The Reverse Review Magazine June 2011

THE

J U N E 2 0 1 1

review

Industry’s Message to Washington, D.C.

the

John Mitchel l , CPA

effectsof the new

compensationguidelines

By Joshua shein

pR tipson a budget

By Justin Meise

5 waysto build youR

netwoRkBy tiMothy a. sherMan, esq

INSIDEthis issue

The software that ...... won’t leave you

in the rain

Rev

erse

Vis

ion

Sui

te

ReverseVision

www.reversevision.com (919) 834 0070 [email protected] Inc. 3310 Pollock Place Raleigh, NC 27607-7006

ReverseVision is supported by more reverse mortgage lenders than any other software.

In these uncertain times, Freedom of Action can determine a company’s survival.

Strategically thinking companies choose ReverseVision because ReverseVision combines the highest independence with maximum compatibility.

ReverseVision protects its customers by giving them the maximum freedom of action.

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The Report 9,11

Ask the Underwriter 12

The Perspective 14

The Advisor 16

Ask the Appraiser 18

The Hot Seat 20

The Industry Roundup 22

The Last Word 41

The Resources 42

TRR 06.11

HECM Counseling as a Marketing Tool 24By understanding how HECM counseling works, you are able to increase loan production and boost referrals. AlAin VAlles, CRMP

The Industry’s Message to Washington, D.C. 28Reverse mortgages save billions of Medicaid dollars a year.John MitChell, CPA

Leveling the Playing Field 34The effects of the new compensation guidelines. JoshuA shein

Visibility on a Budget 36Understanding the fundamentals of PR can help you generate visibility on a limited budget.Justin Meise

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the Essentials

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the Core

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reversereview.com 8 TRR | 5

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© 2011 The Reverse Review, LLC. All rights reserved. The Reverse Review, LLC is a California limited liability company and is the publisher of The Reverse Review magazine. Reproductions or distribution of any materials obtained in the publication without written permission is expressly prohibited. The views, claims and opinions expressed in article and advertisement herein are not necessarily those of The Reverse Review, its employees, agents or directors. This publication and any references to products or services are provided “as is” without any expressed or implied warranty or term of any kind. While effort is made to ensure accuracy in the content of the information presented herein, The Reverse Review, LLC is not responsible for any errors, misprints, or misinformation. Any legal information contained herein is not to be construed as legal advice and is provided for entertainment or educational purposes only.Postmaster : Please send address changes to The Reverse Review, 16745 W. Bernardo Drive Suite 450 San Diego, CA 92127

Letter from the Editorl

Printer The Ovid Bell Press

Advertising Informationphone : 858.832.8320e-mail : [email protected]

Subscriptions e-mail : [email protected]

Editorial Contente-mail : [email protected]

Meet the Team

Publisher AmAn mAkkAr

Your greatest strength is knowing your greatest weakness.

Editor-in-ChiefEmily VAnnucci

“You’re trying too hard... try less.”

National Sales Rep. & Marketing Coordinator kAtE ShEEhAn

“Love what you do. Do what you love”... Done and done.

Copy EditorkErStEn WEhdE

I can’t read a menu, text or wedding invitation without proofreading it.

Creative DirectortArAcEy knight

My spelling is better when I type with my toes.

News EditorBrEtt g. VArnEr

“He who spends too much time looking over their shoulder, walks into walls.”

e

After finishing up this month’s issue, I’ve realized that we have an array of rock-solid articles on marketing and PR for all those movers and shakers out there.

Not only is the industry changing, but characteristics of our target market are changing as well. In Justin Meise’s article, “Visibility on a Budget”, he shares some very significant stats about the baby boomer generation and the Internet. Boomers are moving online and we need to be right there with them to continue to communicate through tools such as Facebook, LinkedIn and YouTube.

I was an early user of Facebook and solely logged on to connect with college friends who had access and to peruse the abundance of photos posted to their profiles. I’m happy to see that Facebook has finally evolved into a means of communication for so many more age groups and especially growing businesses! I must admit, I was a little taken aback when both my mother and father “friended” me on the social site. But after coming to terms with the staggering stats regarding baby boomers and the Internet, I realized that they needed

to be on there. As a matter of fact, they are latecomers to this limitless site. Instead of hesitantly accepting their friend request, I should be thinking, “Come on, get with the times Mom and Dad!”

Don’t miss The Advisor this month, written by Timothy A. Sherman, ESQ (a new contributor of the pub). Tim provides five relationships one should cultivate to build and grow your personal network, a great article to bookmark for use throughout the workday.

I think in the end, the underlying message of these articles is to stay connected. With the way that our industry is changing, we should constantly be networking, talking, emailing, YouTubing, Facebooking and LinkedIn(ing?) with each other. The world is online and we need to make sure we are as well.

Please enjoy all of the hard work that went into our June issue of The Reverse Review.

Until next time,

Editor-in-Chief{ e m i l y v a n n u c c i }


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the Contributors

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John Mitchell, cPAThe Industry’s Message

to Washington, D.C. pg 28

John Mitchell, CPA is the Founder of

Reverse Mortgage USA (formally 1st AA

Reverse Mortgage Inc.) In 2010 they were the

largest reverse mortgage broker in the country and have been in the

top 10 originators in the country for the last three

years. The company is based in Austin Texas and originates in 10

states.

FeatureArticle

PeteR Bell

The Hot Seat, pg 20

Peter Bell is a housing policy analyst and advocate who has focused his35-year career on affordable housing and aging issues. His company,Dworbell, Inc., provides association management services to NRMLA,where he has served as CEO since 1996. Bell sits on the boards of several organizations involved in affordable housing and a few jazz organizations, including the Telluride Jazz Celebration and the DC Jazz Festival.

Dennis G. GAssowAy

Tax Tip, pg 19

As the National Sales Executive for ICG Inc., the nation’s most diverse and customizable real estate tax service, Gassoway is responsible for business development at all levels of the loan servicing field. Prior to joining ICG Inc. in 2007, Gassoway held business development positions at Transamerica, Lereta and LandAmerica. In addition to many achievement awards, Gassoway is an honors graduate with a BA in marketing and finance.

shAnnon hiCks

The Last Word, pg 41

Shannon Hicks is VP of Product Development at Reverse Fortunes, Inc. Hicks draws from his experience as a reverse mortgage originator and prior work in the financial services industry. Hicks has spoken nationally at NRMLA events and is host of Reverse Fortunes Weekly, the nation’s only weekly podcast for reverse mortgage professionals. 800.805.9328

John k. lunDe The Report, pg 9,11

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

Justin Meise Visibility on a Budget, pg 36

Justin Meise is a Principal with River Communications, a White Plains, NY PR firm specializing in financial services for over 20 years. Meise worked with NRMLA to launch the consumer education program starting in 2000 and provided PR services to Financial Freedom for over 10 years. [email protected]

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the ReVeRse ReView June 2011

the Report

April 2011 Top Lenders Report

1 2 3 4 5Wells FargoBank, N.A. Endorsement

1253

Bank of America, N.A.

CHARLOTTE

Endorsement 896

MetLife Bank, N.A.

Endorsement 616

One Reverse Mortgage, LLC

Endorsement 423

Generation Mortgage Co.Endorsement 243

Lender Endorsements

URBAN FINANCIAL GROUP 228

GENWORTH FINANCIAL HM EQUITY 140

SECURITY ONE LENDING 123

GUARDIAN FIRST FUNDING GROUP 99

AMERICAN ADVISORS GROUP 82

REVERSE MORTGAGE USA INC 82

NEW DAY FINANCIAL LLC 77

SENIOR MORTGAGE BANKERS INC 61

THE FIRST NATIONAL BANK 59

GREAT OAK LENDING 53

EQUIPOINT FINANCIAL NETWORK 53

PNC REVERSE MORTGAGE LLC 48

FINANCIAL FREEDOM ACQUISITION 45

M AND T BANK 42

ROYAL UNITED MORTGAGE LLC 38

MONEY HOUSE INC 34

ASPIRE FINANCIAL INC 33

SUN WEST MORTGAGE CO INC 33

SUNTRUST MORTGAGE INC 33

WEBSTER BANK 28

PRIMELENDING A PLAINSCAPITAL 23

MAS ASSOCIATES 20

IREVERSE HOME LOANS LLC 20

SIDUS FINANCIAL LLC 19

NATIONWIDE EQUITIES CO 17

AMERICAN PACIFIC MORTGAGE 17

PRIMARY RESIDENTIAL MORTGAGE 16

LIVE WELL FINANCIAL INC 15

METRO ISLAND MORTGAGE INC 14

MIDCONTINENT FINANCIAL CENTER 14

NETWORK FUNDING 14

GMFS LLC 14

REVERSE MORTGAGE SOLUTIONS INC 14

STAY IN HOME MORTGAGE INC 13

ENVOY MORTGAGE LTD 13

JAMES B NUTTER AND COMPANY 13

HOME SAVINGS OF AMERICA 13

BRIAN A COLE & ASSOCIATES LTD 13

CHRISTENSEN FINANCIAL INC 12

HARVARD HOME MORTGAGE INC 11

FULTON BANK NATIONAL ASSOCIATION 11

TOWNEBANK 11

Lender Endorsements

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RAlPh Rosynek Ask the Underwriter, pg 12

Ralph Rosynek has been The Reverse Review “Ask the Underwriter” columnist for more than two years. Rosynek is the Vice President for National Correspondent Production at Reverse Mortgage Solutions, Inc. RMS is a premier provider of reverse mortgage servicing, a Ginnie Mae Seller/Servicer and offers complete mortgage banking support and services to the reverse mortgage industry. He is currently seated as a member of the NRMLA Board, co-chair of the Professional Development Committee and holds HUD HECM Direct Endorsement [email protected] | 708.774.1092

JoshuA shein Leveling the Playing Field, pg 34

Joshua Shein is CEO of 1st Maryland Mortgage Corp. dba Great Oak Lending Partners in Timonium, MD. He Co-Founded the company more than nine years ago and recently led Great Oak’s merger with 1st Maryland Mortgage Corp., which made the company a FHA Full Eagle direct lender. Great Oak has been ranked number one in Maryland for reverse mortgages for the last three quarters and in the top twenty nationwide.

tiMothy A. sheRMAn, esQThe Advisor, pg 16

Attorney Sherman is a proud graduate of Boston College High School (‘93) and the University of Notre Dame (‘97). Sherman earned his J.D. from Boston College Law School in 2002. Sherman worked at Ernst & Young and has been working in the real estate industry since ‘99. Before co-founding Sherman & Calla, he managed three offices of a regional title and escrow company and has handled approximately 2,000 closings since his admittance to the Massachusetts [email protected] | 781.930.3103

BRett G. VARneR

The Perspective, pg 14

Brett G. Varner is the News Editor for www.ReverseReview.com. He has served the mortgage industry for 10 years in leadership capacities in sales, marketing and operations. His unique and knowledgeable perspective is focused on developing useful content and strategies in a forum of open and lively debate.

