The Reverse Review March 2009

March 2009
THE
REVERSE review
SPOTLIGHT:
Jeff Lewis
page “Wall Street and Main Street are joined at the hip: one cannot prosper without the other.
18 This is a take away from the current mortgage and credit crisis.” This month our contributing
author, Atare Agbamu had the opportunity to sit down with Jeffrey Lewis of Generation
Mortgage Company to discuss his thoughts and insights regarding the future of HECM
jumbo loans.
2 reversereview.com
March 2009 3
THE
REVERSE review
Publisher Aman Makkar
Editor-in-Chief Erica English
Copy Editor Harpreet Makkar
Production Jason Westbrook
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Printer The Ovid Bell Press
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THE
REVERSEreview
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© 2009 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
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4 reversereview.com
editor’s note
professions which are as rewarding as this one
where you can honestly say that you touch
someone’s life and genuinely improve it.
w
With that in mind, it’s very easy to forget
about all the great things we are doing as we
read daily news stories or hear about great
economic and housing meltdowns. We should
all be thankful that we are a part of such a
wonderful and positive industry in which we
have all dedicated our lives to helping other
people. Our positive energies will reflect in our
work and help change the environment around
us. If you have the opportunity to make it
to any of the upcoming NRMLA conferences
e’re writing this in Chicago, Orlando, or San Diego, we would
note as we sit in attendance at the first definitely encourage the effort to come visit us
National Reverse Mortgage Lenders and meet other industry leaders who live their
Association (NRMLA) road show of 2009 in lives with the same passion that you do.
Boston. As a regular reader we know you’re
probably thinking, “that was March 18-19, and Thanks for reading and enjoy!
you’re just writing this for the March issue!”
We’re running a bit late this month, so we
apologize for the delay.
That being said, every time we attend a reverse

mortgage conference, we’re reminded of the
many reasons why we decided to be a part of
this industry and the same reasons we used to
Erica English
justify the launch of this magazine. However,
Editor-In-Chief
the one underlying theme we see time and
time again is the dedication and passion innate
within all the professionals who have chosen to
service the senior community. It’s refreshing
to be a part of something so rewarding, to
help a community that can really use our
assistance, and to reach out beyond a seniors’
financial needs and build lifelong relationships Aman Makkar
with our clients. There aren’t too many other Publisher
March 2009 5
CONTENTS
12 Cross Selling is Against 26 Mandatory Live Pricing 34 Creating a World Class

The Law??? Brad Thompson Reverse Mortgage
Michael Banner Training Program,
32 Here Is Your Own 4 PART II
16 Can You Hear Me Now? Day Marketing Plan Jacqueline Del Priore
Monte Rose Sam Collins
40 A Whole New “HECM”
18 SPOTLIGHT Interview World – How Interest
with Jeff Lewis Rate Volatility Can
Atare E. Agbamu, CRMS Impact Your Magic
Carpet Ride
Weiner Brodsky Sidman
ESSENTIALS
Kider, pc
5 Note From the Editor 7 Ask the Underwriter 10 Industry Snapshot
39 Ask the Servicer NEW! 44 Press Release 45 Directory
46 The Last Word: “It was the best of times, It was the worst of times”
6 reversereview.com
“I am your vehicle baby……” ask the underwriter
March, another month upon us, for many the first sighting of Ralph Rosynek
spring flowers, the green beer of St. Paddy’s Day, the Vernal
Equinox, HUD financial statement filing shortly due for you 5 key checklist words to remember when reviewing a are:
12/31 year enders and for some of us, the Ides of March (for • Conformity – The POA document must conform to ALL
those “You Tubers” state statutes, rules and guidelines to allow the capacity for
http://www.youtube.com/watch?v=_EBMo8xHGNs ). the Attorney-In-Fact to act. Be aware that State rules and
guidelines vary necessitating a complete review by several
I recently reviewed a rush file with 2 interesting features: participants in the loan process. A critical review checkpoint
• The Processor note indicated the purpose of the rush was is the title company Underwriter who will determine if the
“to replenish funds for continuing in home healthcare due document when used to encumber the property will provide
to Borrowers’ Alzheimer’s condition” for a legal transaction in the property state. Generally, a
• A “sticky note” affixed to the 37 day old POA document faulted document negates all parts of the transaction.
in the file indicated “physician’s letter of Borrower • Competency – The loan Underwriter reviews the document
competency will follow as an e-mail attachment” for determination of Borrower mental competency and/
or need for the Attorney-In-Fact based upon conditions
“Ripley’s Believe It Or Not!!” I said to myself, dumbfounded present. Many times the Underwriter must be supported by a
as I realized I had just stumbled on to a case where a serious physician’s evaluation and statement or letter of explanation
incapacitating disease showed signs of reversal! What do you from the Borrower to arrive at a decision as to how the
think? POA document can be used in the reverse mortgage loan
transaction. Generally a faulted document or lack of form
Speaking of vehicles, what an appropriate time to visit an often and substance of the situation and need for the document
used, very confusing vehicle, the Power of Attorney (POA). could result in restrictive use or additional conditions for use
of the document. Clearly, the Underwriter is not acting as an
By the way, I am not an attorney nor a physician. For a more attorney or physician, but rather the “protector” of both the
detailed analysis and opinion you should engage one of these Borrower and Lender interests.
professionals as this information is for discussion purposes only. • Counseling – A General or Specific POA may not be used to
represent the Borrower for Counseling purposes regardless of
Simply, a POA is a legal document whereby one individual his/her mental capacity. The same would apply for application
authorizes another individual to act on their behalf. execution purposes as well. Only a Durable POA would
allow for an Attorney-In-Fact to represent the Borrower.
In a reverse mortgage transaction, the most common uses of a Generally, many Lenders also stipulate that if the Borrower is
POA would be in situations where: competent, he/she attends counseling and, at minimum, may
• the borrower is mentally incompetent, be requested to execute the Counseling Certificate and 1009.
• the borrower is mentally competent, but physically Incompetent Borrowers may not execute the Counseling
incapable of signing, Certificate or the Application documents.
• the borrower is mentally competent and physically capable • Closing – Generally, all 3 forms of a POA document noted
of signing, but chooses to have an Attorney-In-Fact execute may be used to execute closing documents (may vary by
documents on his or her behalf. Lender) provided the POA document complies with all State
requirements and allows for both legal Note enforcement and
Generally, there are 3 kinds of POA Documents: the subject property to be encumbered.
• Durable – the Attorney-In-Fact is granted full powers
to act, and in the case of a reverse mortgage transaction, to One last note, notice the absence of the “double C” -
encumber the property. The “durability” is an unrestricted Compassionate Collaboration in the checklist. As an Originator,
ability to act from execution through incapacity versus other you may choose to be of the opinion that you are not a party
forms which become ineffective when the Borrower to determining the Capacity of the Borrower, however, as
becomes incompetent. the initial point of contact and “advocate” for the Borrower,
• General – the Attorney-In-Fact is granted similar wide your actions or lack thereof may result in a dramatic negative
range powers, however, lacking the durability feature, the impact to one or more of the participants in the loan process.
POA document is only effective as long as the Borrower is Ethically, you must distinguish yourself to assist the Borrower
competent. and the Lender in the transaction at all times. Your analysis and
• Specific – the Attorney-In-Fact is granted powers for a review may delay the proposed transaction until such time as
specific task or action and not wide and broad ongoing ability a court appointed Guardian or Conservator is in place, due to
to act. .Lacking the durability feature this document is only the inability for the Borrower to competently execute a durable
effective as long as the Borrower is competent and due to POA. The decision to do what is right and best for all parties is
its nature only good for the specific task or action it was what affirms a professional.
executed for.
March 2009 7
contributors
Ralph Rosynek - Ask the Underwriter, page 7
Ralph Rosynek is President and CEO of 1st Reverse as well as a HECM DE Underwriter.
Mr. Rosynek has been involved in mortgage lending for over 30 years with the last 5+
years exclusively providing reverse mortgage lending solutions. To contact Mr. Rosynek
or to learn more about 1st Reverse Financial Services, Please visit www.1streverse.com
or call 877.574.1000.
Jacqueline Del Priore - Creating a World Class Reverse Mortgage Training Program,
PART II, page 34
Jacqui Del Priore is the Director of MCTI (The Mortgage Career Training Institute), a
company which specializes in reverse mortgage sales and product training. As former
VP of Training and Development for World Alliance Financial, she has helped hundreds
of reverse mortgage loan officers achieve success in our industry. For more information,
contact Jacqui at 516-983-9396 or e-mail her at jdelpriore@mctionline.com.
Atare E. Agbamu, CRMS - Why Jumbo Reverse could be in Limbo for Years,
Spotlight Interview with Jeff Lewis, page 18
Author and columnist, Atare E. Agbamu, is director of reverse mortgages at
Minneapolis-based AdvisorNet Mortgage, LLC. A member of BusinessWeek Market
Advisory Board, Agbamu is author of Think Reverse and more than 100 articles on
reverse mortgages. He can be reached by phone at 612-436-3711 and
e-mail at aagbamu@advisornet.com or atare@thinkreverse.com
Ryan LaRose - Ask The Servicer, page 39

Ryan LaRose is the Executive Vice President of Celink, an independent reverse mortgage
subservicer. Ryan has over 12 years of servicing experience; exclusively in reverse
mortgage servicing since 2005. In addition, Ryan is an active member of the NRMLA
servicing and technology committees.
John Lunde - Reverse Market Snapshot, page 10

John Lunde is President and founder of Reverse Market Insight, the premier source for
market intelligence and analytics services in the reverse mortgage industry. RMI clients
include five of the top ten reverse mortgage originators, both lender and independent
servicers, as well as some of the largest financial services firms in the world. Find out
more at www.rminsight.net or call 949.281.6470.
Joel Schiffman - A Whole New “HECM” World – How Interest Rate Volatility Can
Impact Your Magic Carpet Ride, page 40
Joel Schiffman is a member with the law firm of Weiner Brodsky Sidman Kider, P.C. The
firm serves as General Counsel to the National Reverse Mortgage Lenders Association
and advisor to reverse mortgage lenders and industry participants throughout the
nation. Mr. Schiffman can be reached at schiffman@wbsk.com or by telephone at
949.798.5570.
8 reversereview.com
contributors
Cross Selling is Against The Law, page 12 - Michael Banner
Founder of LoanWell America, Inc., Michael has been in the mortgage industry for 27
years. He is one of few Reverse Mortgage professionals accredited to teach continued
education classes for CFP’s, CPA’s, attorneys & insurance agents. A proven senior
advocate, he is a member of NRMLA’s State & Local Issues Committee and sits on the
Board of Directors for the FPA of Tampa Bay. Michael has been interviewed by the
Wall Street Journal, the Tampa Bay Business Journal, Sr. Market Advisor & The Reverse
Mortgage Wire as well as numerous other Reverse Mortgage Internet sites. For more
information: Micahel.Banner@loanwellamerica.com or 877.700.0555
Here is your own 4 Day marketing plan… - Sam Collins

Getting back to the Basics…, page 32
Sam Collins is the President of Sam Collins Reverse Marketing, LLC and Founder of
REMALO, the Reverse Mortgage Association for Loan Officers. REMALO is a web
based National sales, marketing, training, and full service center, created exclusively
for Reverse Mortgage Loan Officers, Correspondents, Branch Managers, and key
executives, and brokers. www.remalo.org or 877.262.7656
“It was the best of times; It was the worst of times…”, page 46 - David Cesario
David Cesario is the Executive Vice President of 1st Reverse Financial Services, LLC,
(www.1stReverse.com) a national reverse mortgage retail and wholesale lender. David
regularly participates in educational and training sessions for numerous mortgage
industry organizations and is a nationally recognized speaker designated instructor for
reverse mortgage loans. information, call 800.516.0545 or e-mail info@monterose.biz.
A Whole New “HECM” World – How Interest Rate Volatility Can Fed Kamensky
Impact Your Magic Carpet Ride, page 40
Fed Kamensky is an associate with the law firm of Weiner Brodsky Sidman Kider,
P.C. The firm serves as General Counsel to the National Reverse Mortgage Lenders
Association and advisor to reverse mortgage lenders and industry participants
throughout the nation. Mr. Kamensky can be reached at kamensky@wbsk.com or by
telephone at 202.628.2000.
Reverse Lenders Transition to Mandatory Live Pricing Technology - Brad Thompson

Solutions That Could Save Your Business, page 26
Executive Vice President, Mortgage Cadence Finale™ Business Unit. Brad Thompson
currently oversees Finaledocument services and compliance solution division of
Mortgage Cadence, Inc. Mortgage Cadence, Inc. is the leading provider of Enterprise
Lending Solutions (ELS) for both the forward and reverse markets. Mortgage Cadence
Orchestrator™ provides data driven workflow automation and business rules
management for seamless integration across the enterprise. Find out more at
www.mortgagecadence com or call 888.462.2336.
Can You Hear Me Now?, page 16 - Monte Rose

