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8/14/2019 The Reverse Review February 2009
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THE
REVERSEreview
Spotlight: Brian D. Montgomery
page
26As the nal days of the Bush Administration came to a close, we had the privilege of
engaging in a candid conversation with Brian D. Montgomery. We spoke about his persona
accomplishments, and experiences while in ofce as well as his advice for the new
administration. Read for a glimpse into the personal thoughts of one of the most inuential
people on FHA and HUD over the last eight years.
February 2009
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THE
REVERSEreview
THE REVERSE review
THE INDUSTRY STANDARD SINCE 1995e Industry Standard is not just a slogan.
Six of the top 10 reverse mortgage originatorsuse Ibis Soware for their websites, retail
and wholesale businesses.
ose lenders are using:
Ibis RMO:Loan origination modules include CRM,
Quick Quote, Proposal, Application,Underwriting, Documents, Closing, Pipeline
Reports, and Cost Templates. Plus Brokerand Correspondent Management. Full state
specific application and closing packages canbe stored, printed, and emailed.
Ibis Quik Quote:Bilingual consumer calculators,
already in use at: www.rmaarp.com www.wellsrm.com
and many other websites
Ibis also provides:
Ibis RMA:A complete counseling package forHUD-Approved reverse counselors.
For more information, visit
www.ReverseMortgageHomePage.com
Or call (800) 566-5077
Publisher Aman Makkar
Design & Production Jason Westbrook
2008 The Reverse Review, LLC. All rights reserved. The Reverse Review, LLC is a California
limited liability company and is the publisher ofThe Reverse Reviewmagazine. Reproducons
distribuon of any materials obtained in the publicaon without wrien permission is express
prohibited. The views, claims and opinions expressed in arcle and adversement herein are
not necessarily those ofThe Reverse Review, its employees, agents or directors. This publicao
and any references to products or services are provided as is without any expressed or
implied warranty or term of any kind. While eort is made to ensure accuracy in the content
of the informaon presented herein, The Reverse Review, LLC is not responsible for any errors
misprints, or misinformaon. Any legal informaon contained herein is not to be construed as
legal advice and is provided for entertainment or educaonal purposes only.
Postmaster : Please send address changes to The Reverse Review, 11440 W Bernardo Ct, Ste 2
San Diego, CA 92127
11440 West Bernardo Court
Suite 220
San Diego, CA 92127
Subscriptions and Editorial Contentphone : 858.217.5332
email : [email protected] : www.reversereview.com
Advertising InformationRates, specicaons, and deadline informaon available.
phone : 858.217.5332
email : [email protected]
Copy Editor Harpreet Makkar
Printer The Ovid Bell Press
Editor-in-Chief Erica English
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February 2009
editors not
When I thinkabout a New Year, a few words come to mind,Renew, Rebuildand Refresh. They each havedierent meanings, things we all care about:commitments, success in business, friendships
and restoring new successes in a New Year.
Rebuilding in this small space is not hard,
especially with the new reverse mortgage loanlimits being increased to $625,000, opening
the door to a whole new income bracket
of borrowers. This will undoubtedly have a
posive impact in our industry.
Lately Ive been planning for 2009, gathering
new editorials, campaign ideas and helping
new companies with their campaigns.
Addionally, I would like to invite our readers
to share quesons they may want answered in
2009. Our goal is to be a monthly guide for the
conversaons taking place within the industry.
Speaking of which, recently Ive had
the pleasure of campaigning new
books hing the circuit, and Im
proud to announce that some of your
favorite TRR contributors are releasing
new books. The well respected Atare
Agbamu shares with us his valuable
insight and informaon for every loan
ocer in our industry to beer service
our senior clients in, Think Reverse!.Addionally, Monte Rose shares his training
and speaking pracces in Go Sell. Go Serve.
Its going to be a very excing year and we
want you to join us by giving us your feedback
on what you want to read each month. Please
send your emails to feedback@reversereview.
com as we aim to create an interacve
publicaon with our wonderful readers in
2009.
Enjoy!
Erica English
Editor-in-Chief
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CONTENTS
ESSENTIALS
12 Got Content?Valerie VanBooven
5 Note From the Editor 7 Ask the Underwriter 10 Industry Snapshot
45 Directory
16 Creang a World ClassReverse Mortgage
Training ProgramJacqueline Del Priore
40 Birth of a NewIndustry, Part IIMichael Banner
30 What the HECM:Reverse Mortgages
can be Used to Buy a
HomeWeiner Brodsky Sidman
Kider, PC
37 Grandma Ritas Heirand the 20 Year
MistakeAtare E. Agbamu, CRM
22 Building an EecveAdvisor Referral
EngineMonte Rose
26 SPOTLIGHT:Brian Montgomery
46 The Last Word : You are Terminated!
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February 2009
Aaaaahhhh, February, for some, the month before springshould arrive, for others Ground Hogs Day, a Presidenal
Birthday Holiday month, and for many the month of love and
chocolate!
While my wife would prefer I recall the more romanc side of
February 14th last year, I must admit a dierent event of the
day ran a very close second.
You see, as I opened a large Fedex box delivered to me that day,
a rather thin le slid out, and then the package with a note
Will 2 pounds do it?....P.S., I just love your Underwriter(s) it
proclaimed.
As I curiously opened the package, I was presented with a
classic symbol of underwring communicaon; chocolate, two 1
pound bags of pink M&Ms, one plain, one peanut.
We use love in so many ways these days, we love our cars,
we love our home, we love our loved ones, and we love our
Underwriter(s)!
While the chocolate isnt necessary for us to do our job, (and
many of us certainly do not need the calories!), I have oen
thought of sharing the love and the chocolate in reverse to
some of the villagers whose eorts brought the le before me
that I am going to underwrite as I munch my way into sugary
bliss.
Honestly, that day, I would have loved to send a pound to the
appraiser who chose to do the appraisal on the manufactured
home before the foundaon inspecon, couldnt read the tags,
and le enough white space in the report to verify the loss of a
current copy of the Appendix D appraisal protocol.
Perhaps the chocolate would have given him/her the required
energy to go that extra mile and ll in all of the spaces, make
appropriate comments, and incorporate all of the required
documentaon.
Too oen we accept reports from our vendors withoutquesoning quality or content. More importantly, we do not set
the appropriate expectaons for the nal work product. Some
of the things I would especially love to know as I read through
an appraisal report are:
The name of the lender for whom the report was prepared.
Property tax amounts and homeowner informaon
The FHA Casele box was lled in with what number?
The comparable photos were clear and correctly matched
to the correct properes.
The Locaon Map indicators were on the right side of thhighway that divided the subdivision.
The funconal obsolescence comment of tandem
bedrooms was drawn on the sketch without two separat
entry doors.
Oil tanks, outbuildings, sepc elds, well locaon, pao
gazebos, and other site improvements were drawn and/
commented on.
Interior photos depicng the hole in the oor behind th
toilet, the big grey spot on a wall, the missing les in a
ceiling, a dangling light bulb, and other notable features
interest were described and a recommended/lack of nee
for repair acon/inspecon proposed.And my remaining economic life is?
And how about that site value?
The pavement that split le to the subject property and
right to the next parcel, is it a private road?
That large black line that runs from one pole to another
across the back of the home is it a power line?
That puddle in the corner of the basement is it sewage
seepage or a surprise?
The report menons a scenic and picturesque landscape
(??), the rear photo was shot from across the creek in th
back of the yard to get the gazebo, pool and pao in one
frame the report says ood zone X.The report legal descripon indicates, see aached lega
descripon or refer to preliminary tle report, yet the
pdf of the report has no aachments.
The subject photos remind me of a winter wonderland
scene from a postcard. Hows that roof doing under all o
that snow?
The unit has space heat. And?
Nice electrical box photo any idea why one fuse is
missing?
The blue tarp on the back of the roof in the photo was fo
Thanks for comp 4,5 and 6 what are they for?
Is 35 DOM in a stated declining market a typo?
What a novel idea, every subdivision should have an
equestrian estate as one of the comps.
So, as those bags of pink M&Ms embark upon their Fedex
journey to Underwriter(s) around the country (I like the M&
Peanuts!) in the next few weeks, why not start a new tradio
and dont forget your quality appraisers - drop them both a
good appraisal checklist and a pound with your note P.S. I ju
love your appraisal quality.
ask the underwriteRalph Rosy
Will 2 pounds
do it?........
