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WHAT THE HECM?
RMS AGENT DEVELOPMENT
5 Star Conference // Dallas, TX
September 15, 2015
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REO Management Solutions
REO Management Solutions (REOMS) is a wholly-owned subsidiary of Reverse Mortgage Solutions, Inc. (RMS) that specializes in asset management and liquidating bank-owned properties on behalf of investors.
Walters Investment Corporation
Sister companies with :
Ditech/Greentree, Everbank, MA Systems
RMS specializes in:
liquidating reverse mortgage/HECM REOs
maximizing return of HUD insurance process
diminishing investor exposure to loss
Q4 2014
For Mortgage Professionals Only
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HECM Home Equity Conversion Mortgage
Industry term is a Reverse Mortgage
Q4 2014
For Mortgage Professionals Only
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HECM Product Overview
Tool to allow seniors the opportunity to remain in their homes and to supplement income.
Borrower RequirementsYou must:Be 62 years of age or olderOwn the property outright or paid-down a considerable amountOccupy the property as your principal residenceNot be delinquent on any federal debtParticipate in a consumer information session given by a HUD- approved HECM counselor
Property RequirementsMeet all FHA property standards and flood requirements:Single family home or 2-4 unit home with one unit occupied by the borrowerHUD-approved condominium projectManufactured home that meets FHA requirements
Financial RequirementsIncome, assets, monthly living expenses, and credit history will be verified.Timely payment of real estate taxes, hazard and flood insurance premiums will be verified
Q4 2014
For Mortgage Professionals Only
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HECM Product Overview
But what does this mean to for me as an agent….
Future Inventory
Q4 2014
For Mortgage Professionals Only
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HOW MANY ARE OUT THERE?
FY 2015--53,372 FY 2014--51,642FY 2013--60,091FY 2012--54,822FY 2011--73,131FY 2010--79,106FY 2009--114,692FY 2008--112,154FY 2007--107,558FY 2006--76,351 FY 2005--43,131FY 2004--37,829FY 2003--18,097FY 2002--13,049
FY 2001--7,781FY 2000--6,640FY 1999--7,982FY 1998--7,896FY 1997--5,208FY 1996--3,596FY 1995--4,165FY 1994--3,365FY 1993--1,964FY 1992--1,019FY 1991--389FY 1990--157 loans
Total = 906,018
Source: HUD
Q4 2014
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HECM Product Overview
All reverse mortgages by nature are designed to default.
You are giving seniors the ability to stay in their homes with no obligation to pay off the debt.
But inevitably default happens…
1. Death of borrowers
2. Tax and Insurance
3. Failure to repair property as a condition of the loan
4. Occupancy
Q4 2014
For Mortgage Professionals Only
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HECM Product Overview
Default- now what?
Borrower or borrower’s heir can redeem the loan.
• 6 month timeframe with 2 optional 90 day extensions
- House can sit for a year before going to FC. Some of these sit for even longer as we wait for the courts to process the legal steps
Short sales and DILs are an option for the estate.
Q4 2014
For Mortgage Professionals Only
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HECM Product Overview
Key Points for HUD marketing requirements following Foreclosure
• Insured loan back to the original investor.
• Must sell at the current valid FHA appraised value.
* approval to 95% may be granted by HUD as a condition
• Sold “as is” no utilities no repairs unless for health and safety or require by local laws.
• All valid preservation expenses and curative expenses will be reimbursed to the investor as long as they incurred during the insured period.
Q4 2014
For Mortgage Professionals Only
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HECM Product Overview
Preservation rules ML 2010-18 Exb B – Schedule of allowances
• $2500 from noncompliance and/or default
• Most of the time this money has been spent.
• The process to get more money is called a 50002. It’s an over-allowable request for more money.
Probably biggest frustration from an agent’s point of view. Not much visibility to the process. Must be submitted by the servicer and coordinated back through local preservation.
