November 2008

THE

REVERSE review

Flip Flopping: Targeting Seniors to buy REO Properties

George B. Lopez
PAGE REO investors are acquiring properties on the cheap and exploiting senior borrowers using

22 existing loopholes in HECM regulations. Read the feature story which describes how REO
flipping could pose significant risks to the reverse mortgage industry.
 THE

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© 2008 The Reverse Review, LLC. All rights reserved. The Reverse Review, LLC is a California limited liability
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4 reversereview.com
 editors’ note

investors to target seniors. Coincidentally,

Ralph Rosynek, our resident underwriter,
was confronted with a similar situation
as well. However, what’s interesting is
just a few years ago investors were not
targeting seniors, given the liquidity in the
subprime market. These same investors

M
were flipping properties to anyone who
could get a subprime loan. Since the
subprime market no longer exists, investors
have unfortunately adapted to the new
environment and found a loophole in the
HECM product. We focus on this to stress
the importance of being vigilant of those
who are simply out to make a profit from
ost people in the senior population, and do not have
our industry will tell you the reverse mortgage their best interest at heart. Everyone who
space is small when compared to the mortgage is a part of our industry understands the
industry as a whole. In fact, according to the tender love and care it requires to work
HECM MIC Endorsement Report provided with our clients.
by Reverse Market Insight, the top 10 HECM
lenders in the nation retain 37.86% market We hope you enjoy our November issue and as
share thus far in 2008. While market share for always, thanks for reading!
the top 10 may decrease as more and more
originators jump on the HECM bandwagon, we
find this to be a much more intimate market
place than the traditional forward mortgage
market.
Erica English Aman Makkar
Though the industry may be small, as we read Co-Editor Co-Editor
the articles submitted every month, we are
reminded of how much there is to learn as our
industry continues to grow and change. In the
past few months, we’ve learned about the loss
of Medicaid eligibility, trusts and estates, and a
variety of other topics.

This month in our feature article, George B.

Lopez spotlights REO flipping schemes setup by

November 2008 5
CONTENTS

14 What is the Method 22 Flip Flopping: 30 Refi City-Maybe,

to the Marketing Targeting Seniors to Maybe Not
Madness Buy REO Properties Gerald C. Wagner
Sam Collins George B. Lopez
35 The Art of Developing
Trust and Credibility
18 The Foundations of 28 Tax & Insurance Through Online
Effective Execution Defaults, a Serious Educational Marketing
Monte Rose Dilemma Industry Valerie VanBooven
Ryan LaRose
38 The Band of Five
Alissa Scott

ESSENTIALS
5 Note From the Editor 7 Ask the Underwriter 12 Industry Snapshot
42 Public Relations 45 Directory
46 The Last Word: Fear Factor - What do Seniors Fear the Most?

6 reversereview.com

| Seasoning –
No, Ask The Underwriter has not been taken over by the
writers of the Food Network Channel! However, it is interesting
that our knowledge and attitudes regarding food may also apply
to one of the latest issues impacting our industry. Along those
lines, read on and please use your sense of smell on this one.
(And oh, by the way, this is a discussion and not a legal or
regulatory interpretation or opinion – your final use of the
information contained herein should be in consultation with
your Lender/Underwriter and legal counsel.)
Q.
I am relatively new to the reverse mortgage origination market
and recently I have come upon an opportunity presented by
several referral sources in my marketplace whose activities
involve the purchase of REO properties for the purpose of
assisting seniors with housing needs. I am aware of the market
values of these homes as an appraisal with comps is done, the
seniors’s eligibility for reverse mortgage proceeds is determined
and in many cases the senior has already taken title by Quit
Claim Deed, and the proceeds are enough to cover all aspects
of the transaction. Is there a limit to how many of these loans I
can originate from one referral source?
A.
My initial “quick response” is probably NONE!
In my opinion, what you have identified is a transactional
methodology which completely distorts the interpretation of
the expressed “seasoning guidelines” of HUD and most Lenders
in the reverse mortgage market. In addition, I am raising issues
of developer/rehabber intent and activities, possible appraisal
guideline misinterpretation, improper title and chain transfer,
and an uninsurable transaction if for no other reason this
activity in most cases is a crafted purchase transaction not a
refinance.
November 2008
ask the underwriter
Ralph Rosynek
A Recipe for Success and Failure |
While individual Investor guidelines may vary slightly, I
am confident that if one of these transactions were to be
submitted, most if not all of the following would need to be
satisfactorily addressed. Therefore, your consideration of
whether to proceed and the appropriateness of the transaction
should initially be centered around the following:
• Consider if this is a non-arms length transaction – a
sampling of prevailing lender guidelines indicate that
seasoning requirements – (layman’s term) the time
duration of allowing the title to settle/quiet between
ownership changes and corrections – has generally been
increased to at least 90 days minimum when looking at
transfers.
• Additional components of determining a non-arms length
transaction will probably include extensive verification of
owner occupancy – at least 60 days prior to application
with actual documentation reflecting same.
• Review of the Borrower(s) profile will more than likely
be increased wherein the ability to meet required
responsibilities of home maintenance, taxes and insurance
will be reviewed
• Questions will definitely arise as to the intent of the parties
involved, possibly their background, capacity and degree
of participation in the overall transaction as well as choice
of addressing their housing need in the form and manner
presented.
• Little or no tolerance for extraordinary transaction
components like issues of competency, Trusts, POA’s, liens,
side contracts, or future performance will be applied.
Your desire to assist seniors is noted. You should explore more
broad based options to provide a level of product familiarity
and education to senior’s who will benefit long term from your
efforts.
Much like the “recipe” to build a bomb is not readily available
to the general public on the web, I am not sure that we as
Underwriters are responsible for providing the basic “recipe”
to cook up a transaction which in my experience fails to serve
a senior’s best interest at the same level of the developer/
rehabber/speculator and places the Investor and others in an
increased risk position. Remember, sniff, sniff.
7
 Helping Elderly
Homeowners Understand
Reverse Mortgages
Doug Erickson
Vice President, Partner Relations
Is it possible that many Americans filing bankruptcy should
be seeking a reverse mortgage instead?
In a growing number of cases, the answer is ”yes.”
While the bankruptcy filing rate in recent years has fallen
for people 55 and under, it has soared for older Americans.
This is according to a new analysis from the Consumer
Bankruptcy Project, which examined a sampling of
noncommercial bankruptcies filed between 1991 and 2007.
The older the age group, the worse it has become -- people
65 and up became more than twice as likely to file during
that period, and the filing rate for those 75 and older more
than quadrupled.
A number of factors are contributing to the increase. Higher
prices for ordinary consumer goods have hit seniors on
fixed budgets. For older Americans living below the poverty
level, or not far above, a safety net likely doesn’t exist for
economic setbacks such as medical problems. And some fall
prey to scams that cripple their finances.
Mortgage originators, as well as nonprofit counseling
agencies that provide elderly homeowners with information
about reverse mortgages, are speaking with more and more
people each month as the industry begins to take shape.
My agency is in a unique position to see the benefits and
disadvantages of filing for bankruptcy and when a reverse
mortgage is a viable alternative.
8 reversereview.com
Consumer Credit Counseling Service (CCCS) of Greater
Atlanta is among a select group of agencies approved
to provide credit counseling and debtor education
for bankruptcy filers nationwide by the U.S. Justice
Department’s Executive Office for United States Trustees.
The nonprofit agency provides counseling to approximately
20% of all Americans that file for bankruptcy.
However, we also provide reverse mortgage counseling, and
our work in this area is growing. Twenty housing counselors
certified by the AARP in reverse mortgage counseling
conduct approximately 500 reverse mortgage counseling
sessions each month. We plan to add five more reverse
mortgage counselors soon as our workload continues to
grow.
As an unbiased third party, the role of the nonprofit credit
counseling agency is simple: to educate homeowners about
the benefits and costs of a reverse mortgage loan. We also
believe it’s critical for homeowners to be able to manage
their new infusion of funds in the most effective way
possible.
We also believe the industry may be missing an opportunity
to reach many homeowners who may be better served
with a reverse mortgage than filing for bankruptcy. We
work closely with bankruptcy attorneys across the United
States, and many of them tell us that an increasing number
of elderly homeowners considering bankruptcy are really
candidates for reverse mortgages.
These homeowners are usually anywhere from 1-2 months
to several months delinquent on their mortgage payment,
but their other debts are under control. And, of course, these
homeowners often have plenty of equity in their homes and
could easily be better off with a reverse mortgage.
The problem has become so critical that my agency
recently established a hotline for bankruptcy attorneys if
a homeowner fitting this profile comes to them to file for
bankruptcy. And the bankruptcy attorneys, seeing this