P.S., I just love
your Underwriter(s)
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Atare E. Agbamu,
CRMS- Grandma Ritas
Heirs and the 20
Year Mistake, page
37
Atare Agbamu is
the author of Think
Reverse! (The Mortgage Press,
coming this fall) and more than
100 arcles on reverse mortgages.
A reverse-mortgage specialist
in Minnesota and an adviser toinstuons across the country,
he writes the Forward on Reverse
column in The Mortgage Press, since
2002. Atare can be reached by email
Jacqueline De
Priore
- Creang a WorClass Reverse
Mortgage Trainin
Program, page 1
Jacqui Del Priore
is the Director
of MCTI (The Mortgage Career
Training Instute), a company
which specializes in reverse
mortgage sales and product
training.
As former VP of Training and
Development for World Alliance
Financial, she has helped hundre
of reverse mortgage loan ocers
achieve success in our industry.
For more informaon, contact
Jacqui at 516-983-9396 or email
her at [email protected]
contributorsRalph Rosynek-Ask the Underwriter, page 7
Ralph Rosynek is President and CEO of 1st Reverse as wellas a HECM DE Underwriter. Mr. Rosynek has been involved
in mortgage lending for over 30 years with the last 5+ years
exclusively providing reverse mortgage lending soluons.
To contact Mr. Rosynek or to learn more about 1st Reverse
Financial Services, Please visit www.1streverse.com or call
877.574.1000.
John Lunde- Reverse Market Snapshot,page 10
John Lunde is President and
founder of Reverse Market
Insight, the premier source
for market intelligence and
analycs services in the reverse mortgage
industry. RMI clients include ve of the top te
reverse mortgage originators, both lender an
independent servicers, as well as some of the
largest nancial services rms in the world.Find out more at www.rminsight.net or call
949.281.6470.
Joel Schiman- What the HECM: Reverse Mortgages Can
be Used to Buy a Home, page 30Joel Schiman is a member with the law
rm of Weiner Brodsky Sidman Kider,
P.C. The rm serves as General Counsel
to the Naonal Reverse Mortgage Lenders
Associaon and advisor to reverse mortgage
lenders and industry parcipants throughout the naon.
Mr. Schiman can be reached at [email protected] or by
telephone at 949.798.5570.
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February 2009
Michael Banner- The Birth of a New Industry Part II, page 40
President & CEO of LoanWell America Inc., Michael hasbeen in the mortgage industry for 27 years. He is one of
few Reverse Mortgage professionals accredited to teach
connued educaon classes for CFPs, CPAs, aorneys
& insurance agents. A proven senior advocate, he is a
member of NRMLAs State & Local Issues Commiee
and sits on the Board of Directors for the FPA of Tampa Bay. Michael has
been interviewed by the Wall Street Journal, the Tampa Bay Business
Journal, Sr. Market Advisor & The Reverse Mortgage Wire as well as
numerous other Reverse Mortgage Internet sites. Please visit his website
at loanwellrm.com or call 877.700.0555
Monte Rose- Building an Eec
Advisor Referral
Engine,
page 22Monte Rose has
helped hundreds o
seniors obtain a reverse mortgage
during the past 17 years. He is an
accomplished speaker and widely
quoted industry expert, appearing
nancial publicaons and naonal
syndicated media. He was head of
naonal retail sales for Financial
Freedom Senior Funding Corpora
Monte is a Cered Senior Adviso
and a Cered strengths Coach
with Gallup University. For more
informaon, call 800.516.0545 or
Sam Collins- You are
Terminated!, page
46
Sam Collins is the
President of Sam
Collins Reverse Markeng, LLC and
Founder of REMALO, the ReverseMortgage Associaon for Loan
Ocers. REMALO is a web based
Naonal sales, markeng, training,
and full service center, created
exclusively for Reverse Mortgage
Loan Ocers, Correspondents,
Branch Managers, and key
execuves, and brokers. www.
remalo.org or 877.262.7656
Fed Kamensky- What the HECM: Reverse Mortgages Can be Used to Buy a Home,
page 30
Fed Kamensky is an associate with the law rm of Weiner Brodsky
Sidman Kider, P.C. The rm serves as General Counsel to the
Naonal Reverse Mortgage Lenders Associaon and advisor to
reverse mortgage lenders and industry parcipants throughout the
naon. Mr. Kamensky can be reached at [email protected] or by
telephone at 202.628.2000.
Valerie
VanBooven- Got Content?,
page 12
Valerie VanBooven
RN BSN is a Senior
Service Markeng Expert and the
Naonal Markeng Director for
Next Generaon Financial Services,
a Division of 1st Mariner Bank.
She is a professional speaker and
the author of the books Aging
Answers (2003) and The Senior
Soluon (2007). She can be
reached at
Please visit her website at www.
myseniorservice.com
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reverse mortgage industry snapshot
10 Regions, ranked by HECM unit volume YTD. Including rank change from prior YTD, as well as growth rates.
Also includes acve lenders and growth
Lender distribuon graph and table, showing number of lenders growing at various growth rates YTD vs. prior
YTD, including volume aributable to each group of lenders.
Client Noces
1) Help improve data quality in the Reverse Mortgage industry. If you believe your companys numbers on this report are inaccurate, please email us (support@
rminsight.net) and we will review your feedback promptly. Please include your name, company and contact informaon along with a thorough descripon of the
suspected inaccuracy. Thanks!
2) If you received this report as a trial or sample and would like to purchase this report or future reports for your company, please visit: www.rminsight.net/MICrepo
php
3) If youve been looking for a source for Reverse Mortgage intelligence beyond MIC endorsement numbers, weve got just what you need. Find out more at www.
rminsight.net/rmarket.php
Rank Chg 2008YTD YTDChg% 2008 Chg%
1 1 29,139 21.34% 877 92.32%
2 -1 21,640 -15.51% 775 48.47%
3 - 14,087 17.82% 420 100.96%
4 - 11,701 2.34% 531 60.91%
5 1 10,478 29.79% 315 88.62%
6 -1 8,342 0.24% 320 90.48%
7 1 6,663 15.08% 304 87.65%
8 -1 6,135 -11.89% 308 55.56%
9 - 4,130 25.3% 199 57.94%
10 - 2,861 1.2% 183 79.41%
115,176 6.36% 2,949 76.48%
Endorsements Active Lenders Region Share
Region 2007TOT 2008YTD Chg%
Southeast/Caribbean 24,014 25.30% 14.08%
Pacific/Hawaii 25,612 18.789% -20.56%
Mid-Atlantic 11,956 12.231% 10.78%
Midwest 11,434 10.159% -3.79%
Southwest 8,073 9.097% 22.03%
New York/New Jersey 8,322 7.243% -5.76%
Northwest/Alaska 5,790 5.785% 8.19%
New England 6,963 5.327% -17.16%
Rocky Mountain 3,296 3.586% 17.81%
Great Plains 2,827 2.484% -4.85%
Industry Totals 108,287
Growth Rate Lenders YTD MIC Last YTD
-100%
266 2,341
-99% to -1%599 53,547 82,345
0 to 100%402 23,789 17,726
101% to 200%117 5,486 2,277
201% to 300%71 7,053 2,029
301% to 400%41 1,556 341
over 400%175 13,536 1,228
New Lenders1,544 10,209
Lender Distribuon by YTD Growth Rate
Stascs Provided by Reverse Market Insight - December 2008
Top 10 Rankings by Region
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February 2009
2 year trend graph of monthly HECM unit volume and industry penetraon against 62+ homeowner households naona
Appendix
1) All stascs based on retail originaons from HUDs Monthly HECM MIC reports
2) Loans are in unit volume, based on HUD reported mortgage insurance cercate issuance
3) Lenders are aggregated using HUDs lender idencaon numbers and unique lender names, along with feedback from
reporng lenders
HUD Regions and Corresponding States/Territories
Region 1 - New England
Conneccut
Maine
Massachuses
New Hampshire
Rhode Island
Vermont
Region 2 - New York/New Jersey
New York
New Jersey
Region 3 - Mid-Atlanc
Delaware
District of Columbia
Maryland
Pennsylvania
Virginia
West Virginia
Region 4 - Southeast/Caribbean
Alabama
Florida
Georgia
Kentucky
Mississippi
North Carolina
Puerto Rico
South Carolina
Tennessee
U.S. Virgin Islands
Region 5 - Midwest
Illinois
Indiana
Michigan
Minnesota
Ohio
Wisconsin
Region 6 - Southwest
Arkansas
Louisiana
New Mexico
Oklahoma
Texas
Region 7 - Great Plains
Iowa
Kansas
Missouri
Nebraska
Region 8 - Rocky Mountain
ColoradoMontana
North Dakota
South Dakota
Utah
Wyoming
Region 9 - Pacic/Hawaii
Arizona
California
Federated States of Micron
Hawaii
Nevada
Region 10 - Northwest/AlasAlaska
Idaho
Oregon
Washington
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
1.80%
6000
8000
10000
12000
2007-1 2007-5 2007-9 2008-1 2008-5 2008-9
Penetration
Units
MIC Units Penetration %
24 Month Penetraon and Unit Volume
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GOT
Content?
