDLOHG�WR�JDLQ�VWHDP��0RXQWLQJ�ORVVHV�EHJDQ�WR�LPSDFW�not only exiting banks and lenders, EXW�DOVR�+8'��DV�WKH�DJHQF\�EHJDQ�WR�VKRZ�VHYHUH�ORVVHV�IURP�WKH�SUH�KRXVLQJ�FULVLV�ERRNV�RI�EXVLQHVV��

&RXSOHG�ZLWK�WKLV�ZDV�DQ�H[DFHUEDWLRQ�RI�RXU�WRXJKHVW�LVVXH��LQFUHDVLQJ�WD[�DQG�LQVXUDQFH�GHIDXOWV��7KH�VDPH�FXVWRPHUV�ZH�VHW�RXW�WR�VDYH�ZHUH�QRZ�ÀQGLQJ�WKHPVHOYHV�RXW�RI�UHYHUVH�PRUWJDJH�IXQGV��RXW�RI�LQFRPH��RXW�RI�VDYLQJV�DQG�LQYHVWPHQWV��DQG�MXVW�SODLQ�RXW�RI�OXFN�

7KXV�LQ��ZH�ÀQG�RXUVHOYHV�LQ�RXU�IRXUWK�WXUQLQJ��ZLWK�ZLQWHU�GHVFHQGLQJ�LQWR�RXU�HOGHUKRRG��:KLOH�the world deals with its crisis, we ÀQG�RXUVHOYHV�EDWWOLQJ�WR�NHHS�WKH�PRVW�LPSRUWDQW�IHDWXUHV�DQG�SURGXFW�RSWLRQV�DYDLODEOH�IRU�RXU�FXVWRPHUV��0HDQZKLOH��WKH�RXWVLGH�ZRUOG�GHDOV�ZLWK�WKH�IRXUWK�WXUQLQJ�FULVLV��D�SHULRG�6WUDXVV�DQG�+RZH�VDLG�PD\�ODVW�DV�ORQJ�DV��\HDUV��(YHU\RQH�KDV�WKHLU�RZQ�SUREOHPV�LQ�WKLV�FOLPDWH��IHZ�seemingly have the inclination or DELOLW\�WR�KHOS�XV�ZLWK�RXUV�

Into this rides the Gray Champion, WKH�OHDGHU�RI�KHURHV�GXEEHG�E\�6WUDXVV�DQG�+RZH�DV�WKH�SHUVRQ�ZKR�

rallies the world to break the crisis and lead the world into a new spring DQG�UHELUWK��6XUHO\�LQ�RXU�EXVLQHVV�RI�retirees and seniors, there can be no better analogy than that of the Gray &KDPSLRQ��<RXQJHU�JHQHUDWLRQV�PXVW�GR�WKH�ÀJXUDWLYH�RU�OLWHUDO�ÀJKWLQJ��EXW�WKH\�QHHG�D�OHDGHU�ZLWK�ZLVGRP��XQVKDNDEOH�LQWHJULW\��XQEHOLHYDEOH�FRXUDJH�DQG�VWUHQJWK��,Q�WKH�ZRUOG·V�prior crisis, this Gray Champion, at least in America, was none other than )UDQNOLQ�'HODQR�5RRVHYHOW�

:KDW�LQGLYLGXDO�RU�JURXS�LQ�WKLV�LQGXVWU\�ZLOO�EH�RXU�*UD\�&KDPSLRQ��RXU�FKDPSLRQ�IRU�WKH�JUD\V"�:KR�will take the reins and provide WKH�QHFHVVDU\�OHDGHUVKLS�IRU�XV�WR�SXOO�RXW�RI�WKLV�ZLQWHU�RI�FULVLV�DQG�FURVVURDGV��DQG�XVKHU�LQ�D�QHZ�F\FOH�IRU�RXU�LQGXVWU\"�:LWK�D�OLWWOH�OXFN��DQ�DEXQGDQFH�RI�KRSH�DQG�D�WUHPHQGRXV�DPRXQW�RI�KDUG�ZRUN��ZH�ZLOO�VHH�RXU�UHYHUVH�PRUWJDJH�LQGXVWU\��DQG�RXU�HOGHU�FXVWRPHUV��WKULYH�DJDLQ��x

oR

igin

at

ing

Ma

Rk

et

ing

ap

pR

ais

ing

se

Rv

icin

gt

ec

hh

MB

s

*

sp

ot

lig

ht

�Tweeting about your boss

�Wearing leather pants

�Becoming a leader in your industry

Reach our network of more than 8,200 reverse mortgage professionals.

CONTACT US TODAY to join this group of industry [email protected] ~ 630.207.3882

�

THE

reviewREVERSE

| TRR24


“It goes without saying that most Americans are going to need to DFFHVV�HYHU\�¿QDQFLDO�µEXFNHW¶�DYDLODEOH��1R�matter how diligently a couple might have saved, putting aside

enough money to last to the end of life simply

was not possible for PDQ\��$GG�WR�WKDW�EDE\�boomers’ spending (and saving) habits and the disproportional impact

of job cuts borne by those in their 50s and 60s, and the likelihood of tomorrow’s retirees going into retirement ZLWK�VXI¿FLHQW�VDYLQJV�GURSV�WR�MXVW�DERXW�QLO�´

ORIGINATING

n the soft, gray tones of the photograph, my grandmother’s dark eyes are serene and her long, silken

KDLU�LV�ORRVHO\�VZHSW�LQWR�FURZQ�OLNH�EUDLGV��+HU�ORYHO\��ÀQH�ERQHG�IDFH�LV�WXUQHG�GLUHFWO\�toward the camera, her chin ever so slightly WLOWHG�XS��7KH�JROG�ULQJ��ÀOLJUHH�EUDFHOHW�DQG�HODERUDWH�ODFH�FXIIV�FRQQRWH�DQ�XQGHUVWDWHG�GLVSOD\�RI�IDPLO\�ZHDOWK��%XW�WKDW�ZDV�ORQJ�EHIRUH�,�ZDV�ERUQ��

Ages Past

I am far down the line in a large family, and my grandparents were old by the time ,�DSSHDUHG�RQ�WKH�VFHQH��$QG�KRZ�ROG�LV�´ROGµ"�$W�RQH�SRLQW��7KRPDV�(GLVRQ�KDG�EHHQ�P\�JUDQGIDWKHU·V�HPSOR\HU��

:KHQ�,�ZDV�VWLOO�YHU\�\RXQJ��P\�SDUHQWV�GHFLGHG�P\�JUDQGSDUHQWV�FRXOG�QR�ORQJHU�live on their own, and the decision was PDGH��*UDQGPRWKHU�DQG�*UDQGIDWKHU�ZRXOG�OLYH�ZLWK�XV��7KRXJK�P\�SDUHQWV�KDG�D�ODUJH�KRPH��WKHUH�ZDV�QRW�HQRXJK�VSDFH�IRU�P\�grandparents to have their own rooms, so *UDQGPRWKHU�DQG�,�ZHUH�WR�VKDUH�D�EHGURRP��

What might seem an improbable pairing ZDV�WR�PH�D�GHOLJKW��0\�JUDQGPRWKHU�ZDV�JHQWOH�VSLULWHG��WROG�ZRQGHUIXO�VWRULHV�DERXW�FKLOGKRRG��UHFLWHG�IUDJPHQWV�RI�ORQJ�*HUPDQ�SRHPV��DQG�LQ�D�WKLQ��ZDYHULQJ�YRLFH�WKDW�VWLOO�KHOG�WUXH�WR�SLWFK��VDQJ�VRQJV�LQ�*HUPDQ��)UHQFK�DQG�<LGGLVK��6KH�ZDV�DQ�HQRUPRXV�LQÁXHQFH�LQ�P\�HDUO\�OLIH��

%XW�DW�VRPH�SRLQW�WKH�VLJQV�EHJDQ�WR�HPHUJH��DQG�WKHQ�WR�DFFHOHUDWH³GLVMRLQWHG�conversations, insomnia, food hoarding, inability to navigate my parents’ home, DQG�ODWHU��LQFRQWLQHQFH��LPPRELOLW\��WLVVXH�EUHDNGRZQ�DQG�QHDU�FRPSOHWH�PHPRU\�ORVV��$QG�HYHU\�GD\�WKH�VDPH�TXHVWLRQ��´:KHQ�DUH�\RX�WDNLQJ�PH�KRPH"µ

:H�GLGQ·W�KDYH�WKH�ZRUG�´$O]KHLPHU·Vµ�EDFN�WKHQ��*UDQGPRWKHU�ZDV�VHQLOH��RU�LQ�KHU�VHFRQG�FKLOGKRRG��RU��TXLUNLHVW�RI�DOO��´EDOP\�µ�$QG�,�KDG�QRW�RQH�FKLOGKRRG�IULHQG�ZKR�KDG�D�FOXH�ZKDW�WKH\�ZHUH�ORRNLQJ�DW�when in my bedroom they saw the thin, ZKLWH��EHGULGGHQ�HQYHORSH�WKDW�KRXVHG�*UDQGPRWKHU·V�VRXO��

Yet today I hardly know anyone who isn’t QDYLJDWLQJ�WKH�URXJK�ZDWHUV�RI�FDUHJLYLQJ��

I

7KH�3LFWXUH�±�<HVWHUGD\��7RGD\�DQG�7RPRUURZ LAURIE DENKER

MACNAUGHTON

According to Laurie


ORIGINATING

+

A nationwide title and settlement company servicing

the reverse mortgage industry.

Our dedicated team of professionals has the experience and knowledge to smoothly close reverse transactions. Through years of experience, FNC has gained valuable knowledge by building strong relationships with reverse PRUWJDJH�OHQGHUV�DQG�EURNHUV��DV�ZHOO�DV�WKH�ERUURZHUV�ZH�VHUYLFH��:H�¿UPO\�EHOLHYH�WKDW�RXU�FOLHQWV�GHVHUYH�WKH�

best treatment, and that is why FNC is where reverse mortgages take center stage.

240-864-4844 fnctitle.com

A BEttEr choicE!

The Ghost of Care Costs Future

/DVW�ZHHN�5$1'�SXEOLVKHG�D�VWXG\�in The New England Journal of Medicine UHSRUWLQJ�WKDW�QHDUO\��PLOOLRQ�$PHULFDQV�DJHG��DQG�ROGHU�KDYH�GHPHQWLD��+RZHYHU��GXH�WR�D�VZHOOLQJ�SRSXODWLRQ�RI�VHQLRUV��E\��WKDW�QXPEHU�LV�H[SHFWHG�WR�JURZ�WR�D�VWDJJHULQJ��PLOOLRQ�SHRSOH��

And the cost of care for these older SDWLHQWV"�$FFRUGLQJ�WR�WKH�5$1'�VWXG\��LQ��WKH�DQQXDO�FRVW�ZDV�FDOFXODWHG�WR�EH��ELOOLRQ�IRU�WUDLQHG��SURIHVVLRQDO�FDUH��+RZHYHU��ZKHQ�´LQIRUPDO�FDUHµ�ZDV�LQFOXGHG��WKH�FRVW�HVWLPDWH�URVH�WR��ELOOLRQ��$QG�DV�PLQG�EORZLQJ�DV�WKRVH�QXPEHUV�DUH��5$1'�HVWLPDWHV�E\��WKRVH�FRVWV�ZLOO�LQFUHDVH�VRPH��SHUFHQW³DQG�WKDW·V�DVVXPLQJ�FRVW�RI�FDUH�UHPDLQV�WKH�VDPH��'DLO\��PRUH�$PHULFDQV�MRLQ�WKH�UDQNV�RI�WKH�RYHU��FURZG��DQG�WR�PDNH�PDWWHUV�worse, these new retirees had fewer children, meaning the potential pool of LQIRUPDO�FDUHJLYHUV�LV�VPDOOHU��

We Ain’t Getting There From Here

:LWK�SURMHFWLRQV�OLNH�WKHVH��LW�JRHV�ZLWKRXW�VD\LQJ�WKDW�PRVW�$PHULFDQV�are going to need to access every ÀQDQFLDO�´EXFNHWµ�DYDLODEOH��1R�PDWWHU�KRZ�GLOLJHQWO\�D�FRXSOH�PLJKW�KDYH�VDYHG��SXWWLQJ�DVLGH�HQRXJK�PRQH\�WR�last to the end of life simply was not SRVVLEOH�IRU�PDQ\��$GG�WR�WKDW�EDE\�boomers’ spending (and saving) habits DQG�WKH�GLVSURSRUWLRQDO�LPSDFW�RI�MRE�FXWV�ERUQH�E\�WKRVH�LQ�WKHLU��V�DQG�60s, and the likelihood of tomorrow’s retirees going into retirement with VXIÀFLHQW�VDYLQJV�GURSV�WR�MXVW�DERXW�QLO��

Growing Awareness of the Hidden Bucket

(YHQ�LI�SHRSOH�ZHUH�QRW�IXOO\�IXQGLQJ�RWKHU�UHWLUHPHQW�EXFNHWV��KRZHYHU��most homeowners were paying their PRUWJDJH³HYHQ�GXULQJ�WKH�GDUNHVW�GD\V�RI�WKH�UHFHVVLRQ��7KRXJK�KDUG�VWDWLVWLFV�GR�QRW�H[LVW��FROOHDJXHV�DURXQG�WKH�QDWLRQ�KDYH�VDLG�WKDW�ERWK�

DWWRUQH\�DQG�ÀQDQFLDO�SODQQHU�UHIHUUDOV�DSSHDU�WR�EH�XS��&HUWDLQO\�WKLV�LV�WUXH�LQ�P\�EXVLQHVV��$QG�WKH�1R��UHDVRQ"�These professionals are seeing what we originators are seeing: seniors with too PXFK�OLIH�OHIW�DW�WKH�HQG�RI�WKH�PRQH\��or seniors who have done the hard PDWK�DQG�VHH�WKDW�GD\�DSSURDFKLQJ��)LQDQFLDO�SODQQHUV�FDQ�GR�PXFK�WR�make money go farther, and attorneys FDQ�QDYLJDWH�WKH�EHQHÀW�HOLJLELOLW\�ODE\ULQWK��%XW�QHLWKHU�FDQ�PDQXIDFWXUH�VRPHWKLQJ�IURP�QRWKLQJ��$�UHYHUVH�PRUWJDJH�FDQ�EH�WKH�VDYLQJ�JUDFH��

Changes, Rumors of Changes and Rumors of Reports Recommending Changes

$OO�LQGLFDWLRQV�VXJJHVW�WKDW�+8'�LV�QRW�ÀQLVKHG�PDNLQJ�FKDQJHV�WR�RXU�SURGXFW��+RZHYHU��DV�ORQJ�DV�WKHUH�DUH�seniors, and as long as seniors want to VSHQG�WKHLU�ÀQDO�\HDUV�DW�KRPH��WKHUH�ZLOO�EH�D�QHHG�IRU�UHYHUVH�PRUWJDJHV��I only hope changes yet to come will QRW�SXW�WKHP�RXW�RI�UHDFK�IRU�DOO�EXW�D�IHZ��x

oR

igin

at

ing

Ma

Rk

et

ing

ap

pR

ais

ing

se

Rv

icin

gt

ec

hh

MB

s

*

sp

ot

lig

ht

| TRR26


For more information contact:

Proud member of:

© 2013 Generation Mortgage Company, 3565 Piedmont Road NE, 3 Piedmont Center, Suite 300, Atlanta, GA 30305 — 866-733-6090.NMLS #1319. For our state(s) legalese, visit: www.generationmortgage.com/statelegalese.

Visit our booth at NRMLA West. Reverse mortgages were designed to be a valuable fi nancial tool for seniors, allowing them to age-in-place. The nu62SM app makes it easy to explain how a reverse mortgage, tailored to their specifi c needs, can be used as a fi nancial planning tool. This app will open up the reverse mortgage market to a whole new audience, as the benefi ts can be quickly and easily demonstrated on the spot.

A STAR IS BORNCome share the stage and learn how you can be a reverse mortgage star


KH�TXHVWLRQ�RI�KRZ�WR�VHOO�WR�the largest demographic in the United States, retiring baby

ERRPHUV��LV�IUHTXHQWO\�GLVFXVVHG�LQ�D�PXOWLWXGH�RI�LQGXVWULHV��:KLOH�WKLV�GHPRJUDSKLF�LV�SDUWLFXODUO\�LPSRUWDQW�to reverse mortgage professionals, marketing reverse mortgage services WR�EDE\�ERRPHUV�VKRXOG�QRW�EH�\RXU�RQO\�VWUDWHJ\��7R�DFFHVV�WKLV�JHQHUDWLRQ��\RX�VKRXOG�DOVR�PDUNHW�WR�WKHLU�DGXOW�NLGV��WKH�PDMRULW\�RI�ZKRP�DUH�QRZ�between the ages of 31 and 49 years ROG��7KH�FKLOGUHQ�RI�EDE\�ERRPHUV�DUH�often directly or indirectly involved LQ�D�UHYHUVH�PRUWJDJH�WUDQVDFWLRQ��7KHUHIRUH��WKHVH�FKLOGUHQ�PXVW�EH�DQ�DXGLHQFH�IRU�\RXU�PDUNHWLQJ��0DUNHWLQJ�WR�WKH�FKLOGUHQ�RI�\RXU�potential borrowers certainly possesses GLIIHUHQW�UHTXLUHPHQWV�WKDQ�PDUNHWLQJ�WR�WKHLU�SDUHQWV��7KHUH�DUH�VWDUN�differences in terms of messaging, PHGLD�W\SH�DQG�MXVW�DERXW�HYHU\�DVSHFW�RI�\RXU�VDOHV�IXQQHO�

:KHQ�EXLOGLQJ�D�SLSHOLQH�RI�UHYHUVH�mortgages there are different, WUDGLWLRQDO�PHGLD�RXWOHWV��H�J��$$53��JUDVVURRWV�WDFWLFV��H�J��DGYHUWLVLQJ�

QHWZRUNLQJ�ZLWK�UHOLJLRXV�LQVWLWXWLRQV��and targeted television advertisement placements that we all know work well to reach the baby boomer GHPRJUDSKLF��,Q�FRQWUDVW��PDUNHWLQJ�to the children of baby boomers means JRLQJ�GLJLWDO��ÀUVW�DQG�IRUHPRVW��*LYHQ�WKDW�RXU�FRPSDQ\�LV�WKH�ÀUVW�GLUHFW�WR�FRQVXPHU�WLWOH�SURYLGHU��ZH�DUH�H[SHUWV�LQ�FRQVXPHU�PDUNHWLQJ�DQG�LQ�SDUWLFXODU��GLJLWDO�DGYHUWLVLQJ�DV�LW�is clearly the lead horse for marketing WR�WKH�KRPHEX\HU�GHPRJUDSKLF��Increasingly, the children of baby boomers are searching for and UHFHLYLQJ�WKH�PDMRULW\�RI�WKHLU�LQIRUPDWLRQ�IURP�RQOLQH�VRXUFHV��DQG�increasingly via mobile and tablet GHYLFHV��

Here are a few key things to keep in mind when marketing online:Interested parties are easily targeted.

The reason for the YDVW�VXFFHVV�RI�RQOLQH�marketing is not RQO\�EHFDXVH�WKDW�LV�ZKHUH�\RXU�DXGLHQFH�LV��WKRXJK�some people still read papers and ZDWFK�WHOHYLVLRQ��EXW�DOVR�EHFDXVH�RI�WKH�XQSDUDOOHOHG�DELOLW\�WR�WDUJHW�D�KLJKO\�VSHFLÀF�DXGLHQFH��*RRJOH�AdWords is a great place to start, as HYHQ�DQ�DPDWHXU�PDUNHWHU�FDQ�TXLFNO\�WDUJHW�XVHUV�LQ�WKHLU�JHRJUDSKLF�DUHD�who are actively looking for reverse PRUWJDJH�VROXWLRQV��)RU�H[DPSOH��WKH�WDUJHW�DXGLHQFH�PD\�EHFRPH�DZDUH�RI�UHYHUVH�PRUWJDJHV�WKURXJK�D�WHOHYLVLRQ�DG��1RZDGD\V��PRUH�RIWHQ�WKDQ�QRW��they will go online to research reverse mortgages after they see that television VSRW��,W�LV�WR�\RXU�DGYDQWDJH�WR�HQVXUH�that when they search for information RQ�UHYHUVH�PRUWJDJHV�LQ�\RXU�DUHD��WKH\�VHH�\RX�

Your success is trackable.

Online marketing also affords a higher degree of tracking with less effort than FRQYHQWLRQDO�PRGHV�RI�PHDVXULQJ�PDUNHWLQJ�HIIHFWLYHQHVV��:KHQ�\RX�WUDFN�SHUIRUPDQFH�\RX�FDQ�TXLFNO\�DOORFDWH�\RXU�EXGJHW�WR�WKH�PRVW�VXFFHVVIXO�SURJUDPV�DQG�HDVLO\�WHVW�new marketing copy and targeting LGHDV��(QVXUH�WKDW�\RX�WDNH�DGYDQWDJH�RI�WKLV�E\�VHWWLQJ�XS�DQG�VHOHFWLQJ�types of digital marketing that easily RIIHU�WKH�DELOLW\�WR�WUDFN�SHUIRUPDQFH��Again, Google AdWords is a good SODFH�WR�VWDUW��*RRJOH·V�SUHSDFNDJHG�tracking mechanisms provide the ability to instantly become a statistical, SHUIRUPDQFH�PDUNHWLQJ�H[WUDRUGLQDLUH�

4HRL�Z\YL�`V\Y�^LIZP[L�PZ�ÄULS`�tuned.

,I�\RX�DUH�JRLQJ�WR�KDYH�D�SUHVHQFH�RQ�WKH�:HE��WKHQ�PDNH�VXUH�DOO�\RXU�:HE�DVVHWV�DUH�WRS�QRWFK��0DQ\�RI�\RXU�PDUNHWLQJ�FDPSDLJQV�ZLOO�XOWLPDWHO\�GULYH�SURVSHFWV�WR�\RXU�ZHEVLWH��DQG�WKH�PRUH�RSWLPL]HG�\RXU�ZHEVLWH�LV�IRU�WXUQLQJ�WUDIÀF�LQWR�OHDGV��WKH�EHWWHU�\RXU�FDPSDLJQ�SHUIRUPDQFH��$OVR��UHPHPEHU�WKDW�\RXU�ZHEVLWH�ZLOO�RIWHQ�EH�WKLV�DXGLHQFH·V�ÀUVW�LPSUHVVLRQ�RI�\RX��$V�UHYHUVH�PRUWJDJH�SURIHVVLRQDOV��ZH�NQRZ�WKDW�ÀUVW�impressions are especially important to the baby boomer generation, and WKDW�LV�DOVR�WUXH�RI�WKHLU�FKLOGUHQ�

While baby boomers may be one of the ODUJHVW��PRVW�LPSDFWIXO�GHPRJUDSKLFV�LQ�WKH�FRXQWU\��GR�QRW�RYHUORRN�WKH�OHVV�FURZGHG�DXGLHQFH�IRU�PDUNHWLQJ�UHYHUVH�PRUWJDJHV³WKHLU��WR��\HDU�ROG�NLGV��$QG�DV�D�ERQXV��when marketing digitally to kids, \RX�ZLOO�EH�VXUH�WR�FDWFK�WKH�JURZLQJ�SRSXODWLRQ�RI�WHFK�VDYY\�VHQLRUV�VXUÀQJ�WKH�:HE��WRR��x

T

0DUNHWLQJ�to “Kids”TIMOTHY M. DWYER

MARKETINGPROMOTE

For more information contact:

Proud member of:

© 2013 Generation Mortgage Company, 3565 Piedmont Road NE, 3 Piedmont Center, Suite 300, Atlanta, GA 30305 — 866-733-6090.NMLS #1319. For our state(s) legalese, visit: www.generationmortgage.com/statelegalese.

Visit our booth at NRMLA West. Reverse mortgages were designed to be a valuable fi nancial tool for seniors, allowing them to age-in-place. The nu62SM app makes it easy to explain how a reverse mortgage, tailored to their specifi c needs, can be used as a fi nancial planning tool. This app will open up the reverse mortgage market to a whole new audience, as the benefi ts can be quickly and easily demonstrated on the spot.