growing problem, helped us understand the need and have
begun referring people to the hotline.
As our economy continues to worsen, it is important for the
mortgage industry to realize that they can provide enormous
help to these homeowners.
While bankruptcy may be the only choice for many
consumers, for others there are viable alternatives. The
decision to file for bankruptcy is definitely an opportunity to
get a new start, but it also has long-term implications and
consumers need to clearly understand them.
Many people filing for bankruptcy have experienced a major
health crisis or have suffered a life-changing event, such
as job loss or divorce. But properly utilizing the equity in a
home can give people age 62 or older the funds needed to
pay their bills during one of these difficult periods and avoid
bankruptcy.
As a nationwide reverse mortgage counseling agency, we
speak with homeowners from around the country. We know
that most of the people we counsel are not wealthy, and
their house is their primary asset.
During 2007 our average reverse mortgage client was 73
years old and had an income of $24,598. More important,
their monthly expenses exceed their monthly income by
$357. But they also had approximately $126,000 in equity in
the home.
Of course, any homeowner seeking a reverse mortgage
needs to feel that it’s the right product for their needs. As
a nonprofit counseling agency, we provide objective advice
that will help a homeowner decide whether to seek a reverse
mortgage.
The vast majority of the people we counsel eventually
receive a reverse mortgage, approximately 10% of
homeowners who speak with our counselors decide shortly
after their session not to pursue a reverse mortgage. Industry
sources say up to 30% of homeowners eventually decide not
to sign up for a reverse mortgage loan following counseling.
As we know, most people applying for a reverse mortgage
have immediate financial needs. But many are also
concerned about the long-term impact of a reverse
mortgage. We find there are two questions that almost
everyone asks:
1. Will I lose my home after getting a reverse mortgage?
2. What is the impact of a reverse mortgage on leaving my
house to my heirs?
In educating a homeowner about a reverse mortgage, we
November 2008
Advertorial by Consumer Credit Counseling Service
begin with a conversation about helping them define what
they want to accomplish. If they want to remain in the home
for the rest of their lives, a reverse mortgage may be the
answer.
We also make sure they understand that, as long as they live
in the home, pay the property taxes, insurance, and keep
it in good condition, they won’t lose the home. We also
make certain they know that, as the homeowner, they will
continue to hold the title to the home after they receive a
reverse mortgage loan.
During a reverse mortgage counseling session, we answer
the following questions:
• What is a reverse mortgage?
• What are the eligibility requirements?
• How does a reverse mortgage impact their equity in the
home?
• What are the fees they are required to pay?
• What are the options in how the funds from a reverse
mortgage will be paid to them? This includes a line of
credit, lump sum and other options.
• How the loan will be repaid?
• What is the impact on their social security?
• And, finally, what is the impact on their heirs?
To help each homeowner understand the costs of a reverse
mortgage, we provide them calculators to help them
determine the cost of their loan. We discuss the cost of the
reverse mortgage during our counseling session and provide
them a printout with an analysis of the cost of the loan.
The final step – and probably the most important step – is
providing the homeowner with a complete review of their
budget and reviewing their credit report.
While many lenders do not require homeowners to establish
a budget or review their credit report, we believe it’s critical
for the homeowner to understand how the funds from the
reverse mortgage will be spent. Since nearly every person
seeking reverse mortgage counseling needs the funds to pay
for essential items, they need to understand if the money
they receive from the loan will, indeed, cover their monthly
expenses.
Once they can see the budget and begin calculating various
financial scenarios, the homeowner can make an informed
decision.
To Contact:
www.cccsinc.org
800 . 251 . 2227
NRMLA Both # 57
9
contributors
Ralph Rosynek Valerie
- Ask the Underwriter, page 7 VanBooven
Ralph Rosynek is President and CEO of 1st Reverse as well - The Art of
as a HECM DE Underwriter. Mr. Rosynek has been involved Developing Trust
in mortgage lending for over 30 years with the last 5+ years and Credibility
exclusively providing reverse mortgage lending solutions. Through Online
To contact Mr. Rosynek or to learn more about 1st Reverse Educational
Financial Services, Please visit www.1streverse.com or call Marketing, page 35
877-574-1000. Valerie VanBooven RN BSN is a
Senior Service Marketing Expert
and the National Marketing
Monte Rose Director for Next Generation
- The Foundations of Financial Services, a Division of 1st
Effective Execution, Mariner Bank. She is a professional
page 18 speaker and the author of the
Monte Rose has books “Aging Answers” (2003) and
helped hundreds “The Senior Solution” (2007). She
of seniors obtain a can be reached at
reverse mortgage during the past 17 John Lunde valerie@nextgenfinser.com.
years. He is an accomplished speaker - Reverse Market
Please visit her website at www.
and widely quoted industry expert, Snapshot,
myseniorservice.com
appearing in financial publications page 12
and nationally syndicated media. John Lunde is
He was head of national retail President and
sales for Financial Freedom Senior founder of Sam Collins
Funding Corporation. Monte is Reverse Market Insight, the premier - What is the
a Certified Senior Advisor and a source for market intelligence and Method to the
Certified strengths Coach with Gallup analytics services in the reverse Marketing Madness,
University. For more information, call mortgage industry. RMI clients page 14
800-516-0545 or email include five of the top ten reverse Sam Collins is the
info@monterose.biz. mortgage originators, both lender President of Sam Collins Reverse
and independent servicers, as well Marketing, LLC and Founder of
as some of the largest financial REMALO, the Reverse Mortgage
services firms in the world. Find out Association for Loan Officers.
more at www.rminsight.net or call REMALO is a web based National
949-281-6470. 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

10 reversereview.com
 George B. Lopez
- Flip Flopping: Targeting Seniors to Buy REO Properties,
page 22
George Lopez is Vice President of James B. Nutter &
Company, one of the largest wholesale reverse mortgage Gerald C.
lenders in the nation. Now celebrating his 20th year with Wagner
the firm, George was the only industry representative to - Refi City - Maybe
testify before the Senate Special Committee on Aging in Maybe Not, page
December 2007. 30
Jerry Wagner
is President
and Ashok Shinde is CTO of Ibis
Alissa Scott software based in San Francisco.
- The Band of Five, page 38 Ibis has been the Standard of the
Alissa Scott has been an employee of Premier Reverse reverse mortgage industry since
Closings since August of 2004. Ms. Scott started her 1995. Wagner graduated from
career at PRC in Southern California and now resides in Harvard Business School and has a
Long Island City, NY developing and managing the entire Ph.D. in Economics from Harvard.
East Coast. But he’s still a fun guy and can
be reached at 800-566-5077 or
wagner@ourtoolbox.com. To learn
Ryan about Ibis software, see www.
LaRose reversemortgagehomepage.com.
- Tax and
Insurance
Defaults, a
Serious Dilemma Gary Onks
Industry, - Fear Factor - What do Seniors Fear the Most, page 46
page 28 Gary Onks has been selling to seniors since 1990.
Ryan LaRose is the Executive His book “Sold On Seniors” is acclaimed as “The ‘Art’
Vice President of Celink, an of pleasing senior customers” and he is nationally
independent reverse mortgage recognized as a senior marketing expert. In 2007 he
subservicer. Ryan has over 12 broke national sales records for reverse mortgage selling.
years of servicing experience; He now offers consulting and training in this business.
exclusively in reverse mortgage www.soldonseniors.com
servicing since 2005. In addition,
Ryan is an active member of the
NRMLA servicing and technology
committees.

November 2008 11
reverse mortgage industry snapshot
Statistics Provided by Reverse Market Insight - September 2008

Top 10 Rankings by Region

Endorsements Active Lenders Region Share
Rank Chg Region 2008YTD YTDChg% 2007TOT 2008 Chg% 2008YTD Chg%
1 1 Southeast/Caribbean 22,036 19.85% 24,014 774 116.2% 25.177% 14.46%
2 -1 Pacific/Hawaii 17,273 -14.38% 25,612 708 58.04% 19.735% -18.22%
3 - Mid-Atlantic 10,683 15.58% 11,956 361 113.61% 12.206% 10.39%
4 - Midwest 8,790 2.11% 11,434 464 66.91% 10.043% -2.47%
5 1 Southwest 7,427 23.76% 8,073 268 84.83% 8.486% 18.21%
6 -1 New York/New Jersey 6,310 -4.21% 8,322 280 94.44% 7.21% -8.51%
7 1 Northwest/Alaska 5,149 15.53% 5,790 266 92.75% 5.883% 10.34%
8 -1 New England 4,737 -14.74% 6,963 282 57.54% 5.412% -18.57%
9 - Rocky Mountain 2,989 21.85% 3,296 166 50.91% 3.415% 16.38%
10 - Great Plains 2,129 0.09% 2,827 151 84.15% 2.433% -4.4%
Industry Totals 87,523 4.7% 108,287 2,625 86.83%

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

Growth Rate Lenders YTD MIC Last YTD

-100% 242 2,229
-99% to -1% 526 41,203 63,785
0 to 100% 357 19,019 14,098
101% to 200% 96 3,823 1,630
201% to 300% 45 1,582 463
301% to 400% 34 3,886 799
over 400% 105 7,902 589
New Lenders 1,462 10,108

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 email 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