Valerie VanBooven
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February 2009
Two of the most fascinang and important books Ive read
this year (and last year) are: Get Content, Get Customers.by Joe Pulizzi and Newt Barre, and The New Rules of
Markeng and PR by David Meerman Sco. Both books will
give you a much more in-depth discussion on the shi that
has taken place in markeng products and services in a VERY
short period of me.
It is more important than ever that you begin to understand
how the internet is impacng your business, and will
connue to have a much bigger eect on your boom line
this year and in years to come. Your prospects and adult
children of aging parents arent looking in the local maniacal,
over-adversed, over-priced version of The Senior Timesfor a reverse mortgage, an adult day care, or home care
needs, or assisted living, or elder law aorneys, or medical
equipment.
They are looking online. They are searching for you. Make
sure they can nd you in every possible way. Leave no stone
unturned, and you will see a very large increase in your
business. The beauty of this strategy is that you can do it all
on your own me, and its all free. Thats right if you can
take the me, you can change your business direcon in 48
hours with a weekends worth of work and some weekly
maintenance.
The more CONTENT you have to oer (beyond the usual
boring brochure-on-the-web stu), the more trusted you
will become as a thought leader in your local area, and
perceived as an expert in your business.
Aer all, who do I trust to write a reverse mortgage for
my mother when I live a thousand miles away? The guy
who has the weekly blog content and really seems to not
only care about seniors, but also understands the long-
distance caregiving situaon? OR the guy who has aprey corporate website, that says nothing dierent from
gazillion other websites that I have visited today!?
I trust the thought leader. I trust content. I trust
personalized content.
I trust that if I nd educaonal videos, a blog, and host of
other links poinng to this business owners site, they mu
be extremely involved and commied to what they do.
On the internet, percepon is reality. Have you taken a
really hard look at how you are perceived? Lets shi gear
moment a look at 5 Emerging Trends in 2009. Even thougyou probably sell SERVICES and products, this informaon
relevant to you too!
According to eMarketer reports, this year, online sales in t
US alone will jump from $136.8 BILLION to $142.4 BILLION
(thats an INCREASE of nearly $6 BILLION in online spendi
Or how about this stasc: Nielsen Consumer Insight rep
that in 2009, consumers will spend 17% MORE me on
eCommerce websites every DAY!
Emerging Trend #1: Consumers Are Increasingly Turning TThe Internet As A Way To Save Money
You know all those people I just told you about who are
coming online to shop? Well, according to this survey, 80%
them say theyre now shopping online to save money.
And further, 95% of these people report that theyre
movated to buy by oers of free shipping, and 83% are
movated to buy by special prices.
You dont need expensive campaigns orcustom built websitesto reach
customers. The secret to content markeng is to put yourself in the
customers shoes and then look for ways to simplify and improve his or
her life. Its about using the same words in your markeng materialsthat customers use in theirsearch queries. The more in-tune you are
with the customerthe easier this process becomes.
Get Content. Get Customers. By Joe Pulizzi and Newt Barre
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Clearly, 2009 will be the year of the deal!
So if you currently oer special discounts on your site, get
them up front and center, so your visitors can nd them
instantly. Do NOT wait for them to dig around your site and
possibly stumble across them.
BUT...
Before you put all of your eggs in the special deal basket,
theres one other related trend you should know about...This
same survey reports that 88% of people are shopping online
in order to save me, and 83% say that they do it because
its less hassle.
So not only are your visitors coming to your site trying
to save money, theyre also looking for ease and
convenience. So make sure youre giving it to
them, by oering the best customer shopping
experience possible.
As well all soon discover, its the websites that
oer a combinaon of pricing and IMPECCABLE
customer service that will connue to thrive this
year.
Emerging Trend #2: Consumers Are Making More
And More REPEAT Purchases Based On Automated
Recommendaons
This recent 2008 Razorsh Consumer Experience reportshows that a whopping 65% of online buyers made
addional purchases from a website based on automated
recommendaons the site gave them.
Thats 6 out of 10 of your customers buying MORE, based
purely on your suggesons for other products they might
like.
Sounds like the perfect job for email markeng, right?!
I strongly believe the people who thrive in 2009 will be
those who spend a LOT of me using email markeng to
nurture the relaonships they have with their customers andsubscribers.
To be really eecve in building these relaonships -- and in
recommending the products people will be MOST interested
in -- youre going to need to be smart about your list.
Gone are the days when having a BIG list was your main
goal! Its me to think quality rather than quanty.
If you build a huge list lled with people who couldnt care
less what youre oering them, then all your email eorts
will be wasted.
Its far beer to have a smaller list of highly qualied
subscribers. The other thing to pay aenon to as you foc
on your email eorts in 2009 is the kinds of emails youre
sending out.
Im nding that shorter, more concise promoonal messa
are far more eecve than long, drawn-out emails that
bombard the reader with informaon.
Finally, the savvy email marketer will spend a lot of me
TESTING in 2009.
Currently only about 40% of marketers
do any tesng at all, which is praccally
criminal, because those who do test are
twice as likely to get email markeng
conversion rates of 3% or MORE!
So make sure you test dierent kinds of
oers, dierent subject lines, dierent mes
day and week for mailing, etc., to make sure yo
really capitalizing on your email.
Emerging Trend #3: Shoppers Are Making More Purcha
Based on Recommendaons Received Through Social
Media Sites
Heres a surprising stasc: 49% of Web users now make
purchase based on a recommendaon they received throa social media site (like Facebook, MySpace, and so on).
Okay, maybe thats not so surprising, but you know what
Apparently only 25% of online business owners created
Facebook page this year!
Despite its clear success rate, marketers have generally
been slow to make the leap to social networking. So if you
havent tested the social media waters, NOW is the me t
get started! Social networking is the perfect way to develo
your online presence, and connue to culvate lasng
relaonships with your potenal customers.
Before you run o and start building your social networki
proles and pages, you should know that other forms of
social media sites will also be crucial tools for your busine
in 2009. Take the social bookmarking sites, for instance (li
Digg, Delicious, and StumbleUpon). Currently, 52% of peo
are using these sites as they search for informaon online
and a full 81% of users read the links marked as most
popular or most emailed.
?
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February 2009
So what does this mean for you? Another key strategy for
you in 2009 will be to create lots of content, and get it to
appear on these sites. Youre going to want to write arcles
that are relevant and useful... and that your readers will
want to pass along to their friends, family, and colleagues,
and recommend on the social bookmarking sites.
In doing so, youll connue to raise your online prole,
establish yourself as an expert in your eld, and build thoseall-important relaonships with your potenal customers.
Emerging Trend #4: A Typical Internet User Is Spending 20%
MORE Time Each Day Reading Blogs
Nielsen Consumer Insight reported in December that people
are now spending 20% more me EACH DAY reading blogs.
Do YOU have a blog yet? Do you add new posts to it on a
regular basis?
If you havent started a blog yet -- or if you havent been
giving yours the aenon that it deserves -- TODAY is the dayyou should start! As with social media, blogging is GREAT for
establishing your reputaon online, for building relaonships
with your market, for creang new content for your site, and
can even help you get a TOP ranking in the search engines
(which in turn can generate up to 7 TIMES more sales).
You dont need to be a natural-born writer to create your
own blog, nor do you need to be a technical wizard! There
are plenty of places where you can even get FREE blogs to
get yourself started..... and as for the actual wring, a blog
is all about showing YOUR personality, and sharing youropinions and ideas. So dont sweat it if youre not a word
nerd. Just write from the heart, and your readers will love it!
Emerging Trend #5: Web Surfers Are Spending 46% MORE
Time Watching Online Videos
Finally, a trend that will connue to have a HUGE impact on
Internet marketers everywhere -- and really change the way
we sell online -- is the growing popularity of online video.
