The Reverse Review - January 2012

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2010: â€¦And We Thought 2009 Was Rough?

Last Updated on Tuesday, 14 December 2010 10:16 Tuesday, 14 December 2010 10:15

Finding the good in the year behind us

Almost exactly 12 months ago I sat down at my computer to write an editorial for The Reverse Review’s 2009 year-end double edition. I named the article “2009: The Year Success Became a Moving Target.” I had fun writing this piece and received a lot of positive response, which I always enjoy immensely.

I started last year’s article with this statement: “If you are a reverse mortgage professional and you survived 2009, then you deserve congratulations. It was the most unusual year I have experienced in my 28-year career. “

Well, guess what?

If you are a reverse mortgage professional and you survived 2010, then you deserve congratulations. It was the most unusual year I have experienced in my 29-year career!

Did you feel that? It’s reverse mortgage déjà vu…

It’s not like there weren’t some incredibly positive moments in 2010. I think there were two of them, to be exact. And they may have actually saved this product and our industry from extinction, though few would admit it.

The first was in April. The decreasing of the origination fee, combined with the elimination of the set-aside fees, was a gift from reverse mortgage heaven, in my opinion. No matter what anyone says, the No. 1 obstacle that has kept the reverse mortgage from being embraced as a mainstream product has always been the upfront costs. This was an incredibly positive step for us as an industry and I thank our industry leaders for stepping up to the plate.

The second came in October with the introduction of the HECM Saver product. Whereas the reduction of fees made the reverse mortgage competitively priced with other government-insured loans such as the standard FHA or VA, the HECM Saver – with its no upfront MIP – has closing costs that rival a zero-point, fully documented, conventional loan. This is incredible and exactly what we needed to introduce this great product to the financial community.

But these two giant steps forward were severely hampered as home values continued to plummet throughout most of the nation. Here in Florida, where I do the bulk of my business, nearly two-thirds of the inquiries coming into my company never even made it to the application stage. In fact, if I had to pick the most popular five words of 2010, they would have to be “My house is worth what?”

The conversations with clients in 2010 were truly more disheartening than the ones in 2009. It seemed in 2009 many people were still in denial as to the value of their home. They just didn’t want to accept the bubble had indeed burst. I hated those 2009 conversations. Being the one to explain to a senior in need that the one option they thought was available truly is not, is a very sad position to be in. And the position it left the senior in was even sadder.

But in 2010 the conversations became even more uncomfortable. In my opinion, most people did come to grips in 2010 with the fact that their home was just not worth what is used to be. What I feel made it worse was after accepting that their home had decreased in value, they then had to hear that it actually decreased much more dramatically than they thought. This was a double hit to these great seniors, and it really hurt.

So 2010 was another rough year. But we survived, we still have our loan limit of $625,500 that so many thought would be gone by now, and we have two reverse mortgage options to offer seniors (we literally doubled our product menu!). Most importantly, we eliminated the No. 1 obstacle most had with this product: the upfront cost!

So, with my customary and widely recognized “glass half-full” attitude, off I went to New Orleans to attend the NRMLA trade show.

I only attended one breakout session in my three days in New Orleans. My goal for making this trip was to meet with industry leaders and learn firsthand how 2010 affected their short- and long-term views of our industry, and how they saw 2011 unfolding in the midst of this seemingly never-ending recession.

Here are the results of some of those meetings:

I finally had the pleasure to meet with Marty Taylor, Owner/CEO of Stay in Home Mortgage as well as his Sales Manager, Dennis Luschen; and his son, Brandon Taylor, Vice President of Marketing. Marty and I have become good LinkedIn friends via The Reverse Review group over the last two years, and it was great to finally meet him. To me, these three men embody everything good about the reverse mortgage industry. They not only survived these crazy times but have rebuilt their company and are going strong; they did it without straying from their “the good of the senior comes first” attitude.

I met with Mr.Bob Scott National Director of Genworth Financial Home Equity Access’ (GFHEA) Affinity & Correspondent Relations. GFHEA is Genworth Financial, Inc.’s reverse mortgage business in Rancho Cordova, CA.

I have known Bob for several years. He is one of the pioneers of our industry and just a true gentleman to spend time with.

Hearing about Genworth Financial’s commitment to the reverse mortgage space was enlightening and very positive.

Personally, I love it when a large and well known long term care insurance company has that much of a commitment to our industry. I have always professed that the relationship between long term care and reverse mortgages is a ship our industry just keeps missing….