AlAin VAlles, CRMPHECM Counseling as a Marketing Tool, pg 24

Alain Valles, CRMP is President of Direct Finance Corp., Hanover, MA, one of the leading reverse mortgage brokers in the country. Valles received a master’s in real estate from M.I.T., an MBA from The Wharton School, and graduated summa cum laude from the Univ. of Massachusetts. Valles’s mission is to improve the quality of life through responsible financing. [email protected] | 781.878.5626

Bill wAltenBAuGh, sRA Ask the Appraiser, pg 18

Bill Waltenbaugh, SRA is a certified appraiser of 20 years. During these years, Waltenbaugh witnessed and experienced firsthand the many changes that occurred in the appraisal industry, from the advent of licensing to the implementation of HVCC. Currently, Waltenbaugh is the Chief Appraiser at AppraiserLoft, a nationwide Appraisal Management Company, and writes a weekly blog called “For What It’s Worth.”

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As regulation forces the reverse industry to evolve, there are many ways that we’ll eventually see the impacts. We’ve been tracking a declining number of originators for quite some time, which is the expected result of many changes pushing revenue down and costs up for the smallest reverse originators.

The potential offset to that trend is just starting to show up, as TPO originations by non-FHA approved originators (working through an approved sponsor) grew dramatically in March. The chart below shows this activity by sponsor for the first three months of 2011:

While this activity wasn’t enough to keep broker/wholesale endorsements from falling -0.7% in March to 2,785, much less keep up with direct/retail endorsements that grew 10.8%, the sheer growth from February is astounding. At the most pessimistic, it should ease the declines in the broker/wholesale channel, and an optimist might hope for a rebound given the potential of credit unions and community banks.

From a lender perspective, we saw 4 of the top 10 lenders hit 12 month highs in the month as the industry set its own high water mark for the same period.

• Wells Fargo captured 31.9% of all loans through both retail and wholesale channels, well above their 12 month share average of 26.4%.

• Generation was whisper close to breaking double digits in market share at 9.7%.

• One Reverse continues to grow their direct lending business, up 22.2% in the past 12 months and showing a 5% market share.

• Sun West is on the comeback trail and back in the top 10 this month for the first time since November. g

INDUSTRY SUMMARY

Retail endorsement growth

10.8%wholesale endorsement growth

-0.71%total endorsement growth

6.1%

TRAILINg TweLve - MONTH eNDORSeMeNTS

10,000

8,000

6,000

4,000

2,000

08 10 11 12 1 2 34 5 6 7

*Numbers Represent MonthsRetail Wholesale

* Figures Above Reflect Change from Prior Month

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7

8

9

10

11

12

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2

3

tot

units chg% units chg% units chg%

2,692

2,465

2,900

3,358

3,969

3,405

2,976

4,004

4,343

4,049

4,075

4,515

-3.27%

-8.43%

17.65%

15.79%

18.2%

-14.21%

-12.6%

34.54

8.47%

-6.77%

0.64%

10.8%

2,813

2,086

2,404

2,521

2,672

2,558

2,307

2,547

2,207

2,413

2,805

2,785

-7.41%

-25.84%

15.24%

4.87%

5.99%

-4.27%

-9.81%

10.4%

-13.35%

9.33%

16.25%

-0.71%

5,505

4,551

5,304

5,879

6,641

5,963

5,283

6,551

6,550

6,462

6,880

7,300

-5.43%

-17.33%

16.55%

10.84%

12.96%

-10.21%

-11.4%

24.0%

-0.02%

-1.34%

6.47%

6.1%

ReTAIL wHOLeSALe TOTAL

March EndorsementsRetail and Wholesale Volumes - ReveRse MaRket InsIght

42.751 30,118 71,390


the Report

90

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250

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350

400

1/1/2011 2/1/2011 3/1/2011

HECM Non-‐FHA Approved TPO Ac5vity By Sponsor

METLIFE BANK

WELLS FARGO BANK NA

GENWORTH FINANCIAL HM EQUITY A

SUN WEST MORTGAGE CO INC

BANK OF AMERICA NA CHARLOTTE

GENERATION MORTGAGE COMPANY

PLAZA HOME MORTGAGE INC

URBAN FINANCIAL GROUP

NATIONWIDE EQUITIES CORPORATION

LIVE WELL FINANCIAL INC

SECURITY ONE LENDING

CHERRY CREEK MORTGAGE CO INC

JAMES B NUTTER AND COMPANY

FINANCIAL FREEDOM ACQUISITION

MCM HOLDINGS INC

hecm non-fha approved tpo activity by sponsor

| TRR12

FHA now requires tHAt All MortgAgees obtAin A Flood zone deterMinAtion on All properties insteAd oF strongly

encourAging sucH Action.


ask the Underwriter

Flood Zone or FEMA Disaster Area? RAlPh Rosynek

Late spring is a memorable time for most. Green grass, budding trees and spring flowers brought about

by warmer temperatures ushering in summer. Unfortunately, spring memories for many include the remnants of northern melting snows and those April showers.

In a year-to-date already filled with significant weather advisories and hazards, the Northeast and the upper and lower Midwest are now experiencing flood issues. Weather related events coupled with an already economically impacted housing market will no doubt also affect the ability for many seniors to remain in their homes as we move into summer. Particular attention is needed when considering the subject property flood zone determination and the existence of a federal disaster declaration.

In December 2010, FHA issued additional guidance and changes to its Flood Zone Requirements. Mortgagee Letter 2010-43 provides new guidance on FHA Flood Zone requirements and updates Mortgagee Letter 2009-37. FHA now requires that all mortgagees obtain a flood zone determination on all properties instead of strongly encouraging such action. In addition, FHA is now consistent with the Coastal Barrier Resources Act (CBRA) by prohibiting FHA Mortgage Insurance for properties located within designated coastal barriers.

The new guidance contained in this Mortgagee Letter is as follows:

8 a notice that any property located

within a designated Coastal Barrier

Resource system (CBRs) unit is

not eligible for an Fha- insured

mortgage.

8 a requirement that mortgagees

obtain life-of-loan flood zone

determination services for all

properties that will be collateral for

Fha-insured mortgages.

If any portion of the property improvements (the dwelling and related structures/equipment essential to the value of the property and subject to flood damage) is located within a SFHA, the property is not eligible for FHA mortgage insurance unless additional documentation, certification, elevation and/or mapping requirements and conditions are provided per guideline and subsequently approved.

The mortgagee is responsible for determining if a property is located in a special flood hazard area (SFHA) as designated by the Federal Emergency Management Agency (FEMA). The FHA appraiser is required to review the FEMA Flood Insurance Rate Map, note the FEMA zone designation on the Uniform Residential Appraisal Report (URAR), and if the property is located in a SFHA, attach a copy of the flood map panel. Mortgagees are required to obtain life-of-loan flood zone determination services independent of any assessment made by the appraiser.


Prior to closing, mortgagees must inform borrowers of the requirement to obtain adequate flood insurance as a condition of closing for properties where any portion of the dwelling and related structures and equipment are located in a SFHA. Flood insurance premiums must be included in the escrow along with taxes and hazard insurance only if escrow is required for those items, and evidence of satisfactory coverage in effect with premiums paid must be provided prior to closing. The actual cost of obtaining flood zone determination services may be passed on to the borrower.

Mortgagees and servicers must assure the borrowers maintain adequate flood insurance during the life of the mortgage. Insurance must be obtained if the mortgagee or servicer becomes aware that the building involved subsequently becomes part of an SFHA due to a Flood Insurance Rate Map (FIRM) revision. Mortgagees are required to force place flood insurance if the borrower allows the policy to lapse or if the coverage is found to be inadequate.

For more detailed information on flood zones and flood insurance requirements, consult Mortgagee Letter 2010-43.

What do you do when your property is not in a flood zone and is part of a federal disaster declaration by FEMA (Federal

Emergency Management Agency)?

Generally, for appraisal reports that have been completed, lender appraisal policies for properties located in Federal Disaster Areas where assistance to individuals and households is being provided by FEMA require a “Property Inspection or Condition Report” with photos (interior and front/back exterior) if the property is located in a new or existing Federal Disaster Area prior to closing.

While sources for the property inspection or condition report

may vary by lender typically, the inspection may be provided by any reputable source such as:

8 appraiser

8 Licensed contractors

8 home & building inspection services

8 Insurance inspectors

8 Flood service damage verification

report services

8 Bank attorney/title closing agent (if

closing held in borrowers home)

The inspector must certify the following:

8 the property is free from damage and

(if re-inspection or re-certification) is

in the same condition as previously

appraised.

8 the property maintains the same

marketability and value as originally

appraised.

The declaration of a Federal Disaster Area may remain in effect for months after the actual occurrence of the event. It is important to be aware of prior declarations when reviewing appraisal reports.

New appraisal reports completed after the disaster declaration should be reviewed in detail to determine any damage or repairs needed resulting from the disaster as well as appraiser specific comments relating to the existence of the disaster declaration.

Key to the acceptability of the appraisal report and property is the pairing of the life of loan flood zone certification, the appraiser comments, the overall effect the disaster had on the marketability and value of the subject property.

A common mistake is to assume that condominium units above the first floor are not subject to flood insurance requirements or, in the case of a federal disaster declaration, subject to re-inspection guidelines. The additional measures undertaken to ensure the property has not been damaged by the effects of the disaster is both a borrower safeguard and safety and soundness measure for the lender and FHA.

Our hearts and thoughts go out to those individuals affected by weather related and natural disaster events. g

Weather related events coupled With an already

economically impacted housing market will no doubt also affect the ability for

many seniors to remain in their homes as we move into summer. Particular

attention is needed when considering the subject

property flood zone determination and the existence of a federal disaster declaration.

| TRR14


the Perspective

Respecting the Process Drives Originator SuccessBRett G. VARneR

As I have evaluated the lending process, the

pervasiveness of adversarial relationships has always surprised me. Over the years, I have heard many rants from originators about how a loan didn’t get closed because the appraiser’s valuation, or the underwriter’s excessive scrutiny over irrelevant details killed the loan.

After reviewing the files, more often than not, I would find the reasons that the file failed to close were not due to the efforts of those providing services or processing the file, but were the direct result of the originator’s failure to properly evaluate the file and available supporting data in accordance with underwriting standards. In other words, the originator would ignore information that put their deal at risk in the hopes that others would too, because the rest of the file was “clean.”