Check this out: 94% of Internet users now watch online
video with some level of frequency, and people now spend
a whopping 46% MORE me each DAY watching videos,compared to last year!
So if you havent dipped your toe into the online video
world, youd beer get cracking!
Video, like blogging, has mulple benets for your
business:
You can use video in your salescopy in order to more
eecvely sell your product or service... you can use it for
SEO purposes and trac generaon (Google LOVES video
to create informave or educaonal videos for your niche
and to spread the word about your business. (Hint Hint)
You dont need to have a lot of complicated equipment or
technical experse to produce your own quality videos.
Theres no denying that 2009 is going to present somechallenges for ALL of us, but you dont have to hide your
head in the sand and wait for the recession to blow over!
If all of this seems overwhelming, confusing, and downr
impossible given the 500 hats you wear each day as a
business owner, I would recommend either:
Learning more about how to do all of this stu and1.
becoming a serious student.
Or, hire someone to do it for you at a reasonable price2.
Watch the free video that tells you everything you need tknow at www.LTCSocialMark.com.
Order your copy now atwww.monterose.com
Monte Roseserves up sales productivity
at the kitchen table
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Creating a World Class
Reverse Mortgage TrainingProgram
In this three part series for The Reverse Review we will explore the components of a
comprehensive Reverse Mortgage Training Program and strategies for effective implementation.
A well-developed training program is the cornerstone of any world-class organization. It is the
foundation for growth and sustenance. It is the vehicle to work as a team, have everyone on th
same page and brand effectively as a company.
As Vice President of Training and Development for World Alliance Financial; I was tasked with
establishing a training department as part of their plan for strategic growth. I spent two yearsworking hand in hand with the best loan officers, crafting our necessary tools and developing be
practices. During my tenure at World Alliance Financial, I created and implemented the reverse
mortgage curriculum. Later, when we rolled out our wholesale division, I had the privilege ofspeaking firsthand to hundreds of mortgage brokers who specialized in marketing reverse produc
nationwide. Through this, I gained the benefits of their insights and experiences. I also worked
closely with customer service, providing me invaluable knowledge of the true customer experien
from a closed loan and a failed-to-close loan perspective. This enabled me to create the tools
needed to properly and proficiently serve our customer base.
Jacqueline Del Priore
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Working for a well-developed corporaon, the basics were
already in place. There was a clear-cut path to transion loan
ocers smoothly to the sales oor. The human resources
department held rst day training for all employees to explain
our mission statement, our sales model, their job descripon
and our organizaonal chart. As a result, the sales agent knew
very clearly why he or she was there and what the company
was all about. They understood how they would be evaluated,when, and by whom. Having a clearly dened job descripon
and expectaon served to make a more eecve sales agent.
If not handled inially by a conscious and responsible human
resource department, these important points will need to
obviously be covered in training.
In dening the culture of your organizaon, your mission
statement will be the mantra of your company. Highly
eecve acvity begins with the end goal in mind. If you dont
already have a mission statement, write one now. It should
serve as the very rst page of your training manual and be
visible at all mes both in your training and sales areas. Itsupports one of the most basic tenets of success: Begin with
the end goal in mind. Your acons at work should consistently
support this mission statement at all mes. With this in place,
you can more closely assure that your team will all be on the
same page.
Always set the right tone for training. Let there be a posive
expectancy for training amongst your crew and do not fail
to live up to that expectaon. Too many loan ocers view
training as drudgery and a waste of otherwise producve me.
If training is fruiul and fun, your loan ocers will love to
come to training. They will bring their best selves to the table.For newly hired loan ocers, training will be the gateway
between orientaon and actually taking their place on the
sales oor. Dont put anyone in training you dont believe
is capable of doing a good job. Camaraderie starts here. Its
also an exercise in team building. Those same persons will go
on to support each other and challenge each other in their
daily acvies. Bonding begins with striving to master the
material and help each other through the course work. This is
where leadership skills will potenally be revealed. Your team
leaders are oen idened in training. Everyone should be
able and will be called upon to do a good job. The reward will
be the earned privilege of walking on the sales oor.
Ive been blessed to work in some of the most state of the art,
amazing training environments. Ive also been crammed into a
room like a bunch of sardines and I will tell you that the single
most important aspect of any actual training me is that it
be solely dedicated, uninterrupted me. No phones ringing,
no interrupons and no excuses. On the rst day of training,
the rules should be outlined clearly. The most important rule
will revolve around the respect that this carved out me will
command. The atude of senior management should sup
this as well. The respect for training will serve to shape a
culture of success within our organizaon.
Going forward, we will be exploring the framework of what
comprehensive inial reverse mortgage training should
include. To begin with, you will want your training to conta
a good strong introducon. This is the me to get excited!Why? Before you, is the task of speaking about one of the
most amazing growth segments of the mortgage industry. T
is your chance to introduce a new, rewarding and lucrave
career to your audience!
You are in a great space. You need to share this with your
people. You need to let them taste the opportunity that
exists. It is absolutely true that we could build a business t
will be fruiul for the rest of our working careers with the
demographic we serve! What other business can make the
same claim? You will know you have set the stage properly
when your people start showing up early for training. You wthem to experience what success in the reverse space can f
like and to understand that through mastery of the materia
success can and will be realized.
I like to give an historical perspecve of the reverse
mortgage. This helps loan ocers understand some of the
misconcepons surrounding the product. History can set
expectaons correctly on what can at mes be frustrang
about our somewhat new and evolving industry. Included
this history should be the creaon of HUD and an explana
of its mission to help Americans achieve and maintain hom
ownership. We can speak about how the FHA operates wiHUD and insures our reverse mortgage program allowing
signicant benets to borrowers and lenders alike. This is a
good me to introduce the aspect of mortgage insurance a
its funcon in assisng lenders and borrowers to achieve th
goals. While the HECM oen seems too good to be true
with many favorable aspects, the borrower funds his ability
have such a mortgage with the inial mortgage insurance a
connues to do so with the addion of the monthly mortga
insurance premiums throughout the life of the loan.
Mortgage 101 is essenal. An important point to make her
is to carefully segment training to be most eecve. Youmust address the sales trainee with no previous mortgage
experience. These persons could be lost if not brought up
speed with basic terminology such as what is a mortgage/n
Who is the mortgagor and who is the mortgagee? What is
deed, renance and purchase money mortgage? Rememb
we are in the mortgage business. A glossary of key mortga
terms will be helpful. As for former forward mortgage loan
ocers, Ive actually asked them to take two steps back and
reverse! The same skills dont necessarily apply and cant
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ensure success. So, advise them to check their egos at the
door and listen up.
Some seasoned loan ocers will need to join new trainees in a
quick study of the adjustable rate mortgage. Most important
here is the terminology of margin, index and cap. The proof
that one is ready to move on is when they can simply explain
how an adjustable rate mortgage works. Much to the horrorof my students, I am a huge proponent of geng students up
in front of the class. I put the dry erase marker in their hand,
and while I sit in their seat, I ask that they teach me along
with the rest of the class. I found this a powerful tool to have
everyone pay careful aenon! I might employ a technique
like this to be sure everyone could explain an adjustable rate
mortgage and contrast it to a xed rate mortgage. Id ask the
types of quesons they might expect from a client to make
sure their answers illustrated they really understood.
Understanding the senior demographic is very important. One
of the rst things I did as part of my inducon into the world
of reverse mortgages was to watch almost 20 hours of focus
group tapes. In these tapes, seniors who were solicited for
a reverse mortgage but decided not to take it, spoke about
what their percepon of the product was, what they sll were
unclear about and what would have made their experience
a beer one. This was invaluable. I never forgot this and
made it part of the training. I thought it was great for the loan
ocers to hear in their own words what the seniors wanted
and needed from them. We made a popcorn party of it with
discussion aerwards. Tesmonials can be a powerful part of
training. In the age of digital cameras, I would say, whenever
a client is willing to speak on camera or be recorded, do sofor training purposes. Its refreshing to bring in a loan ocer
who received a nice thank you card and have him speak briey
about how he handled the challenge at hand and what he felt
he did correctly.
Complaint leers and negave press can serve as a valuable
lesson as well. Encourage everyone to speak about his or her
impression of what went wrong and how it might have been
prevented. Its good to make the point that things can and
do go wrong and somemes are perceived badly. Its how we
choose to handle these situaons that will maer in the end.
What are the rules and expectaons for a reverse mortgage
loan ocer working within your organizaon? We work in a
carefully regulated industry and for good reason! Lets spell
this out from the beginning. How does one lawfully operate?