12 reversereview.com
 24 Month Penetration and Unit Volume
12000 0.018

0.016

0.014

10000 0.012

Penetration
0.01
Units

0.008

8000 0.006

0.004

0.002

6000 0
2006-10 2007-2 2007-6 2007-10 2008-2 2008-6

MIC Units Penetration %

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

November 2008 13
 What is the Method to Your
Marketing Madness?
Sam Collins

14 reversereview.com
 I admire people who plan their day down to the minute
and stick to it. Unfortunately, my creative brain does not
allow me to be that precise. However, I do understand the
importance of a plan and I try not to allow my marketing
madness to interfere. Staying on task for me is a real
challenge and if I did not have a plan, I am not sure where
I might be today. Therefore, I wanted to provide you with
some of the lessons I have learned and hope they help you in
your marketing efforts.
Lesson #1: My first lesson in marketing was to
understand there is no one definitive answer or
solution to marketing (which can pose somewhat of a
problem without a clear direction). I’ve also learned
that if what you are doing is working, you should keep
doing it. That said, you should always keep your mind
open to new ideas, formulas, changes in the world, and
anything that might change or affect your business to
further increase your success ratio.
Most of you reading this article are like me. You are a
creative person and because of that you are in need of
a mindset full of new ideas and even a review of the old
ones. Marketing is an ongoing process and the ideas
and systems for you must be constantly reinforced.
November 2008
Why? Because life gets in the way and we all get
sidetracked doing something else and of course fail to
come back to the real core of our existence, marketing.
Being creative can be a curse. Often an idea you have
is shot down, because many see the process as too
abstract or too risky. In those instances, some may not
think of you as being creative, but don’t let that stop
you!
Lesson #2: The most creative ideas can come to you at
the strangest and most unusual times. It has been my
experience that this is a normal process and I would
encourage you to embrace it. For example, you could
conceive the idea on Monday, research on Tuesday,
stall on Wednesday, think about it on Thursday, and on
Friday decide it’s too cumbersome to achieve. There is
no reason for us to apologize after all; given enough time
we can build the Brooklyn Bridge. However, in our world
we need to set a deadline to get it done. Deadlines are
one of the most important ingredients to the successful
implementation of marketing plans.
Lesson #3: Your attitude can sometimes make or break
»
your marketing approach. If you are just starting out
15
 you need a starting out attitude. A starting out attitude
includes following a plan, being excited, and being
focused on the tasks at hand. If you are seasoned, try to
recapture that same starting out attitude. Your starting
out attitude can lead you to life’s success and business
success.
Lesson #4: Don’t be intimidated by the task at hand.
Chances are it might take you longer to reach your goal
than originally anticipated. It will not be long before you
notice that you wait longer before panicking to reach the
deadline because you know how much pacing is really
needed. Some of the greatest ideas you’ll ever have
will come when you’re new and inexperienced. The
secret is avoid being overwhelmed by those ideas and
immediately say “no”, but to allow your creative mind
to open up to new ideas then implement a plan to make
your idea a reality.
Lesson #5: One of the least expensive ways to learn how
to market is to work with an expert, even a minor expert,
on their particular marketing project. Pay that expert for
the opportunity if you have to, although most will pay
you for any help you can give to make life easier for them
as well as you. You will quickly discover what works and
what was not as important as you might have thought.
Lesson #6: As marketers in the senior world, our goal
should first be to seek to understand then we can go on
to solve the need or fill the want of our senior client.
Remember that servicing the needs and wants of senior
clients is what marketing is all about, whether you use
direct mail, television, telemarketing, or another vehicle
for finding your senior client.
Lesson #7: Credibility, in senior marketing is king. How
credible you are in your consulting and advisory capacity
will dramatically affect all costs, (particularly sales costs)
and ultimately your risk in doing business.
If you are seasoned in the reverse mortgage business
you currently have a track record. Somewhere along the
way you have solved somebody’s need or want. Some
senior client has paid hard-earned cash for you to solve
their problem or concerns.
In your reverse mortgage business we all know that our
product is good and in many cases can solve someone’s
problem. You are known by someone who has allowed
you to do a reverse mortgage for them. This senior client
16 reversereview.com
now trusts you. They paid you once and you delivered
what you promised.
Stop and think,” What is your Credibility score and how
do you rank yourself and what can you do to increase
awareness and credibility in your marketing area?”
Lesson #8: As humans, we are creatures of our comfort
zones. Once we find our comfort zone, we love to stay
there. We’ll even risk getting a little less as long as we
don’t have to change. That’s one way scam artists prey
on seniors. As an ethical businessperson you must use,
not abuse-this understanding of human nature.
Once a client has trusted you, they will use you again or
most likely recommend someone to you. Don’t break
that trust, because a higher being may forgive you but
your senior clients never forget and will tell their friends
if you fail to measure up.
Lesson #9: Senior marketing requires an art form
mentality! We need to derive a strategy that moves our
client from being a suspect to a potential prospect. In
senior marketing this is no easy task. The senior mindset
is opposite of what you might think.
You might think the senior has a limited time to make a
decision, according to our common sense logic; let’s face
it we’re not here forever. However, just the opposite is
true. If you put yourself in the shoes of the senior, every
dollar that goes out most likely cannot be replaced,
since a regular income is no longer an option, and when
expenses continue to rise and income remains the
same, then it is no wonder our senior clients’ mindset is
opposite of how you might be thinking.
Lesson #10: Your marketing challenge is to carve out as
much business as possible without breaking the bank.
Many of us endure what I call panic marketing. Panic
marketing occurs when business is really bad and we
panic, run ineffective ads, which result in extreme costs
and no leads. Our goal is not to panic. If you have a
plan, you don’t have to panic.
The Foundations of Effective Execution
In a previous article, we discussed the importance of
planning as the foundation for a producer’s success. Three
key elements are involved: (a) knowing what optimal set
of activities needs to be done in the short and long term,
(b) ensuring the sustainability of these actions, and (c)
ascertaining the effectiveness of the actions on the market.
Part of the manager’s task is to expose the producer to
these three ideas, and be able to coach around them. These
factors govern “executional consistency” affecting both the
individual’s motivation and ability to sustain effective action
over time. This is separate from
the actual techniques of time and
energy management which we will
cover later. Without a coaching
paradigm that increases the
awareness and understanding of
these three elements, consistent
and effective execution can be a
hit or miss proposition.
Optimization refers to finding a
correct balance between Skills
Development, Brand Building,
and Extending One’s Reach.
When this “strategic portfolio” is
developed based on a combination
of: (a) strengths profile, (b) sales
behavior assessment and (c) one’s sales experience, maturity
and ability, the producer starts with the odds stacked in
his/her favor. This is akin to not only determining what
sport an athlete is fit for, but also the position and general
strategy one can adopt for successful competition. Absent
this systematic profiling of talent, strategy execution will
essentially become a random event. This results in high
turnover and disappointing performance. Without using
valid and reliable tools for establishing correct fit one cannot
establish correct strategy. There is no such thing as correct
strategy for the wrong person. This is a very common
mistake frequently overlooked even in big organizations.
When a sales force is struggling, the first question to ask is:
Is there a correct linkage between the producer’s “success
DNA” and the play being executed?
Monte Rose
Sustainability is inextricably linked with optimization. If you
have congruence between a person’s talent and behavioral
profile, and their market strategy, it can be assumed that
consistent and continued effort will follow. It is not as
simple as it looks however. Different talent and behavioral
profiles dictate different motivational “fuels.” A major
shortcoming for sales managers is not understanding this
fundamental idea: Different individuals respond to different
rewards. Each individual has a unique motivational map.
Part of a successful coaching conversation is discovering
what this map is, and ultimately using it to successfully
navigate towards productivity. Coaching
for “sustainability” is helping a producer
develop stamina and resilience against the
market environment and one’s personal
and professional challenges (read: helping
someone get out of his way). Toughness
flows out of integrity. Integrity comes
with establishing an organic fit between a
producer’s unique talent set and his/her
activities in the marketplace.
Ascertaining “effectiveness of actions” has
to do with having a working system that
monitors activity with results. I call this
the Art of Strategic Observation. CRM’s or
Lead Management systems are effective
in tracking actions and results. Most of
these tools, however, fail to capture the critical “tail ends”
of the cause and effect spectrum. First, they do not provide
information on the producer’s profile, so there is no linkage
between “wiring” and “action.” How do we isolate/identify
what activities/market segments work for specific producer
profiles? This is a critical blind spot.
The second issue is not having the appropriate level of
detail regarding the customer engagement (CE) dimension.
Research in consumer behavior is identifying/quantifying
the emotional variables involved in building CE. Customer
experience maps are becoming an increasingly important
tool in marketing savvy organizations. CRM’s that can capture
CE variables, alongside “activities” and “producer type”, will
elevate strategy formulation to a science.
 Successful Companies
To recap: The three foundations for executing effectively are
having an organic optimized strategy, a sustainable platform Rely On
of support, and an intelligent observation method. All these
ideas can be linked productively in a coaching approach. ReverseVision
The tactical end of execution, the ability to get things done
in a consistent and predictable fashion, is in itself a craft. To
simplify, there are basically three major approaches to time/
energy management: (a) the top down approach (Covey),
(b) the prioritization approach (Lakein), and finally, (c) the
bottoms up approach (Allen’s GTD system). I will cover these
approaches in some detail in a future article, but for now, I
would like to extract the fundamental points common to all
systems:

1. There have to be explicitly written goals, as well as actions

moving you toward the goals. This is actually an important
skill unto itself that is often not given the energy or focus it
deserves.

2. There has to be a way of tracking time and activities via a

“detailed” calendar.

3. There has to be a way of reviewing your actions on a

regular basis (Allen calls this the Weekly Review).

Given these three elements, a variety of approaches can

be fashioned by the producer and/or manager who fits the
organizational temperament of the individual salesperson.
The gamut runs from an analog three-ring binder, to
sophisticated digital configurations embedding CRM systems.
In enterprise-based systems, e.g., Outlook, Lotus Notes,
a producer is forced to follow “the system.” However, the Complete integration from origination to
system can be customized to fit the individual style of the processing, underwriting, closing, and
individual. shipping.

In time management, which is the behavioral basis of
effective execution, form has to follow function. It’s all
about simplicity -- essentially the achievement of maximum
effect with minimum means. To quote Einstein, “Everything
should be made as simple as possible, but not simpler.”
Highly scalable - for small entities to enter-
prises with correspondents and branches.
Sales oriented graphical interface that
integrates directly with Microsoft Word and
Outlook.

Developing the skill set to consistently execute correct Direct export to Celink, RMS, Fannie Mae,
strategy is a critical step in “making productivity predictable.” UBS, Goldman Sachs, ReverseDocuments
For people with the correct mindset, motivational level, and others.
and appropriate market strategy, a well-crafted time
management system can make the difference between
average performance and breakthrough results. ReverseVision Inc.
3310 Pollock Place • Raleigh, NC 27607
www.reversevision.com
(919) 834 0070 • info@reversevision.com

November 2008 19
 Loan Consultant Success
Stories
Gretchen Williams
Director of Sales
We have spotlighted the successes of 3 different loan
consultants purchasing leads from Reverse Mortgage
Directory, each with varying degrees of experience and
coverage throughout the country. The tips highlighted by
these successful loan consultants will help you to close more
deals, regardless of how you are generating your business.
Client Profiles
Deborah Fisher of Beacon Reverse has been in the forward
mortgage business, as a broker/owner for 24 years and a
Certified Financial Planner licensee for 14 years. Her primary
market for the last 17 years has been real estate investors.
She recently felt that it was time for her to make a major
change and has now been originating reverse mortgages for
6 months. “Since making the change I am more happy and
fulfilled (in my work) than I’ve been in many, many years. It’s
like I’ve finally found my calling – not just providing mortgage
information or even some financial planning, but counseling
and psychology – I get to do it all! Plus, I get to share stories
about my grandkids all the time. I truly love what I’m doing.”
EC Forbes of EVOFI has been originating Reverse Mortgages
since the mid 90’s and prior to that worked in the insurance
industry. “Reverse Mortgage Directory has been an
outstanding source for new leads. The potential clients
have apparently done some homework, are interested in
obtaining more Reverse Mortgage knowledge and best of
all are responsive. My contact at the company is equally
responsive and this makes what I do so much easier and
more enjoyable as well as rewarding.”
Wayne Helms moved from a position as a pension
administrator of a $45 million plan to the Reverse Mortgage
field 3 years ago because he enjoyed working with seniors.
His first position in Reverse Mortgage sales was with a small
20 reversereview.com
company in Green Bay, Wisconsin. Little over a year ago,
he was offered a position with Wells Fargo Home Mortgage
of Minneapolis and things have been great ever since. “I
enjoy going to work every day knowing that I’m helping and
improving someone’s life.”
Client Question & Answer
RMD: What strategies do you use in your follow up process
to help ensure that you make contact with as many
borrowers as possible?
Deborah: I call the number provided and leave an
introductory message if I get voicemail. I then immediately
send an introductory email asking them to call me at their
convenience or let me know when I can best reach them. I
call the borrowers daily for the first 7 days and usually send 2
emails over the course of a week.
EC: I make the first call attempt as soon as the lead is
received!
Wayne: One beautiful thing about the RMD leads is that
they are all computer literate and email savvy. Email opens
up another avenue of communication with your client
which is an invaluable (and unusual) asset with the Boomer
generation. As soon as I receive a name, I immediately
email them introducing myself and the benefits of a Reverse
Mortgage and include a picture. Then I follow up with a
call the next day, this way there is already some familiarity
established and they’ll have questions for me.
RMD: What processes/tips do you have in place/suggest for
continued follow up? How long is that follow up schedule?
Deborah: I keep a ‘current’ folder of all leads that need to be
followed up in a short period of time and set my calendar as
a reminder of when. I also put all leads, active, inactive and
unresponsive into my database to receive a letter or postcard
from me every other month. My intention is to keep mailing
them until they tell me to stop!
 Advertorial by Reverse Mortgage Adviser

EC: I am always sure to vary the time of day that I make my
calls, including evening calls in case the borrowers are at
work during the day. I call at least once daily for the first 7
days.
Wayne: I use a series of 3 email templates that I wrote (for
these leads in particular) and 5 information packets that I
send via mail. I follow up with a telephone call to each and
track them in Outlook. I also have a few voicemail scripts
posted on my bulletin board for leaving messages. I can go
out 3 to 6 months with a client with those materials.
RMD: How do you find that RMD’s Internet leads differ from
other leads?
Deborah: The RMD leads seem to have done research on
reverse mortgages and are much more knowledgeable
than leads I get from newspaper advertising. Generally
speaking, they need much less education from me.
in jump starting my business plan.
EC: My ability to establish contact and build rapport early.
Wayne: RMD has doubled my sales in a very short time.
The leads are quality leads, and in the end save me field
time allowing me to focus on clients who are already asking
questions.
**Please note that the information provided by the loan consultants
above were gathered through telephone/email interviews and are the
personal views of the loan consultants interviewed and not the beliefs of
their individual companies.
To Contact:
Reverse Mortgage Directory
(800) 407-6365
www.ReverseMortgageAdviser.com

EC: The borrowers are interested and motivated since they

made the inquiry and I’m just following up on their request.

Wayne: I’ve used other lead providers over the past few
years. I have been using RMD for 4 months now and
I’m impressed. The clients are often ready to go when
I call them, because they’re often familiar with Reverse
Mortgages from studying various websites. The difference is
phenomenal, primarily, because of the manner and methods
by which RMD generates their leads. The leads are, by
definition, computer savvy, more educated, and eager to ask
questions.