Monte Rose has helped hundreds of seniors obtain a reverse mortgage during the past
17 years. He is an accomplished speaker and widely quoted industry expert, appearing
in financial publications and nationally syndicated media. He was head of national retail
sales for Financial Freedom Senior Funding Corporation. Monte is a Certified Senior
Advisor and a Certified strengths Coach with Gallup University. For more information,
call 800.516.0545 or e-mail info@monterose.biz.
March 2009 9
reverse mortgage industry snapshot
Statistics Provided by Reverse Market Insight - January 2009
Top 10 Rankings by Region
10 Regions, ranked by HECM unit volume YTD. Including rank change from prior YTD, as well as growth rates.
Also includes active lenders and growth
Lender Distribution by YTD Growth Rate
Lender distribution graph and table, showing number of lenders growing at various growth rates YTD vs. prior
YTD, including volume attributable to each group of lenders.
Client Notices
1) Help improve data quality in the Reverse Mortgage industry. If you believe your company’s numbers on this report are inaccurate, please e-mail us
(support@rminsight.net) and we will review your feedback promptly. Please include your name, company and contact information along with a thorough description
of the suspected inaccuracy. Thanks!
2) If you received this report as a trial or sample and would like to purchase this report or future reports for your company, please visit:
www.rminsight.net/MICreports.php
3) If you’ve been looking for a source for Reverse Mortgage intelligence beyond MIC endorsement numbers, we’ve got just what you need.
Find out more at www.rminsight.net/rmarket.php
10 reversereview.com
24 Month Penetration and Unit Volume
2 year trend graph of monthly HECM unit volume and industry penetration against 62+ homeowner households nationally.
Appendix
1) All statistics based on retail originations from HUD’s Monthly HECM MIC reports
2) Loans are in unit volume, based on HUD reported mortgage insurance certificate issuance
3) Lenders are aggregated using HUD’s lender identification numbers and unique lender names, along with feedback from
reporting lenders
HUD Regions and Corresponding States/Territories
Region 1 - New England Region 3 - Mid-Atlantic Region 5 - Midwest Region 7 - Great Plains Region 9 - Pacific/Hawaii
Connecticut Delaware Illinois Iowa Arizona
Maine District of Columbia Indiana Kansas California
Massachusetts Maryland Michigan Missouri Federated States of Micronesia
New Hampshire Pennsylvania Minnesota Nebraska Hawaii
Rhode Island Virginia Ohio Nevada
Vermont West Virginia Wisconsin Region 8 - Rocky Mountain
Colorado Region 10 - Northwest/Alaska
Region 2 - New York/New Jersey Region 4 - Southeast/Caribbean Region 6 - Southwest Montana Alaska
New York Alabama Arkansas North Dakota Idaho
New Jersey Florida Louisiana South Dakota Oregon
Georgia New Mexico Utah Washington
Kentucky Oklahoma Wyoming
Mississippi Texas
North Carolina
Puerto Rico
South Carolina
Tennessee
U.S. Virgin Islands
March 2009 11
Cross Selling is
Against The Law???
- Michael Banner
No way….The most capitalistic nation in the world, an entire society based on
free enterprise, why would the government make the cross selling of financial
products that are so badly needed by the elderly, utilizing the best source of
funds ever created for the elderly, (The Reverse Mortgage) against the law?
They wouldn’t do that…
Next you will try and tell me the government is going to give
750 billion dollars to the very industry that crippled the
financial markets and sent us spiraling into a seeming
never ending recession…
Hey, wait a minute. They did

do that one…
So, the cross selling of any insurance or financial products, obvious that one of the reasons for the unprecedented growth
using the proceeds of a reverse mortgage is now against the in the market is due to the fact that there is a lot of money to
law…. be made.”
Let’s put this in perspective. I think we can all agree that the I’m sorry Senator, not all of us have guaranteed 6 figure
passing of the Housing and Economic Recovery Act (HERA) salaries and the greatest lifetime medical benefits for
was a very positive force in the reverse mortgage industry. ourselves and our families for free! That privilege seems to be
Unifying a National FHA loan limit and increasing it to meet reserved for the members of the House & Senate…
Fannie & Freddie is something I have been hearing about for
more than 10 years, and they did it! The approval of the HECM I’m sorry, do I sound bitter or angry? I am! The ability of the far
Purchase, they did it! Approving the HECM for co-ops, they left to demonize “earning a living” while furnishing a service
did it! Decreasing the 2 point origination fee to 1.5, they did it! or product is just mind boggling. It is just one more startling
Decreasing the cost of MIP, whoops, that one they didn’t do…. example of how our elected officials have lost touch with the
Well, you can’t have everything! very people that elected them. But I digress…
Still, HERA was and continues to be one giant step forward Again let’s remember, the good Senator does have the right
towards bringing back our ailing housing market and one giant intentions. Let’s also keep in mind that NRMLA’s Code of Ethics
leap for the reverse mortgage industry. also forbids any requirement for the borrower to purchase
another financial product to obtain a reverse mortgage. Now
But at the last second, led by the very aggressive Sen. Claire that’s the right language! If someone in any segment of the
McCaskill (D-Mo), the “No Cross-Selling” language was financial industry is coercing a senior into securing a reverse
inserted into the Bill, and it was done. mortgage in order to facilitate an additional sale of a product
then please make that against the law! However, NRMLA does
Talk about throwing the baby out with the bath water! allow room for ethical and moral cross selling of financial
Now, before I expand further on how this new law will most products by further stating if lenders meet certain disclosure
certainly hurt more of the very group of consumers (seniors) it and legal conditions, including that the other financial
was designed to protect then it will help, lets deal with a very products and services that it originates or sells “provide a bona
important and very negative aspect of the emerging reverse fide advantage to the customer.”
mortgage industry.
Personally, I am one of the few individuals that is approved
None of us like to say this, we very rarely see articles written by the National Board of Certified Financial Planners to teach
about this subject but the hard truth is there is a tremendous a 2 hour continued education class on reverse mortgages to
amount of potential for abuse in the reverse mortgage Certified Financial Planners. (CFP’s) I do so on a constant basis
industry. The senior segment of this great country has been a in the state of Florida where my company does business.
target for this abuse long before the reverse mortgage industry
emerged. From the financial planning industry, the investment In March of 2008, months before HERA, the Financial Industry
community, to the home improvement industry, the list is Regulatory Authority (FINRA) sent me the following language
virtually endless. The seniors have the liquidity, let’s sell them to add to my class. They were very clear that I must not only
something! include it in my presentation but I must read it aloud verbatim
at every class;
And although I strongly disagree with Sen. McCaskill’s solution,
I think we all must recognize she is on the right track. As FINRA ALERT:
a member of the Senate Special Committee on Aging the
Senator has devoted much of her professional career to the If you are approached by a financial
protection of seniors and that I greatly respect. professional to do a reverse mortgage
in order to fund a particular investment,
But come on Senator… the cliché that comes to mind is “the keep in mind that all investments carry
operation was a total success, but the patient died” risks and costs – and the higher the
promised return, the higher the risk.
The good Senator has been a very strong critic of the reverse It’s best to steer clear of investments
mortgage since its popularity began to grow. At a December that are risky or under diversified – as
2007 hearing on reverse mortgages she was quoted as saying well as those that make it expensive, if
“I want to make sure they (reverse mortgages) don’t become not impossible, for you to access your
the scandal of the next decade.” She continued with “It seems money if unexpected expenses arise.”
March 2009
»13
Wow, it appears that the financial industry has recognized the might be urged to secure a larger liability policy or umbrella
importance of protecting the senior segment of our society policy to offer additional coverage your auto policy doesn’t
against risky investments funded by the proceeds of a reverse cover in case your teenager has an accident with horrific
mortgage. results…
I have performed my CE Class for more than a thousand senior But at no time does your trusted advisor become more
advisors in Florida to date. And whether they were a CFP or important to you than when you turn 62 years of age, when
not that slide was read aloud at every presentation. retirement is either upon you or in your very near future.
When products like Medicare supplement policies, Medicare
I think the one best example that has led to the great cross- advantage policies and long term care insurance are critical
selling controversy is the lawsuit filed in California in 2006. decisions that must be made at this point in your lives. When
This suit named Financial Freedom, a reverse mortgage the repositioning of your assets, as you go from the “income
industry giant as a defendant and made national headlines and earning” portion of your life to the “non-income” earning
appeared on CSPAN. portion will determine the quality of life you have in your
retirement years.
According to the plaintiffs’ attorney an insurance agent
convinced a woman to secure a reverse mortgage and then To take the most valuable tool ever created (the reverse
sold her a deferred annuity that would not mature for 20 mortgage) away from trusted senior advisors would be
years. The client was 80 years old! That insurance agent devastating.
should not only be ashamed of themselves but they should be
prosecuted criminally and civilly to the full extent of the law. You know, we can’t pick up a newspaper or turn on a news
What a disgrace! program without hearing of the many crises’ that plague our
nation today. We of course have the mid east crisis, the energy
It should be noted that the insurance company cancelled crisis, the Wall Street crisis which now has turned into the
the annuity and refunded the client her money. This was the main street crisis. All of the solutions to these crises’ seem so
action of a dishonest insurance agent, not an example of the difficult and so far away…that’s because they are.
insurance industry or of what a reverse mortgage is used for
every day in this country! There is one very real crisis that is very rarely mentioned. I
guess it just doesn’t have the “sizzle” all the other crises’ seem
It should also be noted that the Superior Court Judge on the to have…it’s the crisis that most of our seniors face every day.
case granted Financial Freedom’s motion to dismiss the case. The combination of inflation, recession, the most volatile
At this point let me disclose that I am not an insurance agent, investment environment in the history of our country and
I have never had an insurance license and have no plans to the simple fact that we are just all living longer has greatly
get one. I own no stock or interest in any entities that sell diminished the quality of lives for our seniors. This is a very
insurance. So let’s get right to the bottom line here; real crisis and it affects many more people than we all care to
admit. These are our parents, our grandparents our favorite
No matter what age you are, insurance is at the core of a aunts and uncles.
solid financial plan. Almost all trusted senior advisors, in
every segment of the financial industry, hold an insurance The reverse mortgage industry can help so many of these
license. When you are young and starting a family your trusted people have a higher quality of life and I personally would
advisor will make sure you have major medical coverage to like to see every trusted senior advisor, in all segments of the
protect your entire family. They will urge you to have the financial industry, have the reverse mortgage as the strongest
proper amount of life insurance to protect your family in tool in their tool box, the sharpest arrow in their quiver!
case of yours or your spouse’s untimely death. Depending
on your occupation, you will be urged to have disability Control it, yes! Regulate it, yes! But outlaw it, no!!!!!
insurance so you can support your family during an unplanned
and extended period of time that you cannot work, due to Have an incredible and productive month and let’s help as
illness or an accident (This happens to be the #1 cause of many seniors increase the quality of their lives as we possibly
bankruptcy). When the kids become old enough to drive you can.
“ To take the most valuable tool ever created

(the reverse mortgage) away from trusted
”
senior advisors would be devastating
Advertorial by eCommission
Has there ever been a time when your
business could have benefited from
Gaining Instant advances to loan officers on a case-by-
case basis as secured by their company.
receiving an immediate infusion of working Access to Industry feedback has been positive. Tony
capital? For any business, accessing credit Garcia, founder and board member of
and maintaining consistent cash flow are Working Capital the National Reverse Mortgage Lending
“
vital for achieving success. In the words of Association (NRMLA) and CEO of LibertyStreet
Robert Kiyosaki, author of Rich Dad - Poor Financial Group says, “eCommission has been
Dad, “Good cash flow is good business. No an important service for us over the past
cash flow means you’re out of business.”
So how does a business maintain good cash Good Cash several months. The financing option they
provide is very much needed within the reverse
flow in the reverse mortgage industry? Most flow is good industry and I highly recommend them.”
will have bank loans or lines of credit to business. No “I’m not easily impressed.” Says John
use when closings are slow or investment Railey, President of Homestar Mortgage,
opportunities arise. However, as banks
cash flow means Inc. “But eCommission has impressed me
tighten their underwriting and reduce overall you’re out of with the speed and ease of their service.
loan volume, the reality of this economy business We have a large inventory of loans to get
is making it harder for everyone to access through right now. Accessing some of these
”
credit. Despite this, originators still need to commissions ahead of closing is very helpful.”
pay expenses and salaries even if their
bank line is tapped or their closing So how much does it cost to advance
pipeline is stalled. Although some a commission? The answer is, it varies
companies can absorb the wait, many depending on the amount requested
new and growing companies simply do and the length of time until the loan
not have the financial resources to do so. originators were calling again wanting to closes. On average, the cost is 5%
As an alternative to traditional banks, more access their commissions to take advantage of of the requested commission amount.
and more originators are turning to specialty sales and marketing opportunities. Recently,
financing programs like commission a moratorium on funding within a segment So is commission advance right for you?
advance. A commission advance involves of the wholesale market has caused closing There are several factors to consider. First,
selling a portion of your pending commission delays for some originators who have turned you will want to make sure the loans you
receivables prior to the estimated loan closing to eCommission to keep their cash flowing. wish to advance represent only a portion
date and receiving immediate payment of Other factors have included delays in certain of your company’s total pending pipeline.
funds. Commission advance companies states with getting counseling completed This is helpful in case some of them fail to
charge a fee for advancing the commission due to dual certification requirements. A close for any reason. In those situations, the
and receive repayment as loans close in the convergence of these issues as well as others, commissions are either repaid directly or
future. This type of arrangement is much have caused cash flow shortages for many replaced using the proceeds from different
easier to access than bank loans or lines of originators and it has led to the creation of pending loans. Secondly, you will want to
credit because the company’s pending sales Reverse Mortgage Commission Advance. gauge the relative strength of the loans that
pipeline creates the security for the advance. Here are some specific details make up your pending pipeline. Remember,
Commission advance provides customers about how this new program works: you are assigning portions of the commissions
with a predictable source of cash flow and Commission advances are made on HECM that occur as a result of them closing as
enables them to meet ongoing expenses (FHA) approved loans. The Loan Origination scheduled, so choose the strongest loans with
while providing a clear path to growth. Fee portion (up to $6,000.00) can be advanced the highest probability of closing within the
This type of service is now available to per transaction on pending loans scheduled shortest period of time. Finally, you should
the reverse mortgage industry through to close within a maximum of 85 days. understand that advancing commissions is
eCommission Financial Services Inc. Based Setting up an account is free and all approved generally not done on a continuous basis.
in Austin, Texas, eCommission has been a advances fund within one business day. Most customers will advance in order to
national provider of commission advance Supporting documentation includes: solve an immediate cash flow shortage or to
services to the real estate industry since 1999. • a signed 1009 take advantage of marketing opportunities
A number of forces have combined recently • a signed good faith estimate like spreading the word on the HECM loan
to create a demand within the reverse • a completed appraisal report OR FHA limits being raised to $625,500 for example.
mortgage industry for commission advance. assigned case number
It started last year with the raise in HECM • an escrow/title file number If you are interested in setting up a free Reverse
Mortgage Commission Advance account for your
loan limits. Delays with getting the bill passed Most companies start off by advancing
business, please contact Sean Whaling, President
created pressure on the closing inventory of $10K to $25K. For originators needing to of eCommission Financial Services, Inc. toll free at
many originators. As the bill dragged through advance larger portions of their pending 877-882-4368, ext. 866 or e-mail
congress, eCommission started receiving pipeline, eCommission can establish sean.whaling@ecommission.com or online at
credit limits of up to $200K in most cases. http://www.ecommission.com/mortgageadvance.
requests for advancing commissions. Once
html
HUD finally issued the mortgagee letter, In addition, eCommission offers smaller
March 2009 15
Transform your “presentation” into sabotage trust. I found that a simple
a “conversation” for maximum sales statement delivered respectfully would
impact! communicate my concern, elevate my
stature and give the prospect permission
High performance people in our business to “quit blaming themselves.”
understand that sales requires more
sophistication than simply identifying For example, “Are you aware that
features and benefits, talking about the 450,000 persons have completed a
product, and asking for the sale. reverse mortgage? Many of those
people faced the same challenges that
Top producers are thinking counselors. you face. You’re not the only one. Life
They demonstrate a facility for inquiry, happens. I’m here today to discuss your
synthesis, and persuasion. options.”
The sales professional who really Empathy can unlock denial.