A STAR IS BORNCome share the stage and learn how you can be a reverse mortgage star

oR

igin

at

ing

Ma

Rk

et

ing

ap

pR

ais

ing

se

Rv

icin

gt

ec

hh

MB

s

*

sp

ot

lig

ht

| TRR28



RU�WKH�DSSUDLVDO�LQGXVWU\��ZDV�RQH�RI�WKH�EXVLHVW�DQG�PRVW�SURÀWDEOH�\HDUV��:LWK�VZHHSLQJ�

UHJXODWLRQ�FKDQJHV�DQG�UHFRUG�ORZ�LQWHUHVW�UDWHV��IHHV�DUH�XS�DQG�YROXPH�LV�ZD\�XS��)RU�DSSUDLVHUV��WKLV�LV�WKH�SHUIHFW�UHFLSH�IRU�VXFFHVV��1RZ��DV�ZH�DUH�FUDZOLQJ�RXW�RI�WKH�DVKHV�RI�WKH�ELJJHVW�ERRP�DQG�EXVW�LQ�RXU�FRXQWU\·V�ÀQDQFLDO�KLVWRU\��WKH�PDUNHW�LV�FODZLQJ�EDFN�DQG�WU\LQJ�WR�VWDELOL]H��

One challenge for appraisers in WKLV�FXUUHQW�PDUNHW�FOLPDWH�LV�QHZ�FRQVWUXFWLRQ��,W�VHHPV�WKDW�PRUH�DQG�more appraisal orders are coming WKURXJK�IRU�WKLV�W\SH�RI�WUDQVDFWLRQ�and appraisers everywhere are having D�YHU\�KDUG�WLPH�ÀQGLQJ�FRPSDUDEOH�PDUNHW�GDWD�IRU�QHZ�FRQVWUXFWLRQ�VDOHV��&RQVHTXHQWO\��DSSUDLVDOV�IRU�QHZ�FRQVWUXFWLRQ�DUH�QRW�RQO\�YHU\�GLIÀFXOW�WR�SXW�WRJHWKHU��EXW�DOVR�YHU\�GLIÀFXOW�WR�VXSSRUW�EHFDXVH�RI�D�ODFN�RI�VLPLODU�SURSHUWLHV�ZLWK�YDOXHV�HTXDO�WR�WKH�FRQWUDFW�SULFH��-XVW�RSHQ�D�QHZVSDSHU�and somewhere somebody is calling DSSUDLVHUV�´GHDO�NLOOHUVµ�RU�FODLPLQJ�WKDW�WKH\�DUH�´QRW�PDNLQJ�YDOXH�µ

Now, this is nothing new to a seasoned appraiser, as I am always being told I am too high, too low, or both by different parties involved in a WUDQVDFWLRQ��%XW�ZKDW·V�WURXEOLQJ�WR�PH�LV�WKDW�PHGLD�RXWOHWV�DUH�SODFLQJ�EODPH�RQ�WKH�DSSUDLVHU��7KLV�FRXOG�QRW�EH�IXUWKHU�IURP�WKH�WUXWK��,�KDYH�EHHQ�saying for years that we appraisers GRQ·W�PDNH�WKH�QHZV��ZH�MXVW�UHSRUW�LW��8QIRUWXQDWHO\��VLQFH��WKH�QHZV�MXVW�KDVQ·W�EHHQ�YHU\�JRRG��0DVVLYH�GHFOLQHV�LQ�YDOXH��UHFRUG�QXPEHUV�RI�IRUHFORVXUHV�DQG�D�OLWDQ\�RI�GLVWUHVVHG�sales have given rise to one of the most FKDOOHQJLQJ�WLPHV�LQ�P\��\HDU�FDUHHU�LQ�WKH�DSSUDLVDO�LQGXVWU\��

As we face the challenges of DSSUDLVLQJ�QHZ�FRQVWUXFWLRQ�LQ�WKHVH�GLIÀFXOW�WLPHV��WKHUH�DUH�D�IHZ�REVHUYDWLRQV�WKDW�,�ZRXOG�OLNH�WR�VKDUH��First, let’s acknowledge that most QHZ�FRQVWUXFWLRQ�WUDQVDFWLRQV�DUH�´ORW�and contract price,” meaning that the borrower owns a property and hires a EXLOGHU�WR�FRQVWUXFW�D�KRXVH��7KLV�LV�E\�IDU�WKH�PRVW�FRPPRQ�VLWXDWLRQ�LQ�P\�PDUNHW��DQG�DOVR�WKH�1R��UHDVRQ�ZK\�

QHZ�FRQVWUXFWLRQ�DSSUDLVDOV�DUH�VR�GLIÀFXOW�WR�FRPSOHWH��

:KHQ�WKLV�W\SH�RI�VLWXDWLRQ�RFFXUV�LQ�loans overseen by Fannie, Freddie, +8'�DQG�9HWHUDQV�$IIDLUV��LW�ZRXOG�QRW�EH�FRQVLGHUHG�D�FRPSDUDEOH�VDOH��7KHVH�GHSDUWPHQWV�KDYH�VSHFLÀF�ODQJXDJH�WKDW�SURKLELWV�DQ�DSSUDLVHU�IURP�XVLQJ�WKH�FRQWUDFW�DQG�ORW�SULFH�WR�HTXDWH�D�VDOHV�SULFH�RQ�D�FRPSDUDEOH�VDOHV�UHSRUW��1R�FDQ�GR��6R��ZLWK�D�VLJQLÀFDQW�DPRXQW�RI�QHZ�FRQVWUXFWLRQ�ORDQ�WUDQVDFWLRQV�VHW�XS�LQ�WKLV�ZD\��WKH�DSSUDLVHU�LV�OHIW�ZLWKRXW�DQ\�QHZ�FRQVWUXFWLRQ�FRPSV�WR�UHSRUW�

6R�ZKDW·V�DQ�DSSUDLVHU�VXSSRVHG�WR�GR�ZLWK�QR�FRPSV"�+H�PXVW�XVH�WKH�EHVW�DOWHUQDWLYHV�DYDLODEOH��%XW�ZLWK�D�market still trying to recover from a massive drop in home prices and, in PDQ\�FDVHV��DQ�RYHUVXSSO\�RI�´XVHGµ�homes, a noticeable gap has arisen EHWZHHQ�WKH�PDUNHW�YDOXH�RI�H[LVWLQJ�KRPHV�DQG�WKH�DSSUDLVHG�YDOXH�RI�QHZ�VWUXFWXUHV��<RX�VHH��LQ�D�GRZQ�UHDO�HVWDWH�PDUNHW��QHZ�FRQVWUXFWLRQ�LV�LQFUHDVLQJO\�FRQVLGHUHG�D�SUHPLXP�and most borrowers are accepting the IDFW�WKDW�LI�WKH\�ZDQW�WR�EXLOG�QHZ��they will most likely not be able to ÀQDQFH�WKH�WRWDO�FRVW�DQG�PD\�HYHQ�KDYH�WR�EULQJ�FDVK�WR�FORVLQJ��

,�ZRXOG�DGYLVH�DQ�DSSUDLVHU�WR�DVN�LI�WKH�EXLOGHU�KDV�DQ\�RWKHU�FRQWUDFWV�WR�EXLOG�LQ�WKDW�QHLJKERUKRRG��7KH�Uniform Standards of Professional $SSUDLVDO�3UDFWLFH�UHTXLUH�DSSUDLVHUV�WR�DQDO\]H�DOO�UHOHYDQW�VDOHV�DQG�contracts for sales and properties in WKH�PDUNHW�DUHD��(YHQ�WKRXJK�WKH�DSSUDLVHU�LV�XQDEOH�WR�XWLOL]H�WKH�contract as a comp, he is still able to XVH�WKHP�WR�DQDO\]H�DQG�SRVVLEO\�VXSSRUW�DJH�RU�FRQGLWLRQ�DGMXVWPHQWV��,�WKLQN�XOWLPDWHO\�VKDULQJ�LQIRUPDWLRQ�DQG�ZRUNLQJ�WRJHWKHU�WR�VROYH�RXU�SUREOHPV�LV�WKH�EHVW�FRXUVH�IRU�SDUWLHV�LQYROYHG�LQ�WKH�PRUWJDJH�ÀQDQFH�LQGXVWU\��x

APPRAISINGVALUE

The Gap CHARLES GRESS

F

according to charles // with a market still trying to recover from a massive drop in home prices and, in many cases, an oversupply of “used” homes, a noticeable gap has arisen between the market value of existing homes and the appraised value of new structures. you see, in a down real estate market, new construction is increasingly considered a premium and most borrowers are accepting the fact that if they want to build QHZ��WKH\�ZLOO�PRVW�OLNHO\�QRW�EH�DEOH�WR�ðQDQFH�WKH�WRWDO�FRVW�DQG�PD\�HYHQ�KDYH�WR�EULQJ�FDVK�WR�FORVLQJ�ú�

oR

igin

at

ing

Ma

Rk

et

ing

ap

pR

ais

ing

se

Rv

icin

gt

ec

hh

MB

s

*

sp

ot

lig

ht

| TRR30



W

SERVICINGLEARN

hen borrowers obtain a reverse mortgage to DFFHVV�KRPH�HTXLW\��OHQGHUV�WDNH�D�VXEVWDQWLDO�LQWHUHVW�LQ�WKHLU�KRPHV��0DQ\�WLPHV��

XQEHNQRZQVW�WR�KRPHRZQHUV��]RQLQJ�UHTXLUHPHQWV�DQG�standards of safety and operation change in the years D�KRPH�LV�RFFXSLHG��6PDOO�UHSDLUV�WKDW�PD\�KDYH�EHHQ�SXW�RII�IRU�\HDUV�QRZ�EHFRPH�UHTXLUHPHQWV�IRU�FORVLQJ��)RU�WKH�PDMRULW\�RI�ERUURZHUV��EULQJLQJ�WKHLU�KRPHV�LQWR�HUD compliance with these repairs comes as a relief, EXW�IRU�VRPH��WKLV�FORVLQJ�UHTXLUHPHQW�IHHOV�LQWUXVLYH�DQG�XQZDUUDQWHG��

Repair administration is a critical aspect of the reverse PRUWJDJH�SURFHVV��:KHQ�D�ERUURZHU�DSSOLHV�IRU�D�UHYHUVH�mortgage, an appraisal provides the lender and borrower ZLWK�D�IXOO�DVVHVVPHQW�RI�WKH�SURSHUW\·V�OLDELOLWLHV�DQG�DVVHWV��7KH�VWUXFWXUH�PXVW�EH�EURXJKW�XS�WR�FRGH�DQG�SXW�LQ�JRRG�DQG�SURSHU�UHSDLU�SULRU�WR�FORVLQJ��5HSDLU�DGPLQLVWUDWLRQ�professionals oversee the process of the borrower bringing a KRPH�XS�WR�FRGH�DQG�LQ�IXOO�DQG�VDIH�ZRUNLQJ�RUGHU��6HUYLFLQJ�professionals in the repair administration department walk D�WLJKWURSH�EHWZHHQ�YLJRURXVO\�SURWHFWLQJ�WKHLU�OHQGHU�and HUD’s interests in the property while respecting and SURWHFWLQJ�WKH�ERUURZHUV��,Q�WKH�EHVW�RI�FLUFXPVWDQFHV��WKH�SURFHVV�PRYHV�VPRRWKO\�DQG�ZLWKRXW�LQFLGHQW��DQG�UHSDLU�administration professionals will appear to glide across this ZLUH�

$IWHU�FORVLQJ��WKH�RQO\�WLPH�D�ERUURZHU�ZLOO�HQFRXQWHU�WKH�UHSDLU�DGPLQLVWUDWLRQ�GHSDUWPHQW�LV�LI�DQ�LQVXUDQFH�FODLP�LV�made on the property for damages (commonly referred to DV�´ORVV�GUDIWVµ��6HUYLFLQJ�GHSDUWPHQWV�SURWHFW�WKHLU�FOLHQWV·�interests and serve as the liaison between the lender, the ERUURZHU�DQG�WKH�LQVXUDQFH�FRPSDQ\��

:KDW�KDSSHQV�ZKHQ�QDWXUDO�GLVDVWHU�VWULNHV�DQG�FRXQWOHVV�+(&0�SURSHUWLHV�DUH�LPSDFWHG�DW�RQFH"�7KH�&HOLQN�UHSDLU�administration department learned the hard way when +XUULFDQH�6DQG\�UHDUHG�KHU�XJO\�KHDG�WKLV�SDVW�\HDU��

1DWXUDO�GLVDVWHUV�WKURZ�WKH�EHVW�SHRSOH��SODFHV��V\VWHPV�DQG�SURFHVVHV�LQWR�FKDRV��&HOLQN�ERUURZHUV�ZHUH�LPSDFWHG�LQ�JUHDW�QXPEHUV�E\�6DQG\��3KRQH�FDOOV�ZHUH�QRQVWRS�DQG�ERUURZHUV�ZHUH�LQ�D�VWDWH�RI�VKRFN��WKH\�FRXOG�QRW�IXOO\�JUDVS�ZKDW�KDG�MXVW�KDSSHQHG��7KH\�GLGQ·W�ZDQW�WR�KHDU�DERXW�SURFHGXUHV��WKH\�ZDQWHG�WKHLU�KRPHV�UHVWRUHG�DQG�WKHLU�VHQVH�RI�VDIHW\�UHWXUQHG��5HSDLU�DGPLQLVWUDWLRQ�ZDV�FKDUJHG�ZLWK�the goal of helping get borrowers back into their homes, all ZKLOH�SURWHFWLQJ�WKHLU�FOLHQW·V�LQWHUHVW�LQ�WKH�SURSHUW\��

5HJXODU�PHHWLQJV�ZHUH�KHOG�WR�UHPLQG�VWDII�WKDW�ZKLOH�WKH�ZRUNORDG�ZDV�REYLRXVO\�RYHUZKHOPLQJ�DW�WLPHV��DQG�SKRQH�FDOOV�VHHPHG�WR�OHDG�WR�XSVHW�ERUURZHUV�UDWKHU�WKDQ�UHVROXWLRQ��it was clear that making everyone happy might not happen ULJKW�DZD\��,W�ZDV�FULWLFDO�WKDW�WKH�WHDP�EH�UHPLQGHG�WKDW�ZKDW�LW�ZDV�JRLQJ�WKURXJK�FRXOG�QRW�SRVVLEO\�FRPSDUH�WR�ZKDW�ERUURZHUV�ZHUH�JRLQJ�WKURXJK��

,Q�WKH�DIWHUPDWK�RI�6DQG\�DQG�DQ\�QDWXUDO�GLVDVWHU��UHSDLU�administration provides critical assistance to borrowers in a WLPH�ZKHQ�WKH\�DUH�PRVW�YXOQHUDEOH��(YHU\WKLQJ�WKH\�NQRZ�DERXW�´QRUPDO�OLIHµ�IHHOV�ORVW�LQ�WKH�VWRUP��DQG�VHUYLFHUV�DUH�FKDUJHG�ZLWK�KHOSLQJ�SLHFH�WKHLU�OLYHV�EDFN�WRJHWKHU��5HSDLU�VLWXDWLRQV�DUH�QHYHU�EODFN�DQG�ZKLWH��WKHUH�DUH�KXJH�JUD\�DUHDV��DQG�VRPHWLPHV�SURFHGXUHV�QHHG�WR�DGMXVW�VOLJKWO\�LQ�RUGHU�WR�FUHDWH�WKH�EHVW�RXWFRPH�IRU�DOO��

Repair administration professionals work with clients and ERUURZHUV�WR�LQQRYDWH�SURFHGXUHV�WKDW�ZRUN�IRU�DOO�DQG�PDNH�rocky roads smooth, while always remembering that the primary goal is to get borrowers back to their lives as soon as SRVVLEOH�ZKLOH�SURWHFWLQJ�WKH�FOLHQW·V�LQWHUHVW�LQ�WKH�SURSHUW\��x

Ryan LaRose is the president and COO of Celink, a reverse mortgage subservicer. Sydney Godbehere manages repair administration, loss draft and line-of-credit processing for Celink.

7KH�8QQDWXUDO�6WUHVV�RI�D�1DWXUDO�'LVDVWHU� RYAN LAROSE AND SYDNEY GODBEHERE

oR

igin

at

ing

Ma

Rk

et

ing

ap

pR

ais

ing

se

Rv

icin

gt

ec

hh

MB

s

*

sp

ot

lig

ht

| TRR32


TECHADVANCE

RXOG�\RX�EHOLHYH�WKH�ZRUOG�of reverse mortgage lending is on the verge of getting

D�OLWWOH�HDVLHU"�1RW�E\�DQ\�RI�WKH�QHZ�UHJXODWLRQV�RU�UHVWULFWLRQV�FRPLQJ�IURP�WKH�)+$��EXW�IURP�WKH�YHQGRUV�LQ�WKH�LQGXVWU\�WKDW�DUH�IRFXVHG�RQ�DXWRPDWLQJ�KRZ�\RX�GR�ZKDW�\RX�GR��7KHUH�LV�D�wind of change coming from software DQG�VHUYLFH�SURYLGHUV�WKDW�ZLOO�EHQHÀW�RULJLQDWRUV��OHQGHUV�DQG�LQYHVWRUV�

7KH�XOWLPDWH�JRDO�LQ�WKH�UHYHUVH�PRUWJDJH�OHQGLQJ�OLIHF\FOH�VKRXOG�EH�to have as frictionless of a process as SRVVLEOH³IURP�WKH�RULJLQDWRU�WR�WKH�OHQGHU�WR�WKH�LQYHVWRU��%HLQJ�IULFWLRQOHVV�means that the loan data easily and seamlessly slides between each stakeholder in the process with no need WR�UH�HQWHU�ORDQ�GDWD�DORQJ�WKH�ZD\��,Q�WKLV�XWRSLDQ�HQYLURQPHQW��QRW�RQO\�ZRXOG�WKH�ZKROH�OHQGLQJ�SURFHVV�VSHHG�XS��EXW�WKH�QXPEHU�RI�HUURUV��GXH�WR�GDWD�UH�HQWU\��ZRXOG�GURS�GUDPDWLFDOO\�

7KH�SUREOHP�ZLWK�WKH�LQGXVWU\��XQWLO�now, has been that each party in the OHQGLQJ�ZRUNÁRZ�FDQ�EH�RQ�D�GLIIHUHQW�

WHFKQLFDO�SODWIRUP��%HFDXVH�RI�WKLV��\RXU�GDWD�PXVW�EH�HQWHUHG�RYHU�DQG�RYHU�as the loan moves from one company WR�DQRWKHU��$V�D�UHVXOW��LQWHU�SDUW\�FRPPXQLFDWLRQV�DUH�FRVWO\�DQG�VORZ��SKRQH�DQG�HPDLO��UDWKHU�WKDQ�MXVW�EHLQJ�SDUW�RI�WKH�RYHUDOO�SURFHVV�

7KH�VROXWLRQ�WKDW�LV�HPHUJLQJ�WR�DGGUHVV�WKLV�EURNHQ�V\VWHP�LV�WKH�LQWURGXFWLRQ�of loan and data exchange gateways EDVHG�RQ�GRFXPHQWHG�VWDQGDUGV��1RW�only will these standards make it easier IRU�V\VWHPV�WR�VKDUH�LQIRUPDWLRQ��EXW�WKH\�ZLOO�DOVR�SURYLGH�IRU�EL�GLUHFWLRQDO�FRPPXQLFDWLRQV�

,PDJLQH��DV�DQ�RULJLQDWRU��\RX�HQWHU�\RXU�ERUURZHU�DQG�ORDQ�LQIRUPDWLRQ�LQWR�\RXU�SRLQW�RI�VDOH��2QFH�\RX�GHFLGH�ZKLFK�OHQGHU�\RX�ZDQW�WR�ZRUN�ZLWK��\RX�FDQ�VLPSO\�FOLFN�D�EXWWRQ�DQG�WKDW�SDUWQHU�QRZ�KDV�WKH�ÀOH³\RX�FDQ�FKRRVH�WR�ZRUN�ZLWK�DQ\�OHQGHU�ZLWKRXW�ZRUU\LQJ�DERXW�KRZ�WR�JHW�WKHP�WKH�ÀOH��VR�\RX�KDYH�WKH�ÁH[LELOLW\�WR�SLFN�WKH�ULJKW�OHQGHU�IRU�HDFK�VSHFLÀF�ORDQ��What’s more, as the lender is processing WKH�ORDQ�\RX�FDQ�JHW�VWDWXV�XSGDWHV�DQG�

FRQGLWLRQV�SXVKHG�GLUHFWO\�EDFN�LQWR�\RXU�SRLQW�RI�VDOH�WRRO�DXWRPDWLFDOO\��7KLQN�DERXW�WKH�SRVLWLYH�LPSDFW�WKLV�LQWHUFRQQHFWHG�ZRUOG�FDQ�KDYH�RQ�\RXU�DELOLW\�WR�SURYLGH�JUHDW�FXVWRPHU�VHUYLFH�WR�\RXU�ERUURZHUV�

The impact of being interconnected LV�HTXDOO\�SRZHUIXO�IRU�OHQGHUV��/RDQ�DSSOLFDWLRQV�ZLOO�VWUHDP�LQWR�\RXU�ORDQ�RULJLQDWLRQ�SODWIRUPV�ZLWKRXW�WKH�need to have someone key in data or PDQXDOO\�VHW�XS�ÀOHV��7KLV�ZLOO�QRW�RQO\�VDYH�WLPH��EXW�ZLOO�DOVR�UHGXFH�HUURUV�WKDW�DULVH�IURP�GDWD�HQWU\�PLVWDNHV��$QG�WKH�LQWHJUDWHG�VWDWXV�DQG�FRQGLWLRQV�XSGDWHV�ZLOO�UHGXFH�WKH�FRPPXQLFDWLRQ�ORDG�RQ�\RXU�VWDII��5HDG\�WR�VHOO�WKDW�loan to an investor on the secondary PDUNHW"�&OLFN��'RQH��/LNH�OHQGHUV��LQYHVWRUV�ZLOO�VDYH�WLPH�DQG�UHGXFH�WKH�chance for errors, and they will have to GHDO�ZLWK�IHZHU�H[FHSWLRQV�

7KH�LQWURGXFWLRQ�RI�VWDQGDUGV�DQG�LQWHUFRPPXQLFDWLRQ�WHFKQRORJ\�ZLOO�streamline the reverse mortgage LQGXVWU\��/LIH�LV�DERXW�WR�JHW�D�ELW�HDVLHU�IRU�DOO�RI�XV��x

$�1HZ�(UD�RI�,QWHUFRQQHFWLRQVJOHN BUTTON

W

ACCORDING TO JOHN“The impact of being interconnected is equally powerful for lenders. Loan applications will stream into your loan origination platforms without the need to have someone key in data or manually set up ÄSLZ��;OPZ�^PSS�UV[�VUS`�ZH]L�[PTL��I\[�^PSS�HSZV�YLK\JL�errors that arise from data entry mistakes.”


'�&��,V�:KHUH�WKH�$FWLRQ�,VDARREN STUMBERGER

SECONDARY MARKETHMBS

Want to see more stories like this?Visit reversereview.com.

Q�$SULO��+5(0,&�GHDO�LVVXDQFH�ZDV��million, slightly higher than March’s total RI��PLOOLRQ��%DQN�RI�$PHULFD�0HUULOO�

/\QFK�DQG�.QLJKW�&DSLWDO�EURXJKW�GHDOV�RI��PLOOLRQ�DQG��PLOOLRQ�UHVSHFWLYHO\��0RUH�WKDQ��ELOOLRQ�LQ�+5(0,&�LVVXDQFH�KDV�EHHQ�EURXJKW�WR�PDUNHW�E\�VHFXULWLHV�ÀUPV�LQ��DQG�,�ZRXOG�H[SHFW�FRQWLQXHG�UREXVW�LVVXDQFH�JLYHQ�WKH�PRYH�WR�/,%25�6WDQGDUG�

'HDO�H[HFXWLRQ�KDV�NHSW�VSUHDGV�IRU�+0%6�ZHOO�bid, with originators hedging their pipelines ZLWK�-XQH�VHWWOHPHQW�ERQGV��&XUUHQW�OHYHOV�IRU�À[HG�UDWH�6WDQGDUG�+0%6�DUH�URXJKO\��WR�VZDSV�IRU�QHZ�SURGXFWLRQ��PLG��V�WR�VZDSV�IRU�IRXU��WR�ÀYH�\HDU�DYHUDJH�OLIH�VHFRQGDU\�SDSHU��KLJK��V�WR�VZDSV�IRU�WKUHH��WR�IRXU�\HDU�SDSHU��ORZ�WR�PLG��V�WR�VZDSV�IRU�WZR��WR�WKUHH�\HDU�SDSHU��DQG�ORZ��WR�PLG�WHHQV�WR�VZDSV�IRU�OHVV�WKDQ�WZR�\HDU�DYHUDJH�OLIH�+0%6��)ORDWLQJ�6WDQGDUG�KDV�EHHQ�WUDGLQJ�LQ�WKH�ORZ��V�GLVFRXQW�PDUJLQ�IRU�0DUFK�VHWWOH��

$V�PXFK�DV�,·G�OLNH�WR�VD\�DOO�WKH�DFWLYLW\�LV�RQ�WKH�VHFRQGDU\�VLGH��KDSSHQLQJV�LQ�'�&��GRPLQDWH�WKH�QHZV�DQG�QRQH�RI�LW�LV�JRRG��7KH�LQGXVWU\�LV�ZRUNLQJ�DURXQG�WKH�FORFN�WR�WU\�WR�JHW�WKH�VXVSHQVLRQ�ELOO�SDVVHG�WR�DOORZ�WKH�)+$�WKH�DXWKRULW\�WR�LPSOHPHQW�PXFK�QHHGHG�ULVN�PHDVXUHV��%XW�HYHQ�LI�WKLV�GRHV�SDVV��WKH�LQGXVWU\�KDV�LWV�ZRUN�FXW�RXW�IRU�LW�WR�HQVXUH�WKH�ORQJ�WHUP�YLDELOLW\�RI�WKH�SURJUDP�ZLWK�IRONV�RQ�WKH�+LOO��$V�LW�LV��WKH�PDUNHW�VL]H�PHDVXUHG�E\�YROXPH�ZLOO�EH�GRZQ��WR��SHUFHQW�DW�RULJLQDWLRQ�GXH�WR�WKH�HOLPLQDWLRQ�RI�WKH�À[HG�6WDQGDUG�DQG�83%V�EHLQJ�WKDW�PXFK�OHVV��)LQDQFLDO�DVVHVVPHQW��RQFH�UHOHDVHG��ZLOO�VKDYH�DQRWKHU�SHUFHQWDJH�RII�RI�WKDW��

I

“As much as I’d like to say all the activity is on the secondary side, happenings in D.C. dominate the news and none of it is good. The industry is working around the clock to try to get the

suspension bill passed to allow the FHA the authority to implement much-needed risk measures. But even if this does pass, the industry has its work cut out for it to ensure the long-term viability of the program with folks on the Hill.”