RMD: What advantages do working with RMD’s Internet

leads provide?

Deborah: The biggest advantage is their level of education

and that the lead flow is dependable.

EC: The fact that they requested the information has

definitely been to my advantage.

Wayne: The RMD staff is very customer friendly and ready

to help. But the real test comes with returns for credit. If
the client is unreachable because of an erroneous telephone
number RMD gives you credit without questions asked. In
fact, they provide an easy to use website for returns.

RMD: To what do you attribute most of your success?

Deborah: Being fairly new to this side of the business, having

leads that are qualified and interested has played a huge part

November 2008 21
 Flip
Flopping:
Targeting
Seniors to
Buy REO
Properties
George B. Lopez

At first glance, the reverse mortgage file looked perfectly

normal. A senior client who had recently moved into a
house apparently wanted to use a reverse mortgage to
retire a small lien on the property. The appraisal indicated a
“The road to hell i
well maintained, modestly valued property with more than
sufficient equity to perfect the reverse mortgage transaction.

The loan file conformed in all respects with

intent
FHA underwriting guidelines. In fact, the loan was
indistinguishable from hundreds of reverse mortgages that
are processed and closed each day across the country. - John Ray
However, a closer examination of the loan file revealed
some peculiarities. For example, the previous owner was
a limited liability corporation that purchased the property
three months prior through an REO sale. Just one month
later, the senior client acquired title to the property via a
quitclaim deed (or perhaps a land contract). More troubling,
the appraisal photos indicated that the interior rooms were
sparsely decorated, containing 3-4 pieces of furniture and no
personal effects or accessories whatsoever.

Just weeks after the closing, the servicing lender

received returned mail from the senior client. Further
investigation revealed that the senior homeowner had
vacated the property. Or worse, the servicing lender
discovered that the senior homeowner was penniless and
had been sleeping on the floor in abject poverty. In such
cases, the servicing lender may have no choice but to initiate
foreclosure proceedings.

22 reversereview.com
 The scenario I’ve just described illustrates one of the
fastest growing forms of reverse mortgage fraud in the
country—REO property flipping targeting senior citizens.
Once confined to urban subdivisions in Detroit and Atlanta,
the problem is spreading like wildfire across the country as
investors look to unload newly acquired REO property on
senior clients who can then repay the investor by using a
reverse mortgage.

The Scheme

The marketing tactics for this scheme are constantly

evolving and quite clever. Seniors are lured into attending
homeownership seminars and/or receive direct mail pieces
offering seniors the opportunity to purchase a property
with little or no money down and no monthly payments.
The REO investor, who acquires the property on the cheap,
invests a minimal amount of funds to get the property up to
code and then transfers title to the senior. In the process,
the investor puts 1-2 liens on the property with a tidy profit
baked into the lien amounts.

is paved with good The reverse mortgage then becomes the critical piece
of the puzzle, especially the appraisal. The appraisal
typically contains comps from properties that are located

tions.” in the vicinity of the subject property. However, given that

the subject property is usually in an urbanized, densely
populated area, it is fairly easy for higher value comps to be
chosen from other nearby subdivisions that do not contain

y, ca. 1670 high concentrations of REO properties.

Once the fair market value has been established in a

subdivision where 1-2 of these REO flips have occurred,
the stage is set for widespread fraud. Even reputable FHA
appraisers can be duped by a database of artificially inflated
appraisals. The potential profits to the REO investor and the
mortgage broker can easily run into the millions given the
high volume of REO properties on the market today.

The Responsible Parties

Ironically, the parties responsible for this scheme--

investors, mortgage brokers, appraisers and even community
leaders, are often hidden in plain sight. The reason should
surprise you—arguably, these parties have not violated any
laws. What they have done is exploit a small loophole in
the FHA HECM guidelines that does not exist in the forward
mortgage world.

In the forward mortgage world, if a subject property has

been sold within the past twelve months, the lesser of the
sales price or the appraised value from that transaction is the

November 2008
»
23
fair market value figure used in any refinance transaction.
HUD guidelines explain this unique “seasoning requirement”:

Properties Under Construction or Existing Construction Less than

One Year Old
Properties not meeting the criteria shown below are…
limited to 90 percent financing, i.e., 90 percent of the lesser of the
appraiser’s estimate of value or sales price.
FHA Single Family/4155.1 REV-5/CHAPTER 1, SECTION 2/1-8 (F)

If the loan proceeds from a forward mortgage are used to

pay off a Land Contract, the HUD guidelines are also clear:

If all loan proceeds are used to pay the outstanding balance on the
land contract and eligible repairs, renovations, etc., the appropriate
LTV ratio is applied to the lesser of the appraised value; or the total
cost to acquire the property…
FHA Single Family/4155.1 REV-5/CHAPTER 1, SECTION 2/1-8 (E) 1,2

Yet no such “seasoning requirement” exists with reverse

mortgages. As such, the HECM underwriter can accept a
new appraisal and use the fair market value from the new
appraisal despite the fact that there is recent sales price data
that contravenes the appraisal, sometimes quite significantly.

The Human Tragedy

The philosophical justification for this scheme can sound

compelling at first, but it’s completely misguided. Who
doesn’t think it’s a good idea to enable seniors to buy a
house with no money down and no monthly payments? And
if enough seniors take advantage of this opportunity in a
given area, the thinking goes, the reverse mortgage program

24 reversereview.com
 can singlehandedly restore stability to distressed real estate
markets by ridding subdivisions of dreaded REO properties.

However, the philosophical justification crumbles when

examining the human element involved. Hundreds and
perhaps thousands of lower income seniors have been
targeted and recruited as straw buyers. Many of these
seniors are currently renters, perhaps recent victims of
the subprime crisis, and have no tangible assets. Many
are poorly equipped to deal with the responsibilities of
homeownership.

Houses that were once staged for appraisal photos are

quickly emptied by the REO investor, leaving the senior
with little or no furniture and no means to properly inhabit
the house. Even worse, when the first utility bill arrives or
the first maintenance issue arises, the senior cannot afford
to make payment. Similarly, tax and insurance bills are
permanently put to the side. Frustrated and unable to cope,
seniors either vacate the property or attempt to fashion
some sort of Spartan existence out of their situation.

Risk to FHA and the Lender

FHA’s exposure is plainly apparent. The concept that

an REO property has significantly appreciated in just a few
months during the most depressed real estate market in our
lifetime is dubious at best. While some REO investors may
expend resources to rehab a property, the amount of money
invested is certainly less than the profit involved.

Many REO properties are the byproducts of the

subprime lending crisis and are dragging down the balance
sheets of the Wall Street banks that are saddled with them.
According to RealtyTrac, by the end of the year more than
a million bank-owned properties will have piled up on the
market, representing around a third of all properties on the
market. To allow that burden to be transferred so easily to
FHA’s balance sheet should be a source of concern to FHA
policymakers.

As this edition went to press, FHA released Mortgagee

Letter 2008-33 which contains language designed to deter
reverse mortgage lending on a property within 180 days of
the “flip” date.

Mortgagee Letter 2008-33 appears to be inadequate

to deal with property flipping for two reasons. First, the
REO investor and the senior homeowner can postpone
the reverse mortgage transaction for 180 days, effectively
circumventing the new guidelines. Second, ML 2008-33
appears to only apply to purchase transactions, when in

November 2008
»
25
 fact reverse mortgages in these cases are being used to pay
off seller-financed liens. In other words, these property flips
are being handled as refinance transactions and not purchase
transactions, thus negating the HECM purchase guidelines
outlined in ML 2008-33. More clarification from FHA could be
necessary in the coming months.

Fortunately, the HUD Inspector General is aware of

this REO activity and is actively formulating a response. In
addition, several wholesale lenders have instituted corrective
policies to deal with the problem such as one-year seasoning
requirements. The National Reverse Mortgage Lenders
Association (NRMLA) is working with industry professionals
to create best practices guidelines to combat this gathering
threat.

Clearly, in the area of property flipping and mortgage

fraud it is difficult to keep pace with the sophisticated criminal
mind. Ultimately, the greatest exposure to this problem may
lie with those reverse mortgage lenders who aggressively
pursue partnerships with REO investors. By targeting senior
citizens to buy these properties and using such a flawed
methodology, these lenders may not only harm
their clients, but also cause irreparable
harm to their own businesses.