Something as simple as the fact that we work for one broker
or banker at a me should be a point of discussion. Many
persons coming from other industries may be unaware of this.
What would be considered misconduct? Always begin with a
discussion of ethics. There is no doubt that this discussion will
connue to thread throughout the training.
At this point, it would be good to introduce the NRMLA Cod
of Ethics and Professional Responsibility. The purpose for
the introducon here is this: NRMLA Members will be held
responsible for the acons of their employees. Let it be
known that there will be an expectaon of honor and integ
in the dealings they have with their senior clientele and a re
vigilance within the organizaon regarding this. Later, the
Code of Conduct can be examined and examples introduceillustrate points. An acceptance of this code in wring shou
be required as part of the transion to the sales oor.
It is important to remember that we speak to the Senior
Community. We serve a very special and protected class. T
is not to be taken lightly.
Before we get to the basics of product training, its oen
helpful to run through the mechanics of how the applicao
actually becomes a loan. Lets get an overview of the
originaon steps and where it goes from there. A ow cha
is most useful. Who is in charge of these important processteps? Invite your openers, processors and underwriters in
to speak briey about what they do. Outline the procedure
for communicaon with these persons. Will it be via email
within a certain meframe? Its good to have this in wrin
for future reference. One can never underesmate the pow
of clear communicaon and direcon. This is a good me t
insll respect for your operaons sta and may set the tone
for future friendly discourse.
Product 101
Now lets get down to the fundamentals of the product. Oproduct is a reverse mortgage, which allows seniors to tap
the equity in their home without having to make a monthly
mortgage payment. I like to begin by contrasng this to a
forward mortgage. I like to discuss the reasons why seniors
might be in the market for mortgage money and how our
product could meet their needs versus a forward mortgage
product. This is eecve simply because clients oen need
to understand clearly why taking a HECM is beer than goin
down to their neighborhood bank and taking a home equit
loan or a personal loan.
During this part, I oen like to isolate and discuss the beneof our product as they are revealed throughout the training
write them on big Post-Its and put them around the train
room on the walls so they are always in plain view. As the
loan ocers uncover and idenfy new benets, they are ab
to paste their own Post-It on the wall for the benet of th
class.
One of the most important benets to be understood is the
non-recourse benet. It is what has always separated the
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February 2009
HECM from other reverse mortgages and it is the reason for
the rather hey mortgage insurance premium. The non-
recourse feature as it pertains to the borrower guarantees
that the borrower will never owe more than the value of the
home at the me of repayment. It also guarantees that the
promises of the loan will be insured should the lender default.
The fact that the federal government makes this guarantee
holds quite a bit of weight and is a very important benet forseniors. Have the students pracce arculang this benet. I
frequently queson students as if I am a borrower. I ask them;
Why am I paying that mortgage insurance premium again?
A great student will be able to blurt back as if speaking to the
client; It provides one of your most important assurances; the
federal government guarantee of your benets throughout the
life of the loan and the insurance that neither you, nor your
heirs will ever pay more than the value of your home at the
me of repayment. It gives you peace of mind!
In the product training, role-playing is an eecve training
mechanism. Remember if your loan ocers answer thequesons quickly and condently in training, they will handle
quesons and objecons just as prociently with your clients.
The purpose of the training is to not only impart knowledge
but also insll condence in the product and the loan ocers
ability to handle customers.
A glossary of special reverse mortgage terms should be
provided. Make sure the denions match those in the
training. Be sure to compliment when correct verbiage is
used. A more eecve sales force will speak consistently
with the same vocabulary. Later, when we are working wit
proprietary products, it will be useful to speak the same
language when interpreng guidelines or using a product
matrix.
Product training should include such key terms and concep
as the expected and inial interest rate, maximum claim
amount and principal loan limit. Aer explaining these key
terms and their funcons, its very helpful to show where t
are disclosed and discussed in the inial applicaon proces
I oen include an examinaon of the respecve disclosure
forms in the training.
HECM Training must answer the queson; How is my
principal loan limit determined? Borrowers will inially
want to know if they are qualied and for how much. Theyinevitably will ask how in the world we came up with the
gure!
While we will need to teach that the principal loan limit is
determined by the age of the youngest borrower, the expec
interest rate and the maximum claim amount, we will also
need to pracce how that can simply be conveyed to our
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clients. It will be helpful to pracce this in role-play. Cauon
your loan ocers against geng too technical.
Create a simple exercise to be sure the loan ocers
understand that the maximum claim amount is always the
lesser of HUDs lending limit or the appraised value. In
training, it is the phrase we hear most commonly confused.
Later, we can introduce its importance in the calculaon formany things.
I believe it is helpful to teach the expected interest rate alone
in the beginning as HUDs risk management determinant in
the principal loan calculaon. In this way, loan ocers can
conceptualize this component as separate and apart from the
inial interest rate.
Introduce the Principal Limit Lock Disclosure as part of this
lesson. This disclosure serves to dene and explain the
expected interest rate and its part in the calculaon of the
principal loan limit.
State that the PLL Disclosure creates a sense of urgency for
the borrower to sign today. This is important for sales! You
will want to communicate that while the borrower may enjoy
a larger loan limit due to a decreased expected rate at closing,
all things being equal, they will never be aorded less than
they are signing for today and can proceed with a sense of
certainty. Role-play speaking with the borrower about the
benet of applying today and help loan ocers state their case
simply without being too technical.
Another aspect of the PLL Disclosure that should be clearis when it actually goes into eect. The expected rate the
day the borrower signs the 1009 stays in eect for 120 days
beyond the date the lender orders the FHA case number.
While the nuances of this need to be discussed in training,
you should also discuss how much of this type of informaon
needs to be conveyed to the borrower and if so, how it may be
done plainly.
Ive found that while the circumstances of the lock are a bit
complex to understand, the review of this document serves to
clarify them well and is extremely helpful.
Product training should serve to thoroughly address all
frequently asked quesons.
Other important aspects to address in product training would
be property acceptability, occupancy issues, HECM counseling
and maturity events.
I nd that there is oen an abundance of quesons aributed
to counseling, especially from forward mortgage loan ocers.
Counseling seems to be that extra dreaded foreign aspect o
this procedure! Dont be too bogged down in inial produ
training with counseling quesons. Later you will need to
introduce HECM Counseling protocol and go through the AA
Guide to Homemade Money. You will need to decide when
and how you will set the expectaons for counseling as par
of your sales process. At this me, there are a few importa
points to make that can be facilitated with the help of a blacounseling cercate. The loan ocers need to know that
HECM Counseling is mandatory, the cercate is good for
180 days and the loan cant proceed unl the borrower has
delivered to you a counseling cercate signed by both the
counselor and the borrower. Be sure that your training state
in wring that no services can be ordered prior to having th
fully executed cercate in hand. Also, be explicit about w
needs to be counseled, how they may access counselors an
the cost.
As with any mortgage product, the interest rate will be a
concern for borrowers. While the HECM has enjoyed a
relavely aracve interest rate of late, the majority of HECare monthly adjustable rate loans and this does prompt ma
consumer queries. An understanding of the index is crucial
Since a picture is worth 1,000 words, arm each loan ocer
with a good historical graph of the performance of the inde
Later, in training, we can idenfy the history of the index as
detailed in the HECM Important Terms (TIL) Disclosure.
An important point to train about the inial rate is when it
adjusts. It is also very key to have the borrower understand
the inial rate is a prevailing rate and will oat unl closing
Aer the rst adjustment, the HECM monthly adjustable w
change monthly inhibited only by the lifeme cap which wi
be established at closing.
The inial rate and lifeme cap as listed on the Comparison
Form and other applicaon disclosures are an esmate of
what would be if the borrower were closing the day the
disclosures were prepared.
In my experience, its best not to introduce the relaonship
between the inial interest rate and principal loan limit gro
unl aer the structure loan has been discussed.
In the next issue, we will connue discussion of other
important components of product training such as principa
limit distribuon and the structure and funcon of the loan
We will also discuss the servicing fee and set aside, repair
set asides and other special situaons that are unique to th
originaon of the HECM. Part Two will begin an in-depth
look at the sales process and the job aids that help achieve
maximum producvity.
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Wouldnt your job be easier ifsomeone warmed up your audience,like Ed McMahon did with Johnny
Carson? Wouldnt it be easier to havea conversation with a prospect if youwere introduced by someone theyknew and respected?