7KH�WUXH�VDOH�DFFRXQWLQJ�LVVXH�LV�VWLOO�QRW�UHVROYHG�DQG�LWV�UHVROXWLRQ�UHPDLQV�YHU\�XQFHUWDLQ��7KHUH·V�WDON�DERXW�DQRWKHU�LQWHUHVW�UDWH�ÁRRU�UHGXFWLRQ�DQG�D�FKDQJH�LQ�WKH�FDS�VWUXFWXUH�IRU�$50�ORDQV��/DVWO\��WKHUH·V�WKH�H[SHFWDWLRQ�WKDW�ORDQ�OLPLWV�ZLOO�EH�UHGXFHG�IURP�WKHLU�FXUUHQW�OHYHOV�WR��$Q�LQFUHDVH�LQ�SHQHWUDWLRQ�UDWHV�DQG�D�UHELUWK�RI�SULYDWH�ODEHO�UHYHUVHV�DUH�WZR�WKLQJV�WKDW�KDYH�WR�KDSSHQ�LQ�WKH�YHU\�QHDU�WHUP��x

oR

igin

at

ing

Ma

Rk

et

ing

ap

pR

ais

ing

se

Rv

icin

gt

ec

hh

MB

s

*

sp

ot

lig

ht

*

ACCORDING TO DARREN

| TRR34


AAG Wholesale.R E D E F I N I N Ghow business is done.

AAG Provides:��Superior Customer Service

� Customized Reverse Mortgage Training

� Expert Marketing Support

��Competitive Pricing

��Processing and Underwriting Support

�� Access to the Reverse Mortgage Industry’s BEST Leads

Re-de!ne how business is done with AAG Wholesale. For more information and to learn how we put you and your business !rst, contact Kimberly Smith, Senior Vice President of Wholesale Lending at:

[email protected]


SPOTLIGHT ARTICLE

s the director of the Center for Retirement Research at Boston College, Alicia

0XQQHOO�LV�ZLGHO\�UHFRJQL]HG�DV�DQ�DXWKRULW\�ZKHQ�LW�FRPHV�WR�WKH�HFRQRPLFV�RI�DJLQJ��:LWK�DQ�0�$��IURP�%RVWRQ�8QLYHUVLW\�DQG�D�3K�'��IURP�+DUYDUG��0XQQHOO�EHJDQ�KHU�career as an economist for the Federal Reserve Bank of Boston, where she spent 20 years before moving on to serve as assistant secretary of the 7UHDVXU\�IRU�HFRQRPLF�SROLF\��,Q��0XQQHOO�MRLQHG�WKH�3UHVLGHQW·V�&RXQFLO�of Economic Advisers, where she ZRUNHG�IRU�WZR�\HDUV�EHIRUH�MRLQLQJ�Boston College to teach at the Carroll School of Management and lead the XQLYHUVLW\·V�DFFODLPHG�&HQWHU�IRU�5HWLUHPHQW�5HVHDUFK�

0XQQHOO�KDV�EHHQ�D�ORQJWLPH�proponent of the HECM program, UHJXODUO\�FLWLQJ�KHU�EHOLHI�WKDW�reverse mortgages will one day be a FRPPRQSODFH�ÀQDQFLDO�WRRO�XVHG�E\�VHQLRUV�WR�IXQG�UHWLUHPHQW��0XQQHOO�spoke with TRR�DERXW�WKH�EHQHÀWV�RI�reverse mortgages and her hopes for WKH�IXWXUH�RI�WKH�SURJUDP�

]JG you’ve been outspoken in your support of the reverse mortgage product. why do you think it can be an important tool for seniors looking IRU�ðQDQFLDO�VHFXULW\�LQ�UHWLUHPHQW"

AM\ I consider the reverse mortgage in the context of everything else that LV�JRLQJ�RQ�LQ�WKH�UHWLUHPHQW�VSDFH��,Q�WKDW�ZRUOG��ZH�VHH�WKDW�6RFLDO�6HFXULW\�is going to provide less relative to SUH�UHWLUHPHQW�HDUQLQJV��:H�VHH�D�VKLIW�LQ�UHOLDQFH�IURP�GHÀQHG�FRQWULEXWLRQ�SODQV��$QG�ZKHQ�ZH�ORRN�DW�GHÀQHG�FRQWULEXWLRQ�SODQV��ZH�ÀQG�WKDW�IRU�people approaching retirement, their KRXVHKROGV�KDYH�RQO\��LQ�WKHLU�FRPELQHG��N��DQG�LQGLYLGXDO�,5$�DFFRXQWV«�3HRSOH�DUH�MXVW�QRW�JRLQJ�WR�KDYH�HQRXJK�PRQH\�WR�PDLQWDLQ�WKHLU�VWDQGDUG�RI�OLYLQJ�LQ�UHWLUHPHQW��6R�WKDW�IRUFHV�\RX�WR�ORRN�DW�ZKDW�RWKHU�assets they have, whatever potential VRXUFHV�RI�VXSSRUW��)RU�PRVW�PLGGOH�FODVV�LQGLYLGXDOV��WKHLU�KRXVH�LV�WKHLU�ELJJHVW�DVVHW��6R�WKH�TXHVWLRQ�LV��´+RZ�FDQ�WKH\�WDS�LQWR�WKDW�PRQH\"µ�7KH�UHYHUVH�PRUWJDJH�LV�DQ�REYLRXV�LQVWUXPHQW�IRU�WKRVH�ZKR�ZDQW�WR�VWD\�

LQ�WKHLU�KRXVH�DQG�KDYH�DGGLWLRQDO�LQFRPH�GXULQJ�WKHLU�UHWLUHPHQW�SHULRG�

]JG you wrote an article in response to the cFpB’s Reverse Mortgage Report last year that refuted some RI�WKH�DJHQF\âV�ðQGLQJV�DQG�VHHPHG�to accurately summarize the views of many in the reverse industry. in particular, you criticized the media for running salacious headlines and failing to pick up on the details of the report. Do you think that those negative media headlines impacted WKH�LQGXVWU\�WR�DQ\�VLJQLðFDQW�GHJUHH"

AM\ <HV��,�GR��,�WKLQN�WKDW�WKHUH�LV�D�GUXPEHDW�RI�QHJDWLYH�UHSRUWV��,�WKLQN�a lot of this new agency, I’m delighted ZH�KDYH�LW��EXW�WKLV�UHSRUW�ZDV�MXVW�RQH�PRUH�KLW��$QG�WKLV�RQH�VHHPHG�WR�FRPH�IURP�D�YHU\�UHOLDEOH�VRXUFH�FRQFHUQHG�DERXW�WKH�ZHOIDUH�RI�KRXVHKROGV��$QG�VR�,�WKRXJKW�LW�ZDV�LPSRUWDQW�WR�answer the concerns expressed in the UHSRUW��%XW�PRUH�LPSRUWDQWO\��WKH�SUHVV�PDGH�WKH�UHSRUW�VRXQG�HYHQ�PRUH��

TRR Talks to Alicia MunnellB Y J E S S I C A G U E R I N

A

the DiRectoR oF the centeR FoR RetiReMent ReseaRch at Boston

college talks ReveRse MoRtgages.

IN THIS MONTH’S EDITION, ALiciA MunnELL tALks ABout thE hEcM’s roLE in rEtirEMEnt.

w

oR

igin

at

ing

Ma

Rk

et

ing

ap

pR

ais

ing

se

Rv

icin

gt

ec

hh

MB

ss

po

tl

igh

t

*

| TRR36


SPOTLIGHT ARTICLE

QHJDWLYH�WKDQ�LW�ZDV��,W�UDLVHG�VRPH�OHJLWLPDWH�LVVXHV�DQG�WKHUH�ZDV�D�PXFK�PRUH�QXDQFHG�GLVFXVVLRQ�WKDQ�ZH�VDZ�UHSRUWHG�LQ�WKH�SUHVV��

]JG as a result of that report and of the recent audit of the Mutual Mortgage insurance Fund, the cFpB has promised to make changes to the program. are there any changes you would like to see made in order to make the product safer for FRQVXPHUV"

AM\ ,�WKLQN�WKHUH�DUH�VRPH�REYLRXV�WKLQJV��7KHVH�SURGXFWV�QHHG�WR�EH�VROG�YHU\�FDUHIXOO\��7KH\·UH�FRPSOLFDWHG�and they’re expensive, and I think WKH\�KDYH�WR�EH�LQ�VRPH�VHQVH��EHFDXVH�\RX·UH�JLYLQJ�SHRSOH�PRQH\�XSIURQW�and then saying 20 or 30 years from QRZ��´,�WKH�OHQGHU�ZLOO�EH�UHSDLG�µ�DVVXPLQJ�D�ORW�RI�WKLQJV��$QG�VR��LW·V�D�ULVN\�EXVLQHVV��*LYHQ�WKDW�LW�LV�H[SHQVLYH�E\�QDWXUH��LW�QHHGV�WR�EH�sold to the right people and people QHHG�WR�XQGHUVWDQG�WKH�ULVNV��$QG�,�WKLQN�VSRXVHV�QHHG�WR�EH�IXOO\�informed and tied sales need to be SURKLELWHG��6R�WKHUH�DUH�DOO�WKHVH�WKLQJV�WKDW�\RX�ZDQW�WR�GR�WR�PDNH�WKLV�D�UHSXWDEOH�SURGXFW�WKDW�SHRSOH�DUH�SURXG�WR�XVH�

]JG why do you think the product LV�VR�RIWHQ�PLVXQGHUVWRRG"

AM\�,Q�VRPH�ZD\V�LW·V�QDWXUH��,W·V�sort of taking away the wealth of ROGHU�SHRSOH��3HRSOH�DUH�JRLQJ�EDFN�DQG�WKH\·UH�UHPRUWJDJLQJ�WKH�KRXVH�WKDW�WKH\�MXVW�FRQWULEXWHG�WR�SD\LQJ�RII�RYHU�WKHLU�HQWLUH�ZRUNLQJ�OLIH��6R�WKH\·UH�VD\LQJ��´,·P�JRLQJ�WR�JLYH�XS�P\�KRXVH�IRU�VRPH�PRQH\�LQ�UHWLUHPHQW�µ�7KDW·V�VRUW�RI�D�SDLQIXO�WKLQJ�WR�GR��,�WKLQN�LW·V�HFRQRPLFDOO\�QHFHVVDU\��EXW�ER\��DOO�WKH�HYLGHQFH�WR�date shows that it’s not something that people want to do if they don’t have to GR�LW��$OO�WKH�VXUYH\V�VKRZ�WKDW�SHRSOH�UHWDLQ�WKHLU�KRPH�HTXLW\�XQWLO�ODWH�LQ�UHWLUHPHQW�XQOHVV�WKH\�KDYH�VRPH�

action that forces them to leave it to WKHLU�HVWDWH��6R��LW·V�SDLQIXO�WR�VD\�WKDW�\RX�QHHG�WR�XVH�\RXU�KRXVH�WR�VXSSRUW�\RXUVHOI��$QG�WKHQ��LW�VHHPV�OLNH�LI�WKHUH�DUH�DQ\�LQFLGHQFHV�RI�PLV�VHOOLQJ��WKH\�JHW�HQRUPRXV�SXEOLFLW\�DQG�WKH\�DUH�QRW�SXW�LQ�FRQWH[W��

]JG the product has had a low penetration rate thus far, just about 3 percent of the potential borrower market. what do you think the LQGXVWU\�FDQ�GR�WR�WXUQ�WKDW�DURXQG"

AM\ I think the evolving trends are JRLQJ�WR�WXUQ�LW�DURXQG��7KH�SHRSOH�who are retired today retired when 6RFLDO�6HFXULW\·V�QRUPDO�UHWLUHPHQW�age was 65, and a lot of them have GHÀQHG�EHQHÀW�SODQV��:H·UH�ZDWFKLQJ�D�WUDQVLWLRQ�KHUH�WR�D�VLWXDWLRQ�ZKHUH�QHZ�UHWLUHHV�DUH�JRLQJ�WR�KDYH�UHGXFHG�6RFLDO�6HFXULW\��EHFDXVH�WKH�UHWLUHPHQW�DJH�LV�JRLQJ�RXW��$QG�VR�,�WKLQN�MXVW�the economics of need are going to increase the demand for reverse PRUWJDJHV��

]JG Do you expect this product to be much more commonplace in the IXWXUH"

AM\ I do think it will become more FRPPRQSODFH��,�ZRXOG�OLNH�WR�VHH�LW�EHFRPH�QRUPDOL]HG�WR�WKH�SRLQW�ZKHUH�SHRSOH�LQ�WKHLU�HDUO\��V�ZLOO�JR�RXW�IRU�GLQQHU�DQG�VD\��´1RZ��ZKHUH�GLG�\RX�JHW�\RXU�UHYHUVH�PRUWJDJH"µ�,W�ZRXOG�EH�WKH�QDWXUDO��QRUPDO�WKLQJ�WR�GR��,Q�HFRQRPLFV��D�ORW�RI�VWXGLHV�REVHUYH�QHLJKERUKRRG�HIIHFWV��,�GRQ·W�know where the tipping point is, ZKHUH�SHRSOH�VWDUW�WR�VHH�HQRXJK�RWKHU�people doing it that it becomes the VRFLDO�QRUP��EXW�,�WKLQN�WKDW�LV�KRZ�LW·V�JRLQJ�WR�KDSSHQ��,�WKLQN�HFRQRPLF�SUHVVXUHV�RQ�LQGLYLGXDO�KRXVHKROGV�ZLOO�FDXVH�WKH�PDUNHW�WR�LQFUHDVH��DQG�so it’s very, very important that, as the GHPDQG�IRU�WKHVH�SURGXFWV�LQFUHDVHV��they are sold to the right people and WKDW�WKH�LQGXVWU\�SROLFHV�LWVHOI�WR�PDNH�

The CenTer for reTiremenT researCh aT BosTon

College was esTaBlished in 1998 Through a granT

from The soCial seCuriTy adminisTraTion. reCognized

By The New York Times as “The naTion’s leading

CenTer on reTiremenT sTudies,” The nonprofiT

insTiTuTion foCuses iTs efforTs on soCial

seCuriTy, sTaTe and loCal pensions, healTh and

long-Term Care, older workers and reTiremenT finanCing. aCCording To iTs mission sTaTemenT,

The CenTer aims To reaCh Beyond eConomiCs To sTudy “The Behavioral

faCTors ThaT drive individuals’ deCisions so we Can CrafT soluTions ThaT work in praCTiCe, noT jusT in Theory.” To aChieve This goal, The

CenTer sponsors mulTiple researCh projeCTs ThaT explore TopiCs relaTed

To The eConomiCs of reTiremenT, and iT

puBlishes These findings online for The puBliC.

L E A R N M O R E A B O U T T H E C E N T E R F O R R E T I R E M E N T R E S E A R C H

C R R . B U . E D U

C E N T E R forreTireMenTr e s e A r c hat BOSTON COLLEGE


SPOTLIGHT ARTICLE

VXUH�WKHUH�DUH�VWLOO�HWKLFDO�SURFHGXUHV�JRLQJ�RQ��

]JG i understand that you’re a board member and investor in longbridge Financial. what HQFRXUDJHG�\RX�WR�JHW�LQYROYHG"�

AM\�<HV��,·P�QRW�ULFK��,·YH�VSHQW�P\�whole life not getting rich and I don’t WKLQN�,·P�JRLQJ�WR�JHW�ULFK�KHUH��%XW�,�DP�DQ�LQYHVWRU��,�SXW�D�ELW�RI�PRQH\�LQ�and it’s the only time I’ve ever done LW�LQ�P\�OLIH��,W�UHÁHFWV�WKH�IDFW�WKDW�,�DP�VR�FRQYLQFHG�WKDW�WKLV�LV�D�SURGXFW�SHRSOH�DUH�JRLQJ�WR�QHHG��$QG�DOVR��I’m convinced that Longbridge is GHGLFDWHG�WR�VHOOLQJ�WKHVH�SURGXFWV�LQ�D�VRFLDOO\�UHVSRQVLEOH�ZD\��6R�,·P�YHU\�H[FLWHG�DERXW�WKLV��P\�OLWWOH�SULYDWH�HTXLW\�LQYHVWPHQW��

]JG what do you think is the reverse mortgage industry’s greatest FKDOOHQJH"

AM\�,�WKLQN�ULJKW�QRZ�LW·V�LPDJH��I think that it needs to shift this LPDJH�RI�DQ�LQGXVWU\�WKDW�WULFNV�ROGHU�SHRSOH�LQWR�JLYLQJ�XS�WKHLU�KRPHV�and then once they get some money, IRUFHV�WKHP�WR�EX\�LQWR�H[SHQVLYH�DQQXLWLHV��,W�QHHGV�WR�JHW�DZD\�IURP�this misdealing and there needs to be DQ�LQGXVWU\�JURXS�WKDW�VD\V�ZH·UH�D�JRRG�QHZ�LQGXVWU\�DQG�DOO�WKRVH�EDG�WKLQJV�KDSSHQHG�LQ�WKH�SDVW��6R�LQ�some ways, we need to wipe the slate clean and establish standards that HYHU\ERG\�VLJQV�RQ�WR��LQFUHDVH�WUXVW�LQ�WKH�SURGXFW�DQG�WKH�SHRSOH�ZKR�VHOO�WKH�SURGXFW��

]JG what are your hopes for the GLUHFWLRQ�RI�WKH�SURJUDP"

AM\�,�WKLQN�LW�VKRXOG�EHFRPH�D�VRFLDO�QRUP��D�GHIDXOW�WKLQJ�WKDW�ROGHU�SHRSOH�GR�ZKHQ�WKH\·UH�WKLQNLQJ�DERXW�UHWLUHPHQW��7KH\�VLJQ�XS�IRU�6RFLDO�6HFXULW\��WKH\�VLJQ�XS�IRU�0HGLFDUH��they get a reverse mortgage on their

KRXVH��,�WKLQN�WKH\·UH�JRLQJ�WR�QHHG�WR�do it and I think that it will become, HYHQWXDOO\��D�VRFLDOO\�DFFHSWDEOH��QRUPDO�WKLQJ�WR�GR��,�WKLQN�ZH�KDYHQ·W�UHDOO\�WKRXJKW�HQRXJK�DV�UHVHDUFKHUV�DERXW�ZD\V�WR�XVH�UHYHUVH�PRUWJDJHV��$QG�WKLV�FDPH�XS�LQ�WKH�FRQWH[W�RI�WKH�CFPB report, this notion that people JHW�WKHP�\RXQJ��,Q�P\�YLHZ��WKDW�PLJKW�EH�D�JRRG�WKLQJ��EHFDXVH�,�DP�very big on people deferring claiming WKHLU�6RFLDO�6HFXULW\�EHQHÀWV��EHFDXVH�of the great advantage to getting this LQÁDWLRQ�LQGH[�DQQXLW\�DW�D�ODWHU�DJH��6R��LI�\RXU�KRXVH�FDQ�KHOS�\RX�JHW�IURP��WR��WKDW�PD\�EH�D�YHU\�JRRG�ZD\�WR�XVH�D�UHYHUVH�PRUWJDJH��7KHUH�KDVQ·W�EHHQ�HQRXJK�VWXG\�RQ�GLIIHUHQW�ZD\V�WR�XVH�WKLV�SURGXFW��,�WKLQN�LW�FRXOG�EH�XVHG�YHU\�LQWHOOLJHQWO\�DW�D�\RXQJHU�DJH��x

oR

igin

at

ing

Ma

Rk

et

ing

ap

pR

ais

ing

se

Rv

icin

gt

ec

hh

MB

ss

po

tl

igh

t

*

EXPERIENCE THEDIFFERENCE!

MIS can handle your title, settlement and valuation needs.

Mortgage Information Services expertly handles title insurance, loan settlement services and valuations nationwide under one roof! MIS offers a unique, streamlined approach to compliment our hands-on customer service.

mtginfo.com800.877.7557 ext 1222

Valuations

SettlementTitle

| TRR38


The


UU

o oWReverse mortgage lenders grapple with mounting operational

costs in a hyper-regulated world.


WR�RYHUVHH�ÀQDQFLDO�SURGXFWV�DQG�VHUYLFHV�IRU�FRQVXPHUV�WR�HQVXUH�IDLU�DQG�WUDQVSDUHQW�SUDFWLFHV��:KLOH�LWV�progress to date in achieving this mission might be debatable, what LV�FHUWDLQ�LV�WKDW�WKH�EXUHDX·V�HIIRUWV�WKXV�IDU�KDYH�DOUHDG\�KDG�D�VLJQLÀFDQW�LPSDFW�RQ�WKH�ÀQDQFLDO�VHUYLFHV�LQGXVWU\��$V�PDQ\�LQ�WKLV�VHFWRU�DWWHPSW�WR�DGKHUH�WR�QHZ�UHJXODWLRQV�enacted by the agency, they have seen WKH�FRVW�RI�EXVLQHVV�VN\URFNHW�DV�WKH\�spend time and money grappling with PRXQWLQJ�FRPSOLDQFH�FRQFHUQV��

In March, the CFPB acknowledged these concerns in a blog post that promised to investigate the H[SHQVH�RI�FRPSO\LQJ�ZLWK�ÀQDQFLDO�UHJXODWLRQV��´5HJXODWLRQV�FDQ�KDYH�PDQ\�EHQHÀWV�IRU�FRQVXPHUV��EXW�WKH�EHQHÀWV�VRPHWLPHV�FRPH�DW�D�FRVW�µ�the post conceded, adding that the EXUHDX·V�UHVHDUFK�WHDPV�ZLOO�VWDUW�WDONLQJ�WR�EDQNV�DFURVV�WKH�FRXQWU\�DERXW�FRVWV�LQFXUUHG��EHJLQQLQJ�ZLWK�WKRVH�WKDW�GHDO�ZLWK�GHSRVLW�SURGXFWV�DQG�VHUYLFHV��:KLOH�WKH�&)3%�VDLG�LW�will consider these costs and weigh WKHP�DJDLQVW�FRQVXPHU�EHQHÀWV��LW·V�XQOLNHO\�WKDW�WKH�LQYHVWLJDWLRQ�ZLOO�\LHOG�DQ\�VLJQLÀFDQW�FKDQJH�LQ�WKH�QHDU�WHUP��DW�OHDVW��,Q�DQ�HPDLO�WR�The Reverse Review, the agency declined to FRPPHQW�RQ�LWV�SURJUHVV��

When it comes to compliance concerns, reverse mortgage companies are no

GLIIHUHQW�WKDQ�RWKHU�EXVLQHVVHV�LQ�WKH�EURDG�ÀQDQFLDO�VHUYLFHV�VHFWRU��,Q�WKLV�KHLJKWHQHG�UHJXODWRU\�HQYLURQPHQW��reverse lenders big and small are IHHOLQJ�WKH�HIIHFWV�DV�WKH\�VWUXJJOH�WR�DGMXVW�WR�D�QHZ�ZD\�RI�GRLQJ�EXVLQHVV�

An Unsustainable Path

After months and months of IUXVWUDWLRQ�RYHU�WKH�HYHU�FKDQJLQJ�UHJXODWRU\�HQYLURQPHQW��PDQ\�LQ�WKH�UHYHUVH�LQGXVWU\�DJUHH�WKDW�VRPHWKLQJ�KDV�WR�JLYH��-LP�0LODQR��DQ�DWWRUQH\�DW�:HLQHU�%URGVN\�.LGHU�ZKR�VSHFLDOL]HV�LQ�FRPSOLDQFH�LVVXHV�IRU�UHYHUVH�PRUWJDJH�OHQGHUV��VD\V�WKH�VLWXDWLRQ�LV�EHFRPLQJ�XQPDQDJHDEOH��´7KH�FRVW�RI�FRPSOLDQFH�LV�JRLQJ�XS�DQG��EDVHG�RQ�FXUUHQW�WUHQGV�LQ�WKH�IRUZDUG�VHFWRU��WKH�PRUWJDJH�LQGXVWU\�LV�RQ�DQ�XQVXVWDLQDEOH�SDWK�µ

0RVW�RI�WKH�&)3%·V�UHFHQW�UXOHPDNLQJ�WKXV�IDU�KDV�KLW�WKH�IRUZDUG�PDUNHW�WKH�KDUGHVW��0LODQR�VD\V�WKHVH�UHJXODWLRQV�DUH�ERXQG�WR�WDNH�D�VHULRXV�WROO�RQ�PDLQVWUHDP�PRUWJDJH�OHQGLQJ��´,Q�WKH�IRUZDUG�PRUWJDJH�LQGXVWU\��QHZ�UHTXLUHPHQWV�UHJDUGLQJ�DELOLW\�WR�UHSD\�DQG�TXDOLÀHG�PRUWJDJHV�ZLOO�XQGRXEWHGO\�FRQVWUDLQ�PRUWJDJH�FUHGLW�µ�KH�VD\V��´$QG�WKH��SHUFHQW�points and fees threshold, which cannot be crossed if one is to make a TXDOLÀHG�PRUWJDJH��DQG�WKH�$35�WHVW�WKDW�PXVW�EH�PHW�LQ�RUGHU�WR�VDWLVI\�WKH�TXDOLÀHG�PRUWJDJH�VDIH�KDUERU��

are nothing short of ‘backdoor’ price controls on mainstream, forward UHVLGHQWLDO�PRUWJDJH�ORDQV��:H�KDYH�QRW�KDG�SULFH�FRQWUROV�LQ�WKH�8�6��VLQFH�:RUOG�:DU�,,�µ

:KLOH�WKH�UHYHUVH�LQGXVWU\�KDV�managed to avoid many of the &)3%·V�UHFHQW�UXOHV��OLNH�WKH�4XDOLÀHG�0RUWJDJH�DQG�$ELOLW\�WR�5HSD\�UXOHV��that will drastically impact the forward VHFWRU��LW�KDV�QRW�HVFDSHG�IUHH�DQG�FOHDU��´5HYHUVH�PRUWJDJH�FRPSDQLHV�KDYH�VWLOO�EHHQ�KLW�ZLWK�WKH�VDPH�RQVODXJKW�RI�QHZ�UHJXODWLRQV�WKDW�KDYH�DOVR�EHVHW�WKH�IRUZDUG�PRUWJDJH�LQGXVWU\�RYHU�WKH�SDVW�ÀYH�\HDUV��LQFOXGLQJ�QHZ�6$)(�$FW�UHTXLUHPHQWV��0RUWJDJH�&DOO�5HSRUWV�DQG�VWDWH�DXGLWV�DQG�H[DPV�µ�0LODQR�VD\V��´1RW�WR�PHQWLRQ�D�PRUH�DJJUHVVLYH�DXGLW�DQG�HQIRUFHPHQW�VWDQFH�WDNHQ�E\�+8'�µ

7KH�VLWXDWLRQ�LV�XQOLNHO\�WR�OHW�XS�DQ\WLPH�VRRQ��:KLOH�WKH�&)3%�KDV�IRFXVHG�PRVW�RI�LWV�DWWHQWLRQ�RQ�WKH�IRUZDUG�PDUNHW�WKXV�IDU��WKH�UHYHUVH�VHFWRU�FDQ�H[SHFW�UXOHV�VSHFLÀF�WR�WKH�HECM market sometime in the next \HDU��

Examining the Expense

While many agree that the cost RI�GRLQJ�EXVLQHVV�KDV�LQFUHDVHG�VLJQLÀFDQWO\�LQ�WKH�IDFH�RI�QHZ�DQG�SHQGLQJ�UHJXODWLRQV��VRPH�VD\�LW·V�GLIÀFXOW�WR�SLQSRLQW�DQ�H[DFW�ÀJXUH��

$inceits inception in July 2011, the CFPB has set out on a mission

| TRR40


´$�ORW�RI�LW�JHWV�EXULHG�LQ�RSHUDWLQJ�costs,” says Mark Browning, CEO of 1HZ�<RUN�EDVHG�UHYHUVH�PRUWJDJH�OHQGHU�+RPH&KH[��´)URP�D�PHDVXUHPHQW�VWDQGSRLQW��MXVW�ORRNLQJ�WR�GLUHFW�FRVWV�GRHVQ·W�FDSWXUH�WKH�ZKROH�WKLQJ�µ

While Browning admits that some of WKH�QHZ�UXOHV³OLNH�WKH�VLPSOLÀFDWLRQ�RI�FRQVXPHU�GLVFORVXUHV³DUH�LQVWLWXWLQJ�SRVLWLYH�FKDQJHV�WKDW�ZLOO�EHQHÀW�ERWK�WKH�FRQVXPHU�DQG�LQGXVWU\�LQ�WKH�ORQJ�WHUP��JUDSSOLQJ�ZLWK�FRQVWDQW�UHJXODWRU\�FKDQJHV�KDV�WDNHQ�D�WROO�RQ�SURÀWDELOLW\��´&ROOHFWLYHO\��DOO�RI�WKH�UXOHV�KDYH�created a very expensive operating HQYLURQPHQW�µ�KH�VD\V��´,�ZRXOG�VD\�the cost of operation is two to three WLPHV�ZKDW�LW�RQFH�ZDV�µ

Browning says nearly a third of his time is spent addressing compliance FRQFHUQV��+H�DOVR�VD\V�PXFK�RI�WKH�problem comes down to the fact that KHLJKWHQHG�UHJXODWLRQ�KDV�OHQJWKHQHG�WKH�DPRXQW�RI�WLPH�LW�WDNHV�WR�FORVH�D�ORDQ��´:H�FDQ·W�H[WHQG�D�WLPHOLQH�E\�HLJKWIROG�WR�PRYH�D�SURGXFW�GRZQ�WKH�SURGXFWLRQ�OLQH�DQG�QRW�KDYH�PXFK��PXFK�KLJKHU�RSHUDWLQJ�FRVWV�µ�KH�VD\V��´7KH\·UH�DOORFDWHG�RSHUDWLQJ�FRVWV��EXW�WKH�UHDOLW\�LV�WKH\�DUH�FRPSOLDQFH�FRVWV�µ

0LODQR�DFNQRZOHGJHV�WKH�GLIÀFXOW\�reverse companies have in swallowing WKH�H[WUD�H[SHQVH��´,W�LV�HDV\�WR�EH�V\PSDWKHWLF�WR�DQ�H[HFXWLYH·V�SOLJKW�LQ�WKLV�DUHD�µ�KH�VD\V��´,Q�WKH�ZRUOG�RI�FRVW�DFFRXQWLQJ��FRPSOLDQFH�LV�D�À[HG�FRVW��DV�RSSRVHG�WR�D�YDULDEOH�FRVW��,I�D�FRPSDQ\�KLUHG��QHZ�ORDQ�RIÀFHUV��WKH�ORDQ�RIÀFHUV·�FRPSHQVDWLRQ�ZRXOG�be an expense, however, some, if not DOO��RI�WKH�ORDQ�RIÀFHUV�ZRXOG�SURGXFH�SURÀWDEOH�ORDQV�WKDW�WKH�FRPSDQ\�

FRXOG�VHOO��$�FRPSOLDQFH�RIÀFHU��RQ�the other hand, is not going to make ORDQV�µ

Too Small to Comply

While larger reverse mortgage lenders PXVW�DOVR�JUDSSOH�ZLWK�UHJXODWRU\�expenses, smaller lenders with fewer UHVRXUFHV�DUH�XQGRXEWHGO\�KLW�WKH�hardest, giving credence to the concept that some companies may be too small WR�FRPSO\�

-LP�&RU\��RI�6DQ�'LHJR�EDVHG�/HJDF\�Reverse Mortgage, says that while FRPSOLDQFH�FRVWV�IRU�KLV�EXVLQHVV�DUH�FXUUHQWO\�PDQDJHDEOH��WKHUH�LV�DOZD\V�the threat that they will grow beyond what a small lender can feasibly KDQGOH��

´7KH�LGHD�RI�¶WRR�VPDOO�WR�FRPSO\·�LV�GHÀQLWHO\�D�FRQFHUQ�µ�&RU\�VD\V��´7KHUH·V�MXVW�D�JLJDQWLF�QXPEHU�RI�WKLQJV�\RX�QHHG�WR�ZDWFK�FORVHO\�µ�&RU\�VD\V�WKH�IHDU�LV�WKDW�FRPSOLDQFH�related work will grow so large that, at some point, the company won’t be able to afford to hire an attorney WR�DVVHVV�UHJXODWRU\�ULVN�ZKLOH�KH�FRQWLQXHV�WR�RULJLQDWH�ORDQV��´,I�,·P�no longer originating mortgages, I no longer have the time to do the things that I need to do to make my EXVLQHVV�VXFFHVVIXO��,·P�MXVW�ZRUNLQJ�RQ�FRPSOLDQFH�µ�&RU\�VD\V��´:H·UH�QRW�WKHUH�\HW��EXW�WKDW�ZRXOG�EH�WKH�GDQJHU�µ

Cory says that if this becomes the case, WKH�LQGXVWU\�PD\�VHH�VPDOOHU�HQWLWLHV�OHDYH�WKH�VSDFH��´$W�VRPH�SRLQW��VPDOOHU�OHQGHUV�DQG�EURNHUV�FRXOG�EH�SXVKHG�RXW�RI�WKH�EXVLQHVV�EHFDXVH�WKHUH�ZRXOG�EH�QR�IHDVLEOH�ZD\�IRU�WKHP�WR�NHHS�XS�µ

“Survive and You Will Thrive”

Milano agrees that small lenders have D�WRXJK�MRE�DKHDG�WU\LQJ�WR�VWD\�RQ�WRS�RI�UHJXODWRU\�FKDQJH��EXW�VD\V�WKDW�IRU�QRZ��WKHUH·V�QRW�PXFK�WR�GR�EXW�WUHDG�RQ��

´:KLOH�LW�LV�WUXH�WKDW��XQWLO�VRPHRQH�sells something, no one gets paid, not properly investing in compliance LQ�WKH�FXUUHQW�HQYLURQPHQW�FRXOG�H[SRVH�D�FRPSDQ\�WR�XQGXH�ULVN�DQG�ORVV�µ�KH�VD\V��´7R�WKH�H[WHQW�WKDW�WKH\�have not already started to do so, in WKLQNLQJ�WKURXJK�WKLV�VWUDWHJ\��UHYHUVH�PRUWJDJH�H[HFXWLYHV�PXVW�EHJLQ�WR�view compliance as an investment and QRW�PHUHO\�DQ�H[SHQVH�µ

Milano says that companies that can alter their mindset and start viewing compliance costs as a necessary LQYHVWPHQW�LQ�WKHLU�EXVLQHVVHV·�LQIUDVWUXFWXUH�ZLOO�KDYH�D�VWURQJ�FRPSHWLWLYH�DGYDQWDJH�

´,I�\RX�FDQ�VXUYLYH�DQG�JHW�WKURXJK�WKLV��DQG�JHW�RQ�WKH�RWKHU�VLGH��\RX·UH�JRLQJ�WR�WKULYH�µ�KH�VD\V��´%HFDXVH�ZKHQ�\RX�FRPH�WKURXJK�WKLV��WKHUH·V�JRLQJ�WR�EH�OHVV�FRPSHWLWLRQ�RXW�WKHUH��A lot of people aren’t going to be able WR�FRPPLW�WR�ZKDW�\RX·YH�FRPPLWWHG�WR�GR��ZKLFK�LV�WR�LQYHVW�LQ�\RXU�LQIUDVWUXFWXUH�DQG�\RXU�HQWHUSULVH�DW�DOO�OHYHOV³QRW�MXVW�VDOHV��QRW�MXVW�technology, marketing and advertising, EXW�DOVR�FRPSOLDQFH�µ�x

“In the world of cost accounting, compliance is a fixed cost, as opposed to a variable cost. If a company hired 10 new loan officers, the loan officers’ compensation would be an expense, however, some, if not all, of the loan officers would produce profitable loans that the company could sell. A compliance officer, on the other hand, is not going to make loans.”