26 reversereview.com
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TAX AND INSURANCE DEFAULTS,
a serious dilemma for our industry
uite often we have had people come
Q up to us and say, “Reverse mortgage
servicers have it made. All you have to
do is send money to borrowers when
they request it and keep track of their
accounts.” Oh, if it were only that
simple!
In early 2004, when we began researching the reverse
mortgage market, our CEO attended his first National
Reverse Mortgage Lender’s Association (NRMLA) conference
in Atlanta. It was there that he met people like Jeff Taylor,
Dave Carey, Paul Franklin, Jim Cory, Sarah Hulbert and
Shawna James, among many others.
Interestingly, at that time he also thought servicing reverse
mortgages was quite simple. However, when he was finished
listening to all of the industry experts and veterans, he
was stunned at the breadth of work that was required. It
was then that he ran into the “cold wall of reality”: reverse
mortgages are a highly sophisticated (and slightly esoteric)
loan product. Further, they require not only a thorough
understanding of HUD and Fannie Mae servicing guidelines,
but also the ability to build a servicing platform from scratch,
and of equal or greater importance, the ability to recruit and
retain employees who have an almost “evangelical mission”
to help and protect older adults.
As we began structuring systems, procedures, and processes,
the one huge sticking point in our operational development
was, “What in the world do we do with those borrowers who
are unable to pay their taxes and/or insurance premiums?”
Much to our initial dismay, the HUD servicing guidelines state
that the servicer should request the loan be called due and
payable on any tax or insurance (T&I) default, which sent us
sideways. We simply could not imagine initiating foreclosure
and eviction proceedings against an 85 year-old widow just
because she was unable to make her $500 homeowner’s
insurance premium.
However, our fears were quickly abated when we learned
that Fannie Mae, the only purchaser or investor of HECMs
at the time, had decided not to pursue foreclosure on T&I
defaults for the time being. Okay, we thought, not so bad
after all.
28 reversereview.com
Ryan LaRose
In early 2007, we saw the entrance, albeit short-lived, of
Wall Street investors to the reverse mortgage industry. This
was the first time that a significant number of new reverse
mortgages would very likely not be sold to Fannie Mae
where the servicing policies and procedures were “time-
tested”. This did cause us a certain level of concern: would
the non-Fannie Mae investors be as willing to adopt the “ride
it out” philosophy concerning T&I Defaults as that followed
by Fannie Mae? One, I might add, that we fully support.
Fortunately, so far they have.
Fast forward to the 4th quarter of 2008 and now that we are
servicing close to 20,000 reverse mortgages, the T&I issue
has become a lot more problematic for us, NRMLA, and in
fact, the entire reverse mortgage industry.
Before I get into all of the intricacies and nuances of the T&I
default dilemma, I would like to offer a little perspective.
The vast majority of reverse mortgage borrowers are able to
keep their taxes and insurance current. However, an ever-
increasing number of borrowers require the proceeds from
their reverse mortgage for immediate needs and in many
cases, all available funds are either taken at closing or used
up shortly thereafter.
Now factor into this “equation” the fact that a lot of older
adult borrowers were (or are) accustomed to having their
previous mortgage payments include escrows for taxes and
insurance. Then, when they get the much-needed funds
from their reverse mortgage, the thought of keeping reserves
on hand for the tax or insurance bill, in many cases, doesn’t
occur to them or is simply not economically feasible.
When a servicer receives information that taxes are
delinquent or a homeowner’s policy has lapsed, the
borrower is immediately contacted to discuss these potential
“defaults” in the hopes that it was a simple oversight and the
situation is easily and quickly rectified.
Oh, if it were only that easy!
All too often, the borrower is completely “tapped out” and is
also unable to obtain funds from any other family members
to help resolve the default. Somewhat surprisingly, it is
not uncommon for a borrower to actually thank us for
advancing the funds to pay their taxes or insurance premium
with a rather revealing comment like, “Thank you so much
for paying my tax bill. I honestly don’t know what I would
do without you.” Even though servicers work diligently to
impress upon the borrower that this is not a “free” advance
and they need to pay it back, most efforts at recovery are
generally not very productive. Yes, there are some folks on
repayment plans, but the successful completion rate on
these T&I workouts is dismally low.
With that said, the “pot is beginning to boil” once again as
we are seeing a recent and rather dramatic increase in T&I
defaults, with a significant percentage of those being fairly
new loans. Quite frankly, we were completely amazed by
the results of a recent data analysis that we conducted
on new T&I defaults in our servicing portfolio. When we
studied the underlying reasons behind these new defaults,
one overwhelming “theme” emerged quickly: over 80% of
the borrowers that recently defaulted on their taxes and/or
insurance had selected a lump sum payment (full draw of all
available funds) at the time of closing.
Further exacerbating this problem is the fact that secondary
market investors of the HECM product compensate
originators based upon the amount drawn at closing. This
practice, whether or not it’s intended, is an underlying factor
causing the increasing number of fully drawn loans being
originated.
Fannie Mae, reverse servicers, and HUD have been in
communication with one another regarding this topic over
the past several years. There have been T&I “brainstorming
sessions”, work groups, and a sharing of ideas in an effort to
provide the industry with a clear direction on how to move
forward.
Many great ideas have been generated by all of the various
participants as a result of these meetings and conversations,
but roadblocks continue to be placed in the way of true
progress. Guideline restrictions handcuff HUD from making
any dramatic policy changes, without first seeking and
obtaining congressional approval. Knowing how long it took
to get the most recent housing bill passed, this is not a very
encouraging solution.
Processes were introduced by HUD in the last 12 months
as a tool to help investors mitigate foreclosures on T&I
defaults. Essentially, the plan involves analyzing the current
loan-to-value on the property, along with other factors, to
determine if there could be a potential loss at some point in
the future. If the borrower meets HUD’s criteria, meaning
there is no foreseeable danger of HUD incurring a loss, then
November 2008
they will allow the servicer to “defer” calling the loan due
& payable until a future date, avoiding the requirement for
an immediate foreclosure action. On the flip side, if the
borrower’s property value cannot support the potential
future T&I advances, it is expected that the servicer/investor
will seek approval from HUD to call the reverse mortgage
due & payable, thereby moving towards foreclosure.
Thankfully, I am not aware of any foreclosures on HECM
borrowers due to a default on taxes and insurance as of
today. I do not know if this is due to the success of the HUD
deferral program or the continued stance of HECM investors
to not foreclose on T&I defaulted seniors, because it is not
publicly shared information.
At a HUD training session for HECM servicers in August 2008,
it was reaffirmed that HUD will continue to offer the T&I
deferral program as an option for servicers and investors to
reduce the requirement for foreclosures. However, there are
still more questions than answers that remain on the right
way to deal with borrowers who find themselves in this less-
than-desirable predicament.
While the deferral process is a good first step, there has
not been a HUD Mortgagee Letter issued which details
this process and provides clear direction to servicers and
investors. In addition, there are industry concerns over the
criteria used when analyzing whether a loan passes or fails
the HUD deferral guidelines. This lack of clear direction
could lead to inconsistencies in servicing practices from one
servicer to another, or one investor to another.
This difficult and sensitive situation leaves the primary HECM
investor, Fannie Mae, with the unenviable role of advancing
the necessary T&I advances year after year, after year. And
it leaves the servicer with the haunting, potentially daunting,
and even more unenviable task of initiating foreclosures
if the investor decides that they cannot absorb any more
advances. This becomes an even more challenging decision
for investors to make as falling home prices and the overall
housing crisis impacts the reverse mortgage industry.
As a final note, the reverse mortgage industry has seen
many positive achievements over the past year: continued
growth in the HECM program, more originators entering
the marketplace, higher loan limits, and increased levels of
consumer acceptance, to name just a few. But for servicers
and investors, the “clock is ticking” and those of us at
Celink, as well as any other servicer in the reverse mortgage
industry, are hoping that a broad-based solution to the T&I
default issue can be found – sooner rather than later.
29
Refi City—Maybe, Maybe Not Gerald C. Wagner, Ph. D. and Ashok Shinde, Ibis CTO

For several years we’ve thought HECM-to-HECM Refi’s implies that if there is no increase, there is no incremental
would be beneficial to many borrowers. They’re older now MIP, and the HUD software won’t allow the new Claim to
and rates are lower than usual – age and rates determine be less than the original Claim. So, basically, one cannot
benefits when applied to a Maximum Claim Amount (the get credit for more than the new MIP. Ibis software simply
lesser of the home’s appraised value or the HUD lending limit converts negative incremental MIP to a zero. We’ve seen
in that area). 30% of existing HECM’s are over-collateralized several examples where REFI HECM’s pay no initial MIP
(original appraisal was higher than the original HUD lending owing to declining home values.
limit). Then HUD announces a $417,000 lending limit – way
The Opportunity
over past limits. Great!
With a HECM, the benefits increase whenever (1) the
Not so great – home values have plummeted in the last two
Claim amount is higher, (2) the borrower is older, or (3)
years and HECM’s have fast payoff rates so there are not that
the Expected Rate is lower. This month the HECM national
many ‘old’ loans. Many factors go into finding how many and
lending limit is going to Freddie Mac ‘conforming limit’ of
which HECM borrowers would benefit with a REFI. In these
$417,000. A temporary increase in the conforming loan limits
notes, we explore this and more.
for high-cost areas is included in the 2008 economic stimulus
Over the last several years, HECM Refi’s have accounted for package; it is the lesser of $729,750 or 125% of the average
6.4% of HECM originations. We thought this figure would home value within a metro area. Unfortunately, HECM is
explode with the new $417,000 lending limit. Maybe not! As stuck with the $417,000 limit.
a side note, HECM Refi’s account for 31.2% of HECM payoffs
Claim Amounts
– there are five times more HECM originations than there are
HECM payoffs. Last month, county-by-county 203(b) lending limits ranged
from a national floor of $200,160 to a national ceiling of
Some Background
$362,790 (excepting Hawaii). There are 3,230 counties in the
On April 23, 2004, HUD released Mortgagee Letter 2004-18. U.S. – 79% of them were at the national floor – now they are
It provides that borrowers can receive credit for the initial all at $417,000. A breakdown of the old 2008 limits is below.
Mortgage Insurance Premium (MIP) they paid when doing a 670 of the Counties were classified as ‘high cost’.
HECM-to-HECM REFI. This is called a “Streamlined Refi”, but,
as we shall see, it’s not all that streamlined. Counties Counties Mix Mix
Initial MIP is two percent of the Maximum Claim amount. Hawaii 4
If the original Claim amount was $250,000, the initial MIP $362,790 120 4%
on the existing HECM would have been $5,000. If the new In between 546 670 17% 21%
Claim amount is $417,000, the initial MIP would normally
be $8,340, but with credit for the $5,000 MIP paid on the $200,160 2,560 2,560 79% 79%
original HECM, only $3,340 MIP is charged on the new 3,230 3,230 100% 100%
HECM.
The HECM program began in 1989. For the first three years,
Home prices have fallen materially in the pat couple of lending limits were low. From 1993 thru late 1998, the FHA
years. The Mortgagee Letter doesn’t specifically say what to county maximum and minimum lending limits were set at
do if the new Claim amount is less than the original Claim 75% and 38% of the conforming limit respectively. In late
amount, but the final rule published in the Federal Register 1998, these were reset to be 87% and 48% of the conforming
(75204, Vol. 69, No. 240) on December 15, 2004 says “the limit. Chart 1 shows the max and min lending limits over
initial MIP paid by the mortgagee shall not exceed two time as well as the average HECM home value and the
percent of the increase in the maximum claim amount”. This average Claim amount.

30 reversereview.com
 for a HECM-to-HECM REFI. Of the 30% of HECM’s that are
over-collateralized, 54% were over the then current lending
limit in the 124 maximum limit counties. Only 13% of these
over-collateralized loans were in Minimum limit counties.

Chart 1 shows that HECM borrowers have shared equally in

the housing market down. Downturn is perhaps too soft of
a word – perhaps a ‘market catastrophe that was waiting
to happen.” In the last two years, the average home value
of a new HECM has declined 17.0%, but interestingly, Claim
amounts are down by only 7.9%. That’s because 30% of
HECM’s are over-collateralized – when the home value is Chart 2 shows the percentage of new HECM’s that were
greater than the 203(b) lending limit, a fall in home value made with a home value greater than its 203(b) lending
doesn’t necessarily mean that the Claim amount will fall. limit. This chart indicates that the ‘high-cost’ metro areas
have the most over-collateralized homes. Those areas are
Whenever a HECM’s home value is greater than its Claim
where your REFI market is.
amount, the loan is over-collateralized and a prime candidate
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November 2008 31
 Fiscal Year Average Average Average Average Mix of Accum.
Ending Expected Property Maximum Unpaid Active Active
Sept. 30 Rate Value Claim Balance Cases Cases
1989-99 7.15% 124,382 110,806 91,754 1.1% 100.0%
2000 7.30% 141,700 124,600 86,000 0.5% 98.9%
2001 6.70% 167,100 140,600 95,900 0.7% 98.4%
2002 6.40% 178,000 151,300 101,500 1.6% 97.7%
2003 5.40% 197,600 165,900 118,600 2.8% 96.1%
2004 5.80% 219,400 182,200 119,600 6.7% 93.2%
2005 5.70% 254,900 206,000 130,500 9.6% 86.5%
2006 6.00% 289,700 235,600 134,800 19.9% 76.9%
2007 6.00% 261,900 229,300 120,200 30.1% 57.0%
2008 5.60% 240,400 217,100 108,300 26.8% 26.8%
The Potential Refi Market Older borrowers mean Principal Limit higher factors. And
lower rates mean higher factors – today rates are pretty
So the good news is that 30% of existing HECM’s are over-
low, but they were lower in 2003. To justify a HECM REFI,
collateralized -- a great pool of potential Refi’s exist. The
one must demonstrate benefits that are materially higher
bad news is that HECM home values are falling along with
than the costs of doing the REFI. The next table shows the
the market. 77% of active HECM’s were originated in the
incremental benefits across borrower ages that just using
last three years, and it’s safe to say that few are great refi
current rates would give compared to the loan’s original
candidates unless their original home value was higher than
Expected Rate. The high Expected Rates for loans made from
their original Claim amount.
1989 thru 2002 make them good REFI candidates – they will
One thing is for sure – the borrowers are older than when
enjoy considerably higher Principal Limit factors. Loans made
they got their original HECM. That means higher Principal
in 2006-2007 also show a positive ‘rate’ benefit, but their
Limits (Benefits). The Principal Limit on a HECM is found by
homes have undoubtedly fallen in value and current rates
multiplying the Claim amount by a factor which depends
are jumping around weekly.
on the younger borrower’s age and the Expected Rate.
The Expected Rate is the lender’s margin plus the 10-year So there we are. The HECM Refi market may be less than we
Treasury or LIBOR rate depending upon which HECM product hoped. The prime Refi loans are those originated in 2002
is offered. and earlier. This pool contains only 13,500 active HECM’s out
of more than 450,000 total HECM’s (360,000 of which are
active).
Fiscal Year Original Change in Principal Limit using current rates
Ending Expected With a $240,400 home value and 5.67% Expected Rate.
Sept. 30 Rate 65 70 75 80 85
1989-99 7.15% 37,502 33,656 29,329 24,280 19,472
2000 7.30% 40,147 36,060 31,492 26,204 20,915
2001 6.70% 29,088 25,723 22,357 18,270 14,664
2002 6.40% 19,953 17,549 15,145 12,260 9,616
2003 5.40% -3,606 -3,125 -2,644 -2,164 -1,683
2004 5.80% 3,606 2,885 2,644 1,923 1,442
2005 5.70% 3,606 2,885 2,644 1,923 1,442
2006 6.00% 10,337 8,895 7,693 6,250 4,808
2007 6.00% 10,337 8,895 7,693 6,250 4,808
2008 5.60% -3,606 -3,125 -2,644 -2,164 -1,683