I refer to this as a lg Policy of Wishful Thinking. The policy takes a hold of a person

who, for one reason or another, wants

to get a deal done even though they

are aware of issues that would likely

prevent it from being possible. In some cases, it is related to a personal need, such as needing that commission this month, and in others it is more noble, such as wanting to help a client with a dire need. However, the result is the same; important details get overlooked in the hope that others will see the need and move the file along.

This has nothing to do with the originator’s ability to evaluate the available information. For example, I have conducted trainings with originators where they are provided with details of a subject property and a list of sales that occurred in the subject’s area. The originators are tasked with reviewing the comparable data, selecting what they determine to be the most supportive, and then estimating a value of the subject property. It goes without saying that this is not an exact science, but an exercise in estimation. A vast percentage of originators succeed in providing a reasonable estimation that falls in line with the actual appraised value.

In practice, however, some of these same originators then base their quotes on exaggerations of value estimation and then become frustrated when the appraisal comes in much lower. By ignoring the data, they are wishing for a different result, a Policy of Wishful Thinking. This also disrespects the responsibilities of appraisers who are dealing with increased scrutiny on the strength of their valuations.

Underwriters face an even greater challenge because too many originators fail to truly understand what the underwriters’ responsibilities truly are. Since everyone in the lending process, from the originator up to the investor, receives revenue from closed loan volumes, underwriters do have a vested interest in helping loans to get closed. However, at the same time,

A ForMer colleAgue used to tell Me tHAt “tHe MortgAge business is tHe only business wHere you cAn go FroM tHe HeigHts oF ecstAsy to tHe deptHs oF despAir on tHe sAMe dAy, on tHe sAMe File.”

O

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they must serve as a risk manager for their companies and make sure that files are complete and salable. They do not make the rules or establish the investor guidelines, but they are tasked with diligence to ensure that each file meets the requirements.

Originators will express frustration because an underwriter called for additional information, be it to support occupancy, or further review of a property condition issue. However, just like with valuation, originators are often aware of these situations, or they conveniently do not ask their clients about them in the hopes that they will not come up during underwriting.

Additionally, a point of contention between underwriters and originators can stem from differences between regulatory guidelines and investor guidelines. The investors that lenders sell their loans to often will have more stringent guidelines than the regulators based upon the risk profiles that are acceptable to the sources of capital. In cases where an underwriter rejects a file due to an investor guideline, originators may argue that it goes beyond the regulatory requirement, but investors do have the right to establish standards of loans they are willing to purchase.

With a government insured product, such as the HECM, underwriters have the added responsibility of ensuring that the file will be acceptable for FHA insurance. A whole new source of problems occurs if the FHA rejects a file for the government-backed insurance.

Originators are generally well versed in the guidelines of the lenders they work with and know how to compile a complete and insurable file. Skipping

over certain details may drive a certain exuberance over having another loan in the pipeline.

A former colleague used to tell me that “the mortgage business is the only business where you can go from the heights of ecstasy to the depths of despair on the same day, on the same file.”

I never bought into that philosophy because to me it stemmed from the Policy of Wishful Thinking. Undoubtedly, there are occasional situations that an originator could not have foreseen or expected. At the same time, I have always been confident that the vast majority of problems could be identified and addressed early in the process if the originator was asking the right questions and looking into potential red flags.

The question I always asked was, “if a problem with a file is insurmountable, when would you want to know?” By overlooking issues, not only does a group of people work on a file that isn’t going anywhere, but the borrower is also getting their hopes up. It is a situation where no one wins and ultimately is disrespectful to everyone involved.

Conversely, if there is a problem that can be addressed, wouldn’t it be better to know about it early in the process? This provides the opportunity to find a solution during the normal processing of the file without adding unnecessary

delays if the problem came to light later on.

I think most originators would admit to being influenced by the Policy of Wishful Thinking. The most successful are able to quell the impulse most of the time and acknowledge challenges that a file faces. This is due to a strong respect for their time and the time of others who work on a file during its processing.

The secret to success lies within this respect for time. By understanding and respecting the roles and responsibilities of each person in the loan origination process, along with the rules and guidelines that define those responsibilities, originators can cultivate more respect in return. Striving to make sure that a file is complete and prepared to move on to the next stage streamlines the

process and earns the appreciation of those along the way. Creating a track record of overlooked details bogs down the system and frustrates everyone.

Originators are, in essence, the quarterbacks of the origination process. Everything starts with them and how they create and prepare a file to be processed. It is a simple scenario that the higher quality of the file going in, the higher the likelihood that it will proceed relatively smoothly through the process. Granted, these days, it does seem that every file faces significant challenges along the way, but the more originators avoid the trap of a Policy of Wishful Thinking, the better the process will be for all, most importantly, the borrower. g

the secret to success lies Within

this respect for time. By understanding and respecting the roles and

responsibilities of each person

in the loan origination

process, along with the rules and guidelines

that define those responsibilities, originators can cultivate more

respect in return.

| TRR16


the Advisor

Building Your NetworktiMothy A. sheRMAn, esQ.

I recently conducted a closing at a lovely townhome condominium. It was impeccably maintained and beautifully decorated. Looking around the home, I saw tremendous evidence of lives well lived. They had

scores of family photos, souvenirs of vacations, etc. It was instantly apparent that the owners were proud of their home and their family. However, when I first uttered the phrase “reverse mortgage”, one of the owners immediately moved his index finger in front of his lips and shushed me. In hushed tones, he indicated he didn’t want his neighbors to know he was obtaining a reverse mortgage. Within 30 seconds, the pride I sensed in the borrower had turned to shame.

Such emotion saddened me. The man has absolutely no reason to be ashamed or embarrassed. It is not his fault that our nation’s economy has fallen upon these hard times. It is not his fault it costs $70 to fill his car’s gas tank. It is not his fault that property taxes have risen dramatically, as our towns have to throw more and more money at under-performing school systems.

Instead, I think the couple’s decision to obtain a reverse mortgage should be applauded. They were able to get past the stigma of taking a reverse mortgage and instead were able to see it as a tool to maintain their lifestyle that they were so proud of.

Before I continue, I should point out that I am 36 years old. I perhaps have a

different perspective on life than today’s senior. I am just now starting my family;

there is no shame in that for me. In years past, it was customary for men half my current age to be starting a family, but America has changed. For the better or worse, our country, and indeed our world, is not the same place as it was 40 years ago. It is “normal” in today’s day and age for a man to begin a family at 36. And it should be “normal” for a senior to choose to obtain a reverse mortgage without being embarrassed by it.It has taken all of my 36 years to gain a true appreciation for everything my parents have done and continue to do for me. They spent half of their lives providing for me and another good portion of it caring for their parents. They are entitled to take advantage of any economic

weapon at their disposal in order to best enjoy their later years in life.

Do not be ashamed of a reverse mortgage. Like it or not, the four-letter word “debt” is now a key factor that permeates American life. But instead of using that four-letter word, I prefer “tool.” Whether it is being used to describe a reverse mortgage, a student loan or a traditional mortgage, borrowing money can be an economic tool.

hoWever,

When i first

uttered the

phrase “reverse

mortgage”, one of the owners

immediately moved his index finger in

front of his lips and shushed me. In

hushed tones, he indicated he didn’t want his neighbors

to know he was obtaining a reverse mortgage. Within 30 seconds, the pride I sensed in the borrower had turned to shame.


So while a reverse mortgage can be an important tool, proper life planning should involve a few more tools in the tool belt.

And this is where the reverse mortgage professional can use relationships with professionals such as attorneys, accountants, financial planners, Realtors and even home improvement specialists such as contractors to build their network.

These relationships can be two-way streets and help everybody involved, especially the senior.

I will now address each individually:.

Clearly, every senior should consult with an attorney who specializes in estate planning. No matter the size of the estate, there are numerous ways an experienced attorney can offer valuable assistance. However, many seniors do not have a trusted attorney to turn to. In becoming a trusted advisor, a reverse mortgage professional can provide a credible referral to an attorney. Whether the senior could use a simple will, trust, health care proxy or durable power of attorney, it’s just another way the Reverse Mortgage Professional can help.

And in doing so, developing relationships with estate planning attorneys should prove to be very beneficial in finding candidates for reverse mortgages.

For many Americans, personal accountants often take on the role of personal financial coach. However, overcoming the reverse stigma with accountants proves to be a significant obstacle. This is easily overcome by educating a few of the top local CPAs. With the common question, “Do I have to pay taxes on the money I take from a reverse mortgage?”, the referral stream should flow.

I don’t think I can say anything about this category that hasn’t already been said. Keep in mind that you should prompt your financial planner network to educate their clients as early on as possible about the pros and cons of reverse mortgages. And you don’t need to be connected to every financial planner in town; focus on a few quality referral sources and not quantity.

In theory, a reverse mortgage is a Realtor’s nightmare. A Realtor wants homes to turn over. They want seniors to “downsize”, as long as they get the listing. Educating Realtors as to the power of reverse mortgages in order to allow seniors to purchase a home would be music to their ears. The sales volume of Realtors is actually readily available to date, so ask your local title company or real estate attorney for a list of top-producing targets.

Let’s face it, maintaining a home and a yard as a senior ages becomes a substantial task. Whether it is a leaky roof, the need to install rails, a ramp in the home or simply the landscaping service that shovels or mows the lawn, home improvement specialists often play a key role in a senior’s life. In all likelihood, owners of businesses like these are less in demand as a reverse mortgage referral partner. Take advantage of this by educating a few of these professionals and see if it makes a difference. g

Need assistance from the Advisor?Send your question to [email protected] and it may be addressed in the next issue.

?

number one

attorneys

81% Percentage of householders 65 and older who owned their homes as of 4th quarter 2010.

Number

number three

financial planners

number four

realtors

number f ve

home improvementspecialists

number two

accountants

Source: www.census.gov/hhes/www/housing/hvs/hvs.html

| TRR18


ask the Appraiser

Impact of Short Sales and ForeclosuresBill wAltenBAuGh, sRA

We recently received a question for our knowledgeable appraiser, which is addressed in this month’s column.

If you have any appraisal-related questions, please email the appraiser at [email protected] and we will address your question in an upcoming issue.

QUESTIONWhat kind of impact, if any, do short sales and foreclosures in the area have on the value of a home? This is a great question and one that has certainly become more relevant over the past several years. Not too long ago, during the mortgage boom years, the inventory of foreclosures and the availability of short sales were few and far between. As such, under normal circumstances, considering these sales in the market approach was unnecessary. Most of these distressed properties were “rough around the edges” and wouldn’t normally be considered a reasonable alternative by the typical residential buyer. Customarily, these homes were purchased by investors with the intent of cleaning them up, making a few renovations and then listing and selling the property at a higher price for entrepreneurial profit.