wants to excel must perfect the art
of communication. This includes an Third, practice the five rules of being a
authentic concern. This paves the way
emphasis on intently listening, asking credible person: likability, composure,
for deeper, probing questions that
meaningful questions, and letting the dynamism, confidence, and reliability.
uncover the customer’s true need and
ideas register in the client’s mind. The Don’t overstate your firm’s status or
interest.
communication must be specific to the your credentials. State your unique sales
audience and must be spoken in the proposition and move on.
Heartburn or heart attack
appropriate dialect.
“I want to work with you to tailor a
If you hope to gain a complete revelation
There are four phases in the kitchen solution that addresses your specific
of their situation (the real story), you
table conversation: (1) the relational, (2) situation. I am happy to provide
must connect. The relational phase
the conceptual, (3) the practical, and (4) references should you desire.”
consists of three connecting elements:
the tactical. In this issue I will cover the
affirmation, empathy, and credibility.
first two phases, which set the “stage” Discover the transcendent objective.
for decision making by both salesperson
First, authentic affirmation is the
and prospect. The remaining two The goal of the relational phase of the
opposite of a condescending comment.
phases will be discussed in next month’s kitchen table conversation is to establish
I’m not asking you to play games. You’re
article. trust and then to find out “what
an invited guest. Treat the invitation as a
business you’re in.”
privilege. Say something positive.
The result of methodically working
A compliment can be as simple as “You
through each of these phases is that all Learn about your prospect’s dreams
gave me great directions. I didn’t get
parties will find a place of comfort and and goals. Uncover their transcendent
lost. I struggle with this all the time and I
confidence. The salesperson will feel objective?
want to thank you for your help.”
secure in their recommendation and the
prospect will then find the freedom to Is it peace of mind? Is it connecting with
Find something in their life, home, or
say, “Yes.” You have a sale. They become their family? Is it to travel the world and
neighborhood, and offer a compliment.
a client. revisit famous places seen long ago?
“You have a wonderful family. I see all
the pictures on the wall. You must be
First things first “High level” agreement
very proud of them. Congratulations,” or
“You have a charming home. The yard
Establish some common ground. Drop In the conceptual phase, you’re giving
just looks great.”
the sales and be a person. The relational the prospect an opportunity to “cut to
phase gives you an opportunity to make the chase” and identify their “significant
Say something truthful and
a friend, and provides a foundation for objections.”
encouraging.
the resultant conversation.
For example, I was shopping for a bed
Second, demonstrate appropriate
It gives you, the salesperson and the and a salesman met me at the door.
concern. Contrived empathy is
customer, time to develop trust. It’s the Before I could say a word, he said, “Don’t
unkind, disrespectful, and likely to
time for the salesperson to demonstrate worry. All I want you to do is find a bed
that will help you sleep. I want you to conceptual is that once they agree to the to live the rest of your life in if you
assume they’re all free. If that were the concept, the rest is really an explanation could?” That’s sort of an open-ended,
case, which one would you like to take of how it works. Then, it’s more of an conceptual-type, high-level question.
home?” “if-it’s-a-fit” than a “should-we-do-
it” decision. You’ve crossed the most Second, “If you had access to more
That was a conceptual frame. First treacherous decision chasm. money, would your life be a little bit
things first: is there a bed that meets better? Would you rest easier?”
my sleeping comfort needs and desires? Does that mean that every time you
Is there something that will inspire get conceptual agreement the deal Third, “How do you feel about putting
comfortable rest? Let’s start with that. happens? No. I realize there can your home to work for you?” These
If there isn’t one in the room, we don’t be issues that prevent them from basic probing questions create a level of
need to go any further. I’m going to go proceeding. awareness on the client’s part that will
down the road. help move the conversation forward.
A macro view
“detail noise” vs “solution benefit” However, conceptual agreement MIP this.
is where to begin. The conceptual
I didn’t begin worrying about price, component embodies the macro view It’s not about the rate or fees. At the
financing, or anything. I just began to of the opportunity and then allows you end of the day, you must determine if
think about what it was going to take to to drill down to the basic questions: “Is this person can find comfort with the
satisfy me. That’s exactly what we need this solution, the right solution? What notion of accessing equity to accomplish
to do in any sales conversation. We need are we looking to accomplish? Have you their objective. That’s conceptual.
to begin with conceptual exploration. thought about your options?”
We want to eliminate the detail “noise” The optimal result in any conversation
and focus on the solution. We’ll deal The objective of this phase of the sales is that both parties are heard. Sales is
with the noise later. conversation is to determine if the no different. The two phases discussed
reverse mortgage product is the best in this article, the relational and
If there isn’t a conceptual solution in solution for this particular senior. conceptual, are key to accessing the
our toolkit that’s appropriate for this real customer story and assessing the
prospect, then we don’t need to worry The conceptual phase is comprised of prospect’s capacity to buy.
about explaining all the details. It’s three parts:
not going to be appropriate or they’re Once the “real story” is discovered, you
not going to like it anyway. We would 1) Pinpoint their need or desire. are able to prescribe a solution that is
just move on. The “conceptual sale” is 2) Discuss their options. appropriate and attractive. Then, the
typically the most overlooked part of a 3) Clarify the uniqueness of your prospect has the best opportunity to
sales conversation. solution. choose the best course of action.
How do you feel about using home Take your time. Show respect, and In Part 2 of “Can you hear me, now?”
equity to meet your financial objective? obtain permission to ask questions. I will share with you how to make the
Listen closely. details palatable by mastering the
When you leave a sales opportunity practical and tactical phases of the sales
without taking the order, did you obtain One of the important benefits of this conversation.
“
conceptual agreement? And, it’s always step is that it allows the prospect
better sooner rather than later because to share their concerns, their early
it also provides a foundation from which objections, and any preconceived ideas
you can handle objections. and misunderstandings they may have Transform
about the program. Your
Diving into details before obtaining “presentation”
conceptual agreement confuses the Use this dialogue as a strategic qualifier
prospect. We create noise that obscures or as a temperature-taking benchmark.
into a
the central points of the encounter: 1) Is this person going to be able to pull the “conversation”
the client’s needs and wants, and 2) the trigger or not? The following questions for maximum
benefit of our solution. might help you make this determination. sales impact!”
The beauty of beginning with the First, “Is this the home where you want
March 2009
” 17
HECM at 20: Industry Captains’ conversation with Atare Agbamu, a TRR Exclusive series
Why Jumbo Reverse

could be in
Limbo for Years:
J
A Conversation With
Jeffrey M. Lewis, Chairman

Generation Mortgage Company
By Atare E. Agbamu, CRMS
Wall Street and Main Street are joined at the hip: One cannot
prosper without the other. This is a take away from the
current mortgage and credit crisis.
For Reverse-lenders, the exit of jumbo programs causes

hardship for customers who live in homes valued higher
than the recent national HECM limit of $417,000.* Many of
these customers need relief from forward-mortgage monthly
payments now. While HECM reverse mortgage is their only
hope of keeping their homes, they cannot get relief because
FHA’s puzzling $417,000 national limit for HECM (HERA 2008 had
approved up to $625,000) defies reality in the reverse-mortgage
marketplace today: jumbo reverse mortgages are nonexistent.
Jumbo is simply in limbo. »
“ ”
WALL STREET AND MAIN STREET ARE JOINED
AT THE HIP: ONE CANNOT PROSPER WITHOUT
THE OTHER. THIS IS A TAKE AWAY FROM THE
CURRENT MORTGAGE AND CREDIT CRISIS
MetLife Home Loans
Behold, the wonders

of reverse mortgage
technology.
MetLife Home Loans provides its reverse mortgage wholesale partners with proprietary
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technology to streamline the application process, so they can close more loans—plus the
training and support they need to succeed. Find out what a partnership could do for you.
Technology. Training. Support. All from one reverse mortgage partner.
If you’re an FHA-approved lender, call 1-866-359-3817 to start the conversation.
Mortgage financing provided by MetLife Home Loans, a Division of MetLife Bank, N.A., Equal Housing Lender.
© 2009 METLIFE, INC. L0209017259[exp0210][All States][DC]
PEANUTS © United Feature Syndicate, Inc.
March 2009 19
“
ONE OF THE CONSEQUENCES OF WHAT HAS
HAPPENED RECENTLY IS THAT WE’VE GOT
THIS GREAT DISCONNECT BETWEEN WHERE
ASSETS THAT ARE GOVERNMENT-BACKED
”
TRADE VERSUS ASSETS THAT RELY ON
THEIR OWN CHARACTERISTICS AND
CREDIT QUALITY
Meanwhile, industry conventional wisdom assumes that as

soon as investors start buying mortgage-backed securities,
jumbo reverse programs will come back, and all will be well
again.
Not so soon says Wall Street veteran, Jeffrey M. Lewis. A senior

managing director at Guggenheim Partners, Lewis is Chairman
of Atlanta-based Generation Mortgage Company, a top-12
independent reverse mortgage lender/servicer. Guggenheim
Partners, the controlling shareholder of Generation
Mortgage, is a global financial services company, managing
more than $125 billion in assets.
Before helping to build Generation three years ago, Lewis

formed and ran the fixed income derivatives group at
Donaldson, Lufkin, & Jenrette (DLJ), where he also managed
the mortgage arbitrage unit and co-led residential mortgage
trading. Lewis earned a BA in Government and an MBA in
Finance from Cornell University in New York.
We spoke recently about the jumbo reverse market, Wall rates than those at which people want to borrow money
Street, and other industry issues. today.
AEA: Jeff, what is the short-term and long-term outlook for One of the consequences of what has happened recently is
reverse mortgages in the secondary market? that we’ve got this great disconnect between where assets
that are government-backed trade versus assets that rely on
JML: We’ve got a lot of issues. In the short term, there will their own characteristics and credit quality.
not be a market for jumbo products for years. That is the
result of the enormous overhang of distressed mortgage Interestingly, in the traditional mortgage market, there are
paper in the marketplace. Investors who want to buy a couple of things working for people that are not present
mortgage assets have return hurdles that are consistent with in our market: One, they have much larger loan limits on
what is available for them to buy. Those are much higher government loans. Unfortunately for us, we don’t have the
benefit of the same limits. Two, there are many large banks JML: There are two things that have to happen to allow a
who believe that making jumbo mortgage loans at rates jumbo market to come back. First, housing needs to bottom.
where they could not resell the loans, but where they still Apparently, I am a bull because I believe housing could
make reasonable ROE [return on equity], is a good subsidy bottom within six months. Second, spreads on existing assets
to provide to their large consumer businesses. That explains have to normalize. They have to get back to a level where we
the availability of money at off market rates for people can issue 350, 400, 450 [margins] over jumbo to a customer
with jumbos in the traditional forward space. It is a very and be able to get par for it. We are so far away from it right
large market, and it has a lot of other connections in terms now that it is hard to imagine when the spreads will narrow.
of the other products and services they want to purvey to Even if there were no concerns about future housing price
those clients. But I think it will be some time before they are declines, the rate issue is just a killer.
available in our market.
AEA: The spreads, right?
The other critical issue we have today is that Wall Street has
basically disappeared. There is no securitization market. And JML: Yes, the spreads. The spreads that are out there ….
as an industry, our volumes [reverse] are so small that we are We have to remember that portfolios of uninsured reverse
really not worth anybody’s attention from the standpoint of mortgages will always have a lower rate of return than the
even purchasing our government loans or Ginnie Maes. stated coupon [rate]. So, when we were making loans that
were 350 [margin] over on a stated rate, we knew some
So, we are in a world where Fannie Mae knows they are people would move out of their homes when their houses
the only game in town. They have been reducing their level were still covering the loan. And that some percentage, by
of aggressiveness in the last several weeks. We very much definition, would live long enough that they would cause
appreciate that Fannie Mae has been acting as a bellwether you to not earn the full coupon. Their houses will no longer
for our industry. satisfy the balances when the loan matures. So, everyone’s
estimate of how many losses there might be would be
AEA: You said we are not going to have jumbos for years. different, but everybody would say that a portfolio of jumbo
That is a little disturbing. How many years are we talking reverse mortgages would always have a lower return than
about? the stated coupon. And my guess is that most of the loans
»
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mortgage training?
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March 2009 21
“
THE GROWING NUMBER OF POTENTIAL
”
CUSTOMERS THAT WE HAVE IS GROWING
AND GROWING. I THINK IT MEANS OUR
INDUSTRY IS GOING TO CONTINUE
TO GROW RAPIDLY
we are making on the assumptions we had, if they were 350 The lack of current interest [cash flow?] is a big deal because
over stated, we probably thought might earn 200/225 over most investors are basically match-funding when they buy
net of the losses that will take place in the portfolio. these kinds of assets, and they have to pay interest when
they purchase something. Whether they have to pay interest
In a world where triple-A bonds could be issued at very low on a deposit or a debt instrument or whatever, they have to
spreads, 200 over was a good enough starting point in terms pay when they buy. So if they buy an instrument that accrues
of the overall yield. They were securitize-able and they were rather than pays interest; that creates problems.
securitized. But nowadays, when you think of what that
expected return would need to be to starting out in order to The offset to that, of course, is that these loans do repay
have enough raw materials [loans are raw materials for Wall for a variety of reasons. And when you look at a portfolio of
Street’s securitization factories] to work with in the investor reverse mortgages, they actually have a fair amount of cash
community, I can’t even begin to imagine what that number flow and can service some kind of liability. But it takes a lot
is --- 500, 600, 800? I don’t know what that number is. It is of work and analysis to really understand that.
many, many, many points wider than where we were before.
AEA: Isn’t that an opportunity for those of you in the
AEA: We are still talking near term. You talked about the secondary market who have done your homework?
overhang and the size of existing portfolios of reverse-
mortgage-backed securities. What is the size of the JML: Yes.
overhang in dollars?
AEA: Let’s look at long-term. What do you see long-term for
JML: The overhang is in the mortgage market in general. our market?
The issue is not that there are too many reverse mortgages
around. We are a tiny, tiny, tiny subset of the mortgage JML: Long-term? We obviously have a set of circumstances
market. And we price off the rest of the mortgage market. where our product is going to become part of the
If you are a mortgage investor, you are going to segment mainstream. When we started Generation three years ago,
different parts of the market, and demand returns depending I would still say, we were talking about a fringe financial
on what segment you are in. We would be considered an off- instrument. And I feel that with the necessity that is out
the-run, illiquid segment with small volume. So that already there in the world with respect to people’s needs for funds,
puts a little bit more yield in there. the fact that other retirement assets have been decimated
by what is taking place in the capital markets, the need is as
AEA: Our products, though, have some very good acute as it has ever been in our industry.
investment characteristics that make them more attractive
than forward mortgage-backed securities, right? Every year, more new seniors pass through the turnstiles
and join the ranks. That trend is in place, and there is
JML: They are extremely different. At the end of the day, nothing that can be done to change that. And most
returns are returns. As we love to say in the bond market, importantly for our product, I think the level of satisfaction
“There is no such thing as a good or bad bond, only a good that our customers have had has been off the charts. It has
or bad price.” Reverse mortgages have a lot of characteristics been very, very positive. A lot of the misperceptions and
that are unusual relative to traditional loans that make misconceptions that people had about the product, that
them a little bit difficult to sell. They also have a lot of might have made them hesitate in the past have really been
characteristics that, when people understand them, make put aside. The combination of all those things is a really good
them attractive. It is a mixed bag. I don’t think it is safe to say value proposition for the customer.
it is all good.
And the number of potential customers that we have is a lot of constitutional scholars will tell you that there was
growing and growing. I think it means our industry is going undue delegation by the legislative branch to the executive if
to continue to grow rapidly. I wouldn’t be surprise to see the limit was really that open-ended. Many of the legislators
that 2009 calendar year is 40-50 percent higher than 2008 who voted on that bill believed that what that language
calendar year as far as unit volume. meant was that the HECM limit will be the same as the
Freddie Mac limit
AEA: We also talked about the HECM loan limit. It has gone
up a bit under HERA (Housing and Economic Recovery Act There was this discussion that took place behind closed
of 2008). Why do you believe it hasn’t gone up enough? doors with Republican Senators and HUD regulators and
other people, which didn’t include us, which somehow
JML: I am a free-markets guy. I don’t want the government decided that a completely random number other than the
to do everything for everybody. I’d prefer that the markets Freddie Mac limit should be our limit.
should take care of as many things as possible. But the fact
is that, as I have described, the jumbo market is unlikely to AEA: And these would be in markets such as California,
function in the near future. In the interim, it would have Florida, and others with high-priced homes, right?
made more sense for us to have the kinds of loan limits that
the traditional mortgage market has. It was our view that JML: It not just in the high-priced areas, it is also in some of
that was the intention of the housing bill that was passed the moderately-priced areas where we have people who are
in the fall (HERA). The intention of that bill was to make the still house-rich and otherwise poor. It is not uncommon to
HECM limits one and the same as the Freddie Mac limits. find people who are in that situation at all levels of house
value. It is not just at the lowest levels.
It was a complicated piece of legislation that was put
together pretty quickly. The language in the bill left an AEA: So what do you think really happened?
opening. The bill said the HECM limit – “will not exceed”--
the Freddie Mac limit. That made it sound that it could be JML: I can’t speculate, but I can tell you that when we read
anywhere between the Freddie Mac limit and one dollar, and the bill, we were very happy. We thought that the language
that it is up to HUD to decide what that number is. I think was a little strange “…shall not exceed …,” but it still seemed
»
MetLife Home Loans
The reverse mortgage