32 reversereview.com
Of these 13,500 active loans originated from 1990 thru 2002,
30% were originally over-collateralized. In these 4,000 loans,
the average appraised home value was 32% higher than
the original lending limit. These are prime Refi candidates
because although home values have fallen materially in the
last two years, they haven’t fallen back to the original home
values of these old HECM’s.
One caveat on old HECM’s: For loans originated before May
1, 1997, the Principal Limit grows at the loan’s Expected
Rate (plus 0.5% MIP). After that date, growth is what the
practice is now – the actual note rate (plus 0.5% MIP). The
average Principal Limit growth rate on these pre May 1,
1997, HECM’s is 8.7%. In a Refi comparison of old and new
Principal Limits, finding a benefit for the borrower may be
tough. The borrowers are older, rates are lower, home values
are likely higher – all pluses so the Refi’s Principal Limit will
undoubtedly be much higher than the loans original Principal
Limit. But the original Limit has grown by 8.7% per year for
many years.
HECM Servicers and Refi’s
When doing a Refi proposal, the originator will have to
contact the original HECM’s servicer to get three pieces
of information. For the original HECM being refinanced,
servicers are required by HUD to provide:
November 2008
1. The Maximum Claim Amount (this allows you to
calculate the original MIP).
2. The current Principal Limit (the original PL plus growth
over the years).
3. The current Payoff Amount.
Items (2) and (3) can generally be found on the latest
monthly servicing statement. If you know the loan’s FHA case
number, you can go HUD’s case number assignment screen
to find the name of the servicer. Contact information for the
various servicers is found at HUD’s website (http://www.hud.
gov/offices/hsg/sfh/hecm/hecmservlist.pdf).
HECM’s are either “full service” or “sub-service”. Full service
means an originator sold the servicing rights to a servicer
and received a Service Release Premium (SRP). The servicer
collects the full monthly service fee, and I believe legally the
borrower is now ‘owned’ by the servicer, not the originator.
So originators culling their lists of old clients should be
careful to not get in a flap with the servicer they ‘sold’ the
loan to.
In a sub-servicing situation, the originator ‘retains’ the client,
gets no SRP, and splits the servicing fee with the servicer. So
there should be no problem with the originator getting the
information needed and making Refi proposals for their old
clients.
»
33
Anti-Churning Disclosure
Along with the usual Good Faith Estimate, a HECM REFI
requires a separate disclosure comparing the incremental
costs and benefits of the new HECM vs. the existing HECM.
This is done by estimating the Principal Limit (PL) of the
new HECM and subtracting the PL of the existing HECM. The
PL of a HECM grows each month, and you use the current
(grown) PL of the existing HECM, not its original PL, in this
calculation.
Then you find the cost of the refinancing by adding up the
loan fee, the incremental MIP, third-party costs such as
appraisal, title insurance, etc., and a zinger thrown in by HUD
– the Service Fee Set-Aside (SFSA). Most of us know that the
SFSA is a set-aside, not a cost – at least they could have given
credit for the SFSA on the existing loan – that SFSA is going
away.
One then divides the increase in PL by the new ‘costs’ to find
a ratio of benefits to costs. Five is the magic number. The
disclosure also shows the borrower the net amount that will
be available. This is the new loan’s PL, less the costs above,
and less the payoff on the existing HECM.
34 reversereview.com
Counseling
It may be a good policy to always request your REFI client to
go through HECM counseling again. But, if three conditions
are met, new counseling is not required. The conditions
are: (1) you give your client an Anti-Churning Disclosure,
(2) the magic number from above (the benefit/cost ratio)
is five or higher, and (3) that it hasn’t been more than five
years between the closing date of the existing HECM and the
application date for the new HECM.
There’s a catch to the five-year rule. The period begins with
the original HECM if there has been a prior REFI in between
the original HECM and the new HECM. If your client qualifies,
and opts out of new counseling, the case binder must
include a document showing that the three conditions were
met.
Refi Recap
The housing crash has made a mess of what we thought was
the opportunity of a lifetime – to refi 50,000 HECM’s. Still,
the new $417,000 national lending limit opens up many
HECM’s as potential candidates for immediate refinancing.
We estimate the current number at 5,000 – a far cry from
50,000. When, and if, home values come back, the Refi
market may bloom.
the art of developing
trust and credibility
through online
educational marketing
Valerie VanBooven

Knocking the ball out of the park on Reverse Mortgage

production consistently means knowing your community and
knowing how to educate effectively. Developing trust and
credibility in your local community means not only having
a respected physical presence, but also a respected and
informational online presence.

Where are your prospects and referral sources today?

Most of them are online!

November 2008
»
35
 Where are seniors getting their information on Reverse
Mortgages?

They are receiving their information in the mail, on the radio,

TV, online, and from well meaning adult children who get
their information online.

Here are two things to consider as you ramp up your

marketing plans for 2009.
1. Create and upload excellent videos- 1-3 minutes each on
Reverse Mortgages.
2. Make sure your website is effective in turning leads into
clients.

Video Marketing for Increased Credibility and Trust

You don’t have to be an internet guru to figure out

that video is one of the most pervasive entertainment
and educational facets of the online world. If you are not
leveraging video yet, the good news is you can start at any
time.
• Popularity & Accessibility - Video is now so popular
and accessible, it accounts for half of all Internet traffic.
That’s right -- in less than two years video has gone from
practically non-existent online to comprising half of all
the content consumed each day.
• Power - This is fantastic news for anyone selling products
or services online. Why? Because it’s been widely known
for decades that video is the most powerful selling
medium there is. If you could learn how to sell with
Internet video, just imagine the results you could drive
piggybacking on to the most popular online content
there is.
• Simplicity - Another factor is that the technology and
processes for creating video has gotten so simple,
children are now doing it!
• Affordability - The amount of money it takes to produce
online videos that sell and blast them all over the Web
is now so miniscule, practically any business owner can
now afford it and not even blink.
• FACT: YouTube is now the fourth most popular site on
the Internet, commanding almost 12% of global Web
traffic.
• FACT: More than 70% of Internet users now stream video
each month.
• FACT: Worldwide, nearly 12 billion videos are consumed
online each month.
• FACT: Before our eyes in less than two years, the number
of free video hosting services has gone from a handful to
nearly 300.
(Sources: comScore Media Metrix and the New York Times)

36 reversereview.com
Google.com LOVES videos. When you upload a short video to
some of the most popular online FREE services, you will be
indexed on the front page of Google.com and other search
engines almost overnight. Be sure you understand how to
make keywords work for you!
Equipment and the “How To”
For the beginner, I recommend using a program called
Camtasia, and a simple Power Point presentation. Camtastia
($324 US) can be found online at www.camtasia.com. This
is a screen capture program that will record everything
you do and say as you move through a short Power Point
presentation. No camera required!
In fact, you can record and upload a video in a matter of
minutes with a little practice.
The videos you record should be uploaded to many sites
across the internet including YouTube, Google Videos, Yahoo
Videos, MySpace Videos, Veoh, LiveVideo, GUBA, and dozens
of others. (This takes an investment of TIME.)
Make sure you freshen up your content once a month to
stay on top of the search engine rankings.
November 2008
Use these videos on your website as well. Consumers
want as much information as they can get before making
a decision. Keep your videos short and to the point. By all
means, take a look at what your competition is doing BEFORE
you record. Take note of what looks terrible and what really
shines. Model your videos after those who have done a great
job.
Finally, today video and the internet go hand-in-hand. It’s
cheap, easy to do, and really sets you apart from the boring
crowd. Establish yourself as the ultimate expert on any topic
by using video to your advantage!
Can you pay someone to do this for you? Absolutely! But
don’t spend an arm and a leg on a process that shouldn’t
cost you more than $100 per month. As an example of how
well this works, the next time you are surfing the web, type
in “Marketing Senior Services” and see if you can find one
of my videos on the front page of Google. Use my template
as a model for your own. If you can’t find me, email me at
valerie@nextgenfinser.com, and I’ll point you in the right
direction.
37
The Band Alissa Scott

OF FIVE
Getting a loan closed is not as easy as it appears.
In order to close loans quickly and efficiently it is
important for loan officers to surround themselves
with elite business partners. It is imperative that
loan officers have a team which fits their mold and
provides the same level of service. This team should
consist of a DILIGENT PROCESSOR, an EDUCATED
SETTLEMENT AND TITLE PROVIDER, a TRAINED
REVERSE MORTGAGE NOTARY/ATTORNEY, a
WELL-VERSED TRUST ATTORNEY, and a CREATIVE
FINANCIAL PLANNER. Loan officers often refer to
these individuals as the “band of five.”