UU

o oW

According to Jim


FIVE STEPS TOWARD COMPLIANCE

By Jim Milano

WHEN THE CFPB FOCUSES ON NEW REVERSE MORTGAGE RULES AND SUCH RULES COME INTO EFFECT, THE REVERSE MORTGAGE INDUSTRY WILL HAVE A NEW ROUND OF REGULATORY BURDENS AND IMPLEMENTATION CHALLENGES TO DEAL WITH. HERE ARE FIVE STEPS THAT COMPANIES CAN TAKE TO ASSURE AN EFFECTIVE COMPLIANCE MANAGEMENT SYSTEM:

ADOPT A COMPLIANCE CULTURE FROM THE TOP TO THE BOTTOM. A company’s board of directors and executive management team must not only be aware of compliance issues, but also must direct the compliance function, which leads us to the next steps…

CREATE REGULATORY POLICIES AND PROCEDURES BASED ON CURRENT LAW AND REGULATIONS. There is no substitute (and no excuse) for not knowing the basic black letter of the law. A recitation of the laws applicable to a company’s operations (whether it merely originates, or also makes, funds, sells and services loans) should be contained in its policy statement documents. Many companies’ policies and procedures are contained in an online format so that company employees can easily access such materials and even participate in online training that can be tracked and tested.

No.3 Integrate written policies.

A company must have written policies in place—not merely canned policy documents that sit on a shelf, but policies that are integrated into company operations and procedures. These policies must cover all regulatory and legal aspects that apply to and impact a company’s mortgage operations and its support functions, and should be reviewed and approved by the board of directors.

TRAIN YOUR STAFF. A company should

train all of its staff on compliance requirements, especially its sales

staff. Many companies utilize vendors, such as LOS systems, doc

WYLW�JVTWHUPLZ�HUK�V\[ZPKL�X\HSP[`�JVU[YVS�ÄYTZ��^OPJO�PZ�J\Z[VTHY �̀�

routine and acceptable in the mortgage business. However, while a

mortgage company can outsource certain tasks that assist in

the compliance function, the responsibility to remain compliant cannot be outsourced.

12

4

Develop a strong quality control (QC) and internal audit function. The internal

audit function should report directly to

the board of directors and should not be

subject to supervision or oversight by

the sales or operations functions of the

company. The QC function should review

loans, while the internal audit function

should review the company’s overall

operations and compliance with laws and

regulations. Of course, these two functions

should work together and coordinate their

efforts. When the internal audit function

detects problems, it should report those

problems to the board, which should

review the concerns and perhaps give

the applicable department an opportunity

to respond. If the department questions

the rule being reviewed, compliance or

legal counsel should re-review the rule in

question to assure the company’s policies

and procedures are up to date. Then, if

warranted, the board should direct that

corrective action be taken.

all of this might sound like a great

deal of work. nonetheless, once these

steps are institutionalized, they will

become a routine part of a company’s

overall operations and provide both a

foundation and a feedback loop for a

robust compliance program.

Finally, after hearing the above

overview, one director at a recent

board meeting turned to me with a

question: “Are we in the mortgage business or the compliance business?” he asked.

the answer, for the next few years at

least, is “Both.”

number five

| TRR42


R�WKH�À[HG�UDWH�ORDQ�KDV�EHHQ�RII�WKH�PDUNHW�IRU�PRUH�WKDQ�WZR�PRQWKV�QRZ��+RZ�KDV�HYHU\RQH�EHHQ�GRLQJ�VLQFH�WKH�$SULO��PRUDWRULXP"

,�ZRXOG�OLNH�WR�WDNH�D�ZDON�GRZQ�PHPRU\�ODQH�IRU�D�PLQXWH�DQG�ORRN�DW�VRPH�KLVWRU\�EHKLQG�WKH�À[HG�UDWH�SURGXFW��$ERXW�VHYHQ�\HDUV�DJR��WKH�À[HG�UDWH�ORDQ�ZDV�QRQH[LVWHQW��DOO�ZH�KDG�ZDV�WKH�PRQWKO\�RU�\HDUO\�+(&0�$50��)DQQLH�0DH�KDG�the Home Keeper, its version of the reverse mortgage, which JDYH�XV�GLIIHUHQW�RSWLRQV�WR�RIIHU�EXW�QRW�LQ�WKH�ZD\�RI�D�À[HG�UDWH�ORDQ��:H�DOVR�KDG�WKH�SURSULHWDU\�UHYHUVH�PRUWJDJH�EDFN�WKHQ�IRU�WKH�MXPER�ORDQ�PDUNHW��7KHVH�ZHUH�UHYHUVH�PRUWJDJHV�FUHDWHG�E\�LQVWLWXWLRQV�OLNH�)LQDQFLDO�)UHHGRP��ZKR�FUHDWHG�WKH�´FDVK�DFFRXQW�µ�

$Q\�OHQGHU�RU�EURNHU�LQ�WKH�EXVLQHVV�DW�WKDW�WLPH�KDG�WKH�VDPH�UDWH��PDUJLQV�DQG�FORVLQJ�FRVWV�DV�WKH�FRPSHWLWRU�QH[W�GRRU��Rates on loans were controlled by HUD, not by the broker

RU�WKH�OHQGHU��:KDW�NHSW�XV�FRPSHWLWLYH�ZLWK�HDFK�RWKHU�ZDV�RXU�TXDOLW\�RI�VHUYLFH��:KDW�DOVR�VHSDUDWHG�RQH�IURP�WKH�RWKHU�ZDV�D�ORDQ�RIÀFHU·V�OHYHO�RI�NQRZOHGJH��/DVW�EXW�QRW�OHDVW��WKH�GHJUHH�RI�SDVVLRQ�DQG�KDQG�KROGLQJ�GLVSOD\HG�E\�D�ORDQ�RIÀFHU�DOVR�DIIHFWHG�KLV�VXFFHVV�UDWH��%DFN�LQ�WKRVH�GD\V��WKHUH�ZDV�QR�À[HG�UDWH�ORDQ�WR�VSHDN�RI�DQG�ZH�VHUYHG�RXU�FXVWRPHUV�MXVW�WKH�VDPH��GLVFXVVLQJ�WKH�EHQHÀWV�RI�D�UHYHUVH�PRUWJDJH�DQG�KRZ�LW�FRXOG�FKDQJH�D�VHQLRU·V�OLIH��

%XW�WKHQ�)DQQLH�0DH�LQWURGXFHG�ZKDW�ZH�FDOO�´OLYH�SULFLQJ�µ�7KLV�PHWKRG�RI�SULFLQJ�LQ�WKH�UHYHUVH�PRUWJDJH�LQGXVWU\�SXW�XV�RQ�D�OHYHO�ZLWK�WUDGLWLRQDO�OHQGLQJ��$OO�RI�D�VXGGHQ��UDWHV�DQG�IHHV�VWDUWHG�WR�ÁXFWXDWH��7KH�KLJKHU�WKH�UDWH�RU�PDUJLQ��WKH�PRUH�PRQH\�DQ�/2�DQG�KLV�FRPSDQ\�FRXOG�PDNH��HVSHFLDOO\�RQ�D�À[HG�UDWH�ORDQ��7KH�UHDO�DGMXVWPHQW�WR�WKH�HQG�RI�WKH�À[HG�UDWH�LV�QRW�WKH�ORVV�RI�DQRWKHU�SURGXFW�RIIHULQJ�IRU�WKH�FRQVXPHU�DV�PXFK�DV�WKH�ORVV�RI�WKLV�SURÀW��

0\�IULHQGV��RXU�LQGXVWU\�PD\�KDYH�WR�UHYHUW�EDFN�WR�WKH�ROG�ZD\�RI�GRLQJ�EXVLQHVV��DQG�WKLV�ZRXOG�EH�D�JRRG�WKLQJ�IRU�RXU�VHQLRUV��:KLOH�WKH�DGMXVWPHQW�WR�EXVLQHVV�ZLWKRXW�WKH�6WDQGDUG�À[HG�UDWH�SURGXFW�ZLOO�EH�KDUG�IRU�VRPH��RWKHUV�PD\�UHFRJQL]H�LW�DV�D�ZHOFRPH�EOHVVLQJ��-XVW�UHPHPEHU�WKLV��<RX�QHHG�WR�VHOO�WKH�FRQFHSW��\RX�GR�QRW�QHHG�WR�VHOO�WKH�SURGXFW��,W�GRHV�QRW�PDWWHU�LI�LW�LV�D�À[HG�UDWH�ORDQ�RU�DQ�$50�RU�D�6DYHU��6HOO�WKH�EHQHÀWV�DQG�WKH�FRQFHSW�RI�WKH�SURJUDP��ÀQG�RXW�ZKDW�D�ERUURZHU·V�SDUWLFXODU�QHHG�LV�DQG�ÀOO�WKDW�QHHG�ZLWK�WKH�SURGXFW�WKDW�VXLWV�WKHP�EHVW��,I�\RX�VWLFN�WR�WKDW�DSSURDFK��\RX�ZLOO�VXFFHHG�

:H�DUH�SDUW�RI�DQ�LQGXVWU\�WKDW�JLYHV�XV�WKH�RSSRUWXQLW\�WR�EH�SUREOHP�VROYHUV��:H�KHOS�VHQLRUV�DFKLHYH�WKHLU�GUHDPV��LPSURYH�WKHLU�TXDOLW\�RI�OLIH��VROYH�WURXEOLQJ�ÀQDQFLDO�FRQFHUQV��VDYH�WKHLU�KRPHV�IURP�SRVVLEOH�IRUHFORVXUH�DQG�HYHQ�EULQJ�IDPLOLHV�EDFN�WRJHWKHU�DJDLQ��:KDW�D�ZRQGHUIXO�ZD\�WR�VSHQG�HDFK�DQG�HYHU\�GD\�

:H�KDYH�D�YHU\�EULJKW�IXWXUH�DKHDG�XV�LQ�WKH�UHYHUVH�PRUWJDJH�LQGXVWU\��7KHUH�DUH�PRUH�VHQLRUV�WXUQLQJ�RI�DJH�GDLO\�WKDW�ZLOO�TXDOLI\�IRU�D�UHYHUVH�PRUWJDJH�WKDQ�HYHU�EHIRUH�:H�VKRXOG�DOO�EH�WKDQNIXO�WR�EH�LQ�WKLV�LQGXVWU\��x

Adjusting to Business Without the Fixed-Rate JOHN SMALDONE

LAST WORDDISCUSS

Want to comment on this article?Comment online at reversereview.com.

S


RMPath.com

Wholesale LendingCorrespondent LendingAggregation Partnering

V��V

��V

W E O F F E R E XC E P T I O N A L S E R V I C E A N D M A R K ET ! L E A D I N G P R I C I N GPowerful, Secure, Scalable Loan Origination System utilizing the RM COMPASS Technology Platform

RMS FAMILY OF COMPANIES

Largest Issuer of HMBS in 2012

Rated 'Strong' by Standard and Poors

State-of-the-art CRM/LOS Applications

REO Management and Leasing Services

Forward/Specialty Mortgage Servicing

V��V

��V��V

��V

RMSNAV.com

Your direct path to growth in theReverse Mortgage market.

Looking for a new solution?

Look atMortgage Cadence.

888.462.2336 mortgagecadence.com

Active Innovation. Proven Results. Real Experts.

Innovating the mortgage process since the dawn of on-line, Mortgage Cadence

delivers proven solutions in the form of double-digit ROI thoughout the

mortgage cycle. Our team of mortgage lending and technology experts is the

EHVW�LQ�WKH�EXVLQHVV��/HW�XV�KHOS�\RX�PD[LPL]H�HƯFLHQFLHV��LQFUHDVH�SURƬWV�DQG�quicken the tempo of your mortgage operation.

Orchestrator5XOHV�EDVHG��&RQƬJXUDEOH�

The industry’s leading Enterprise Lending Solution.

SymphonyCloud-based. Comprehensive.

The industry’s leading end-to-end lending solution.

PreludeEasy. Intuitive.

The industry’s newest origination portal.

FinaleData-driven. Compliant.

The industry’s leading document prep and delivery solution.

Opus:RUNƮRZ��,PDJLQJ��

The industry’s answer to paper-IUHH�PRUWJDJH�ƬQDQFH�

MedleyComplete. Integrated.

The industry’s best collection of lending-related services.

The Reverse Review June 2013

Documents

Transcript of The Reverse Review June 2013