support I need, when
I need it.
MetLife Home Loans provides its reverse mortgage wholesale partners with the ongoing
support that can make all the difference—plus the technology and training they need to
succeed. Find out what a partnership could do for you.
March 2009 23
to indicate that the intention of it was to give us those limits. people’s resources and attention spans are stretched by the
When they did the temporary limit increase in the traditional other things that are happening.
market a few months earlier, we were specifically excluded
by the language in the bill from that increase. Again, I don’t AEA: What do you like about HERA and the changes it has
understand the reason for that, but we were. So, I thought it brought to reverse mortgages?
was pretty clear by the fact that we were not excluded, that
we were meant to be included. The intention was to give us JML: We are certainly happy to go from a range of
the Freddie limit. I am hopeful that at some point in the next $200,000/$362,000 to $417,000. It is an improvement, and it
administration, some folks will take a look at this and realize is going to help a lot people. From that perspective, sure, we
that, perhaps, a mistake was made. are happy. We’d have been happier if what was implemented
was what was enacted.
Often in our industry, Atare, especially on the refinancings,
we’d see that we are just short on available proceeds to be AEA: Is it possible that part of the reason the government
able to repay the existing debt. We are in a tough time and didn’t raise the limit higher is the presumption that most
the appraisals are falling very, very rapidly. people who have those kinds of homes don’t need cash?
AEA: A lot of people have jumped out of the business.
We’ve seen some consolidation. Are we going to see people JML: It is not true. And as I said, your proceeds are not the
coming into reverse mortgages from the secondary market limit. If the limit is $417,000, your proceeds are a percentage
as the credit situation improves? of that based on your age and interest rates at the time.
So, roughly speaking, a 70-year-old might be looking at
JML: I think for the time being, institutions aren’t really a maximum, if their house is worth $417,000 or over,
thinking offensively; they are thinking defensively. In time, something like $250,000. So when you are talking of people
people will probably start thinking more strategically. I think having a mortgage obligation over $250,000 that doesn’t
it would be a while before you see a lot of entry. It is an necessarily make that person a rich person.
industry that is idiosyncratic; it’s different. It requires a lot of
commitment. It requires a lot of patience. Right now, I think AEA: You are right. Let’s talk about your company. What is
going on at Generation?
JML: We are growing very rapidly at Generation. We are

HUD Foundation Specialists a national company. I guess we are the most significant
independent company left in the industry. Everybody
else is pretty much part of a larger company. I think our
reputation for service and for taking care of our clients is
really our best asset. There is a wonderful culture in the
Manufactured Housing company, and we are very pleased to have survived the
Troubleshooters worst of the turmoil. [Now] we are looking forward to
being a market leader in this industry as we come out of
this turmoil.
Foundation
Inspections, Upgrades
AEA: You hired Jack Kemp as your spokesperson. Is he
& Repairs
still your spokesperson?
Engineer JML: He is. Unfortunately, there was a press release out

Certifications of his office today [January 7, 2009]. He’s not really our
spokesperson; he is an investor in our company. He’s not
a pitch guy like these other companies have. Secretary
Kemp is having some health-related issues right now, and
our thoughts are with him and his wonderful family as
they work through them.
AEA: He’s good man. He was HUD Secretary when the

program started. The opening quotation in my recent
book came from his words in the first guide to HECM in
1989. He’s definitely part of reverse mortgage history in this whom we deal. Make sure you understand your moral
country. obligation in this arena when all your customers are retirees
and senior citizens. In the industry to date, my competitors
JML: That’s true. He is a giant in the fight for affordable generally have maintained very high standards with respect
housing in this country. to how they have serviced our client base. I’d be very
disappointed if people who didn’t understand that culture of
AEA: What advice do you have for new entrants into this commitment to clients got into our industry and mess that
business? up.
JML: My advice would be to make sure you understand the *Author’s Note:
instrument. It is a complicated instrument. Make sure you At press time, the Obama’s stimulus law contains language
understand all your obligations in the regulatory framework. that raised the HECM national loan limit to $625,000 for
It is a highly-regulated and highly-protected customer with 2009, bringing it in line with forward mortgage FHA limit.
“
MAKE SURE YOU UNDERSTAND YOUR MORAL
”
OBLIGATION IN THIS ARENA WHEN ALL YOUR
CUSTOMERS ARE RETIREES AND SENIOR CITIZENS
MetLife Home Loans
Happiness is getting
everything you need
from your reverse
mortgage partner.
MetLife Home Loans provides its reverse mortgage wholesale partners with the technology,
training, and support they need to succeed. It’s the complete package that gets real results.
Find out what a partnership could do for you.
March 2009 25
Reverse Lenders
Transition to
Mandatory Live
Pricing
Technology Solutions That
Could Save Your Business
Brad Thompson
To remain competitive in today’s market, Enterprise Lending Solutions can
reverse mortgage lenders are feeling the significantly reduce this risk by providing
pressure to embrace the new mandatory Reverse Lenders with advanced technology,
live pricing requirements recently commitment tracking, business workflow
introduced by Fannie Mae. With private and industry knowledge and expertise
investor purchasing and proprietary that provides a comprehensive and
portfolio products going away, lenders streamlined approach to mandatory live
will find it difficult to ignore Fannie pricing and delivery. A solution that puts
Mae’s new pricing requirements; however, reverse lenders in a position to minimize
incorporating the new mandatory live risk, optimize market opportunities, while
pricing and delivery requirements into competitively pricing reverse loans to the
their pricing strategy opens lenders up broker base.
to exposure, and increases the risk and
challenge of correctly pricing and Market Drivers Impacting Reverse Lending
delivering loans. Pricing
As companies start to adopt this new As stated in the August 1st, 2008 Reverse
business model, one that reflects the Mortgage Lender Letter 2008-2 “Effective
already familiar forward secondary November 3, 2008, Fannie Mae will accept
market commitment and delivery process, for purchase closed-end, fully drawn
many lenders will find themselves fixed rate HECM’s that comply with all
behind the curve when it comes to the relevant Housing and Urban Development
ability, knowledge base or technological regulations and guidance.”
infrastructure to support this new
process. Starting in November of 2008 Fannie Mae
announced it was eliminating the need to
March 2009
»
27
convey pricing every 60 days through forward 2009 reverse mortgage lenders are forced to
negotiated commitments in favor of the new radically change from a fixed pricing basis and
mandatory live pricing model. move to a mandatory live commitment and
delivery method of pricing and selling loans. The
“Fannie Mae’s new eCommitting process majority of reverse lenders simply do not have
introduces “live pricing” for reverse lenders with the technology or expertise required to properly
commitment periods from as few as two to as price, track or deliver these commitments in
many as 90 days. Lenders will obtain a reverse order to secure the required margins and stay
mortgage price via the eCommitting application competitive in this space.
for the current business day by selecting the
following: By enacting a live pricing process and
• Reverse mortgage product participating in a secondary market modeled
• Net margin (ARMs) or pass through rate after the forward world which now includes
E
(fixed-rate) mandatory pricing and pair–offs, over-delivery
• Commitment period, and and commitment extensions, there are now
• Commitment amount in dollars (based upon potentially millions of dollars at stake for gain
unpaid principle balance at time of loan closing). or loss depending on how effectively these
nterprise commitments are handled by reverse lenders.
Fannie Mae’s eCommitting will generate a
commitment number and expiration date and Lending The Challenges of Mandatory Live Pricing
will lock-in the price for the chosen parameters. Solutions
Lenders will be obligated to deliver a loan (or set Mandatory live pricing is changing the face
of loans/pool) with the specific parameters input can of reverse lending. It is critical that lenders
at commitment (e.g. reverse mortgage product, significantly gain an understanding of the process and the
net margin/pass through rate, commitment risks associated with effectively managing
period, and commitment amount).” reduce this their commitments and deliveries. Overall,
risk by profitability and success will only be achieved
This now introduces mandatory pricing and pair- with a thorough understanding of the
off, over delivery, and extension requirements providing mandatory margin and rate lock process, pair-
that reverse lenders must adhere to. According Reverse offs, over-delivery, and commitment extensions
to Fannie Mae in the August 1st, 2008 Reverse as well as the risks associated with the non-
Mortgage Lender Letter 2008-2 regarding Lenders with delivery of prior commitments.
reverse mortgage ARM’s: “In order to give advanced
Lenders time to adjust to the new live pricing Lack of Experience
process for reverse mortgage ARM’s, which technology,
includes mandatory commitments, Fannie Mae commitment The shift to mandatory live pricing is a dramatic
will not initially enforce the standard pair-off and change to the way lenders who specialize in
over delivery requirements typically associated tracking, reverse mortgages do business. The move to
with mandatory committing, and extensions business mandatory live pricing clearly demonstrates that
will not be available. Fannie Mae will provide the reverse mortgage industry is transitioning
Lenders with 30 days prior notice of their plans workflow itself to the secondary market that currently
to begin enforcing their standard pair-off fee, and industry exists on the forward side of the mortgage
over delivery and extension requirements for industry. This significant change impacts the
reverse ARM’s. Fannie Mae will monitor all knowledge entire business model of reverse lenders and
commitment activity and performance during requires knowledge and expertise that most
this initial period which began January 1st, 2009 reverse lenders simply do not have on staff at
with a target date of April 1, 2009.” the current time.
“For fixed-rate HECM’s, the standard pair-off, There is also a lack of experience by many of
over-delivery and extension requirements and the technology vendors in the reverse mortgage
fees applicable to whole loan commitments per space who have solely focused on the reverse
the Selling Guide will apply as of November 3, mortgage side of the business. While this may
2008.” have been viewed at one time as a competitive
advantage, it is now a significant limitation.
To finish out 2008 many lenders took one last
60-day forward commitment and locked in their Those vendors are experiencing the same
pricing for the remainder of the year. Now, in learning curve as reverse lenders when trying
to understand the nuances and complexities than the maximum delivery amount, although
of mandatory pricing, which includes tracking, we will authorize only one over delivery per
delivering commitments, pair-offs, over-delivery, commitment. This may occur when a consumer
and extension commitments. Introducing new lowers their down payment or when a mortgage
functionality into an already existing technology is substituted to prevent or reduce a pair-off
platform can be difficult, tedious and time fee. Whole loan prices at commitment and at
consuming for technology vendors as well as over delivery are used to determine if an over
invasive and potentially destructive for those delivery fee will be due.”
lenders trying to implement it.
Fannie Mae also states “Commitment
New Business Paradigm Extensions are calculated based on the
outstanding commitment amount at a flat per
Before the change to live pricing, Fannie diem cost that does not fluctuate with market
Mae only priced reverse mortgages in 60-day movements. Since the cost per day to extend
forward negotiated commitments based upon does not change, it is recommended that you
m
reverse mortgage delivery. Fannie Mae now take the minimum number of days necessary
allows lenders to obtain reverse mortgage to deliver a commitment. There is no refund
commitments ranging from 2 to 90 days. on additional days extended, but not used. A
commitment may be extended for up to a
Lenders will now need to distribute daily rate maximum of 30 days from the original expiration
sheets with loan-by-loan margins. The proper andatory date.”
tracking and delivery of these commitments, live pricing
while managing the lender’s pipeline, is Managing and tracking the pipeline for fall-outs,
vital to the success and sustainability of the that is slotting loans, delivery and making the correct
organization. not done commitments in real time is not a knowledge
base or automation technology that most
This includes the managing and tracking of correctly reverse lenders have at this time, which will
the lender’s pipeline to evaluate loan margins, exposes ultimately prove to be very costly if lenders
best deals “best fit”, and slotting loans daily remain idle.
to effectively meet mandatory delivery lenders to
commitments. In addition, lenders must be heightened The Solution: True Enterprise Lending Solutions
able to manage fall-out in real time within their
pipelines. risk and the To overcome the new requirements and lack
potential for of expertise for reverse lenders to engage in
Once again success and profitability will be mandatory live pricing strategies, lenders are
determined by a lender’s ability to effectively fee increases turning to true Enterprise Lending Solutions.
manage this new process, implement with At their core, true Enterprise Lending Solutions
automation and utilize business rules and reduce risk while achieving an improved return
pipeline management to meet mandatory Fannie Mae for correctly tracking and delivering loan
commitments. commitments.
Risk Exposure (Potential Fee Increases) With true Enterprise Lending Solutions, reverse
lenders can successfully meet the requirements
Mandatory live pricing that is not done correctly to engage in live pricing, and significantly
exposes lenders to heightened risk and the improve their commitment tracking and delivery
potential for fee increases with Fannie Mae. For success rate by incorporating comprehensive
example, as stated by Fannie Mae, “Pair-offs are technology and data analytics to address these
used to repurchase all or part of a mandatory challenges. Technologies employed include
delivery commitment when customers are comprehensive pipeline and commitment
unable to deliver the committed dollar amount. tracking as well as effective rules-based analysis,
Whole loan prices captured at commitment and automated workflow, extensive real time
again at pair-off are used to determine if a pair- management tools and comprehensive vendor
off fee will be due, and the amount of pair off.” experience with commitment tracking, delivery
and secondary marketing activities.
“Over Deliveries- occasionally, a lender will be
faced with an extenuating circumstance that On-demand rules-based analysis needs to
may justify our allowing them to deliver more posses the ability to look at the existing pipeline,
March 2009
»29
daily loan margins, current commitments, pools Greater Accuracy: In dealing with mandatory
and status of lender defined criteria to effectively live pricing the stakes are already high to
track all pricing and locking activity. mitigate risk, eliminate costly mistakes and
Automated workflow is central to true Enterprise reduce loss severity. That is why the accuracy,
Lending Solutions. The solution should ensure validity and speed at which lenders can access,
both data and document driven workflow. analyze and feel confident in the accuracy of
Automated messaging, document generation and the data in their pipeline, and commitment
distribution, task queuing with auto-resolution obligations is absolutely vital.
and real time management monitoring and
visibility in functionality that should be offered Gain Expert Advice: With heightened risk
as standard with any true enterprise solution. exposure, potential for increase in fees to
Fully integrated document imaging and tracking Fannie Mae, having a partner that delivers
combined with industry knowledge and expertise comprehensive knowledge and understanding of
will lead to a more streamlined approach. both the forward and reverse lending channels
is imperative. Engaging in mandatory live
The technology provider should have extensive pricing without the proper understanding and
forward and reverse expertise. As the reverse technology tools is simply not prudent.
mortgage industry is transitioning itself to the
t
secondary market model that exists in the Confidence: Enterprise Lending solutions
forward business, reverse lenders can no longer that provide reverse lenders with enhanced
rely on technology vendors whose experience is consistency, real time information, greater
limited solely to the reverse side of the business. accuracy and expert advice from a trusted and
Reverse lenders need to engage and interact he knowledgeable partner allows reverse lenders
now more than ever, with a vendor that has
the knowledge and experience to help guide
technology to feel confident knowing their commitment
tracking and delivery is taken care of.
them through this significant change in reverse provider
lending.
should have What Reverse Lenders Need in an Enterprise
Lending Solution
Important Benefits extensive • Extensive Commitment Tracking
A number of significant benefits emerge when