I also sat down with Mr. Alain Valles, President of Direct Finance in Hanover, Massachusetts. He has vast conventional mortgage experience that had embraced the reverse mortgage arena and achieved success.

Speaking with professionals like Mark Browning, principal of HomeChex, and Dan Osterhout of Community Senior Capital is always enlightening for me. They bring a financial planning mindset to their reverse mortgage business model (a business model that is near and dear to my heart). Their vision of utilizing the proceeds of a reverse mortgage as part of an overall retirement plan for seniors mirrors my own. The open discussions we had about the many ways a reverse mortgage can be used to assist a senior, other than the present “needs-based product of last resort,” were great.

This type of thinking tends to look at the reverse mortgage in a much broader fashion than today’s reverse mortgage loan officer. Again, in my opinion, bringing the reverse mortgage to the financial community – the literally hundreds of thousands of certified financial planners and independent financial advisors – and showing them this is not just a product of last resort but can play a valuable role in a senior’s retirement plan, is the only way our industry will grow and prosper. Seeing Mark and Dan achieve the success they have with their business model is a great thing!

Lastly, I also had the pleasure of meeting with the group from MetLife. They are true pioneers of the reverse mortgage industry and it is always a learning experience to spend time with them. Subjects discussed were the future of our industry itself, the potential the HECM Saver brings to the table, and the potential of other segments of the financial industry becoming educated on the true benefits of this great product we offer. Having an icon like MetLife so committed to the reverse industry tells me we are all on the right track.

So, what did I walk away from NRMLA with?

The major players are in the market to stay. They freely admit that the reverse mortgage is a work in progress. It’s going to have to keep morphing to survive this constantly changing regulatory environment, as well as the incredibly volatile financial markets, that dictate its future. To me this is a clear message that we, the retail segment of the industry, also have to be a constant work in progress and morph with the times as well.

Now, with all due respect to the major players, it’s much easier to accept change and roll with the punches when you have a balance sheet that resembles that of a fairly nice-sized Third World nation.

For those of us that are very concerned with the new net worth requirements and upcoming changes in regulations regarding our compensation in April 2011, it’s not such an easy thing.

In fact, I met many professionals in New Orleans that came for one purpose only: to find a new home. They are as committed to this industry and serving seniors as any giant but simply do not have the wherewithal to do so. In fact, there are some great opportunities out there right now for these entrepreneurs and I wish them the best of luck.

It’s quite possible that 2011 may be the year of the “roll up.” I feel there is a great opportunity for retail industry leaders to consider joining forces. A handful of independents strategically located throughout the country could be a real force in this industry. This happens to be one of my priorities and I welcome any and all input.

I’d like to say I’m going to miss 2010. I’d like to say that, but I would be lying. Damn, I’m glad it’s over!

We enter 2011 with a certain feeling of apprehension. Many changes are still to come and some of them are still unknown. But as an industry we are still standing proud. Thanks to the constant efforts of NRMLA and all the players, from the giants right down to the small independents, slowly but surely, the reverse mortgage is being recognized as the incredible product it is.

We have two great products to offer now: the needs-based traditional HECM and the HECM Saver.

So we keep moving forward. We keep the needs of our seniors our No. 1 priority and we help as many of them as we can. Nothing silences critics quicker than success.

I wish you and yours a very happy, healthy and prosperous 2011.

Congratulations on Your CRMPâ€¦ Now What?

Last Updated on Tuesday, 14 December 2010 10:01 Tuesday, 14 December 2010 10:00

Earning the designation of Certified Reverse Mortgage Professional (CRMP) from the National Reverse Mortgage Lenders Association (NRMLA) is a significant achievement. It is proof that you have the “three E’s” — expertise, experience and ethics — necessary to provide exceptional reverse mortgage services to your clients. But unless prospective clients know about your CRMP and understand what it means, the designation has very little value to you or your business.

Making CRMP meaningful will require a two-pronged approach, a “pull and push” to create awareness of and appreciation for the letters “CRMP.”

PULLING

The “pull” part is the job of NRMLA. In order to make CRMP valued and desired by its members, NRMLA is educating the public about the importance of the CRMP designation. Just as the American Institute of Certified Public Accountants (AICPA) has made the “CPA” designation the standard by which all other tax and accounting professionals are measured, so NRMLA is doing for CRMP.