Developing a staple of referringadvisors is the most cost effectivemeans of ensuring sales success.
Most top producers I know areproficient in advisor outreach. Its aabout relationships, follow-throughexpertise, and fit. Understanding thadvisors needs is paramount.
Building an effective advisor referral engine
Monte Rose
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February 2009
Advisor segmentaon
I divide advisors into four categories: Professional Advisor,
Business Partner, Community Services, and Friends/Family.
There are four prerequisites to building an eecve advisor
referral pracce.
First, you must build a relaonship. This is something that
requires me, aenon, and some emoonal investment.
You must be likeable and knowledgeable.
Second, you must be a contributor. Know how your program
synchronizes with their business. What can you oer that
will strengthen their relaonship with their client? Help them
use your technical experse in their market.
Third, you must arm the advisors reputaon. Minimize
the noise. Go to them rst when theres a problem and
make sure they know youre handling the problem.
Fourth, be dependable. Own the transacon. Do what you
say when you say it. Make credibility, reliability, impeccable
follow-up, and experse the foundaons of your personal
brand.
Professional Advisors
The primary disnguishing characterisc present in this
segment is high-level professional designaons or special
For example, CPAs, CFPs, Registered Investment Advisors
and Elder Law aorneys would fall into the professional
advisor category.
These professionals take their duciary responsibility
seriously. They are highly analycal gatekeepers: the
numbers must make sense, and the soluon you
recommend must t. Oen, their greatest concern is
negave amorzaon and, secondly, adjustable rate
mortgages with a 10% lifeme interest rate cap over the
start rate. Therefore, developing a preferred provider
relaonship with a professional advisor is likely to require
much explanaon and signicant me to prove your
trustworthiness.
The clientele of this advisor segment give great credenceto the advisors recommendaon. A referral from a
professional advisor is one of the strongest referrals
a salesperson can receive. Each professional advisor
segment is its own community, with its own code of ethic
professional organizaons, cerfying bodies, publicaons
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and watering holes. Since it is dicult to gain experse
in all of them, its far beer to specialize in the niches where
you have the easiest access and the best t.
Business Partners
Business partners provide a product or service to your
eligible prospects. They can be very pragmac and focusedon the sale. You provide the liquidity tool that enables
their customer to buy. Be cauous, but not oended, when
they press you for a split. Most will understand your
explanaon regarding your inability to split revenue with
them. From those who do not, run.
Make sure you employ sucient rewalls to insure their
client is served well. The primary strategy you will employ
for the benet of their client is full disclosure. Make certain
that the whole story is always told and all the opons at their
disposal are reviewed.
Business partners run the gamut. If they oer senior
products or services, they can be a potenal referral
source. Agencies that specialize in long term care insurance,
boat brokers, real estate oces, remodeling contractors,
home security devices and equipment, safety and medical
equipment retailers, and so forth.
The consumer segments life stage needs will alert you
to what products and services are of interest and, thus,
what providers might become referral sources for you.
For example, some seniors require medical aenon or
assistance. They also use medical products that assist the
mobility (e.g., motorized wheelchairs, walking aids). Med
equipment providers are a potenal referral partner. Meewith the owner or manager and oer them a brochure an
display device for their display area. Reverse mortgage
brochures or booklets are appropriate for a variety of wai
rooms (denst, therapist, pharmacy).
Community Services
The community services segment is comprised of an
assortment of senior advocacy organizaons and service
providers such as: LivHome, Area Agency on Aging, count
conservatorship oces, and non-prot organizaons. The
encompass ethnic, faith-based, neighborhood, cultural,cause or interest-based, topical, tribal, polical, as well
as inter/intra/mul-generaonal groups. The community
segments are driven by heart. Their interest is serving and
protecng a vulnerable constuency or protected class of
persons, seniors. They can be sales-averse. If youre a ha
charging salesperson, your dialect and tone may aggravat
the community organizaon or senior advocate.
Community services as a referring segment is a large and
complex lode of potenal business. It is one of the most
overlooked areas of business development. Salesperson
with a high mission drive and a gentle authenc persondo well with this audience. Becoming a recognizable
insider is a key to successful penetraon.
Salespersons who use communies as a starng point for
their business are typically locals who already have inte
access owing to their own aliaons or memberships,
whether formal or otherwise.
Its the un-sales referring network.
Friends/Family
Seniors oen look to friends or family to shop on their
behalf. Or they may direct the seniors aenon to
informaon worthy of invesgang more closely. I have a
client who was referred to me by a trusted neighbor. The
neighbor was aware of the declining health and nancial
challenges of the senior, and alerted the senior to invesg
reverse mortgages. This lead, the neighbor, responded
an inexpensive adversement in a local senior publicaon
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February 2009
One of the advantages of having an internet presence is that
relaves can shop from afar on behalf of their loved ones.
Your website provides them easy access to informaon, and
you become known. Your photo, your brand persona, the
virtual you is on display.
The movaonal spectrum ranges from greed to
compassion. On the one hand, they may want to accesstheir inheritance in advance. Or they may be worn out,
need relief from care giving and the reverse mortgage is the
nancing mechanism. It may be a maer of distance, and
they cant care for their loved one because they are too far
away.
This is the most dicult niche to culvate because of its
moving target nature. However, know that your local
visibility eorts will bring you some friends and family
referrals over the long haul.
Locate your Advisor true north
Two key quesons will help you determine your advisor
niche t.
Whom do you understand when they speak?1.
Who listens to you when you speak?2.
If you dont understand them when they speak and they
dont listen to you when you speak, thats a prey good
indicaon that youre not a t.
To become a preferred provider you must add value to
their pracce or business. What can you do to improve
their dexterity and facility with the nancial tools that
may not be in their primary area of experse? Help themunderstand the senior mind more completely, and therefo
raise their game by adjusng their bedside manner or
communicaon delivery to improve their eecveness.
Answer this queson, How can I help them cement the
relaonship with their clients, enhance their reputaon, a
aract new clients?
Remember, you want to tell your story to as many advisor
as possible. You are prospecng. You are not selling. In
this stage of the game, you are creang connecons and a
constuency for your professional brand.
Your goal is to become their preferred reverse mortgageprovider.
Atare Agbamuis one of only a handful of people in the reverse mortgage arena who possesses a co
manding understanding of the reverse mortgage industry. As an originator, he has hands-on experience
ucating seniors and their advisors. As author of the Forward on Reverse column inThe Mortgage Pre
since 2002, Atare Agbamu communicates nationally with the housing finance community, bringing
unique insights and experience of an ardent reverse mortgage expert into a wider business context.
This book combines Atares keen insights and know-how with extensive research to create afirst of its kind
source for the reverse mortgage industry. It offers a comprehensive overview of the industry plus detailed informat
on marketing and originating reverse mortgages.
Present and future reverse mortgage professionals and senior advisors will profit from decades of experience skfully woven into this book. If you plan to succeed in this industry, this book is the place to start.
Sarah F. Hulbert, President, Senior Financial Corporation and former four-term Co-Chair of NRMLAs Board of Directors
Part I:
The new pillar of
retirement security
Part II:
Marketing reverse mortgages:
Its all about education
Part III:
Originating reverse
mortgages
Part IV:
Enhancing freedom: The
essence of reverse mortgages
Part V:
A new frontier in mortgag
lending
Think Reverse! Table of Contents
Only
$49.95Plus Postage& Handling
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UpClosePersonal&
Brian D. Montgomerwith
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February 2009
On FHA Reform:
We wanted to start with one of your main initiatives, FHAReform. Give us a sense of the history, what has transpiredover the years, where it stands today, and where it shouldbe? Additionally, where you would like to see it in the future?
Certainly after I got here in June of 05, it became quicklyapparent to us that FHAs market share had declinedsignicantly, and we saw it when we peeled back the
onion. Our traditional borrower, lower income borrower,rst-time borrower, minority home borrower, you name it,
had gone toward the sub-prime route. This concerned usfor reasons that we all since have learned and we realizedwe needed to reform FHA, not just legislatively, but also
administratively. The administrative side was lower hangingfruit. Our appraisal protocols were unique. The fact that
we didnt use technology for the case binders and still
required all lenders t
submit a rather thickcase binder really se
us apart from the re
of the industry. So,we worked hard to
better align FHA withthe rest of the indust
We didnt want to cutcorners, but at the
same time we thoughwe could at least brinFHA into the late 90s
to speak.