forward • Superior Technology on One Comprehensive
Platform
advanced technology automation, data analytics, and reverse • Pooling & Delivery Capabilities
real time commitment tracking, pipeline
monitoring and extensive industry knowledge
expertise • Data-Driven Workflow Automation
• Pipeline Management Tools
are combined to form a comprehensive true • Advanced Electronic Document Management
Enterprise Lending Solution including: & Imaging
• Extensive Forward & Reverse Knowledge &
Enhanced Consistency: True Enterprise Support
Lending Solutions create a comprehensive and
streamlined approach that creates greater What to look for in a True Enterprise Lending
consistency in commitment tracking and Solution
delivery. This is even more critical in today’s
challenging market as lenders are tasked with When looking for a true Enterprise Lending
doing more with less. Add on the additional Solution provider, be sure to consider the
pressure of live pricing and without consistent following requirements:
approach, lenders are sure to make costly
mistakes. Extensive Commitment Tracking: When
incorporating advanced technology, data
Real Time Information: Provides lenders with analytics and extensive industry knowledge to
the right information at the right time to make live pricing strategies, lenders will gain
informed decisions. Decisions that take into maximum pipeline tracking options to deal
account all of the variables (net margin, pass with these new requirements. This will provide
through rate, commitment period, commitment greater flexibility in dealing with the current and
amount, etc) involved with mandatory live ever changing market conditions.
pricing to successfully track, commit and delivery
loans profitably. Superior Technology on One Comprehensive
Platform: Seek a solution that provides full
end-to-end loan management functionality annotates documents. This creates an electronic
for both forward and reverse lending which audit trail, eliminates re-keying of data and
includes commitment tracking, pipeline ensure greater data quality and consistency.
management, automated decisioning, business
rules management, product and pricing, data Extensive Forward & Reverse Knowledge &
driven workflow automation as well as electronic Support: Find a company that will partner with
document management. you for the long-term. One that understands
the full spectrum of industry issues in both
Pooling and Delivery Capabilities: Maximizing forward and reverse as well as offer the best mix
pipeline value while also taking advantage of of solutions to meet the needs of your business.
investor requirements for specified pools has The company should provide consulting,
always been a secondary marketing challenge technology implementation, training, support
whether forward or reverse. Utilize a powerful and in depth industry expertise. Experience and
a
rules engine that models business processes expertise in dealing with mandatory live pricing
within a rigorous optimization analysis. These on the forward side provides great insight, best
rules can incorporate eligibility and aggregation practices and proven solutions that are ready for
constraints, as well as expected pay-ups, to market now. Don’t risk working with a reverse
achieve optimal loan slotting. Utilize a variety
of loan delivery vehicles— security and cash,
s vendor that is learning the ropes along with you,
your business is too important to take that type
specified pools, etc. reverse of risk.
Data Driven Workflow Automation: Having

lenders The move to mandatory live pricing clearly
one centralized location for maintaining transition illustrates that the reverse mortgage industry is
rules, security, products, and workflow are
key to workflow automation. This eliminates
to transitioning to the secondary market-pricing
model that currently exists on the forward
problems of synchronizing multiple systems, mandatory side. This includes the ability to effectively:
thus reducing the time required to add
products, change processes, and adapt to the
live pricing, price, lock, commit, deliver, and track all of this
secondary market activity for reverse lenders.
competitive landscape. It also provides the there are This presents opportunities to deliver more
ability to quickly and easily access data required
by your customers. The solution should offer
technology competitive pricing and increased margins,
but it also significantly increases risk and loss
sophisticated data driven workflow automation solutions severity when commitments are not tracked and
(powered by a robust Rules Engine) including
auto-resolution capabilities that greatly improve
and delivered correctly.
efficiencies, mitigate the need for additional solution Traditional thinking and looking to familiar
training and deliver a significant increase in
employee productivity and customer service.
providers sources (current reverse vendors) that focus
solely on the reverse business is not the answer
that could when trying to deal with this dramatic change in
Pipeline Management Tools: Being able to
view your pipeline in real time to determine
save your how reverse mortgages are priced. Enterprise
Lending Solutions that deliver both forward and
your current market position, tracking business reverse automation for commitment tracking
your commitment period and amount of and delivery, backed by experts who have been
commitments is vital. Effective pipeline producing mandatory live pricing solutions to
management tools also allow for fall-out tracking lenders nationwide for many years, is the most
to ensure that commitments are properly met. prudent direction to go.
Managing your pipeline to avoid unnecessary
fees and or additional steps such as pair-offs, As reverse lenders transition to mandatory live
over-delivery and commitment extensions is pricing, there are technology solutions and
critical to the future success of reverse lenders. solution providers that could save your business.
The time for reverse lenders to embrace
Advanced Electronic Document Management Enterprise Lending Solutions that handle both
& Imaging: Look for a solution that can capture forward and reverse mortgages is now. Your
any document from anywhere, utilizes Optical business simply cannot afford to not handle
Character Recognition (OCR), efficiently indexes mandatory live pricing correctly.
and stores documents, automates events,
actions and data analysis, retrieves specific
documents for specific tasks and views and
March 2009 31
Here is your own
4 Day marketing
plan Getting back
to the Basics
Sam Collins
Technology is great. As a matter of fact I think you need to embrace it fully, if
not your future success may be endangered. However, before venturing into the
realm of the unknown, you should consider revisiting the known.
Yes, we all need to be and become better at the basics.
Fundamentally, the basics of a good sound marketing plan and strategy are the
same and will never change. However, being known that all things are equal, few
of us really follow and stick to a basic marketing plan. We’re still early into the
year, so it’s not too late to get on track with the basics.
Considering the current state of the economy we need to - Have you established a marketing budget based on your
consider maximizing every dollar we spend. Once we’ve actual expenses that calculate your true senior prospect
spent those dollars we need to insure our marketing acquisition costs? In other words, do you know your true
investment pays off. lead costs and what it takes to give you the touches you need
to be successful?
Simply stated, “What you choose to attract, you will.” This
is where many problems for reverse mortgage loan officers - Have you reviewed closed loans to uncover senior
begin; they don’t plan specifically how they want to attract marketing data that improves the quality of your mortgage
senior prospects. So instead of enjoying the benefits of marketing messages?
great senior client relationships, reverse mortgage marketers
can get headaches and frustrations due to a lack of success - Profile the ideal senior prospect based on demographics,
and poor lead generation. values and behaviors, this approach will reveal what works
best in your market. Once this is determined, you will have a
Planning is the foundation from which you should build your better handle on your senior profile and how best to craft a
senior reverse mortgage marketing approach. The planning message to them.
process helps you yield decisions on how to best compete. If
you take the time to properly plan you can avoid many of the If you don’t have the proper planning tools in place, you’re
common mistakes loan officers make in creating an overall like a ship’s captain in the middle of the ocean with no GPS.
marketing strategy. You don’t know where you’re going, you have no idea where
you are when you arrive, and upon returning, don’t know
Here are some of the important questions you want to ask: where you’ve been.
Do you have specific planning tools, which are designed, and Do you have a system that works and creates results? Today
monitor to: an automated system is essential for you to develop your
strategy. It can also help you stand out from the competition
- Estimate the daily number of originations needed to and get you noticed by your senior clients, otherwise you’re
achieve your financial goals? invisible to them. You want an approach that establishes
familiarity and fosters trust, which are the building blocks for
- Estimate the number of senior relationships needed to attracting seniors to your business.
reach your daily origination goal? In other words, how many
senior prospects do you need to speak with on a monthly Are you properly positioned to get all you can from your
basis to yield the results you want? investment, which includes both your time and money?
A position is a place in your senior’s mind. You want to You bet, my photos are professional looking, clear, and
use positioning as a communication tool to reach targeted unmistakably first class.
seniors in an information-overloaded market space.
Our informational brochure was designed by a graphics
By narrowing your focus, you can build a position as a design professional and printed by a professional print
specialist in your senior’s mind. This specialization will house, customized with our personal, and company contact
increase the chances of your message cutting through the information. You also have complete control over how your
communications jungle. image is perceived, what it communicates and how it can
even influence the outcome in your seniors mind. Do you
Instead of competing with every competitor in your have a professional presentation folder? Do you have a
town, you’re creating a niche specialty in which you can professional company logo design? If not, these resources
become recognized as the senior reverse mortgage expert. are easily accessible and available in your marketing area.
Once you’ve achieved expert status, you will have other
professionals seeking you out. Rolling Forward for the remainder of the year…
When Alice (Alice in Wonderland) asks the Cheshire cat Why not start off by keeping a record of what you do
which path to take, he responds, “If you don’t care where daily and how your marketing is completed in a proper
you’re going, it doesn’t make a difference which path you Sequence?
take.” This is quite a profound statement.
What is a sequence?
If you don’t invest resources, like time, energy and money,
into enhancing your position, then you’ll be perceived as In the context of senior marketing, “Sequence” is one of the
coming from a multi-headed creature - speaking from many most important parts of your marketing and the one many
mouths, saying nothing and going absolutely nowhere. Of originators fail to do when connecting the dots.
course this is what you don’t want to do.
Your marketing sequences move your senior client from one
Now is the time to beef up your investment. Why? Because stage of the origination process to the next stage. These
when times get tough, the first thing most marketers do is stages are done in a logical and predictive manner. You
cut their marketing budgets. need to think logically how your senior client subconsciously
perceives these sequences from their perspectives and write
This week please do the following: make sure you collect them down in the proper order.
all of the mail delivered to your home. Compare your mail
delivery for the next 4 weeks. Next, count the pieces you Your goal in marketing sequences is to get the senior
receive from week to week. I would almost wager you will client moving forward by providing information in an
see the direct mail deliveries decline over a 4 week test. understandable and educational manner to move them
What does this mean to you? Opportunity! Yes, now the toward expressing an interest in speaking with you about a
mail is less cluttered and your piece has a chance to get reverse mortgage. However, this is easier said than done,
opened. since our timing and our senior client’s timing are often on
different schedules.
Have you developed and practiced your professional
presentation? Without sequences, many originators ‘Give Up” too soon.
Giving up too soon allows competitors to take your business.
Often, it’s the marketing materials you give to your Remember, once you capture a potential senior prospect,
senior prospects that give them a first impression of you. your cost has already been incurred. Using sequence
Perceptions are formed beginning with the quality of your marketing will produce the most results and yield you the
marketing materials that promote your services. Packaging of highest income and profits over the longest period of time.
your marketing materials is your opportunity to build a brand
identity with your senior that they’ll trust. Finally, here is the simplest way to get started. Start from
the beginning. Do one thing at time, but do something. We
If you’re out of sight, you’re out of mind. Most of us are all have great ideas and the best intentions, but most of us
visually attracted. Remember the phrase, “Never judge a never follow through with them.
book by its cover.” In the real world, I’m sure you’ve figured
out that your cover is always judged with lightning speed. Make a note on your calendar to start your 4 day marketing
For example, I spent 2 hours with a photographer who did plan today and get back to the basics. Good Luck!
a photo of me, costing $250. Was it worth the money?
March 2009 33
In our last segment outlining a successful reverse mortgage uation so you can best structure a loan to meet their needs.
training program for your company, we reviewed important
points such as setting the proper tone for training, creat- Be extremely attentive to each borrower. A good loan officer
ing enthusiasm and giving loan officers a sense of where is truly interested in their clients and will use active listen-
they stand by providing historical perspective, marketplace ing to encourage borrowers to speak about themselves. It is
insight, and information about the senior demographic. the listening, not the talking that is important. Many reverse
loan officers will use a pre-qualifying sheet to gather initial
Since the reverse mortgage is an educational sale, product information during an interview. Train your loan
knowledge is very important. The best reverse mortgage officers to use this tool as a prompt to help borrowers be
training will combine sales technique with product forthcoming with information. This provides for a deep
knowledge. The technique should be developed, refined and understanding as to what is meaningful to the client. While
reinforced throughout the training by role playing, modeling pre-qualification sheets often ask information about the
and reiteration. The goal is to have the technique become home, mortgage and borrower, make sure your loan officers
second nature to the loan officers. know how to ask open ended questions and listen strategi-
cally. Remind them that we need to help borrowers clarify
Our goal should be to cultivate a customer for life. Satisfied their situations.
customers are the most significant source of referrals. In
this fashion, one excellent loan transaction can bring about If a client is responding to your ad, it’s because they have a
many others. This will only happen if our client perceives hope that the reverse mortgage may meet a need they have.
real value in having dealt with us. Remember, we are In fact, it may meet many needs. Use simple conversation
already paid and expected to do a good job. Where all the openers such as: “In a perfect world, what would you hope
rest comes in is when we are perceived to do an excellent this would accomplish for you?” Another question could
job, above and beyond and well worthy of praise. Building be: “What is it that most interests you about this product?”
perceived value should always be a consideration in our sales Make sure to elaborate and take notes. It is these details
process. We should never miss an opportunity to do so. Nei- that will later allow you to structure the reverse mortgage in
ther should we miss an opportunity to set the expectation a way that uniquely addresses their situation.
for referrals. The way your client can best express their
appreciation for a job well done is to speak glowingly of you! An important point to remember here is that consumers
don’t want to be manipulated and often avoid making a
A basic fact of sales psychology is that the borrower is pri- phone call for that very reason. When you have the op-
marily concerned with meeting their own needs and satisfy- portunity to speak to someone brave enough to call and get
ing their own desires. Our sales process is all about com- information on what might be valuable to them, avoid imme-
municating to the borrower in a way that is meaningful. It diately trying to sell them a bill of goods. Be polite and re-
should speak directly to them about their wants and needs. spectfully answer their questions even if sometimes it is with
They should hear loud and clear that the reverse mortgage a question of your own! You are here to help them learn
could provide a meaningful solution for them in their unique about the opportunity that exists with the reverse mortgage
situation. product and make their own decisions about whether or not
it is right for them. This can’t be accomplished without a
For a full appreciation of this, discuss with your students complete understanding of the borrower’s situation and you
exactly what should be happening during an initial sales call. need to get that far.
The first part of your sale is a fact finding mission! You want
to not only obtain the simple qualifying information about Avoid making any kind of promises even if you know a cli-
the borrower but also understand the borrower’s unique sit- ent is well qualified. Initially speak only in general terms
Creating a World Class