However, today’s market is much different. Freddie Mac sold roughly 31,000 previously foreclosed and repossessed homes in the first quarter, a new record for the company as both government-sponsored enterprises shed inventory from the end of last year1. To make matters worse, it doesn’t

look like things will get better anytime soon. Combined, both Fannie Mae and Freddie hold 218,000 REO properties as of the end of the first quarter1 and the

Federal Housing Administration held 60,739 properties repossessed through foreclosure on its books as of December 20102, up 47 percent from the year before.

With so much distressed inventory and sales available, the question

remains; how do these properties affect the values of neighboring homes?

The Uniform Standards of Professional Appraisal Practice (USPAP) is the standard appraisers must adhere to when completing an appraisal for a federally related mortgage transaction. This standard requires appraisers to consider all relevant transfers and determine which sales they should use in their analysis to arrive at a credible opinion of value for the subject property. To do this, the appraiser needs to investigate the circumstances of each transaction to determine if any atypical motivations or sales concessions were involved in the transaction. If a transfer involves atypical seller motivations, it probably shouldn’t be used as a comparable sale. However, just because a property is bank-owned, doesn’t mean the transfer didn’t involve typical motivations. These days, many bank-owned properties are in similar, if not better, condition than competing properties in the neighborhood. Given adequate market exposure, the typical buyer in the neighborhood would also

Freddie MAc sold rougHly 31,000 previously Foreclosed And repossessed HoMes in tHe First quArter...

1 Jon Prior, “Freddie Mac sells record number of REO in 1Q”, HousingWire, The LTV Group, May 13, 2001 http://www.housingwire.com/2011/05/06/freddie-mac-sells-record-number-of-reo-in-1q. 2 Jon Prior, “FHA REO inventory up 47% from one year ago”, HousingWire, The LTV Group, May 13, 2001 http://www.housingwire.com/2011/02/22/fha-reo-inventory-up-47-from-one-year-ago.


consider these properties when in the market for a home.

Although USPAP requires appraisers to consider these types of sales, some states are fixing to make it more difficult. Four states – Illinois, Maryland, Missouri and Nevada – are currently considering legislation that would prohibit or greatly restrict the consideration of distressed transfers in an appraiser’s analysis and estimation of market value. Legislation like this can very easily put appraisers between a rock and a hard place. On one hand, appraisers are required to adhere to the requirements of USPAP. Yet on the other, doing so and

considering distressed sales could get them in trouble with the state.

Despite which side you fall on in regards to the legal wrangling, there is no doubt

in my mind that distressed properties have an affect on neighboring non-distressed homes. One of the main tenets of appraisal theory is the principle of substitution that dictates that a buyer will not pay more for a property than the price of an equivalent substitute property. Given this principle, the value of a property, or any other goods or services for

that matter, is limited by its competition. In other words, if any given market has enough distressed properties, those

properties will have an affect on the value of the rest of the competing properties in the neighborhood.

I like to explain it this way: a good comparable property is one the typical buyer of the subject would also consider when in the market for a home. Essentially, these properties are considered reasonable alternatives. They are similar with respect to location, condition, utility and appeal. For the most part, the owner of the property doesn’t matter; a similar turnkey conditioned property from a lender is just as appealing as a turnkey conditioned property from the average-Joe homeowner. At the end of the day, it comes down to availability and competition. If there are enough reasonably alternative similar properties available at a lower price, the price of the competing properties will need to be lower in order to compete. g

Have a question for the Appraiser?Email questions to [email protected] and look for your answer in an upcoming issue. a? a

To reduce cost, mitigate risk and shift liability for loss, consider outsourcing property tax and insurance management to a third-party servicer. As property tax regulations grow more complex nationwide, in-house servicers are faced with the difficult task of tracking property

taxes and insurance. Tax collectors must replace reduced revenue streams and are under pressure to put delinquent taxes out to bid sooner than ever for tax deed or lien sale. In-house servicers are finding it harder to keep pace with the constant change in tax rules and shortened timelines.

Making this move will provide protection to you, your customers and your investors with minimal impact on staff and operations. You have the ability to better manage and track cash, assets and expenses by leveraging the best practices that a tax and insurance specialist has to offer.

these days, many bank-

oWned properties

are in similar, if not

better, condition than

competing properties

in the neighborhood. given adequate market

exposure, the typical buyer in the neighborhood would also

consider these properties when in the market for a home.

TAX TIPPRoPeRTY TAX & InSuRAnce TIP

$ o p

Dennis G. Gassoway Heather Amick

| TRR20

t h e

hot

s e a t

From his favorite magazine to the best job he has ever had, we get

the personal and professional facts from Peter Bell, ceo of nRMLA,

in our monthly edition of The Hot Seat.

hothotU

SeatSeatC C

q&A - things you need to know or mAy hAve been wondering -June 2011


peter

> my favorite website is NYTimes.com. There is so much to read about so many topics. Politics, business, international relations, the arts, cuisine, every topic you can imagine and more.

> my favorite magazine is The Economist. > i never miss an episode of certain HBO series. I’m not much of a TV watcher, but I do enjoy a few HBO series like

Entourage, Boardwalk Empire, Treme. I also love watching Bill Maher’s show. Creating humor out of political irony is amusing to me.

> i can’t go without music. I try to get out to hear live music at least one night a week. > the best job i’ve ever had is what I do today. Association management is a fascinating field. You get to do so

many things. It’s the intersection of policy and business. It’s where concepts are born and ideas are germinated. You get to work with so many interesting people. Travel. See. Write. Speak. Beats sitting in the office all day, if you’re a hyperactive sort of guy, like me.

> my parents taught me how to put myself in the shoes of the other person when discussing an issue. You’ll come up with much more persuasive arguments that way, then if you were to only look at things from your own perspective.

> my favorite time of the day is right now, my morning read, think and write session.> Right now i’m listening to Anat Cohen, a top-of-the-trade NYC-based female saxophone and clarinet player.

> the biggest challenge in the reverse mortgage industry is to manage the integrity of all who participate and keep out the riff raff. The biggest obstacle to growth in the reverse mortgage business is the public’s perception of it. Every time something untoward happens it casts aspersions upon our entire industry, not just the perpetrators. We all pay for their misbehavior.

> the future of reverse mortgages is very bright, if you look at the demographics. There’s the age wave, the lack of financial preparedness for funding longevity and the fact that housing wealth is often the largest component of personal wealth means.

> the greatest setback for our industry was the aggressive marketing of annuities with reverse mortgages a few years ago. It was not only outreach directly to consumers that drew the public and regulators’ wrath, but also the aggressive promotion to mortgage and insurance brokers that they could earn big fees by doing this double sell.

> The most important thing fnancial advisors can learn about reverse mortgages is how they fit into a comprehensive personal finance strategy that aims at funding longevity.

> industry growth is dependent upon the integrity of those involved in the reverse mortgage business and earning the public trust.

> the development of a proprietary market for reverse mortgages will require stability in home values. I don’t see how it will happen until then.

> the ideal characteristics of leaders in the industry are broad-minded, socially aware, straight-talking, politically- astute, diplomatic, consumer-centric and respectful of others.

P E R S O N A L

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

Dworbell, Inc.

CEO of NRMLA

| TRR22


the Industry Roundup

industryroundup June edition

movers k shakerscFPb:

The Consumer Financial Protection Bureau continued to fill out their senior leadership team by adding Sendhil Mullainathan as Assistant Director for Research and Patrice Ficklin as Assistant Director for Fair Lending.

kenneth austIn:

Austin has joined Wendover Consulting, Inc. as Managing Director for Loan Administration. Austin was previously with RMS where he served as President.

homestreet bank:

They have expanded their reverse mortgage business in Washington by adding Chris Barnes, Mike Broderick and Gayle Woodruff to their origination team.

rms:

Reverse Mortgage Solutions hired Kyle Bradford to lead its Southeast regional sales team. He will be responsible for developing retail originations in the Southern and Mid-Atlantic regions.

axIa FInancIal:

The company has acquired Stay In Home Reverse Mortgage based in Bellevue, Washington.

GeneratIon mortGaGe:

Generation Mortgage became the first top 10 reverse mortgage lender to open a retail office in Puerto Rico. Luis Alberto De Jesus was hired to lead the new branch office located in San Juan. He previously served as a senior executive at Senior Mortgage Bankers.

uP-k-comers rmca:

The Reverse Mortgage Counseling Association announced plans to launch a new program designed to connect reverse mortgage borrowers and other services to promote the reverse mortgage industry.

sunwest:

They have announced plans to launch a new retail platform with goal of being 30 percent of their origination business.

sarah hulbert:

Hulbert joined 1st Reverse Mortgage USA as Retail Business Development Manager. She will be responsible for developing their retail sales channel.

tPo orIGInatIons:

HECM originations by non-FHA approved Third-Party Originators jumped in March to about 400, roughly 5.5 percent of all originations.

FIrst century bank, n.a: First Century has added Bruce Diaddigo, Pam Martin and Dennis Loxton to lead their reverse mortgage division expansion in the Southeast. They plan to add 30-50 originators in the next 6-12 months.

what haPPeneD?retaIl ProDuctIon:

After finally crossing over to positive year-over-year growth in March, retail production fell by 16.2 percent in April.

home values: In their Home Value Index, Clear Capital reported that home values fell in March to 0.7 percent below prior lows reached in March 2009, indicating a double dip.

sheIla baIr:

Bair has resigned from her post as Chairman of the Federal Deposit Insurance Corporation, effective July 8, 2011. Her exit corresponds with the expiration of her term and she previously stated she would not seek a second term.

aarP:

AARP publicly jumped into the battle over the federal budget and potential restructuring of entitlement programs such as Social Security and Medicare. In addition to presenting testimony to congressional committees, AARP launched a national advertising campaign defending the programs.

a roundup of this past month’s breaking news: Who moved where; Why a company closed its doors; Who is new to the industry?

Find it here


the EssentialsThe Essentials | i’sen sh l | - your monthly source of in-depth information,

industry updates, highly opinionated views and at-your-fingertips news.