So, early in 06, we weto the Hill and sat dow
with members from bsides, Republicans anDemocrats, and show
them the volume in thstates, in particular
California. We met wMaxine Waters and the volume had almost vanished in he
district. She worked, as other Democrats and Republicanfor us to get FHA passed in the House. Unfortunately, it din the Senate but at least we started sounding the alarm
that something was amiss. For political reasons I think ittook way too long to get FHA Reform and what we eventu
got was not really what we originally set out. Nonethelesthere were some big victories and there are certainly the
loan limits.
As to the future, a major concern for both forward and
reverse, would be FHA becoming too large a share of thmarket. I dont know if that is healthy for the privat
sector in the totality of the mortgage market. Thatpart of what played into our decision on the loan limfor HECMs. We didnt want to crowd out jumbo lend
in the reverse phase, in the reverse portion. Right
As the nal days of the Bush Administration came to aclose, The Reverse Reviewhad the privilege of engagingin a candid conversation with Brian D. Montgomery, the(former) Assistant Secretary for Housing-Federal HousingCommissioner. As we spoke with Mr. Montgomery he sharedwith us his plans for Inauguration day, which he did not
attend, but he was one of a select few long-time Bush staffers who hadthe honor of accompanying former President Bush one last time on AirForce One as he returned to Texas.In his former position, Mr. Montgomery was responsible for overseeingthe $400 billion Federal Housing Administration (FHA) insuranceportfolio. In addition, he oversaw HUDs regulatory responsibilities inthe areas of the Real Estate Settlement Procedures Act (RESPA), thehousing mission of Government Sponsored Enterprises (GSEs) FannieMae and Freddie Mac, and the manufactured housing industry.
A
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now, the FHA insured part is such a large majority of reverse
mortgages. We knew that if we had a jumbo product, we
would probably crowd out the enre non-insured private
market from that space.
Now I think FHA is well posioned with our volume growing
so much with some of the reforms that weve done, as well
as the business processing for engineering and laying thegroundwork for some systems upgrades. I feel very favorably
that FHA is up to the task and will connue to be so.
On the new Administraon:
What do you want to see happen in the coming years in the
new administraon?
Well, I certainly think they need to go back and look at
the pricing structure. We had a short-lived move toward
risk-based pricing, which only made immense sense to us,
especially in our space, where FHA borrowers with the
highest FICO scores were our lowest income borrowers.
So, we wanted to be able to give those borrowers, the lower
income borrowers that had the higher FICO scores, a lile
beer price on the premiums. We now have three pricing
buckets, but to protect the long-term solidarity of FHA, I
think, having risk-based pricing would do that. I think they
need to go back and make sure some of the seller funded
down payments dont come back. I know some members
of Congress are trying to introduce legislaon to bring the
back, but we recently announced the 2nd biggest re-esm
to the FHA Insurance Fund. While it is partly due to declin
home prices, it had more to do with the seller-funded dow
payment assistance, which almost drove us to the brink o
insolvency, but Congress nally acted and the prohibion
that began in October of 08.
On the HECM Product:
The HECM Market, naturally, is a much smaller market
than all the products that exist as a part of FHA. What are
your thoughts about the future of the HECM market and
the reverse mortgage industry; its success and its growth,
granted that its grown very slow in 2008? Talk to us abou
how you see it growing in 2009 and 2010.
A major concern
reverse, would be
a share
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As you know, weve been enjoying almost exponenal
growth, starng at the turn of the century, we insured about
6,600 FHA HECMs and by the year 2007 it had grown to
about 107,000. Yes, youre right, in 08, we had an increase,
but a slight one. If memory serves me correct, we went
from 107,000 to 112.000, but growth, nonetheless. It just
shows you that FHA and reverse mortgages are not immune
to declining house prices. Certainly, a lot of seniors wantto get more bang for their buck, and I know from what
were hearing and seeing, some of them are sing on the
sidelines, waing for prices to go back up. Even looking at
the demographics, as we all know, one of the last numbers I
saw is by the year 2020, 30 percent of all Americans will be
age 65 and older. That is a staggering number. With such
a small market penetraon now with reverse mortgages,
I think youll only connue to see those numbers go up.
Im very opmisc on the future of the reverse mortgage
product, in parcular the HECM.
On Personal Accomplishment:
What is your greatest accomplishment while serving at HU
Do you feel you were able to accomplish all your iniave
while in oce?
Well, there was a lot of stu we did here that never made
the press, but in the aggregate, we think what was importwas what we have been talking on: administrave reform
doing the business process reengineering, and the lien, us
the Toyota lean model for our homeownership centers, so
we can more eciently and quickly process the case bind
We were the rst ones with a plaorm and we were len
the world know, in parcular Congress, something was
wrong with the mortgage market. Im poinng back to th
middle of 05, when you saw our volume drop percepbly
low, and the near expedienal growth of the subprime, th
we were mainly concerned when we looked at minories
African-Americans and Lanos in parcular, paying
signicantly higher for a loan than non-minories. It took
lile longer on the Senate side, but the good news is that
started early, and we stayed at it and we got the bill throu
I would also say FHA Secure is another one. I think 499,59
people have renanced with FHA since we launched that
about 15 months ago. Those were all subprime borrower
who knew they were facing a reset or had just reset, and
many of them with very high interest rates. They were ab
both forward and
becoming too large
e market.
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to renance into a safe and secure FHA loan. So, we are
proud of that number, as well.
On Experiences:
What was your most rewarding experience during your
years of service?
As you know, I go to a fair amount of conferences, not that
I enjoy travel like I did maybe 20 years ago, but geng out
and meeng people who work in the industry; being able to
hear rsthand what lenders through realtors thought was
good and bad about the FHA product was great. I think by
everybody working together irrespecve of parsan polics,
we were able to do a lot for people. There were a lot of
people, by the way, that didnt want us to succeed. Their
inials both begin with an F. Fannie and Freddie. They
were doing what they could behind the scenes to, quite
frankly, drive us out of business. I didnt think that was
healthy for lower-income, rst-me homebuyers.
I feel good about some of the other things that we
arculated before to you. I also think in showing the
country that its important to have the FHA around in good
mes and in bad mes. This is the rst me youve seen
the naonwide downturn and prices like this. We can look
back at regional economic problems in the 80s, and the
manufacturing states, not just in the 80s, but also now. And
whos sll there? Private mortgage insurers are gone and
others, but FHA is here. Were here and open for business.
Were proud about that fact, as well.
On Hurricane Katrina:
Please share with us some of your work with the vicms of
Hurricane Katrina.
Well, you remember I came over here from the White
House and the oce I ran at the White House was called
Cabinet Aairs. One of the things that we did was that we
helped coordinate the post hurricane relief eort, and Im
backing up a lile before that. If you remember in 04, we
had four hurricanes move through the Gulf region literallyin a maer of three months. Was it Jean, Ivan? Anyway, its
amazing how you forget them. Im going back to the middle
of 04. This is pre-Hurricane Katrina, nonetheless, I helped
coordinate that eort at the White House, working among
agencies like FEMA and others, the Dept. of Educaon, HUD,
and the Dept. of Labor. Theres a whole host of issues that
pop up following a disaster. Things of that nature that most
people dont even know about. So, when I got over here to
HUD and I had only been on the job a month and one-half,
when Hurricane Katrina happened, the Secretary put me
in charge of the more immediate need of having FHA out
there looking to expand our role. FEMA tradionally does
the short-term shelter and even the short-term housing,
although, now this has been shied to HUD. FHA had not
been a disaster enty. Quite frankly, HUD really had not
been either. We put ourselves into that business in a big
way, coming up with the Katrina Housing Voucher Programwhich became the Disaster Housing Program that we used
in subsequent disasters. Geng out there, we sent team
of employees to Louisiana and Mississippi to help scout fo
manufactured home sites and a few of those went in. We
went down there to man the disaster recovery centers, w
with lenders on foreclosure moratoriums and theres a lot
that goes in, especially of the magnitude of Katrina, which
most of the public doesnt even know about. We had jus
started our FHA REFORM eort, which we had to almost
put on hold for about three months while we dealt with
the immediate aer eects of Hurricane Katrina. So it was
demanding me back then, and quite frankly, sll is.
On the Future:
What are your plans for the future, and do you plan to
remain involved in the work you have been doing? Are y
going to take any me o?