Reverse Mortgage
Training Program
PART TWO
Jacqueline Del Priore

about the product, for example, you may want to say: “A reverse
mortgage could provide lifetime payments for qualified buyers. A
reverse mortgage will satisfy the current mortgage, eliminating
that payment. Because the reverse mortgage does not require a
payment, the borrower will not have to make a payment for as
long as they live in the home.” Let the borrower imagine how this
might be of value to them and let them be engaged with you to
see if this could possibly happen for them. If you disclose the bor-
rower’s benefit upfront, they will have no reason to speak further
with you and will go off on their own to contemplate the value in
the information without your assistance. You will have done a dis-
service both to yourself and the customer!
THE INDUSTRY STANDARD SINCE 1995

The reverse mortgage can sound too good to be true creating, an
underlying need to be cautious. It is sometimes good to introduce
a negative point, such as; “The HECM isn’t well suited for
everyone. My job is to help you determine if and how it can best
work for you.” The Industry Standard is not just a slogan.
Six of the top 10 reverse mortgage originators
It is almost always beneficial to pause between the information use Ibis Software for their websites, retail
gathering part of the sales process and the benefit presentation. and wholesale businesses.
This pause will help to create value in the service you are
providing. After having an initial meeting or phone call with a bor- Those lenders are using:
rower, thank them and promise to get back to them after making a
careful analysis of their situation. At times, this suggestion will be
met with resistance. Explain why time is needed and the impor- Ibis RMO:
tance of being thorough in not overlooking a benefit to them. This Loan origination modules include CRM,
could mean calling them back in an hour, or meeting them later in Quick Quote, Proposal, Application,
their home. It activates the powerful rule of reciprocity. If a Underwriting, Documents, Closing, Pipeline
borrower feels you are working on their behalf, they are more
likely to work with you. It also helps to create anticipation and Reports, and Cost Templates. Plus Broker
excitement about our product. In the information gathering stage and Correspondent Management. Full state
the borrower is defining what they need. In doing so, they create speciﬁc application and closing packages can
a mental wish list. When we create a pause, we afford them the be stored, printed, and emailed.
opportunity to experience what that wish list represents to them.
For example, in contemplating the possibility of receiving an extra Ibis Quick Quote:
$500 a month, they begin to taste the experience of what that
money could mean to them. They begin to dream about doing the Bilingual consumer calculators,
things they could be doing if they had that money. In a very real already in use at:
way, the pause is building a value proposition in dealing with you. • www.rmaarp.com •
• www.wellsrm.com •
In the interim, your work will include not only calculating their and many other websites
benefit, but structuring it in a way that best suits their needs. The
documents you create will illustrate this structure. More impor-
tantly, you will begin to structure your sales presentation by outlin- Ibis also provides:
ing all the benefits to the borrower that the loan provides and
what each benefit means to the borrower. Ibis RMA:
A complete counseling package for
While the sales presentation will hold the answers to the
borrower’s questions, a general explanation as to how the principal HUD-Approved reverse counselors.
loan limit is determined will have to do at first. For more information, visit
When we last left off in product training, your loan officers could
explain all components of the principal limit calculation. Explaining www.ReverseMortgageHomePage.com
the structure and function as it pertains specifically to the
borrower is best left to the second part of the sales process which Or call (800) 566-5077
is the actual presentation. Once the motivation for the sale has
been completely uncovered, and there is a benefit to the borrower
in proceeding with the mortgage, the transaction can move into
the sales presentation phase.
You will want your loan officers to understand how the available
principal loan limit is distributed. It is important to provide them
»
with an overview of how this is technically achieved. Break out
March 2009 35
your reverse software and illustrate how simply the principal into the habit of emphasizing this in every illustration. This
loan limit is calculated. While use of this tool is best taught often is lost in translation. The costs of the mortgage can
in workshops, a general overview will serve to remove any be financed, eliminating the need for the borrower to come
anxiety about this procedure upfront. Many of your older up with any money to facilitate the transaction. This is also
reverse mortgage loan officers are less adept with technol- often overlooked and needs to be underscored.
ogy. It will put their mind at ease to see how easily the
calculator can be navigated and how thoroughly it provides After paying off the mortgage and loan costs, the remaining
solutions. When I do the overview in training, I hear my stu- proceeds can be taken in a lump sum distribution available
dents breathe a deep sigh of relief. Their math phobia will once the rescission period has passed. Question your group
magically disappear. as to when this would be a good idea. They will begin to
identify scenarios where a lump sum distribution is a good
Your overview of the reverse mortgage calculator will rein- solution such as when all the money is needed for a specific
force the information needed to obtain a principal limit cal- purpose like buying a business or a vacation home. Point out
culation and identify documents that will later be discussed that the money begins accruing interest the day after it is
in detail with the client. These include the Loan Comparison disbursed. Show how the balance begins on the Loan
Form, the Good Faith Estimate and the Loan Amortization Amortization Schedule. There is nothing left for future
Schedule. This is where they can be viewed, edited and draws. Show how there is no credit line available.
printed. Don’t go into great detail. The message you want to
convey is that information can be obtained at the touch of a Lump sum distributions are not available until after the
button. rescission period. Be explicit about this so that borrowers do
not expect a check at closing and are not disappointed.
Here is where you will first introduce structuring the loan as
a solution to best meet the borrower’s needs. The calculator If the borrower has no immediate need for the remaining
is a valuable sales tool. We want our loan officers to be hung money, show how it is best placed in the credit line. Speak
up solutions rather than numbers. To do so, you must take about the benefits of this as the money will not be accruing
your overview to the next level which would be using your interest until used. Here is your opportunity to speak about
reverse software to illustrate the different options for princi- the credit line growth and the best way to illustrate this is by
pal limit distribution. As you do so, be sure to point out the going to the Amortization Schedule. Explain that the princi-
benefit to the borrower in each ‘solution’. Remember the pal limit which is available to the borrower is always growing
first benefit to the borrower is that the mortgage they cur- at the current interest rate plus a half. While this is best
rently have will be paid off with the proceeds of the reverse seen in the credit line structure on the Loan Amortization
mortgage. This will create cash flow equal to the amount of Schedule, it is present within all structures. While the credit
their current monthly principal and interest payment. Get line structure lets the growth be immediately available to the
borrower, the expected growth is what allows for payments
projected in other structures.
I’d like to caution anyone training the principal limit growth
aspect of the HECM to be certain to say that more credit
becomes available. This is not earned interest like money
in the bank. Loan officers will have a tendency to state
that the credit line earns interest which is misleading and
creates problems down the road. I can’t tell you how many
times I’ve heard, that borrowers upon satisfying their loans,
will call the servicing company looking for their earned
interest!
Another important point to drive home at this juncture is
that for an adjustable HECM, the Amortization Schedule is
showing the loan balance and credit line growth based on
the initial interest rate the day they are prepared. In
actuality, the interest rate will change monthly and
therefore the balance and credit line growth on the disclo-
sures are estimates.
It is very good for the loan officers to see how draws on the
credit line will reduce credit available and increase the loan
balance. Be sure to illustrate this in your overview. Discuss
scenarios where showing this to a client could be
beneficial.
Move through the different options, explaining if the
money is not taken, a tenure option is offered. Make sure
to reinforce all the benefits of the tenure option. Question
the group as to which scenarios are well suited to tenure
options. Show that if they don’t need as much, the tenure helps to close deals. It is a relief to the senior to know that a
option can be lessened, creating a credit line. Explain that decision made today doesn’t have to stay that way for the
rest of their lives, making the decision less weighty.
the addition of the credit line has created what is called a
modified tenure scenario. As part of a comprehensive training program, workshops
utilizing typical scenarios for each loan structure can be
What if the tenure options are not sufficient? Show how conducted ensuring that the loan officers have a good
the term option works. The calculator will let us propose knowledge of how to illustrate and explain different
a payment which is greater than tenure and calculate how distribution methods and when they are best utilized.
long it will allow us to receive this payment. Show this term Make sure your loan officers understand the mechanics of
scenario on the amortization schedule. how the borrower will actually receive or request future
draws or scheduled payments.
Create a term scenario that is dictated such as $1,000
monthly for three years. Let your example leave a The better the loan meets the needs of the borrower, the
remainder in the credit line. Explain that the calculator will more value is perceived in taking the loan. We have a better
let you propose an amount for a specific term and if there is chance of doing business by customizing our loans to exactly
a remainder, will create a credit line. The term together with suit the needs of our borrowers and explaining both verbally
the credit line is a ‘modified term scenario’. and in writing how the loan does so! Many agents in the
market place don’t take the time to even explain how the
Make sure to mention that a partial lump sum is an option money can be made available much less tailor the loan to
always available with all structures when the entire amount the client’s needs. Once structured, the loan can be further
is not taken. Finding something that the borrower can do refined during the presentation should new information
right away with a partial lump sum can create enthusiasm to arise.
close quickly!
In demonstrating the Loan Amortization Schedule, there will
In your grand list of HECM benefits, don’t forget to list inevitably be a discussion of home appreciation as this is
payment flexibility as one of the unique and important ones. prevalent in each instance. Explain that the 4% appreciation
Just as our lives and needs can change in the future, the is an example used and the home appreciation may be more
HECM has the ability to change with us. The way the unused or less. A very important, highly misunderstood component
principal limit is distributed can be changed at will by of the home equity conversion mortgage is that unused
contacting the servicing agent. Be sure to mention the small principal loan limit is guaranteed to be available to the
fee that is charged. This is a simple yet important fact and
»
March 2009 37
borrower whether or not appreciation actually takes place. benefit of the loan before possibly becoming immersed in a
Along with interest charges, the monthly service fees and conversation about individual closing costs.
mortgage insurance premiums are part of the unpaid Another line item for discussion on the Loan Comparison
principal balance as illustrated on the same schedule. Form is the servicing fee set aside. This is often
Here is a good opportunity to discuss each. misconstrued as an actual cost to the borrower. It is really
important that this is properly explained to the sales staff.
The monthly service fee is not unique to the reverse The servicing fee set aside simply reduces the credit available
mortgage. What is unique is that it is separately disclosed. to the borrower. It is a precaution for the lender to preserve
In the forward mortgage world, it would simply be combined additional equity in the home, to provide for the loan
in the interest rate. Explain that our fee is regulated and balance and to include servicing fees charged monthly
limited by the federal government and has a legitimate throughout the life of the loan. Be sure all your loan officers
purpose. While all HECM participants will initially be charged are able to answer questions regarding the servicing fee set
2% of the maximum claim amount for their mortgage aside.
insurance, the monthly expense will be commensurate with
what they actually use. The half percent is assessed only Some loan officers will use these documents as tools for
to the unpaid principal balance each month. Here is where discussion, others will just discuss. The bottom line is that
we can remind the borrower that this is an important cost the loan officer should be taking each fact about the loan
because it provides the important and unique non-recourse and matching it to how it directly meets that borrower’s
feature, insuring their payments, protecting other assets need during an effective sales presentation.
and assuring that neither they nor their heirs will ever owe
more than the appraised value at the time of repayment (the Encourage loan officers to uncover every aspect of the loan
balance will need to be paid in full if the property is to be and to paint a vivid, descriptive picture of how it will benefit
retained). the borrower. Leave no benefit undiscovered and sell that
loan in a way that truly speaks to them.
Gross closing costs should be disclosed and discussed. These
will be evident on both the Comparison Form and the Amor- At this point, the borrower will be asking where to sign! This
tization Schedule. It’s not necessary to go through a good will be the subject of our next discussion.
faith estimate until application. You can set the stage for the
application by assuring them that they will later be provided Available in our February issue, Part one of this article