Q4 2014
For Mortgage Professionals Only
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HECM Product Overview
Occupied Assets
6 types
1. Former Borrower
2. Non Borrowing spouse
3. Tenants
4. Heirs
5. Unauthorized Occupants- Squatters
6. Personal Property
HUD does not offer Cash For Keys- non-reimbursable investor expense
Q4 2014
For Mortgage Professionals Only
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Marketable Title Established The marketable title date (MT) is determined by the most recent of the
following three dates:
1. Vacant date
2. Foreclosure Deed recorded date
3. Expiration of Redemption, Ratification or Confirmation
*including IRS redemption rights
6 month clock starts upon latest event
Q4 2014
For Mortgage Professionals Only
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HECM Product Overview
Investor has 6 months to sell the asset during the insured period.
***Commonly called pre180.
-This is called a sales based claim if sold during pre180
At the end of the expiration of marketable title the investor must settle up with HUD to the value of their current appraisal and now the property it investor owned. True REO.
***Commonly called post180.
-This is called an appraisal based claim if sold during post180
Property must be sold at the valid FHA appraisal. Only good for 120 days. To file the claim one must have an appraisal dated within 15 days of the expiration of MT.
Q4 2014
For Mortgage Professionals Only
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ADDITIONAL KEY POINTS TO KNOW
Q4 2014
• Older homes in nature
• Investor friendly sales
• ~70% are not FHA financeable
• Significant deferred maintenance
• Double edged sword to repair
• Always have BPO done and repair considerations ready for appraisers.
• Bad values leave you stuck on the market.
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Government Regulations & Investor Guidelines
Q4 2014
Department Regulation/Guideline
Eviction & Redemption 24 CFR 206.125 (3)ML 2013-38State Eviction LawsProtecting Tenants at Foreclosure Act
HECM REO Sales 24 CFR 206.125 (4)
Sales & Appraisal Based Claims 24 CFR 206.127 & 129
Property Preservation ML 2010-18 and related FAQs
For Mortgage Professionals Only
What does the future at RMS look like?
RMS CLIENT MATRIX
(8188) ENT Federal Credit Union (7022) Random Properties Acquisition, Corp. III(8115) Random Properties Acquisition-HECM(7087) Transcendent Investments Management(7056) Wells-Riverview 2007-1(7067) Wells-Riverview 2007-2(7058) Wells-Riverview 2007-3(7020) World Alliance Financial Group
o Total commission is 6% of sale price, of which 1% is to be paid to RMS.
o There is no minimum commission offered.o Client will consider a sales price of 95% of the appraised value
RMS CLIENT MATRIX (cont.)
(7271) RMS-RBS-Greenwich(7299) RMS-Owned(7394) RMS-Goldman(7416) RMS-FNMA Repurchase(7418) RMS-GNMA
o Total commission is 6% to be equally split between LA/SA. o Minimum Commission of $2,000 applies if the total commission payout is < or =
$2,000.o The $2,000 minimum commission is to be equally divided between LA/SA.o 1% referral fee does not apply. o Client will consider a sales price of 95% of the appraised value
RMS CLIENT MATRIX (cont.)
(7392) RMS-MECA 2010 Trust
o Total commission is 6% of sale price, of which 1% is to be paid to RMS o Client will consider a sales price of 95% of the appraised value
(7945) US Bank N.A. as Trustee for MECA 2011-1
o Total commission is 6%. o 1% referral fee does not apply. o Minimum commission is granted on a case by case basis, and
determined by the client. o Client will consider a sales price of 95% of the appraised value
RMS CLIENT MATRIX (cont.)
(7091) BAML(8619) Bank of America, N.A(8797) BAML 002(113234) BAML 2 REO Transfer
o Total commission is 6% of sales price of which 1% is to be paid to RMS. o Minimum Commission of $2,000 applies if the total commission payout is < or =
$2,000. o The $2,000 minimum commission is to be equally divided between LA/SA. o Client will consider a sales price of 95% of the appraised valueo Transfer assets are boarded 1x month and may be assigned to previous listing
agent.
RMS CLIENT MATRIX (cont.)