Justin Meise

John Mitchell, cPAJoshuA shein

AlAin VAlles, cRMP

E

It takes a lot to create an attention-grabbing, informative article and The Reverse Review is very fortunate to

have worked hand in hand with industry leaders over the past couple of years. We are always searching for new

writers and industry-related articles. If you are interested in contributing your views and have what it takes to

intrigue our readers, we would love to hear from you! email [email protected] to start the conversation.

| TRR24

UD requires every prospective reverse mortgage borrower to complete a reverse mortgage counseling session. We should all be in agreement that counseling is critical to the success of the Home Equity Conversion Mortgage (HECM) program. Unfortunately, some loan officers have not invested the time to understand the role of the counselor, and believe the counseling requirement slows the mortgage process and even discourages seniors from obtaining a reverse mortgage.


the Essentials

HECM Counseling as a Marketing Tool

By understanding how HECM counseling works, you are able to increase loan production and boost referrals.

AlAin VAlles, CRMP

H


As usual, I look for the silver lining. And WHAT I HAve dIScoveRed IS THIS:

If you understand how HECM counseling works and are able to properly guide your borrower through the process, you can increase loan production and boost referrals.

While doing research for this article, I had the pleasure of speaking with several counselors. I must admit that with all of my reverse mortgage experience, I thought I knew everything about counseling. However, my conversations yielded information that cleared up several misconceptions and filled in knowledge gaps about the counseling process. Now I’m better informed, and soon you will be as well.

The History

HECM counseling underwent significant changes with the implementation of a new HUD protocol in 2009. These changes resulted from the study conducted by the Government Accountability Office (GAO), which is the Congressional investigative arm.

One item that stood out in the GAO report was that few counselors covered all required reverse mortgage topics, and fewer still covered the topic adequately. The GAO presented its critical findings to HUD, which then revamped the HECM counseling process.

One example of the changes that were made is the arduous counselor exam that is now mandatory for all counselors. This extensive test has over a 90 percent failure rate for first-time takers, leading many counselors to drop out of the program, but resulting in a more beneficial experience for senior borrowers.

Understanding the Counseling Process is Key There is an urban legend floating around that loan officers are prohibited from “knowing” the counseling protocol. That is false. In fact, the more you know about it, the better. The counselors I spoke to were more than happy to discuss the challenges of HECM counseling and offered insights to make all of our lives easier.

The new face of HECM counseling is now rooted in education and suitability. As with many things in life, you get out what you put in, meaning that preparing your clients for the counseling session can go a long way in creating efficiencies and preparing seniors for what they will experience.

For instance, a counselor is unable to provide a certificate to those that do not understand the product, or are confused as to the specifics of the product in which they are interested. To ensure people understand the commitment and provisions of a reverse mortgage, counselors are required to pepper qualifying questions throughout the counseling session. These questions range from, “Who owns your home after a reverse mortgage?” to “Are you required to make monthly payments to your lender?”

If the participant answers more than five of these questions incorrectly, a counselor is unable to provide a counseling certificate. Therefore, it is important that we do the best job in explaining the intricacies of reverse mortgage prior to the counseling session.

My conversations also brought up several points that would greatly enhance a borrower’s experience, and make for a

smoother counseling session. Not only would the adoption of these practices better prepare your borrower, but the care you take in cultivating an understanding of the reverse mortgage product and process could lead to referrals.

Have the Numbers!By far, the number one challenge faced by both the counselor and loan officers is reviewing loan estimates. Loan

officers get frustrated when counselors use different HECM programs with different rates, costs and fees. This can lead to the feeling that the counselor is suggesting that the borrower shop elsewhere or should attempt to negotiate fees. Counselors, on the other hand, get frustrated when they don’t have the figures the loan officer used to explain the various programs. The counselor is then forced to use generic HECM scenarios, which results in confusion for the borrower and diminishes the impact of the counseling session. The good news is that these problems can be easily avoided. >>

there is an urban legend

floating around that loan officers

are prohibited from “knowing” the

counseling protocol. that is false. In fact, the more you know about it, the better.

tHe new FAce oF HecM counseling is now rooted in educAtion And suitAbility. 3

| TRR26

The key to solving the numbers challenge is for the loan officer to invest the time to properly explain the pros and cons of a reverse mortgage so seniors can make an educated decision before the counseling session. Once the senior has selected a counseling agency, I forward the HECM scenarios we presented to the borrower to the counselor. Though this is part of the new HECM protocol not all lenders are doing so. This results in additional work and less accuracy on the part of the counselor.

Technology can help lenders and HECM counselors share the exact loan scenarios. Web based systems such as Reverse Vision’s SmartClient® or Ibis’ Sandbox® programs generate client specific file numbers that permit a counselor to see the lender’s figures.

Be the One to Explain the ProcessCounseling sessions last an average of 90 minutes. Throughout the session the counselor is educating the participant and gauging product suitability. Your borrower will be asked pointed questions about their finances, needs and the loan products you have presented for consideration.

The counselors I spoke with emphasized that loan officers should prepare their borrowers for how long the average session takes. Let them know that many questions will be asked, suggestions will be given, and that they might feel the counselor is prying just a bit too personally into their lives. I always explain to my clients that the counselor is doing his/her best job to educate and protect them.

You should explain the details of the loan specifics and how (and why) the counseling

process works to every borrower. I share that, “I hope the counseling session is the most boring conversation you’ve ever had. If it is, then I’ve done a wonderful job explaining everything.”

If counseling is an eye opening event, then I’ve done a poor job explaining or there is a misunderstanding that we need to talk through. The loan officer has the opportunity—even the responsibility!—to thoroughly explain the counseling session. By doing so, your closing percentage will improve. I’ve found that, as long as I explain the counseling process up front, I get a “second chance” with the borrower if the counseling does not go well for any reason.

Here is an actual example. I recently followed up with a borrower to see how her counseling session went. The woman said, “Not so well.” She was upset that I had not explained how she had the option of a very large line of credit or monthly check. I had not done so because the hoped for appraised value would barely cover her current mortgage balance, leaving the other options remote at best.

The saving grace was the fact that I had built some goodwill

with her and she agreed to a conference call with the

counselor. The problem arose when the counselor asked my

client if she had any liens on the property and she said “no.” This led the counselor to explain to my borrower that she had the options of a large line of credit or monthly check.

Once I explained that there was a large first mortgage, the counselor agreed with me that the only likely option was a lump sum distribution. Several lessons here: explain uncommon terms in different ways (lien, mortgage, equity line, second mortgage, owe any money if you sell); invest the time up front to educate your client so that you’ll get a second chance if something goes off track; and call the counselor if confused.

Disclose the Counseling FeeThis should be obvious. But the counselors I spoke with say they are often the first to tell the senior that there is a fee for counseling. All loan officers should fully disclose any and all upfront fees as well as the overall cost of a HECM. The fees are the fees, and by not properly disclosing or discussing them, you can only hurt your legitimacy and reputation. Although some agencies are able to offer HECM counseling at no cost, the recently passed 2011 federal budget eliminated over $88 million of funding to housing counseling agencies. As a result, it will be more common for seniors to be charged for counseling services.

Include the FamilySome loan officers hate it when other family members get involved. My attitude is the more the merrier! Every borrower has a “trusted advisor circle” and none is closer or more trusted than kin. Invite everyone to take part in counseling. I always ask the borrower if there are any other people they will be talking with about their decision and let

i share that, “I hope the counseling

session is the most boring conversation you’ve ever had. If it is, then I’ve done a wonderful job explaining

everything.”


them know that I’d be happy to meet with them as well.

Nothing is more frustrating than to have a long lost relative (a silent assassin when it comes to a reverse mortgage) arrive the day of closing and say they “heard” reverse mortgages are “terrible.” I’m very proactive about meeting as many family members as possible and welcoming their comments about any other financing options.

Inviting the family often prompts the discussion about “will anything be left to the kids,” which is a common question asked of the counselor. Believe it or not, getting the family involved also generates new referral sources!

Tell Them EverythingI was surprised that counselors mentioned that some seniors don’t realize they must continue to pay real estate taxes and hazard insurance. It’s imperative to the future of the HECM program that the loan officer discloses as much information about how a reverse mortgage works as possible. You can’t assume that the borrower knows all the details that you know. Make it a point to over inform the borrower so that there are no surprises.

Handling Curve Balls Power-of-attorney, guardian, non-borrowing spouse, trusts, death of a spouse during processing, incompetence, deaf, illiterate, physical limitations, under the influence, life estate, occupancy

status, etc., are just some of the special situations that may crop up during the HECM counseling session.

I always suggest to the senior that they share their particular situation with the counselor, no matter how trivial it may seem or how overwhelming it may appear. In some cases it may be appropriate (even advisable) to have an attorney or accountant involved. The key is not to give advice outside of your expertise.

I’ve had examples where a borrower repeatedly asked my name every 15 minutes; was not aware a senior was drinking straight vodka until her speech became slurred; had to call an ambulance due to a diabetic seizure; and had a borrower admit he could not read after he signed all the forms. I’ve even had one very amorous 85-year old woman become very disappointed to learn I was married! (In good conscious, I felt it necessary to warn the unmarried counselor once she had scheduled her in-person session.)

These are examples where a borrower could have faked their way through a counseling call. However, it’s incumbent upon all loan officers to take the appropriate steps of reaching out to family members if one feels a senior does not fully comprehend the HECM explanation.

No GuaranteesIt is important to acknowledge that a HECM is not a magic cure all. When used properly, a reverse mortgage is a fantastic financial tool to improve the retirement security of seniors. However, counselors

shared that some seniors are told by loan officers that they will be “all set” or will be able to live in their homes “for free” or with “no payments” ever.

The fact that taxes and insurance must be paid; the home must be maintained; in some situations the borrower may out live a line of credit or lump sum distribution; and the fact that there might not be enough money for the senior’s next chapter of life must be discussed with the senior at the time of application. A more fully informed senior leads to a more meaningful counseling session, and will afford the senior the best opportunity to make an educated decision on whether or not a reverse mortgage is the best solution for them. Though my company’s mission statement is to “improve the quality of life through responsible financing,” I use a custom loan disclosure that ends with the statement that I can’t guarantee their future happiness.

Why More Business For You?

My business approach is to become the “trusted advisor to the trusted advisors.” By investing the additional time to explain to prospective HECM borrowers about the nuances of a reverse mortgage and the required counseling session, the client becomes better informed and will be able to make a decision in a shorter period of time. The senior will have a smoother counseling experience and will become an advocate for your service. Referral sources will have more trust and confidence in you. And, just like underwriters recognizing the quality of your files and moving them along, HECM counselors will recognize your name the next time a senior calls, and will appreciate that you took the time to properly educate them. g

Special thank you for contributing information from Cambridge Credit Counseling Corp. (Thomas Fox, Justin Lally and Steve Willett).

tHe key to solving tHe nuMbers cHAllenge is For tHe loAn oFFicer to invest tHe tiMe to properly explAin tHe pros And cons oF A reverse MortgAge.1

| TRR28


the


Reverse mortgages save billions of Medicaid dollars a year.