with a detailed list of all fees and have the opportunity to outlines an introduction to creating a world class reverse
discuss each one when you discuss the loan disclosures with mortgage training program. This segment is available at
them. You will want your customers to fully digest the www.reversereview.com.
“Atare Agbamu is one of only a handful of people in the reverse mortgage arena who possesses a com-
manding understanding of the reverse mortgage industry. As an originator, he has hands-on experience ed-
ucating seniors and their advisors. As author of the “Forward on Reverse” column in The Mortgage Press
since 2002, Atare Agbamu communicates nationally with the housing finance community, bringing the
unique insights and experience of an ardent reverse mortgage expert into a wider business context.
“This book combines Atare’s keen insights and know-how with extensive research to create a first of its kind re-
source for the reverse mortgage industry. It offers a comprehensive overview of the industry plus detailed information
on marketing and originating reverse mortgages.
“Present and future reverse mortgage professionals and senior advisors will profit from decades of experience skill-
fully woven into this book. If you plan to succeed in this industry, this book is the place to start.”
Only
49.95
—Sarah F. Hulbert, President, Senior Financial Corporation and former four-term Co-Chair of NRMLA’s Board of Directors
$ Think Reverse! Table of Contents
Part I: Part II: Part III: Part IV: Part V:
Plus Postage The new pillar of Marketing reverse mortgages: Originating reverse Enhancing freedom: The A new frontier in mortgage
& Handling retirement security It’s all about education mortgages essence of reverse mortgages lending
ask the servicer
This column is a new addition to The Reverse Review, so
allow me to tell you a little bit about who I am. I currently
serve as Executive Vice President of the Reverse Mortgage
Servicing Department at Celink. I’ve worked at Celink for Ryan LaRose
more than 10 years alongside my father, John LaRose, a great
role model and mentor in business and in life. I’m a Certified
Senior Advisor, an active member of the National Reverse I have been a regular reader of The Reverse Review, and
Mortgage Lender’s Association (NRMLA) and currently serve have always enjoyed Ralph Rosynek’s ‘Ask the Underwriter’
on the NRMLA Servicing and Technology Committees. Okay, column. Every month he tackles the routine and the not-
enough about me. Here’s the thinking behind the need for so-routine questions that surround the important activities
this column. in loan origination. This column follows that same model.
As a servicer of the reverse mortgage product, I have
While daily servicing activities can be challenging and regularly received telephone calls and e-mails from lenders
frustrating, it is also incredibly rewarding to be a vital part with various questions about servicing. Questions around
of an industry that has helped so many people retain the the servicing function will range from standard questions
integrity of their homes, solve financial dilemmas, and age (When do borrowers receive their first payment?) to those
gracefully in the place of their choice. The goal of this that arise on a case-by-case basis (What happens when the
monthly column is to provide lenders with insight into the borrowers permanently move from their home?). This ‘Ask
servicing aspect of the reverse mortgage product. The most the Servicer’ column is being created to “lend” you a hand.
important outcome for this column is to provide you with (That might be my last attempt at humor.)
assurance and trust that your borrowers are well taken care
of, long after the loan is closed. Knowledge of the servicing Every conscientious person in the reverse mortgage industry
function is indispensable for anyone originating reverse knows that this product and its borrowers are very “high
mortgage loans. If each lender is able to communicate touch”. On the origination side of the business, we know
effectively on servicing-related issues before the loan is about the extremely long sales cycle of this product. We
closed, their borrowers are more likely to be satisfied with regularly hear about the extraordinary lengths that lenders
their overall reverse mortgage experience. have gone to ensure that their borrowers are treated
professionally. I once heard of a lender who halted a closing
For several years, I have had the pleasure of participating for several hours to drive their senior customer to the
as a panelist at several industry conference sessions grocery store to pick up a few last minute items she forgot
addressing the important topic: “What Happens after the for a dinner party! Once these items were purchased, they
Loan Closes?” Each panelist is charged with preparing drove back to the closing and he assisted her in finishing the
and discussing specific servicing topics, and we are always paperwork.
reminded to “talk fast!” Every session consists of this topic
presentation followed by an open question and answer I want you to know about how the servicing community
period. We strive to leave ample time at the conclusion of continues these same extraordinary efforts with your
our presentations to field as many questions as possible borrowers, long after each loan is closed. There is a delicate
from audience members. It seems that at every session, balance between developing and enhancing sophisticated
no matter how rapidly we conclude our presentations, we “high tech” back-end operations with maintaining “high
find that there never seems to be enough time to answer touch” efforts, defined as picking up each phone call and
the multitude of questions coming from the lenders in the actively listening to and addressing the borrower’s questions
room. Since we can’t talk any faster, and questions are going or concerns. That balance is what we, as servicers, strive to
unanswered, this column affords the opportunity for the achieve for the benefit of the borrower.
regular, free-flow of information between the servicing and
lending communities. It’s very likely there are questions and I truly love servicing the reverse mortgage product for
concerns that can’t and shouldn’t wait to be addressed until both our clients and their borrowers, and I love answering
the next conference. questions about the servicing functions. As used here,
“love” isn’t too strong a word. The best career comes from
finding what you love to do, and then finding someone to
pay you to do it. In that regard, I am very fortunate.
I started out by telling you about me, but this column is not
about me. It’s about answering YOUR questions regarding
what servicers do with your loans and your borrowers, after
the closing has taken place. Please tell me what you are
interested in learning more about, and I will do my best to
respond to each and every question.
Please remember: there is no such thing as a stupid
question! No doubt, the question you ask will have been
in the minds of other readers as well. I look forward to
receiving your inquiries at: ryan@celink.com. If you wish to
remain anonymous for my response, just let me know.
March 2009 39
A Whole New “HECM” World
How Interest Rate Volatility Can
Impact Your Magic Carpet Ride
Weiner Brodsky Sidman Kider, pc
As reverse mortgage industry participants already principal limit (or the initial loan amount) on a HECM
know, 2009 has brought greater pricing volatility as the loan. As explained in Mortgagee Letter 2003-16,
secondary market has contracted and responded to the so-called principal limit “lock” is intended, during
dramatic changes in world financial markets. The good a rising interest rate environment, to protect the
news is that the industry’s traditional investor, Fannie borrower from erosion in the principal limit between
Mae, continues to support the cornerstone product application and closing of the loan. Although this is
of the industry, the Federal Housing Administration clearly a praiseworthy goal, in a volatile secondary
insured Home Equity Conversion Mortgage (“HECM”). market, where prices can change daily and, in fact, are
However, unlike days of yore, and prior to the short- changing at a pace not previously experienced in the
lived surge of secondary market investors, when Fannie industry, it is important that lenders and originators
Mae was the sole industry investor and investor pricing manage the risks associated with the operation of the
rarely changed, lenders and originators must now principal limit lock and provide appropriate disclosures
cope with Fannie Mae’s “live” daily pricing. Effective to the consumer.
November 3, 2008, Fannie Mae eliminated 60-day
forward negotiated (or “static”) pricing for HECM loans Principal Limit 101
in favor of automated (or “live”) pricing. Under the To fully understand these issues, it is helpful to take a
“live pricing” process, lenders obtain a price for a HECM step back and review the basics on how the principal
loan for the current business day, with commitment limit lock works. There are three components under
periods ranging from as few as two to as many as 90 the HECM program that are used in an algorithm to
days. In addition, lenders and originators must cope determine the initial principal limit. As pointed out
with the availability of new HECM products, including above, the expected interest rate is one of those
multiple fixed interest rate HECMs and adjustable components, the others are (i) the age of the youngest
interest rate HECMs offering different margins. From borrower and (ii) the appraised property value, or FHA
a macro perspective, these developments reflect the limit, whichever is lower (known as the “maximum
maturation of market forces that ultimately drive claim amount”). To clarify, the “expected rate” is not
innovation and offer seniors more options that better the contract interest rate that lenders use to calculate
suit their needs. From a micro perspective, they finance charges that accrue during the term of the
pose challenges to our industry members that create loan (although, as discussed below, on a fixed interest
operational hurdles and reputational risk for the reverse rate HECM the expected rate and the contract rate
mortgage industry as a whole. must be the same). Instead, it should be thought
of conceptually as a projection of what the average
With that broad view in mind, this article will focus interest rate will be over the life of the loan.
on one of the legal and regulatory issues raised by
our new, more “volatile,” pricing landscape. Namely, For adjustable rate HECM loans, the expected interest
the operation and disclosure of the so-called HECM rate is equal to an index plus a margin. The index
principal limit lock. used to calculate the expected interest rate is based
on a longer term Treasury or LIBOR based rate, while
HECM Principal Limit Lock the contract interest rate is based on a shorter term
HUD initially announced the operation of a principal Treasury or LIBOR based rate. For example, as directed
limit lock for HECM loans on September 24, 2003, in by HUD in Mortgagee Letter 2007-13, lenders offering
Mortgagee Letter 2003-16. In a nutshell, operation of adjustable rate HECMs utilizing a 1-year or a 1-Month
the principal limit lock, as announced by HUD, simply CMT index to calculate the contract interest rate must
sets the expected interest rate used to determine the use the 10-year CMT index as the corresponding index
for calculating the expected interest rate. Lenders as originally provided in Mortgagee Letter 2003-16. In
offering adjustable rate HECMs utilizing a 1-year or a addition, seniors are afforded a “float-down” feature.
1-Month LIBOR index to calculate the contract interest This simply means that if the expected interest rate
rate must use the 10-year LIBOR swap index as the at closing is lower than the expected interest rate
corresponding index for calculating the expected at application, the senior will generally be provided
interest rate. Finally, if a HECM is offered as a fixed the lower expected interest and correspondingly an
interest rate, HUD has mandated in Mortgagee Letter increased principal limit. HUD stated in Mortgagee
2008-08 that the expected rate must be the same as Letter 2006-22 that lenders may not charge a fee for the
the fixed contract interest rate. principal limit lock nor the float-down feature. Finally,
HUD reiterated in Mortgagee Letter 2008-08 that while
Because these three components factored together lenders may extend operation of the principal limit lock
generate the principal limit, it is clear that a change in on fixed-rate HECMs, offering a true lock of the contract
any one of the three will impact the principal limit at rate and corresponding expected interest rate, they
closing. As you might suspect, there is a directional may not charge the consumer a fee for this feature.
relationship between each of these factors and the
resulting principal limit. As the age of the borrower Although there is currently no requirement under
goes down, generally the principal limit will also the HECM regulations, HUD’s HECM Handbook or any
decrease since the borrower’s life expectancy is longer Mortgagee Letter requiring a disclosure in any particular
and negative amortization accruing under the loan is form, or at all, as a matter of industry practice, most
expected to be greater. As the value of the property originators and lenders provide a disclosure to the
increases, generally the principal limit will increase applicant describing how the expected interest rate is
since the value of the collateral that ultimately must set (or “locked”) in determining the initial principal limit
retire the loan is greater (subject to the FHA limit). of their HECM loan. Whether or not such a disclosure
Finally, as the expected interest rate goes up, the is provided to the consumer, the setting of the expected
principal limit will generally decrease since the amount interest rate must be consistent with Mortgagee Letters
of negative amortization anticipated over the life of the
loan is projected to be higher. »
Monte Rose
Given the foregoing, and putting aside changes in the
underlying index or even any change in the offered
margin or fixed interest rate, if the appraised value of
the property is less than projected by the borrower
in his/her application (which is not an uncommon
serves up sales productivity
occurrence during a period of declining real estate
values), the principal limit available to the borrower at the kitchen table
at closing will be less than projected at application.
Additionally, although the age of the borrower should Order your copy now at
be readily ascertainable, if the youngest borrower www.monterose.com
celebrates a birthday between application and
closing, the principal limit at closing will be different
than was initially projected at application. Each of
these instances highlight the fallacy of using the term
principal limit “lock” when describing the process of
setting the borrower’s expected interest rate, since
the projected principal limit provided to the applicant
is never truly “locked.” Accordingly, the principal limit
“lock” can be more accurately described as principal
limit “protection” that lenders offer to HECM borrowers
by setting the expected interest rate at the time of
application.
As set forth in Mortgagee Letters 2006-22 and 2007-