With a newborn, it is tough to take me o. The Secretar
nominee, Shaun Donovan, asked me to stay here for a few
weeks. So, Im going to do that. I will also be acng as
Secretary, Ive been told, unl he gets formerly voted in. Sto answer your queson, I will be here (Washington, DC) f
a few weeks, and then well start packing up to move dow
to Texas. Yes, I think I will stay in this eld, and Ive talked
some companies and Im close to a decision on that front
also want to do some consulng work, not just in housing
but some other areas and get involved with some non-
prots.
The Reverse Review would like to thank Mr. Montgomery
taking the me to share with us his invaluable experience
and thoughts regarding FHA and HUD. We know each and
every one of our readers will nd the informaon containabove to be of great value.
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One of the more excing developments for the reverse
mortgage industry stemming from the Housing and
Economic Recovery Act of 2008 was its authorizaon of theFederal Housing Administraon (FHA) to insure Home
Equity Conversion Mortgages (or HECMs) for the purchase of
homes (HECM for Purchase). HECM for Purchase has been
a long sought iniave of the Naonal Reverse Mortgage
Lenders Associaon (NRMLA) working collaboravely with
FHA, for the principal reason that it facilitates the ability
of seniors to downsize into homes that beer suit their
needs or to move from their exisng residence to another
geographical region to be close to family or others who can
beer provide the care and fellowship they desire.
Although the road to HECM for Purchaser as been along and not altogether easy one, in many ways, and as
discussed in this arcle, the hard part may have just begun.
Implemenng HECM for Purchase raises a number of issues
not previously dealt with by reverse mortgage lenders and
originators requiring new documents, policies, procedures
and processes. Although this may not be entertaining
reading for the squeamish (aer all, this arcle is wrien by
lawyers), the goal of the HECM for Purchase program is a
noble one, and the industrys eorts will greatly benet not
only the seniors we serve, but also their loved ones.
So, come along with us as we explore the guidance that has
been provided by FHA as well as some of the problems and
pialls on the road to implemenng HECM for Purchase.
What is a HECM for Purchase?
The new HECM for Purchase program allows senior
borrowers 62 years of age or older to purchase a home using
the proceeds from an FHA-insured HECM reverse mortgage.
On October 20, 2008, the FHA issued Mortgagee Leer
2008-33 (ML 08-33) implemenng amendments enacted
by the Housing and Economic Recovery Act of 2008. As isthe case with many mortgagee leers outlining new HECM
program terms, ML 08-33 raised almost as many queson
as it answered. The result is that FHA has further claried
ML 08-33 in its Frequently Asked Quesons publicaon o
its website (HECM for Purchase FAQ) and, as of the date t
arcle was submied for publicaon, HUD had informally
indicated its intenon to further clarify the program by
issuing a new HECM for home purchase mortgagee leer
the near future.
ML 08-33 denes a HECM for Purchase as a real estate
purchase where tle to the property is transferred to theHECM borrower, which the borrower will occupy as a
principal residence, and, at the me of closing, the HECM
rst and second liens will be the only liens against the
property. The HECM for Purchase FAQ further claries th
the HECM for Purchase program eliminates the need for a
second closing, allowing the senior borrower to purchase
new principal residence and obtain a reverse mortgage as
part of a single transacon.
The new HECM for Purchase program became available fo
loans with FHA case numbers assigned on or aer January2009. Prior to January 1, 2009, FHA-approved mortgagee
were allowed to take an applicaon for a HECM for Purch
however, they were not permied to process or perform
services that would result in a charge to a prospecve
borrower. HUD permied lenders to lock-in the expected
average mortgage interest rate for HECM for Purchase
applicaons taken prior to January 1, 2009. However, HU
indicated in the HECM for Purchase FAQ that the maximu
permied interest rate lock period of 120 days begins to r
Weiner Brodsky Sidman Kider, P
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on the day the FHA case number is assigned to the loan, i.e.,
on or aer January 1, 2009.
Similar to tradional HECM renance transacons, in
HECM for Purchase transacons, lenders must calculate the
maximum claim amount and the principal limit in accordance
with HECM regulaons.
Eligible Property Types
Eligible property types for the new HECM for Purchase
program include exisng one-to-four unit properes where
construcon has been completed, the property has been
approved for occupancy (a nal Cercate of Occupancy, or
its equivalent, has been issued), and the property is occupied
by the borrower(s) as a principal residence. Any construcon
loan nancing for the property must be sased, the HECM
liens must be in a rst and second lien posion, and no other
liens against the property must exist at closing.
Certain types of properes are ineligible for FHA insurance
under the HECM for Purchase program, including, among
others: (i) cooperave units; (ii) newly constructed
residences where a Cercate of Occupancy or its equivalent
has not been issued by the appropriate local authority; (iii)
exisng manufactured homes built before June 15, 1976; and
(iv) exisng manufactured homes built aer June 15, 1976
that fail to conform to the Manufactured Home Construcon
Safety Standards, as evidenced by axed cercaon labels
(e.g., data plate and HUD cercaon label) and/or lack
a permanent foundaon as required in HUDs PermanentFoundaons for Manufactured Housing Guide.
Further, lenders and originators are not permied to take an
applicaon on a property that is under construcon and not
habitable. HUD made clear in its HECM for Purchase FAQ
that lenders and originators may only take an applicaon
once the Cercate of Occupancy or its equivalent has
been issued. This limitaon promises to create headaches
for senior purchasers and sellers on new construcon
by eliminang the ability of the purchaser to provide
preliminary loan qualicaon to the seller and necessarily
delaying closing for several weeks (to accommodate theprocessing and closing of the HECM for Purchase transacon)
following the compleon of construcon.
Title Requirements
HECM for Purchase can be used to sasfy outstanding
payment obligaons associated with a land contract,
contract for deed or other similar installment purchasing
arrangements. However, lenders and originators need to
ensure that the property which is the subject of the land
contract will (A) be used as collateral for the HECM loan,
and (B) will meet FHAs tle requirements (see discussion
immediately below).
ML 08-33 noted that FHAs tle requirements, as provided
in secon 255(b)(4) of the Naonal Housing Act and
implemented in the HECM regulaons at 24 C.F.R. 206.4provide, in part, that a HECM must be on real estate held
(i) in fee simple, or (ii) on a leasehold under a lease for no
less than 99 years which is renewable, or (iii) under a leas
having a remaining period of not less than 50 years beyon
the date of the 100th birthday of the youngest borrower.
Notably, ML 08-33, on its face, does not appear to include
a life estate as a permied property interest. ML 08-33
makes no reference to HUDs previous regulatory guidanc
authorizing tradional HECM renance transacons secur
by an interest in the property that is a life estate (provided
remaindermen subject their interests to the lien of the HEmortgage or deed of trust). Accordingly, without further
claricaon from HUD, it is an open queson whether a
HECM for Purchase transacon, where the senior holds
as a life estate, is insurable by FHA.
Monetary Investment Requirement
Senior borrowers must make a down payment sucient t
sasfy the dierence between the HECM principal limit a
the sales price for the purchased property, plus any HECM
loan related fees that are not nanced or otherwise ose
by other allowable FHA funding sources. As is the casewith tradional HECM renance transacons, seniors may
connue to nance closing costs, or elect to pay them out
of pocket. The required monetary investment must come
from an allowable funding source. Seniors will either nee
to use cash on hand or cash from the sale of other assets
for this down payment. For example, a withdrawal from t
senior borrowers savings or rerement account would be
acceptable funding source.
ML 08-33 further explained that seniors applying for a
HECM for Purchase loan may not obtain a bridge loan (or
so called gap nancing) or employ other interim nancitechniques to meet the down payment requirements and
pay for closing costs in connecon with HECM for Purchas
transacons. This restricon includes subordinate liens,
personal loans, secured or non-secured loans from other
assets (i.e., car, home equity line of credit, or investment
property or second home), cash withdrawals from credit
cards, seller nancing and any other lending commitment
that cannot be sased at closing.
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HUD expressly noted in its HECM for Purchase FAQ that
seniors may not apply credit card cash advances towards
the required monetary investment or closing costs. Doing
so would be in violaon of FHAs requirement that all
outstanding obligaons connected to the HECM transacon
(whether for home purchase or renance) be sased prior
to or on the date of closing.
In addion, importantly, HUD indicated that gis are not
allowed as an acceptable source of funding. HUD explained
that prospecve borrowers may only use their own money
or money obtained from the sale of their own assets. FHA
also prohibits the use of loan discount points, interest rate
buy downs, closing cost assistance, builder incenves, gis
or personal property given by the seller or any other party.
Seller concessions and seller nancing are not permied.