John Mitchel l , CPA


| TRR30

I’ve got some good news and I’ve got some bad news.The bad news first:

The federal government and members of Congress control our industry’s fate.

Now the good news: For the first time ever, the reverse mortgage industry has the opportunity to craft a simple and clear message that resonates in the current Washington, D.C. environment. That message is that reverse mortgages save Medicaid dollars. Additionally, we know we have the facts to prove it.

But first, let’s appreciate the problem our country is in. As you grasp its magnitude, you’ll also see the opportunity; the reverse mortgage industry is now a part of the solution to our country’s fiscal problems.

Our Country Has a Serious ProblemThe central focus in Washington, D.C. today (and for the near future) is fiscal responsibility and reducing government spending. Here’s why: Our country is at a financial tipping point. Most economists agree that a nation is in trouble when its formal debt exceeds its annual output of goods and services (GDP). This is not an arbitrary measure. When a nation has debt equal to its annual output, the annual cost of interest on the debt is likely to be greater than the annual growth of the economy. To illustrate this, the interest rate on the national debt approximates 4 percent. If the economy is not growing by a similar amount, a country can slide toward a hopeless debt spiral; this is what is happening in the United States today. Our formal debt is $14.1 trillion and our gross domestic product for 2011 is estimated at $14.7 trillion—about the same. We are already at the flashpoint. The United States economy certainly isn’t growing at a rate close to the interest rate on the national debt. Accordingly, the country is at a tipping point.

If that news wasn’t bad enough, consider this, as mentioned above, the United States’ formal debt is $14.1 trillion, but that does not include our informal debts. What are informal debts? They are promises of future benefits—payments—embedded in the entitlement programs like Social Security, Medicare and Medicaid. They may not be treasury bonds, but most of us

regard these programs as very strong promises. Citizens riot when governments default, renege or even fiddle with promises like these and unfortunately these unfunded liabilities are gigantic. For Social Security, Medicare and Medicaid, the unfunded liability exceeds $70 trillion. Add that to the $14.1 trillion formal debt and now you get a real sense of the dire economic reality the United States faces in 2011.

The Primary Solution – Reign in the Entitlements

In the United States, the three major entitlement programs (Social Security, Medicare and Medicaid) account for approximately 58 percent of the annual budget. Other than national defense, these entitlements dwarf the other components of the budget. Accordingly, the solution to the national debt problem of the United States noted above can only be found in scaling back and finding savings in those big three entitlements. Again, the math doesn’t lie; this is the only path to get the national debt under control and restore fiscal

the

SAy IT AllFInanCIaL tIPPIng PoInt: Most economists agree that a nation is in trouble when its formal debt exceeds its annual output of goods and services (GdP).

united States debt is

tRillion.united States gross domestic product for 2011 is estimated at $14.7 trillion.

The most serious problem with regard to medicaid is the eligibility side of the equation. Medicaid eligibility rules are very loose and that’s the fundamental

problem. Today, there is a thriving industry within the legal community that helps people shift their assets so

they can qualify for Medicaid and have

their long-term care paid by the government rather than themselves.


responsibility to our government’s finances.

Medicaid: The Problem and the Reverse Mortgage Industry’s Opportunit y

Medicaid currently covers 53 million people at an annual cost of $373.9 billion with the states being responsible for about half of it. Starting in 2014, the Obama Care rules will add about 20 million people to Medicaid all at one time according to Medicaid’s chief actuary, Richard Foster. This is a 39 percent increase from the existing 53 million people already covered.

The biggest expense of Medicaid is long-term care primarily for the elderly. We spend $98 billion a year on this with the majority spent on nursing home care. Further, it’s been well documented that when people are institutionalized and put in a nursing home, they are often over treated, overmedicated and Medicaid dollars are wasted. Few would challenge the claim that the Medicaid

program is poorly run, inefficient and is a huge obstacle in getting this nation’s spending problem under control. But, this Medicaid problem is only growing as the baby boomer generation evolves into old age.

The most serious problem with regard to Medicaid is the eligibility side of the equation. Medicaid eligibility rules are very loose and that’s the fundamental problem. Today, there is a thriving industry within the legal community that helps people shift their assets so they can qualify for Medicaid and have their long-term care paid by the government rather than themselves. To make matters worse, Medicaid has codified into law the planning techniques allowing this. It is for this reason that, Medicaid has evolved from its intended purpose of being the provider of quality long-term care for the genuinely needy into the role it actually plays today: protecting people’s inheritances. This role is contributing to the bankruptcy that the United States is facing.

The most glaring problem in the Medicaid eligibility rules is that Medicaid allows a person to exclude their personal residence, regardless

of value, from the means test to determine if he or she qualifies for Medicaid. The effect of this is that there is no incentive for

people to take responsibility for paying for their own long-term care with their biggest asset: their home. This is why today, Medicaid is the primary payer of nursing home care

in the United States instead of individuals taking financial responsibility for their own long-term care.

Our Industry Has a Unique Opportunit y Regarding Our Value Proposition

In the past, the reverse mortgage industry has not had a clear and articulate message that resonates with the entity that controls our destiny (Congress); now we do! The changes that we have seen in this country beginning in November 2010 with the midterm elections create a new opportunity for our industry in the coming years. Fiscal responsibility has clearly become the dominant theme for the next five years. It will be the central topic of discussion in 2012 because of the presidential campaign, which all plays well for the reverse mortgage industry. By promoting the value proposition that reverse mortgages save Medicaid dollars, we become part of the solution. And as they say, if you’re not part of the solution, you’re part of the problem. Our industry has never had a better opportunity than we have today; in the next few years we can craft a message that resonates and ensures our industry’s long-term viability.

Our Message to Washington, D.C. Should Be: Reverse Mortgages Save Medicaid $3.3 billion to $5 billion a Year

Increased use of reverse mortgages for long-term care could result in savings for Medicaid, ranging from about $3.3 billion to almost $5 >>

THE 3 MAJORentitlement programs (Social Security, Medicare and Medicaid) in the u.S. account for approximately

percent of the annual budget.

Medicaid’s annual cost:

billionbillionbillionbillion

by promoting the value proposition that reverse mortgages save medicaid dollars, we become part of the solution. And as they say, if you’re not part of the solution, you’re part of the problem.

ReveRSe MoRTGAGeS couLd SAve

3.3 BIllIOn 5 BIllIOn

annually in Medicaid expenses.

to

| TRR32

billion annually, depending on the future market penetration of reverse mortgages from its current 2-3 percent. These savings result from the additional cash available to borrowers that would delay or eliminate the need for Medicaid.

One of the keys to increasing the use of reverse mortgages in the future is to eliminate the home exemption rule for Medicaid eligibility. This is definitely going to happen as the hemorrhaging Medicaid program is fixed, irrespective of whether or not we, as an industry, support this or not.

As previously noted, under the Medicaid rules today, a person can qualify for Medicaid but still have had a home of unlimited value. Changing this will increase the use of reverse mortgages and will fundamentally shift the responsibility for the future long-term care of seniors off the government’s shoulders and back onto the shoulders of the individuals.

Support for This Position: A new Industry Study

In the first quarter of 2011, I created a 59-page study to support the contention that reverse mortgages save Medicaid dollars. I did this study because I felt like the value proposition for our industry with regard to the federal government had to be that reverse mortgages save Medicaid dollars. To me, this was the obvious message in the evolving Washington,

D.C. environment of fiscal responsibility. It was also clear to me that this was going to be the priority in Washington, D.C. for the next five years. In light of this undeniable fact, we needed some support for this concept. The heavy lifting for my study was really done by Barbara Stucki, Ph.D. with the National Council on Aging. Her landmark study, “Use Your Home to Stay at

Home: Expanding the Use of Reverse Mortgages for Long-Term Care” was done a few years ago and really fleshed out in detail the size of the Medicaid savings. Her study was the foundational part of my study and our industry owes a debt of gratitude to her. I took the great work she did and updated it with what is happening today and where the country is headed in the future.

My study, “Medicaid Cost Solutions 2011 and 2012 … Reverse Mortgages” was released April 2011, but that only started the conversation. Now a new version of my study is coming out in

July 2011. The 2.0 version will include the input and wisdom of the top 10 leaders in the reverse mortgage industry. Each has been distributed a copy of the study and each has a unique perspective that can improve the study. The goal of coming out with a 2.0 version is to evolve a study done by one person into one that the entire industry can support because it incorporates the

thoughts and ideas of the top 10 movers and shakers in the reverse mortgage industry.

So How is This Message likely to be Received in Washington, D.C.?

I’ve seen the future. In early April, as one of the board members of CIS, I accompanied other board members to Washington, D.C. to meet directly with Congressmen and Senators. Our agenda was to present the message that reverse mortgages save Medicaid dollars. From doing this, I saw the effect firsthand; it was very encouraging. The message that reverse

mortgages could play a vital role in reforming Medicaid along the path of greater fiscal responsibility for the country lit up people’s eyes. For most, it was a refreshing change to meet with someone that had a solution rather than asking for something and being part of the problem. More often than not, we heard, “this is something new we hadn’t heard of


before.” The message was very well received.

The other thing that we discovered is how valuable letters are to Congressmen and Senators. Each Congressman and Senator takes the letters they receive and puts them in categories. Senator Kay Bailey Hutchison from Texas, told us about the positive effect the letters she received last year had on her. It caused her to learn more about reverse mortgages and appreciate the positive benefits. This happened because my company, Reverse Mortgage USA, made a concerted effort to get our past clients in Texas

to write Senator Hutchison in 2010. While this was good for the Senators to see, our eyes were also opened to a significant problem. Most Senators, Congressmen and their staff don’t really know what a reverse mortgage is, they don’t understand our value proposition, and because people haven’t been writing to them about reverse mortgages, it’s not on their radar. Clearly we have to

change this if we are going to protect our industry for the long-run.

A Radical Solution with Regards to the Media That Distorts Reverse Mortgages

As an industry, we are not going to change the sound bite driven media; we will never win that battle. But there is a way to win the war. As an alternative to thinking we can win over the media, let’s create security for our industry by having the presence of mind to have a simple and clear message that resonates with Washington, D.C.: simply that reverse

mortgages save Medicaid dollars. Then, with that message, as an industry, let’s develop a long-term, month-in-and-month-out letter writing campaign directed to members of Congress. Today more than ever, members of Congress are listening to their constituency. The take away is that we need to have an aggressive letter writing campaign on an ongoing basis that influences our

benefactors in Congress. I intend to spearhead that initiative in the second half of 2011 on behalf of the industry with the help of many of my competitors.