(8763) RMS-BOA-UNIS
o Total commission is 6% of sales price of which 1% is to be paid to RMS. o Minimum Commission of $2,000 applies if the total commission payout is < or
= $2,000. o The $2,000 minimum commission is to be equally divided between LA/SA. o List Price will be determined by the BPO/Appraised valueo Agents may be required to provide bids for repairs and debris removalo Marketable Title does not apply
RMS CLIENT MATRIX (cont.)
(8285) Seattle Bank(9067) RML Trust 2013-1(9069) RMS Trust 2013-2
o Total commission is 6% of sales price. o 1% referral fee does not apply. o Client will consider a sales price of 95% of the appraised value
RMS CLIENT MATRIX (cont.)
(8289) Reverse Mortgage Loan Trust 2008-1(8583) GTE Federal Credit Union(9069) RMS Trust 2013-2
o Total commission is 6% of sales price of which 1% is to be paid to RMS. o Minimum Commission of $2,000 applies if the total commission payout is < or
= $2,000. o The $2,000 minimum commission is to be equally divided between LA/SA. o Client will consider a sales price of 95% of the appraised value
RMS CLIENT MATRIX (cont.)
(8237) Chetco Federal Credit Union(28393) American National Bank(300093345) Black Reef Trust – HECM(300079407) Black Reef Trust – Proprietary(109921) TRM
TRM – Proprietary *Properties not yet boarded
o Total commission is 6% of sales price of which 1% is to be paid to RMS. o Client will consider a sales price of 95% of the appraised value
RMS CLIENT MATRIX (cont.)
(8187) Urban Financial of America, LLC
o Total commission is 6% of sales price of which 1% is to be paid to RMS. o Minimum Commission of $2,000 applies if the total commission payout is < or
= $2,000. o The $2,000 minimum commission is to be equally divided between LA/SA. o Client will consider a sales price of 95% of the appraised valueo 60 Day property look backo Broker Marketing Questionnaireo Weekly property inspections during vacancyo UFA appraisal review prior to listing o Agent proximity to properties:
- 5 miles Urban- 15 miles Suburban- 25 miles Rural
RMS CLIENT MATRIX (cont.)
(7488) Fannie Mae
o Transfer Timeline:- New/Redemption/Occupied: Transferred on 9/10/15- Pre-Marketing &Weekly Post 180: 9/17/15 - Weekly Post 180: 9/24/15- Listed & Weekly Post 180: 10/1/15- Pending offer: 10/8/15
o Contract Extensions in November will only be extended on a case by case basis.
RMS BUSINESS FUNCTIONS/TIMELINES MUST BE METTasking KPI Metrics of Scheduled Task
Assignment Acceptance or Rejection 24 hours of assigned taskInitial Occupancy 24 hours of assignment
Weekly – on Redemption/Occupied Properties
Monthly – on subsequent tasksHOA 24 hours of assignmentBPO Tasking 5 days MSRs Tasking MonthlySubmit Initial Listing Agreement 24 hoursMLS 24 hoursSubmit Signed Sales Contract 4 days to submit contractSubmit Contract Modifications (Corrections)
2 days
Submit Final Sales Contract to Buyer’s Agent
24 hours
Submit Sales Contract Extensions/Amendments
24 hours
Submit Listing Extensions 24 hours
No Offers?No Help?
GOODBYE!
COMPLETING THE BPOBelow is a guide Asset Management utilizes when evaluating the condition of the BPO.
ETHICS & PROFESSIONALISM
o We expect you to adhere to your local state laws regarding real estate practice.
o We expect you to remain professional at all times in your communication with RMS vendors, buyers agents, and buyers.
o A few things to consider when handling RMS properties: - Property MUST be listed in your local MLS for 3 days / 5 days
on BOA assets - Listing Agents are not permitted to purchase Fannie Mae assets
- Not disclosing personal interest in property or the purchasing entity
REOCentral Updates
oRMS Exclusive Right to sell Listing Agreement.
oRMS Real Estate Purchase Addendum (REPA) 2016