By educating the public and aiming specific communications at trusted advisors (i.e. attorneys, accountants, and financial planners), NRMLA can give sanction to CRMP as the sign of a preferred provider. This will help to “pull” customer inquiries and create a public demand for loan officers who have attained CRMP status. We want seniors who are considering a reverse mortgage to seek out a CRMP in the same way a taxpayer insists on a CPA for tax planning and preparation.

PUSHING

The “push,” on the other hand, must come at a local level. You need to do your part to develop an aura of professionalism and competence and associate it with CRMP. This effort should begin while the ink is still drying on your CRMP business cards!

Start with the achievement itself. Make noise about your accomplishment through press releases, announcement cards to referral sources and ads in local publications. Don’t let people guess what “CRMP” stands for; define the designation and its meaning clearly in order to build recognition.

Make sure you include an explanation of CRMP in all of your collateral materials, on your website and in all presentations. Talk about CRMP at your business lead exchanges and Chamber of Commerce breakfasts. Be proud of it and describe why it makes you a superior reverse mortgage provider.

You can’t expend the time, energy and money required to attain CRMP status and then magically expect the world to recognize and understand what it means. Becoming certified is only the beginning of the job. Now you must make the most of the title by actively and aggressively promoting the fact that you are a Certified Reverse Mortgage Professional.

Senior Moments

Last Updated on Tuesday, 02 November 2010 08:26 Tuesday, 02 November 2010 07:31

This past November, I encountered Laverne, a senior who had lost her husband, Frank, a little more than two years ago. They had resided in the same Chicago home for more than 45 years.

When I contacted Laverne, she said that she had just sold their home and was moving to Arizona to be closer to her daughter, son-in-law and grandchildren. She was going to live with her daughter until she could find a one-story patio home. Her vision had worsened and she was hoping to relocate before the harsh Chicago weather arrived. At the time, she was staying with one of her sons and his family in the city.

Laverne was concerned that the money from her home she had just closed on would be absorbed in the purchase of the new property, leaving her with little to live on. She was worried sick about having a mortgage payment all over again and did not want to be a burden on her daughter’s family. Oh, and did I mention her cat and longtime companion, Boots? Laverne found him abandoned on a snowy night when the temperature was 20 degrees below zero. Worried about her financial situation and the cost of having a pet, Laverne thought she was going to have to leave Boots behind and began to cry whenever she mentioned him. After her husband’s passing, Laverne was not about to be without her “baby,” as she called him.

After several more conversations with Laverne and her children, I’m happy to report that she and Boots are doing great, having settled into their new home in Arizona. She has had her vision corrected and has renewed her driver’s license. Laverne has plenty of money in the bank and a new perspective on life, all thanks to the HECM for Purchase. When we talk, she calls me her angel – she can’t believe how a simple phone call created something so wonderful. She has her independence back and says she feels 20 years younger. (Did I mention she’s 80?) She has plenty to do and we talk when I can get through; she’s on the phone a lot these days and has not considered call waiting. “Too much technology,” she says. “I can only talk to one person at a time.” Her answering machine greeting begins, “You have reached Laverne and Boots,” To this day, Boots has not picked up.

It is this and many other “senior moments,” as I call them, that make our careers so rewarding. For those that are in this for the long haul and have a true passion, I say: Keep on fighting the good fight.

A New Direction, A New Look

Last Updated on Tuesday, 02 November 2010 08:29 Tuesday, 02 November 2010 07:24

It was about two and a half years ago when The Reverse Review released the first issue of a magazine specifically for the reverse mortgage industry. Publisher Aman Makkar launched the publication with a seemingly simple goal: “to educate and create awareness in the industry” and “create a community of reverse mortgage professionals that will continue to help this industry grow in the right direction.”

The magazine has served that purpose well for a very simple reason: It is built upon and supported by industry insiders. Aman was compelled by his experiences at NRMLA’s conference to start the magazine. From the beginning, the contributors have been active and engaged participants, helping the magazine to continue to be a strong voice and gathering point for the industry.

However, to truly meet the mission crafted by Aman and diligently pursued by the staff, the magazine must do more to not only bring the community together, but engage it in lively discussion and debate the issues and opportunities that lie ahead. The magazine has always had a vehicle for serving this purpose in their website, but honestly, it has lacked focus and direction.