38 reversereview.com
By having a “band of five” in their network, loan officers
will be able to get their loans closed without stress. No
two loans or borrowers are alike and it is the loan officer’s
responsibility to assist the senior homeowners in making the
loan work.
For example, a loan officer was not able to get the loan to
closing because their senor borrowers had not fully executed
their trust and it was a lender requirement that the trust be
signed prior to the loan documents. The senior borrower’s
attorney had drawn up the trust but the attorney forgot to
have them sign and notarize it. An easy solution would have
been to have the senior borrowers contact the attorney or a
notary to get the trust signed and notarized.
Unfortunately, the senior borrowers had been in and out of
the hospital and were unable to find time to get the trust
signed. The loan officer solved the problem by contacting a
member of the “band of five,” their title company. One of
the title company’s account managers had a notary license
and offered to drive to the senior borrower’s home to obtain
their signature at no additional charge. This is just one of the
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November 2008
many instances where a valued business partner can assist a
loan officer in finding solutions to their client’s needs.
When choosing a processor to handle reverse mortgage
closings, the loan officer should be selective. Many senior
homeowners haven’t obtained a mortgage in 30 years, so
the processor must have the patience to communicate with
the older, wiser homeowner who doesn’t understand the
reverse mortgage process or industry jargon.
A reverse mortgage processor will have to be kind, caring,
and understanding of the senior borrower who cannot locate
a copy of their bank statements, trust, or death certificate.
Many times, the reverse mortgage processor will have to
guide the senior borrowers on what the documents look
like so they can assist in locating what is needed to close the
loan.
A reverse mortgage processor will get to know the family
members of the elder homeowner and will have to learn to
remain calm when they receive a call from a disgruntled heir
asking why they are taking their inheritance. They will have
to adjust to clearing all conditions prior to receiving the loan
documents and assist in the coordination of scheduling the
closing.
Typically, the reverse mortgage processor is the main point
of contact throughout the transaction due to the fact that
the senior homeowners get confused when they receive calls
from vendors who have their private information. To prevent
from upsetting a senior borrower, the reverse mortgage
processor will work closely with title to help cure old liens,
obtain the proper documentation to clear conditions, and
scheduling the reverse mortgage closing. An efficient reverse
mortgage processor will help loan officers close their loans
quickly and allow them to do what they do best, bring in
more reverse mortgage applications.
Choosing a reverse mortgage processor to be a part of
the “band of five” is equally as important as electing a
settlement and title company. First, loan officers would
want to check to make sure they chose a settlement and
title company that is on their reverse mortgage lender’s
preferred vendor list. Next, loan officers should find out how
many reverse mortgage transactions the settlement and title
company has closed and they would also want to verify that
the settlement and title has the ability to review trusts based
on HUD, lender, and state guidelines. Also, a settlement
and title company should be able to offer resources and
suggestions to assist loan officers in getting their loan closed
such as: counseling agencies, reverse mortgage experienced
»
notaries/attorneys, and industry referrals.
39
In comparison to the conventional mortgage industry, the them in getting a reverse mortgage and they trust them with
title and settlement company takes on a different role in their biggest asset.
the reverse mortgage industry. Their interaction is done
behind the scenes and they have very little interaction with Other things to consider are the mishaps that happen on
the senior borrowers due to the confusion it provides to the loans such as: the signer misses a signature or the senior
senior homeowners. However, that doesn’t mean they don’t homeowners are late for the signing, or the documents don’t
have their work cut out for them. The settlement and title arrive on time and the notary/attorney has to reschedule
officer acts as a liaison between the loan officer, processor, after they drove an hour for an appointment or the loan
lender, and notary/attorney. documents were incorrect and we have to redraw. The
notary/attorney may want to charge additional fees for
The biggest obstacle the title company faces is old liens the extra work, mileage, or time. If the loan officer had
where a reconveyance hasn’t been recorded or the lending a relationship with a notary/attorney who understood
institution has gone out of business. Trying to locate a that people make mistakes and that it is not the senior
zero demand letter, paid in full statement, or copy of the borrower’s fault, the notary/attorney might be more willing
recon can be difficult and to work with the loan officer
can delay the closing. This on adjusting their fees.
is why it is so important
that the reverse mortgage “A lot of senior homeowners don’t It is important to stress the
processor and settlement and have a trust but they are interested fact that if a loan officer can
title company have a strong attend their closings, they
relationship and can work in creating one for the purpose of have a 99.9 percent chance
together in a timely manner that the borrower won’t
to get the loan closed. If the
avoiding probate for their heirs rescind. Realistically, a loan
reverse mortgage processor should they pass away.” officer can’t always attend
can provide a complete the signing because they
copy of the trust and all are either writing another
of the amendments, bank application or spending
statements, death certificates, homeowner’s insurance time with their family. Business is based on referrals so a
information, statement of information, borrower’s loan officer better make certain that if they can’t attend
authorization, power of attorney, and final vesting (if it needs the reverse mortgage closing, the notary/attorney who
to be altered) then the settlement and title company can is representing them knows and understands reverse
efficiently do their job and the loan officer can continue to mortgages.
do their job of bringing in more loans.
Now it’s time to focus on the professional partners; trust
After all the conditions have been met and the clear to close attorneys and financial planners. A trust attorney who is
has been issued, it is time to call upon another member of well-versed in reverse mortgages is essential to the success
the “band of five,” the notary/attorney. A notary/attorney is of a loan officer. The trust attorney will be able to offer
an extension of the loan officer. They are the last person to assistance by drawing up a trust for senior borrowers,
contact the client before the loan disburses. A title company providing an attorney opinion letter when required by the
will do their best to elect a notary/attorney who has been lender, amending the trust to reflect only one beneficiary,
trained on reverse mortgages but sometimes at the end of providing a letter to state that the property lies in the
the month, it’s harder to schedule the most experienced revocable portion of the trust, an instruction and a deed to
notaries/attorneys. remove the borrower from the irrevocable trust, and assist in
addressing senior borrower’s concerns about how a reverse
However, if a loan officer has an established relationship with mortgage will affect their trust. A lot of senior homeowners
a notary/attorney and that person is a part of their “band of don’t have a trust but they are interested in creating one for
five,” the loan officer wouldn’t have to worry about whether the purpose of avoiding probate for their heirs should they
or not their senior borrower had a question on their loan pass away.
documents. The notary/attorney would be able to answer
the senior borrower’s questions, or they would get the loan By including a trust attorney in the “band of five,” loan
officer on the phone to address their client’s concerns. After officers can refer their clients to a trusted attorney who they
all, the senior borrowers chose that loan officer to assist know will treat them with care. Also, since the trust attorney

40 reversereview.com
is well-versed in HECM/HUD guidelines, the loan officer
won’t have to worry about the attorney including verbiage
in the trust that would prevent the senior borrowers from
obtaining a reverse mortgage loan.
Another scenario that might occur would be if the senior
borrower can’t locate a copy of the trust and the vesting
clearly reflects that they hold title in an irrevocable trust. At
the trust attorney’s discretion, they can provide an attorney
opinion letter to have the senior borrower removed from
the irrevocable trust. A trust attorney can be a saving grace
when a loan officer is faced with a deceased borrower and
the property is in an “A and B” trust. A trust attorney can
come to the rescue by providing the senior borrowers with
an attorney opinion letter stating that the property lies in the
revocable portion. A trust attorney is a great ally because
not only are they helping the senior borrowers, they are a
great referral source for the loan officer.
borrowers Medicaid benefits and the senior borrower was
not happy. There are many different scenarios and each
borrower is different but choosing a financial planner that
has the proper accreditation to work with seniors and
making them a part of the “band of five” can only help loan
officers achieve their goals of being the best.
It is well known that the most successful loan officers have
strong relationships within the reverse mortgage industry.
Loan officers can’t close these loans on their own; they need
help. It’s a necessity for loan officers to work with business
professionals that can assist in growing their business. The
“band of five” must share the same morals as the loan officer
and want to achieve the same goals; closing loans quickly,
efficiently and professionally.

An additional referral source and trusted advisor is a

financial planner. We have all heard about the nightmare
loans where a broker was sued because they sold a senior
borrower an annuity along with a reverse mortgage. They
may have thought they were doing the senior borrower a
favor or they may have just been greedy. If the loan officer
had only suggested that their senior borrowers seek the
advice of a financial planner, they wouldn’t have been put in
HUD Foundation Specialists
that predicament. A financial planner can offer solutions to
a senior homeowner that a loan officer cannot. For instance,
if a senior borrower has a spouse who is not 62 years of age,
that spouse cannot be on title to the loan. This may prevent
M
Manufactured
actured Hou
Housing
sing
the senior homeowner from going through with the reverse
mortgage because they are concerned about what will
Troubleshooters
Trouble
happen to their spouse once they pass away.
FFoundation
One situation that may occur is the non-borrowing spouse
could lose the home if they are not able to refinance the
Inspections, Upgrades
reverse mortgage with either another reverse mortgage or a & Repairs
conventional loan. Also, depending upon the state and how
the senior homeowners are holding title, the non-borrowing
spouse may have to go to court to claim their inheritance
EEngineer
due to probate. Certificatio
C ons

In order to put the senior homeowner’s mind at ease, the

financial planner may offer some suggestions to protect
the interest of the non-borrowing spouse, such as a life
insurance policy. A financial planner can also be a resource
when senior homeowners have concerns about how a
reverse mortgage can affect their taxes or Medicare benefits.
For instance, a loan officer advised a senior borrower to
remove the property from the trust. Changing the vesting
on the property affected the look back period on the senior

November 2008 41
 Press Release
NEWS RELEASE
Contact: Tyler Sebresos
801.316.6999
NEW REVERSE DOCUMENT PREPARATION INTERFACE
International Document Services Inc. and Ibis software announce a data interface opening the way for unprecedented reverse
mortgage document flexibility.

DRAPER, UTAH November 6, 2008: IDS a document preparation company has teamed up with Ibis, makers of Ibis RMO, the
leading reverse mortgage origination software. This integration allows lenders to transfer all of the data from Ibis RMO into
idsDoc; IDS’s document preparation solution, enables the generation of necessary documents for reverse mortgage loans
smoothly and without data entry.

With its experience doing forward mortgage documents for over 20 years together with this new interface, IDS surges into
the reverse mortgage market touting a broad range of competitive advantages. By working with a widely used and well
respected company like Ibis, IDS is making the right moves to show their commitment to the reverse industry. Moreover, as
a historically forward mortgage doc prep company, IDS is a pioneer by expanding into reverse documents, a commendable
move that reflects the company’s aim to be flexible to client needs.

The partnership combines the usefulness of Ibis with the customization abilities of IDS. This gives lenders a streamline
workflow through the closing process, plus a range of tools and options to avoid compliance issues or costly data entry
mistakes. “I am excited to give RMO users the flexibility that IDS provides. They will be getting the type of options and
efficiency that is expected of document preparation on the forward side.” said Jerry Wagner, President of Ibis.

“I think lenders will be impressed with the new tools and features we’re bringing to the reverse mortgage space,”
commented Curt Doman President of IDS. “I’m excited about our partnership with IBIS. The seamless integration of our
systems provides a new standard of service.”

A noticeable difference that IDS brings to the reverse market is the progressive manner in which the data is merged
dynamically into the proper forms. Once all the information is entered or interfaced from Ibis, the document package is
created in a matter of seconds. Other tools include data entry shortcuts and auto-fills that speed up doc generation, audit
checks to help catch clerical mistakes or enforce company compliance settings and form manipulation to refine the package
to meet the specific requirements and requests of the client.

About IDS Inc.