SummaryCan you connect the dots? First, the United States is at a financial tipping point. We have a $14 trillion annual economy and a $14 trillion national debt. Additionally, we have a $70 trillion plus unfunded liability from the entitlements: Social Security, Medicare and Medicaid. The growth rate of the economy over the

next few years is projected to be at about half the interest rate on the national debt.

Accordingly, we are starting a downward spiral, which will pick up momentum with each coming year as the entitlements’ unfunded liabilities come even more into play with the increased aging of the overall population.

There is an available solution to the financial situation our country is in that will save $3.3 billion to $5 billion annually in Medicaid expenses; that solution is reverse mortgages. The beauty of the reverse mortgage Medicaid savings proposition is that it is easy to understand. If people are incentivized and encouraged to take out a reverse mortgage to pay for their future medical needs, fewer people will go on Medicaid and be a burden on the US government and its taxpayers. Not hard

to understand, is it? It’s this simplicity

that provides so

much strength and staying power to our message, and that’s what we need to promote. Let’s get behind a clear message that resonates, coupled with an ongoing letter writing campaign that influences the people that directly control our industry’s destiny. g

| TRR34

he new compensation guidelines for loan officers have sent shockwaves through our industry. We spent months getting ready for it, attending meetings, conference calls and webinars to learn how to best make the transition. Yet there was no way to know the full impact until the guidelines went into effect last month. ¶ To a large degree, the changes have leveled the playing field. We are more in-tune with what our competitors are doing and everyone is earning their

compensation the same way. The upshot is that success for the originator will now boil down to just one thing: customer service.

T


the Essentials

Leveling the Playing Field The effects of the new compensation

guidelines. JoshuA shein


As we move to implement and adjust to this new way of doing business, the shock of change has been slightly less significant in our niche of reverse mortgages than in other areas. Still, it has been a major adjustment for everyone.

For larger banks, the transition was somewhat easier because many already had a pay scale similar to the one required by the new rules; salary and bonuses were tied to the volume of loans that originators were generating. Also, many big banks started implementing the new guidelines in March to get ahead of the game.

For direct lenders like Great Oak, much of March was spent talking to compliance attorneys, re-reading the guidelines, discussing with our peers and educating ourselves about the new changes, then putting together a plan on the best way to implement the changes within our business.

It wasn’t easy getting ready for the shift: The rules are not black and white, so there was constant modifying and tweaking as it came down to the wire. Even as the weeks have progressed since the implementation date, many continue to make adjustments and changes as unforeseen scenarios and circumstances arise. That said, smaller lenders like us have the advantage of being more nimble. With fewer layers to go through as we put our plan into action, we are able to make adjustments as necessary.

Now that everything is in place, our challenge will be to help our loan officers adjust to the new way of doing business and what it means for their income. The days of big money on a single loan are

gone; the originator now has to focus on volume of loans and service, not fees on any single transaction. The incentive has shifted to closing a higher volume of loans, and it’s an adjustment for some of the successful loan officers in the reverse mortgage industry who were used to the high premiums of the past.

We are just now starting to see the effects of this, with April loans closing and the first round of paychecks under the new guidelines being handed out. As loan officers see their new paychecks for the first time, they are starting to understand the long-term implications of the changes. Some of these originators may still be in for a surprise as they crunch numbers moving into the summer months.

With this in mind, some loan officers have left the industry and many smaller brokers and lenders have closed because they have determined that the new pay scale will not be financially viable over the long term.

However, there is still money to be made in this industry, and these new guidelines put us all on the same level. Big or small, we are all paid the same way now. Everyone is much closer together in terms of earning power, and we all have a better sense of how our peers and

competitors are operating. In the long run, the guidelines may make it easier to retain talent as well.

now, it all comes down to customer service. We can honestly tell our customers that we aren’t making money off of the fees they pay and that we just get paid for closing loans. This allows borrowers to rest a little easier and choose a lender based on where they will get the best service.

In the end, the new guidelines will allow lenders to focus less on fees and more on customer service and customer relationships. It’s a game-changer for the industry and a win for our customers. g

gone are the days of big money on a single loan; the originator noW has to focus

on volume of loans and service, not fees on any single transaction. the incentive has shifted to closing a higher volume of loans, and it’s an adjustment for some of the successful loan

officers in the reverse mortgage industry who were used to the high premiums of the past.

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| TRR36

requently, I’m asked by all types of financial professionals—from reverse mortgage specialists to investment advisors to accountants—“How can I better position myself in my market? Oh, and we’re a small shop with no budget to hire a PR firm or consultant.” ¶ Well, I have good news. While nothing in life is free, there’s a lot of PR that can be had on the cheap or, more correctly, by committing the time and using some basic tactics.

F


the Essentials

Visibility on a Budget Understanding the fundamentals of PR can help you generate

visibility on a limited budget. Justin Meise


A professional or a small firm seeking to raise its visibility in a specific market (which they know well) and to a specific audience (which they understand) can generate quite a bit of visibility without having to make a major spend on consultants or advertising. Also, if your target audience is limited to a relatively small geographic area—say within several counties or a portion of a state—it won’t be cost effective to hire a firm in most cases.

To build a good strategy and plan for the small, local firm let’s focus on three key elements: Audience, content and distribution. (Yes, it can be more complicated, but we’ll keep it simple.) Let’s examine each…

Audience

Experienced reverse mortgage professionals know that the sales cycle for a reverse mortgage is long—really long. The primary audience—senior homeowners—is very cautious and rightfully so.

The home represents, for most borrowers, their single largest asset and one that they probably spent their lifetime purchasing. For their generation, home ownership was the pinnacle of the American dream and a truly special achievement. Their mindset was that it wasn’t truly owned until it was paid off. This varies significantly from the mindset of baby boomers and gen-X-ers who are very comfortable carrying debt on everything from homes to home appliances.

Further, despite the industry’s best efforts to educate consumers and the media about reverse mortgages, these complicated products continue to receive mixed reviews and are frequently impugned. As a result, seniors are slow to make decisions and take a long time to think about the decision.

Like all large demographic groups, it’s difficult, or even a mistake, to attempt to generalize too much about seniors. For example, it may surprise some people to learn that seniors’ use of the Internet has been increasing steadily. According to a 2010 Neilsen Company report, more seniors are using the web and spending more time on it than ever before.

While people 65 and older still make up less than 10 percent of the active Internet universe, their numbers are on the rise. In the last five years, the number of seniors actively using the Internet has increased by more than 55 percent, from 11.3 million active users in November 2004 to 17.5 million in November 2009. Among people 65+, the growth of women in the last five years has outpaced the growth of men by 6 percentage points. Not only are more people 65 and older heading online, but they are also spending more time on the Web. Time spent on the Internet by seniors increased 11 percent in the last five years, from approximately 52 hours per month in November 2004 to just over 58 hours in 2009.

We also know from a mix of research and personal experiences that seniors have quite an extensive group of advisors they turn to for help making major decisions,

starting with their adult children Frequently, it’s a daughter who provides care and helps parents make decisions. Beyond family, there’s a wide range of possible influencers that includes friends, attorneys, accountants, financial advisors and organizations they respect such as AARP.

The point is that there are multiple audiences to consider when developing a strategy. The primary audience is obviously the senior homeowner who is eligible for a reverse mortgage. However, the communications approach needs to include tactics that will reach all of these other influencers or advisors – the secondary audiences.

Content

Last year, I wrote a piece for The Reverse Review (June, 2010) discussing many of the challenging topics to address with reporters. I was optimistic that NRMLA’s current effort to develop new messaging and content would reap benefits for all members. Well, it has. The Marttila Strategies research piece, The Retirement Abyss: America’s Seniors’ Search for Security is a veritable treasure trove from a PR perspective.

The challenges and the surrounding issues raised last year are worthy of review but let’s also see how the new content makes it easier so you can handle the tough issues. >>

In the last five years, the number of seniors actively using the Internet has increased by more than 55 percent, from 11.3 million active users in november 2004 to 17.5 million in november 2009.

h

f

| TRR38

Scams

To combat an image that reverse mortgages are a scam, credible, third party data is crucial. Critics typically attack reverse mortgages for its sales practices, suggest that seniors are taken advantage of and suggest that seniors would be better without them.

Thankfully, the industry has produced very useful survey data for addressing these types of arguments.

standpoint data points include:

u Seniors with reverse mortgages give

the financial product exceptionally high

ratings.

u on a 10 point scale, 43 percent rated

their reverse mortgage a “10”.

u More than 50 percent of seniors with a

reverse mortgage would recommend

one to a family member or friend.

u 90 percent of all seniors with a reverse

mortgage felt no pressure to proceed

with a reverse mortgage.

u More than half of seniors with a reverse

mortgage could not cover their monthly

expenses without one.

These are just a sample; the study includes many great data points for combating this criticism.

High Cost

The cost of reverse mortgages will likely always be an easy topic for critics to target. Product enhancements, such as options that lower upfront costs and the new HECM Savers product are just two examples that can be used to handle this criticism.

tips to use locally on this

issue include:

u Take on the issue of cost upfront and

be prepared to disclose and explain

the different fees, especially as they

are required by Hud. Make a clear

connection between cost and value.

u Incorporate information on newer

products and product enhancements

into your discussion. For example,

when addressing a topic like the cost

of the MIP, discuss the value back

to the consumer when discussing

product changes:

g In October 2010, FHA introduced the HECM Saver, which charges an upfront premium equal to 0.01 percent. The annual MIP charged for the Saver and Traditional HECM was raised to 1.25 percent.

g Such options offer the senior more choice and lowers costs of obtaining a reverse mortgage.

u Be sure to reinforce the value seniors

derive from a reverse mortgage using

survey data:

g 48 percent of reverse mortgage borrowers need it to stay in their homes.

g 45 percent of reverse mortgage borrowers live in the home in which they raised their children vs. 35 percent for non-borrowers.

g More than half of seniors with a reverse mortgage could not cover their monthly expenses without one.

u Also, reinforce the national data by

injecting real borrower stories from

your market to illustrate the value and

benefits.

Distribution

So now that you know your audience and you have good content., it’s time to explore the most effective ways to distribute that content to your audiences.

Since most reverse mortgage people I’ve met are adept at using events, seminars and other similar activities, I’ll focus on the press, social media and the web. Purists may cringe at my characterization, but these are simply forms of distribution. Each has its nuances, so the basic concept is to adapt your content for the audience and the method of distribution.