When the magazine was first released in April 2008, one of the biggest concerns we had was a flood of new participants and whether they were prepared with the same knowledge and passion for the product and clients as those who had helped drive the growth of the product. Industry changes did not happen rapidly, so the magazine was the perfect vehicle to fuel the discussion. Since then, however, the pace of changes in the industry, including product changes, economic impact and regulatory developments, have come in rapid-fire fashion. It is nearly impossible for an individual to keep up with the research necessary to track changes and understand the impacts on their area of the reverse mortgage sector.

The magazine is one piece to the puzzle, but it needs to be complemented by daily updates from the website that address the topics of immediate importance – not only for the purpose of disseminating information, but to provide useful analysis and advice on how the information impacts the industry and foster discussion and debate from participants.

I am thrilled to have the opportunity to join The Reverse Review as News Editor with the sole purpose of revitalizing the website and supporting its noble mission. As I have been preparing for this role, I have been bolstered by the unending passion exhibited by Aman and Editor-in-Chief Emily Vannucci for this project. Our planning sessions have generated some amazing ideas to unify the industry, raise the bar for expected knowledge and service, and create a platform where approaches and strategies are developed, debated and implemented. I promise that our enthusiasm will spill over into new and exciting elements that will capture your attention, compelling you not only to stay tuned, but to get involved!

The expectation is clear: This is not about information dissemination; it is about knowledge expansion! If your goal is to thrive in this industry, then the only way to stay ahead is through constant, interactive education. Your role in this mission is to engage in the debate. I challenge you to partner with www.reversereview.com and share your own voice. Get involved by commenting on articles of interest to you, responding to others supporting or debating their viewpoint, contribute articles or information, and let us know about information or topics you’d like to see. We will make sure information and topics of discussion are informative, relevant, engaging and entertaining!! You just have to promise to join the fray.

Those who persevere in this industry will reap the benefits. The Reverse Review will continue to be a unifying source and community gathering point where we can support, defend and grow, as professionals and as an industry, in a manner aligned with the mission of The Reverse Review and many other committed individuals and organizations within the industry .

Are you ready to join in? Start today by making The Reverse Review your homepage. Then give me your thoughts and share your ideas for content that you would like to see or even contribute. This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

The Trifecta

Last Updated on Tuesday, 02 November 2010 08:29 Tuesday, 02 November 2010 07:17

The Trifecta, the Triple Lindy, the ménage à trois: all things three that are as memorable as your first fumbled kiss on a second date. I got a new top three and it is David Arquette, the DMV and the new rules for counseling, all things wrong that we can do nothing about. See, the problem is that we have people making rules on subjects that have no experience doing any of the things they are trying to fix. I call it the Ideal versus Reality syndrome: it would seem to make sense until found to be inapplicable in the system. Like the David Arquette thing, this bumbling extrovert thinks he is ideal for the more sophisticated Courteney Cox, but in reality we were all screaming “Loser!!” Another perfect example: Did you hear that the HVCC rule was eliminated on the forward side? You see, a month after releasing the new HECM Counseling Protocols, the average time spent during each session has increased substantially and future costs to the borrower will go up… great. Like we need another obstacle in the way, another reason to have the borrower lose faith in us or one more “FIT” test that hamstrings success. We need things to be easier, more flexible, with extended time tables to meet all of the personalities of our clients. See, some people don’t mind the process; they think it is OK to spend well over an hour talking to a stranger about MIP, MMI and Amortization tables that go out 30 years. Ask personal questions about income reserves, mental stability and if the client knows he can (shhhh) ask for a reduction on the origination fee. Read over GFE’s and costs while being asked if they have evaluated all the “other” options. I have never been part of such forward thinking since “The Rock” did Tooth Fairy, I mean, c’mon, can we at least have somebody make a rule that has done one HECM loan? Here is my idea: At least make the counseling ordeal a prior to doc requirement. Right, then maybe we can qualify home value and pray to God that the underwriter doesn’t take a machete to the appraisal. Maybe we can find out if that lien on title has really been paid off or that the HOA president will get back to us so we can help him get the complex approved. Why are we spending so much time upfront on a flawed process when in reality there are far more poisonous venoms killing our deals? By the way, I have just left the DMV, 1 hour and 45 minutes after arriving to renew my license I let expire. Here is the kicker – no BS – you can no longer smile on your driver’s license picture and show teeth. As it was so eloquently said in The Hangover: “Thanks, Bin Laden.”