For over 20 years, IDS Inc. has been a nationwide provider of mortgage closing documents. In this time, IDS has become
quickly recognizable in the industry due to system flexibility and industry recognized customer support. The idsDoc system
is fully customizable to applicable legal, compliance and automation requirements of each individual lender. In addition,
IDS backs the system with unsurpassed customer service and progressive technological advances. For lenders looking for a
flexible and accelerated document ordering process with 24hr support; visit the IDS website at www.idsdoc.com or call 800-
554-1872.

About Ibis Capital, LLC

Ibis software has been the industry standard since 1995. The sister company of Ibis, NETirement.com, Inc., licenses online
reverse mortgage software products that are second to none, including The Reverse Mortgage Analyst (RMA), The Reverse
Mortgage Calculator (RMC) and The Reverse Mortgage Originator (RMO), the first non-HUD software to propose and disclose
HECM’s. To learn more, please visit Ibis on the Web at www.ReverseMortgageHomePage.com or call 800-566-5077.

42 reversereview.com
MBA’s ANNUAL 08SF CONVENTION & EXPO

Gallery of Guests

Carl Rove
Norman Edwards
Kim Newell
Jay Leno with Club MBA
John Courson
Senator George Mitchell

November 2008 43
 Press Release
NEWS RELEASE
Contact: Trevor J. Gauthier
AVP of Marketing
303.991.8337

SENIOR LENDING NETWORK® GOES LIVE ON MORTGAGE CADENCE ORCHESTRATOR™ AND FINALE™ PLATFORMS
Transforms Reverse Automation with Data Driven Workflow and Fully Integrated Document Solution

DENVER, October 21, 2008 – Mortgage Cadence, Inc., a leading provider of Enterprise Lending Solutions (ELS) for the financial services
industry, announces the successful implementation of Mortgage Cadence Orchestrator and Finale to Senior Lending Network®, a program
of World Alliance Financial Corp, and a leader in reverse mortgages. The Mortgage Cadence solution delivers extraordinary back office
automation while driving efficiency throughout the reverse lending and document preparation process.
“This is a marketplace that is expanding exponentially, with more than 6,500 seniors turning 62 each day. There is a tremendous need
for the reverse mortgage product and a proven technology solution to support our business as it rapidly grows,” said David Peskin,
Chief Executive Officer of Senior Lending Network. “We were looking for someone with the ability to scale our operations in an efficient
manner and implement a fully integrated document solution to move our loans swiftly from point of sale to the closing table. “
Mortgage Cadence supports multiple top 10 reverse lenders and lenders that are new to the reverse market segment. The reverse
mortgage functionality included in the Mortgage Cadence Orchestrator ELS supports reverse process flows and requirements.
Additionally, it provides lenders with the ability to enter 1009s and HUD supplements, complete calculations for FHA HECMs and
Fannie Mae Home Keeper products, reverse mortgage specific forms with a 100% pull through, the power to add additional customized
calculations for custom products, as well as full support for multiple underwriting processes such as mortgage credit analysis and
property analysis.
Mortgage Cadence Orchestrator also offers sophisticated data driven workflow automation (powered by the ACE™ Rules Engine)
including auto-resolution capabilities that greatly improve efficiencies, mitigate the need for additional training and deliver a significant
increase in employee productivity and customer service. “By using the ACE™ Rules Engine to validate ratio’s and other reverse specific
lending guidelines, we have been able automate our processes to significantly drive down costs,” added Peskin.
Mortgage Cadence Finale, a premier document solution that supports both forward and reverse lending, is leveraged to dynamically
create initial disclosures & closing packages and deliver them securely to the borrower or settlement agent. The Mortgage Cadence Finale
team works in conjunction with Weiner Brodsky Sidman Kider PC to provide a full range of superior legal services and guidance in areas
including due diligence, FHA/VA/GNMA and federal and state regulatory compliance. This relationship strengthens Mortgage Cadence
Finale’s position within the entire mortgage document services space and facilitates continued dominance in the field of document
services and technology for both forward and reverse mortgage lending.
“We saw the potential in the reverse mortgage lending market early on and so we have been pro-actively working on this functionality
for years,” stated Michael Detwiler, Chief Executive Officer of Mortgage Cadence. “We are pleased to partner with one of the true reverse
lending innovators, Senior Lending Network, a program of World Alliance Financial Corp., to provide them with the industry’s leading
Enterprise Lending Solution and premier document preparation and delivery technology.”
About Senior Lending Network®
Since 2004, the Senior Lending Network has been championing the rights of the nation’s senior citizens through its educational efforts,
mortgage products, and philanthropic endeavors. By providing seniors with information and guidance on issues most pertinent to their
lives as well as access to a network of qualified reverse mortgage experts, the Senior Lending Network has already touched the lives of
more than one million seniors. For more information call (800) 454-1546 or visit the company’s Web site at www.seniorlendingnetwork.
com.
About Mortgage Cadence, Inc.
Mortgage Cadence, Inc. is the leading provider of Enterprise Lending Solutions (ELS). Mortgage Cadence Orchestrator™ provides data
driven workflow automation and seamless integration across the enterprise to help lenders achieve harmonious operational rhythm from
origination, processing, underwriting, and closing through secondary marketing. The solution provides both forward and reverse lending
automation – as well as support for multiple lending channels. This superior technology features business rules management, product
and pricing, electronic document management, and a suite of Web portal options within one comprehensive platform. To learn more,
please visit us on the Web at http://www.mortgagecadence.com.

44 reversereview.com
 directory

James B Nutter and Company

1st Reverse Financial Services, LLC 800.798.3946
A Subsidiary of Wilmington Savings jbnutter.com
Fund Society, FSB Reverse Fortunes.com
877.574.1000 866.592.2096
1streverse.com reversefortunes.com

America’s Recommended Mailers, Inc. Monte Rose

800.992.2722 Reverse Market Insight, Inc.
800.516.0545
armleads.com 949.429.0452
monterose.biz
rminsight.net

AppraiserLoft
877.229.7799 Reverse Mortgage Adviser
appraiserloft.com 800.407.6365
Mortgage Bankers Association reversemortgageadviser.com
202.557.2700
mortgagebankers.org

Reverse Mortgage Association for

Loan Officers
Celink 877.262.7656
517.321.9002 remalo.org
www.celink.com
Next Generation Financial Services
888.973.8377
www.ngfs.net Reverse Mortgage Daily
reversemortgagedaily.com
Consumer Credit Counseling Service
800.251.2227
cccsinc.org
Reverse Vision
919.834.0070
OnTheLevel reversevision.com
800.909.1110
Ibis onthelevelcontractors.com
800.566.5070
reversemortgagehomepage.com

Premier Reverse Closings SoldonSeniors

International Document Services
800.542.4113 540.785.9050
800.554.1872
prclosings.com soldonseniors.com
idsdoc.com

November 2008 45
the last word
Gary Onks - Fear Factor - What do seniors fear the most?

If you ask most people what a senior citizen fears the most, they will probably say illness or death of either
themselves or loved ones. This would seem to be the logical answer about people whose age has brought them
to the final stages of life. However, this answer is incorrect. Seniors are fully aware that due to their age they are
facing potential physical and health problems, but those fears are way down their list of concerns about their lives.
During my 18 years of marketing to seniors I’ve learned directly from “the horses’ mouths” what really worries seniors the most, and it’s
not getting sick or dying. They literally worry that they will live too long.

The top 3 things seniors fear the most are:

1. Will I outlive my money?

2. If I run out of money, what will happen to me and where will I live?
3. Will I become a burden to my children or my family?

These concerns are very practical and make sense because seniors know that once they are gone, they will never be a burden to
anyone. Seniors come from an era of extremely strong work ethics and have always prided themselves on being independent, paying
their own way and taking care of themselves and their family. The thought of becoming dependent on others and being a burden to
anyone, especially their family members, is almost unbearable and they will do anything in their power to avoid having that situation
occur.

I began learning this about seniors in the early 1990s while selling retirement community and assisted living units. As necessary
as these were to my clients and as nice as the facilities were, I learned that my clients did not want to move there and they told me
so. Their desire was to stay in their homes, but aging issues were forcing them to make life changes they did not have the money to
address. Their only option was to sell their home in order to get the money they needed. Then they could move to a facility that offered
the necessary services. This was an extremely negative emotional experience since they had to give up their home in order to get
services they needed. It was like having an estate sale while they were still alive. They would have given anything to stay in their home
and be able to pay to bring the services to their home, but alas there was no money available since they were house rich but cash poor.

Knowing these financial fears of seniors gives those of us in the reverse mortgage business a major marketing advantage. Our
product does not require melting down their existing home or lifestyle. In fact, we can make these fears disappear and replace them
with peace of mind and happiness. No one else offers a remedy to fix these concerns that is even remotely close to what we can give
them.

The current economic crisis that fills the front page of every newspaper each day and is the lead story on every radio and TV
program is adding greatly to seniors’ monetary fears. They are watching their investments or 401k plans shrink more every day. Their
worst financial nightmares are occurring right before their eyes and they are sick with worry about what the future holds for them.

But, as Paul Harvey would say, here is the rest of the story. Reverse mortgage originators offer seniors the best financial news they
could possibly ever hope for. Not only do we offer them a financial breath of fresh air, we actually bring them something that is as sweet
as a summer breeze. We give them a way to stay in their home for as long as they want without any fear of losing it; and in addition, we
give them access to money every month that can help them avoid becoming a burden to their loved ones. It’s no wonder that so many
seniors say this is truly a dream come true.

In these dreadfully bad news financial times we are the Good News Missionaries who can truly change seniors’ lives for the better
and save them from misery and despair. We are like doctors with a miracle cure that the patients did not realize even existed.

It’s been said that there are three words, which are stronger than “I love you” and those words are “I understand you”. This is what
seniors long to hear from us. They seek someone who understands what they are facing, who understands how worried they are and
who can offer them a way to be free from their financial fears.

Knowledge is Power. You now have some crucial and very personal knowledge from inside the hearts and minds of seniors. If you
use it wisely, seniors will thank you and your sales will soar.

46 reversereview.com
 REVERSEVISION

ReverseVision
ReverseVision Suite is the leading reverse mortgage
origination solution for mid to large sized organizations.
It covers all aspects of the origination process from
prospect to closing and shipping.

Graphs Workflow End-to-end

POS to Com
p
swit anies
shipping

c
Rev hing to
er
Ease of use Proprietary expe seVisio
r n
loans
imm ience an
e
incr diate
Connectioins ease
prod in
uctiv their
Automatic
update
Mobile Enterprise
solutions
ity.

z Complete integration from origination to processing, underwriting, closing, and shipping.

z Highly scalable - for small entities to enterprises with correspondents and branches.
ReverseVision Suite

z Sales oriented graphical interface that integrates directly with Microsoft Word and Outlook.
z Direct export to Celink, RMS, Fannie Mae, UBS, Goldman Sachs, and others.
z Business process driven workflow for best practices in the reverse mortgage industry.

Over the past 12 months more than 100 companies with over 2000 users
switched to ReverseVision.

www.reversevision.com z (919) 834 0070 z info@reversevision.com

ReverseVision Inc. z 3310 Pollock Place z Raleigh, NC 27607-7006
 Get More Leads.
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Introducing The Ultimate
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