Working with the Media

Novices should maintain a healthy fear of the press. A poorly chosen phrase or analogy may seem innocuous in conversation but can be horrible to see in print. Also, reporters, despite their best intentions, get things wrong. With a topic like reverse mortgages, expect that they will rehash past information run by national news outlets.

On the plus side, effective use of the media can improve perceptions not only of the product, but also of you or your firm. After all, positive press is essentially a de facto endorsement by a third party.

The key is to help the reporter do his or her job by presenting organized, easy-to-understand information and being responsive to their needs.

There are likely anywhere from a handful to over a dozen print publications that are potential targets for the kinds of information you will provide. What you

not only Are More people 65 And older HeAding online, but tHey Are Also spending More tiMe on tHe web. tiMe spent on tHe internet by seniors increAsed 11 percent in tHe lAst Five yeArs, FroM ApproxiMAtely 52 Hours per MontH in noveMber 2004 to just over 58 Hours in 2009.8

Tip!


are looking for are editorials that cover senior issues, personal finance, retirement planning, real estate or local business activity.

some publication categories include:

u Local daily papers

u community business papers

u community senior papers

u Weekly community papers

u community news websites

Working with seniors to sell reverse mortgages is probably a good parallel for handling media outreach. It’s a bit of a sales process, but as with reverse mortgages, it’s a trust and relationship based sell. Your goal is to become a reliable, credible source of information for the reporter. Achieve that and you will begin to see results.

some additional tips for

outreach include:

u Focus on what is of value to the

reporter and his/her mission to write an

accurate story that is interesting and

helpful to the publication’s readers.

u Learn and understand the publication’s

news cycle—don’t expect to reach

reporters at deadline time.

u Be conscientious about returning

calls, following through and providing

promised content.

u Learn reporters’ preferred method of

interaction, which might even include

LinkedIn or Facebook.

u Be patient—it takes time to build

relationships and it can

take weeks or even

months to see press

coverage.

Social Media & the Web

Social media, blogs and other community sites present an opportunity to reach a portion of the senior audience directly and indirectly (via adult children/caregivers/advisors to seniors). The numbers and diversity of people using these sites are mind boggling and can therefore help you establish a personal brand with the circle of influencers around seniors. Facebook is particularly intriguing because somewhere between 400-500 million people use Facebook, depending on the source. Roughly 56 percent are women and the fastest growing demographic on Facebook (reported through the end of 2009) are women over the age of 55. YouTube offers less precise statistics, yet hundreds of millions of videos a day are viewed and their core audience is men and women (evenly split) ages 18-55. LinkedIn had about 55 million users in 2009 and that has climbed to above 100 million.

Facebook is a fascinating phenomenon and presents the most exciting and interesting opportunities. As defined, Facebook is a communication tool that enables conversation and the efficient transfer of information, images and other content. But to the avid user, it’s much more. Facebook is the primary interface through which they experience the internet and the lens through which they view

all news and information local to the global. It’s a playground filled with silly games, it’s a forum for debate and for validation, and as a result, well-packaged information can spread at lightning speed to millions of people. All of these vehicles can be used to create visibility and connection with your primary and secondary audiences.

Here are some quick tips

and ideas to consider:

u Walk Before you Run – Just as

companies weren’t real without a

website as of 10 years ago, companies

without a social media presence are

similarly deemed out of step. But

remember: >>

Facebook(‘feis,b k): a communication tool that enables conversation and the efficient transfer of information, images and other content.

400-500 mIllION

people use Facebook,(depending on the source).

ouT oF THe 400-500 MILLIon PeoPLe on FAceBook, APPRoX.

percent are women.

The fastest growing demographic on Facebook (reported through the end of 2009) are women over the age of 55.

facebook facts ?

Tip!

Tip!

novices should

maintain a healthy

fear of the press. a poorly chosen phrase or analogy may seem

innocuous in conversation but can be horrible to see in print. also, reporters,

despite their best intentions, get things wrong. With a

topic like reverse mortgages, expect that they will rehash

past information run by national news outlets.

| TRR40

g It’s about conversations not presentations.

g It takes time and lots of it to develop a meaningful following and to remain engaged with followers.

g Effective use requires a continuous stream of activity.

u social networking sites – Facebook

and LinkedIn are points of engagement

and communication.

g Facebook, LinkedIn – Create a profile and get in the conversation.

g Share Content – Become a source of valuable information. Don’t post sales pitches, but do post helpful information for local seniors that other people will want to follow and forward.

g Leverage PR – Repost positive media coverage to create more distribution for good news on the web.

g Engage – For example, LinkedIn Groups and Answers in particular, offer terrific additional distribution of content to targeted audiences. Join and monitor relevant groups and find opportunities to showcase your knowledge.

u youtube, et al – video is one of

the fastest growing content delivery

methods on the Internet.

g Consider creating video versions of the content you provide.

u Blogging – Blogs can create additional

distribution for thought leadership

content and are also leveraged through

social media sites like LinkedIn and

Facebook, where content is easily

reposted.

g Establish a blog about your local housing market, issues for local seniors, etc. Google’s Blogger is about as easy as it comes to create one.

g Optimize for Google blog search through a combination of simple preferences and content.

g Repost and link blog entries to your social networking site profiles (most can be integrated automatically now anyway).

Most professionals I know have great content in their heads and know their audiences. Building a personal brand in many cases is really about taking the time to create effective and efficient distribution. By focusing on knowing their complete audience, developing great content and being creative with distribution, any professional can raise their visibility. Just remember, it’s a marathon, not a sprint, and focus on delivering valuable information, not sales pitches. g



the Last Word

Unique Skill Set shAnnon hiCks

Improvise, adapt and overcome. Those are the traits that comprise the unique skill set reverse mortgage originators must possess to succeed. Honestly speaking, no one likes adversity yet we find that innovation, creativity and the new ideas that bring a product to market are born from the fires of hardship. Case and point; the HECM Saver was created during the most challenging times and yet opens doors to increase market share. No one can deny the hardships we

face as an industry, for in the last several years we have not only seen housing values plummet, but also the compounded challenge of reduced lending ratios (principal limits). It’s in this very crucible that we have the opportunity to reinvent ourselves, our practices and market approach.

Working as a partner for Reverse Fortunes, I have the unique opportunity to speak with hundreds of reverse mortgage professionals across our great country. Yes, some have thrown in the towel and left the business, but others have actually stabilized and even grown their loan production. This piqued my interest. In speaking with these war-weary veterans of the industry I found some common traits, business practices and an overall mindset.

Improvise

In a static or stable market there tends to be little innovation. What’s the motivation? Times are good, business is ticking along nicely and one tends to focus working in their business rather than on it. Presently, we find ourselves in a tumultuous market at best and pressed by weak home prices, which affords us the prime opportunity to improvise. By improvising, we are not advocating a haphazard approach but rather the adventurous mindset of testing, evaluating and executing new strategies.

For example, several years ago my good friend and myself hosted bi-monthly educational workshops. It was a low cost effort and the rewards in funded loans were tremendous. Then came 2008; attendance fell sharply along with conversion ratios of attendees to loan applications. Looking at our options, we stopped the workshops altogether for over a year and a half. Our emphasis

began to shift to other lead sources and further development of referral partners. Over time I began to have this nagging thought, “Is it time to try workshops again?” Looking to stick our toe in the proverbial water, we scheduled two classes and a modest direct mail campaign. The effort was rewarded with four funded loans from the first class and two from the second. The lesson learned was that one may put aside one approach for a season, but should be willing to test it again in the future.

Adapt

I am blessed that while being a teacher of sorts, I find myself learning much from the professionals we serve. In speaking with one gentleman who has been steadily increasing his production, I asked, “What are you doing differently today than you were last year?” He began to share with me his new practice. Each week, he consistently time-blocks (sets aside time in his schedule) for customer acquisition. This could be outbound phone calls >>

presently, We find ourselves in a

tumultuous market at best and pressed

by Weak home prices, Which affords us the prime opportunity to improvise. By improvising,

we are not advocating a haphazard approach but rather

the adventurous mindset of testing, evaluating and executing new strategies.

| TRR42

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the ResourcesInformation at your fingertips. A listing of advertisers and contributors featured in this issue.

to prospects, meeting professionals for referrals or touching base with his existing clientele. This accounts for eight to ten hours of his workweek. What did he have to give up to make room? Not much. In fact, he shared with me the fact that he’s gaining more traction every week and closing an additional 2-3 loans per month. He adapted to the changing market, stepped back from what was not producing results and found a simple solution. A recent study of mortgage professionals found that the top fifteen percent of originators account for seven times more production than the bottom

eighty-five percent. What is their magic formula? They spend on average one-third of their time acquiring new customers and keeping in touch with their existing ones. He mentioned he is using a CRM (customer relationship manager) to make this task less daunting and with great success.

Overcome

Our greatest challenge today reaches beyond market conditions, public perceptions, housing values or interest rates. It is our own mindset. Having spent

over a decade in sales, I have both seen and experienced first hand the all too common self-fulfilling prophecy, both positively and negatively. To quote James Allen from his class, As a Man Thinketh, “Act is the blossom of thought, and joy and suffering are its fruits...” We cannot change the outside forces that buffet our industry and economy. We can choose to improvise, and experiment with new approaches. We can choose to adapt new business practices and disciplines in place of the old ones. We can overcome the negative news and melancholy that challenges us. Our actions will determine our success and our mindset can give us the opportunity to learn and create in ways that only adversity could bestow upon us. g

A recent study oF MortgAge proFessionAls Found tHAt tHe top FiFteen percent oF originAtors Account For seven tiMes More production tHAn tHe bottoM eigHty-Five percent.


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Mortgage Cadence gives you the

flexibility to easily adapt to industry

changes and capitalize on new business

opportunities; creating a more efficient,

agile and profitable enterprise.

Enterprise Lending Solutions, Document Services and Compliance SolutionsIn every enterprise, there is an underlying rhythm – a cadence – in the execution of mortgage loans. Those companies that have seamless system integration and dynamic data flow across the enterprise are in rhythm and optimize their efficiency at every step. Their business flows in absolute harmony to increase productivity, retain customers, maintain compliance and reduce costs. Now your company can catch the rhythm and reach a whole new level of performance. Mortgage Cadence is orchestrating the ultimate mortgage origination performance by providing a true Enterprise Lending Solution (ELS) that handles both forward and reverse lending, as well as multiple business channels. With the Mortgage Cadence suite of solutions you have access to full end-to-end loan origination functionality, automated underwriting, business rule management, product and pricing, workflow automation, document services, and Web portals within one integrated platform. No other system in the market today can deliver this level of fully integrated performance tools and compliance support to accelerate the tempo of your enterprise.

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Documents

The Reverse Review Magazine June 2011