13, HUD provided further clarification and extended
operation of the setting of the expected interest rate.
HUD explained that the expected interest rate set at
application may extend for up to 120 days from the
FHA loan case number assignment, rather than 60 days
March 2009 41
2003-16, 2006-22 and 2007-13, and therefore the 120- the consumer understand that the so-called principal
day expected interest rate protection and “float down” limit “lock” is not a commitment to make a reverse
features apply whether or not an initial principal limit mortgage at any particular fixed interest rate, adjustable
“lock” disclosure is provided. rate margin or at all. In addition, if used, the principal
limit disclosure should clarify that the expected interest
Principal Limit & Interest Rate Volatility rate used to set the initial principal limit is protected
Now that we understand the mechanics behind the for 120-days solely in connection with the particular
calculation of a principal limit in the HECM world and adjustable rate margin or fixed interest rate HECM
how it is initially established, let’s turn now to how product for which the consumer applied. If that
setting of the expected interest rate used to determine particular fixed interest rate or adjustable rate margin
the initial principal limit in a volatile interest rate product is no longer available, or if the consumer elects
environment might cause confusion for consumers and to change to a different HECM product notwithstanding
potentially expose originators and lenders to legal and the continuing availability of the product initially
regulatory risk. applied for, the lender’s disclosure should clearly inform
the consumer that the disclosed expected interest
As originators and lenders are aware, current volatility rate, and projected principal limit, will no longer apply.
in the reverse mortgage secondary market has Without clear disclosures, seniors might understandably
made continuing availability of any particular HECM be confused when their originator or lender advises
adjustable rate margin, or fixed interest rate, over a them that they cannot obtain the initial principal limit
period of 120 days problematic. During this interval, they expected.
unless a lender receives a purchase commitment from This raises the question of what lenders should be doing
its investor, there is a chance that the investor may in these circumstances. Focusing on a scenario in which
not even be willing to purchase a HECM with the same the senior changes his or her loan program selection,
margin or fixed interest rate as the lender disclosed to as discussed above, and assuming no commitment has
the consumer, or if willing to do so, may only be willing been made by the lender to the consumer to make a
to do so at a reduced price. For this reason, if a lender HECM with a particular fixed interest rate, adjustable
provides a principal limit disclosure, it is important that rate margin, or initial principal limit, the expected rate
and initial principal limit provided to the consumer in
connection with this change (occurring within the 120-
day period from the initial application) is governed by
Mortgagee Letter 2007-13. There, HUD provides the
industry with very specific guidance stating:
“If the borrower chooses or is offered an index and/

or margin different from that chosen or offered
at application, the Expected Interest Rate used to
calculate the Principal Limit shall be the new margin
chosen or offered, plus the index as applicable, as of
the application date or the date of closing, whichever
is lower.”
This, among other things, means that if the index used

at loan application is based on the Treasury rate, and
the borrower later changes to a LIBOR index based
loan, the lender must use the applicable LIBOR index to
calculate the expected interest rate and set the initial
principal limit. If the index at loan application is based
on the LIBOR rate and the borrower later changes to
a Treasury index based loan, the lender must use the
applicable Treasury Index to calculate the expected
interest rate and set the initial principal limit.
In addition, in cases involving a product change,

originators and lenders should consider providing the
consumer a new principal limit disclosure (if such a
disclosure was provided initially), re-disclosing the
projected initial principal limit for the new product
and the remaining period of expected interest rate
protection (calculated based on the original application
date). In such instances, lenders also should consider Strategically
providing an updated TALC disclosure, a new HECM
comparison worksheet and a new amortization
disclosure.
thinking...
NRMLA Best Practice
In recognition of the impact a volatile interest rate
environment may have on operation of the so-called
principal limit lock, the National Reverse Mortgage
Lenders Association (NRMLA), through its Compliance
Committee, published on February 5, 2009, an
industry Best Practice entitled HECM Principal Limit
Lock and Disclosure. That document acknowledges
the complexity and the risk of managing any principal
limit lock commitment made to a senior. The NRMLA
Best Practice further emphasizes the need for sound
disclosures, and provides model language for use
in either a HECM Principal Limit Lock Disclosure,
or other disclosures. In addition, NRMLA strongly
recommends that its members consult with their
counsel on appropriate and required disclosure policy
and documentation of their HECM product offerings
and hedging strategies. The NRMLA Best Practice
Compliance Committee memo is published in the
password protected NRMLA Members-only section of
NRMLA’s website, at www.nrmlaonline.org, and NRMLA
Members are urged to review it in its entirety for the
additional guidance it provides to NRMLA Members
in this challenging area, including its suggested model Strategically thinking
disclosure language.
companies
As we’ve seen, interest rate volatility can add a little
turbulence to the magic carpet ride, but employing a rely on ReverseVision
few safeguards as we’ve discussed, starting with good
disclosures and re-disclosures when changes occur,
can keep you firmly in your seat as you navigate the Freedom of Action
wonders of a whole new “HECM” world. ReverseVision is supported by more
Due to the generality of this article, the information reverse mortgage lenders than any
provided herein may not be applicable in all situations other software, giving customers
and should not be acted upon without specific legal maximum freedom of action.
advised based on particular situations.
By Joel Schiffman and Fed Kamensky, of the law firm Independence

of Weiner Brodsky Sidman Kider, P.C. The law firm As an independent technology company
serves as General Counsel to the National Reverse ReverseVision gives its customers the
Mortgage Lenders Association and advisor to reverse highest flexibility and independence to
mortgage lenders and industry participants throughout
the nation. The firm has offices in Washington, D.C., grow their business.
Newport Beach and Dallas. Additional information
can be found at www.wbsk.com or by telephone at
202.628.2000. Messrs. Schiffman and Kamensky can be ReverseVision Inc.
reached at schiffman@wbsk.com and kamensky@wbsk. 3310 Pollock Place • Raleigh, NC 27607
com. www.reversevision.com
(919) 834 0070 • info@reversevision.com
March 2009 43
Press Release NEWS RELEASE
Contact: Edgar Urrutia
714. 250.4158
First American Title Insurance Company Introduces Trusted Reverse Transaction Division
—New Division Provides Title, Signing and Settlement Solutions for Reverse Mortgage Lenders—

February 5, 2009, SANTA ANA, Calif.

First American Title Insurance Company, the largest subsidiary of The First American Corporation (NYSE: FAF) family of companies, today
announced the launch of a new division designed to address the title, signing and settlement service needs of reverse mortgage lenders.
The Trusted Reverse Transactions division specializes exclusively in closing reverse mortgage loans, providing a single point of contact for
nationwide coverage.
Reverse mortgage loans allow qualified homeowners who are 62 years or older to benefit from the equity in their homes by borrowing
against that equity. The reverse mortgage industry has experienced a continual upward trend in volume since 2001. The settlement
for reverse mortgage loans is often complicated because it may involve working with powers of attorney, probates and living trusts.
The Trusted Reverse Transactions division’s highly skilled staff members understand all the nuances of reverse mortgages and deliver
streamlined products and services with simplified pricing.
Carin Bucklin will lead the growth and development of the Trusted Reverse Transactions division in her role as the division’s new director.
With more than 15 years of reverse mortgage experience, Bucklin has spoken at annual conferences for the National Reverse Mortgage
Lenders Association (NRMLA) and its Learn While-U-Lunch program. Bucklin also has hands-on experience with closing thousands of
reverse mortgage transactions.
Toni Rossetta has joined First American as the division’s operations manager to oversee the daily activities and performance of the
Trusted Reverse Transactions division. Rossetta has been in the title and escrow industry for 27 years, specializing in reverse mortgage for
the last seven years.
“Reverse mortgage lenders have been asking for a dedicated, one-stop title and closing solution and we are proud to be meeting their
needs,” said Patrick E. McLaughlin, president of Lenders Advantage®. “Our team brings a highly developed skill set to this important and
specialized segment of the mortgage industry. Combined with advanced technology, streamlined products and the financial strength
of First American, we believe the Trusted Reverse Transactions division fulfills a vital need among reverse mortgage lenders and their
customers.”
The Trusted Reverse Transactions division provides nationwide coverage through its California office; coordinating its services with local
First American branches, where required, to provide a seamless solution to national reverse mortgage lenders. In addition to offering a
streamlined title insurance product that meets the requirements of a government-insured Home Equity Conversion Mortgage (HECM),
the Trusted Reverse Transactions division provides homeowners with convenient signing options, including a fully screened mobile notary
for home-based signings or online signing through its secure WebSigning platform.
About First American Title Insurance Company

First American Title Insurance Company, the largest subsidiary of The First American Corporation (NYSE: FAF), traces its history to 1889.
One of the largest title insurers in the nation, the company offers title services through its direct operations and an extensive network
of agents throughout the United States and abroad. The company has its headquarters in Santa Ana, Calif. Information about The First
American Corporation’s subsidiaries and an archive of its press releases can be found on the Internet at www.firstam.com.
directory Operationally
thinking...
st 800.516.0545
monterose.biz
everse
FINANCIAL SERVICES, LLC
A SUBSIDIARY OF WILMINGTON SAVINGS FUND SOCIETY, FSB
A Subsidiary of Wilmington
Savings Fund Society, FSB
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metlifewholesalereversemortgage.com
March 2009 45
the last word
“It was the best of times; It was the worst of times…” - David J. Cesario
“It was the best of times, it was the worst of times; it was the age of normalcy in the future and this should increase revenues.
wisdom, it was the age of foolishness; it was the epoch of belief, it • Depreciating housing values give reverse mortgage borrowers
was the epoch of incredulity; it was the season of Light, it was the a reason to act now, instead of waiting. When a borrower can
season of Darkness; it was the spring of hope, it was the winter of effectively “lock in” proceeds at today’s values versus uncertain
despair…” future values is a great reason for someone to apply, today!
• Financial despair is a negative market factor that actually forces
Nostradamus is considered to be one of the world’s greatest “seers potential borrowers to look for options to protect their financial
of the future”, but not even he could have predicted where we find well-being. A reverse mortgage truly provides borrowers with
ourselves in 2009. But in 1859, Charles Dickens’ penned the above tremendous certainty in very uncertain times.
opening line to “A Tale of Two Cities” that could easily be confused • Increasing competition is a good thing! More people will be
with a Nostradamian prediction of the financial world we now live in. promoting the reverse mortgage programs, increasing awareness
and overall interest and acceptance of the product in the
The beauty of Dickens’ opening is that the eloquently paired marketplace. With industry estimates pinning reverse mortgage
contradictions convey the multitude of emotions and realities that market penetration at around 1%, there is plenty of opportunity
can be experienced, all at the same time. The reverse mortgage for all.
industry finds itself in situation where vast contradictions appear • Nationalization of banks is good? Some would say actions of this
and it is truly difficult to determine if these are “the best of times or magnitude will stabilize the financial markets and improve the flow
the worst of times.” I think there are empirical data and compelling of credit. If that is the outcome, then there may be a silver lining…
stories that can be made for each of these realities. Let’s try to
determine where we are. These reasons alone should make you want to keep your day job in
the reverse mortgage world, but there is more good news to enhance
The arguments to be made for it being the “worst of times” in the “the best of times” argument:
reverse mortgage world include:
• FHA recently raised the HECM national lending limits to
• Currently limited and potentially shrinking numbers of $625,000 from $417,000. The high cost areas in the country that
secondary market delivery sources were hamstringed by the previous lending limit are now able to
• Increasing margins charged to borrowers on current products realize many new prospects.
• Depreciating housing values • HECM for Purchase is now a reality and this expands the
• Financial despair grows as consumers deal with a recession that opportunity to work with other real estate professionals and
is beginning to look the beginnings of a depression. consumers who have an enhanced way of obtaining the benefits of
• Increasing competition as lenders fight for new revenue streams a reverse mortgage
• The prospect of nationalization of banks that, if enacted, will • New HECM authorization for Co-ops is sure to bring new
send further shivers into the financial markets opportunities to lenders serving these markets
• Specialty HECM programs and features are being created to
So, it’s clearly the worst of times, isn’t it? Are you ready to call it a serve borrowers who are “just miss” when it comes to paying
day and go apply for a government job in renewal energy research? off existing liens and those needing to bring funds to closing (i.e.
HECM Pathway).
Not me, not now! • AND JUMBO reverse mortgage products are beginning to
reappear. Yes, I said JUMBO Reverse Mortgage Loans are making
While all of the dire issues outlined above are true and weigh on their way back to the market.
the conscience and psyche of consumers, these same issues are
also opportunities for smart business people who can see what is In conclusion, I believe we are on the verge of “the best of times”
possible: in the reverse mortgage industry. As your company tries to chart
a course to insure profitability in this new world, it is important
• Limited and shrinking numbers of secondary market delivery to realize that most of the challenges in your way are really the
sources creates opportunities for new players to enter the market opportunities you have been waiting for. Be flexible and nibble
who will face very limited competition. Also, those existing enough to adapt and take advantage of these opportunities.
sources can expect to see ever growing market share due to the
scarcity of delivery options.
• Increasing product margins, in a normal market, would typically
equate to increasing revenue opportunities at time of sale into the
secondary markets. While we are clearly not in a normal market,
we can have confidence in believing there will be some return to
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March 2009

Editor-in-Chief Erica English

Copy Editor Harpreet Makkar

Production Jason Westbrook

Layout & Design Guenthoer Design

Printer The Ovid Bell Press

Subscriptions and Editorial Content

That being said, every time we attend a reverse

12 Cross Selling is Against 26 Mandatory Live Pricing 34 Creating a World Class

5 Note From the Editor 7 Ask the Underwriter 10 Industry Snapshot

39 Ask the Servicer NEW! 44 Press Release 45 Directory

Ryan LaRose - Ask The Servicer, page 39

John Lunde - Reverse Market Snapshot, page 10

Here is your own 4 Day marketing plan… - Sam Collins

Reverse Lenders Transition to Mandatory Live Pricing Technology - Brad Thompson

Can You Hear Me Now?, page 16 - Monte Rose

Top 10 Rankings by Region

Lender Distribution by YTD Growth Rate

HUD Regions and Corresponding States/Territories

They wouldn’t do that…

Hey, wait a minute. They did

“ To take the most valuable tool ever created

The sales professional who really Empathy can unlock denial.

Why Jumbo Reverse

Jeffrey M. Lewis, Chairman

For Reverse-lenders, the exit of jumbo programs causes

MetLife Home Loans

Behold, the wonders

Technology. Training. Support. All from one reverse mortgage partner.

If you’re an FHA-approved lender, call 1-866-359-3817 to start the conversation.

Meanwhile, industry conventional wisdom assumes that as

Not so soon says Wall Street veteran, Jeffrey M. Lewis. A senior

Before helping to build Generation three years ago, Lewis

Technology. Training. Support. All from one reverse mortgage partner.

If you’re an FHA-approved lender, call 1-866-359-3817 to start the conversation.

The reverse mortgage

Technology. Training. Support. All from one reverse mortgage partner.

If you’re an FHA-approved lender, call 1-866-359-3817 to start the conversation.

JML: We are growing very rapidly at Generation. We are

Engineer JML: He is. Unfortunately, there was a press release out

AEA: He’s good man. He was HUD Secretary when the

MetLife Home Loans

Technology. Training. Support. All from one reverse mortgage partner.

If you’re an FHA-approved lender, call 1-866-359-3817 to start the conversation.

A number of significant benefits emerge when

Data Driven Workflow Automation: Having

Creating a World Class

Jacqueline Del Priore

THE INDUSTRY STANDARD SINCE 1995

As set forth in Mortgagee Letters 2006-22 and 2007-

“If the borrower chooses or is offered an index and/

This, among other things, means that if the index used

In addition, in cases involving a product change,

By Joel Schiffman and Fed Kamensky, of the law firm Independence

February 5, 2009, SANTA ANA, Calif.

About First American Title Insurance Company

800.566.5070 Increased Productivity

lead & Seminar mailingS from a company that

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Mortgage Cadence is orchestrating the ultimate mortgage origination performance by providing

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