the reverse review april 2009

8/14/2019 The Reverse Review April 2009

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THE

REVERSEreview

Keeping Your Reverse Experience Non-Toxic

Regulatory Challenges Of Entering The Reverse Mortgage Busines

Weiner Brodsky Sidman Kider, P

page

24

During these tumultuous times, when news articles referring to mortgages are frequently precede

by adjectives such as toxic or troubled, reverse mortgage participants have fared somewhat

better than their forward brethren. As more and more newbies enter the reverse mortgage space,

many are entering with little to no prior knowledge of the intimate workings of this niche market. Thi

month our feature article focuses on the topics related to FHA approval as well as non-FHA specic

issues as they pertain to the closing of HECMs.

April 2009


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22 reversereview.com


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April 2009


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44 reversereview.com17100 Gillette Ave., Suite 131, Irvine, CA 92614

800-516-0545 [email protected]

Its Here!

Go Sell. Go Serve.The best and only true How To

guide to reverse mortgage selling.

Barton O. Johnson - President & CEOLifestages Financial, Inc.

Order your copy now at

www.monterose.com

$18.95(Plus Shipping & Handling)

Publisher Aman Makkar

Copy Editor Harpreet Makkar

2009 The Reverse Review, LLC. All rights reserved. The Reverse Review, LLC is a California lim

liability company and is the publisher ofThe Reverse Reviewmagazine. Reproducons or distri

of any materials obtained in the publicaon without wrien permission is expressly prohibited

views, claims and opinions expressed in arcle and adversement herein are not necessarily th

ofThe Reverse Review, its employees, agents or directors. This publicaon and any references

products or services are provided as is without any expressed or implied warranty or term of

kind. While eort is made to ensure accuracy in the content of the informaon presented here

The Reverse Review, LLC is not responsible for any errors, misprints, or misinformaon. Any leg

informaon contained herein is not to be construed as legal advice and is provided for enterta

or educaonal purposes only.

Postmaster : Please send address changes to The Reverse Review, 11440 W Bernardo Ct, Ste 22

Diego, CA 92127

11440 West Bernardo Court

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San Diego, CA 92127

Subscriptions and Editorial Contentphone : 858.217.5332

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website : www.reversereview.com

Advertising InformationRates, specicaons, and deadline informaon available.

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THE REVERSEreview

Editor-in-Chief Erica English

Production Jason Westbrook

Layout & Design Guenthoer Design

Printer The Ovid Bell Press


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April 2009

editors not

Educaon: Beingable to dierenate between what you doknow and what you dont. Its knowing whereto go to nd out what you need to know; and

its knowing how to use the informaon onceyou get it. --William Feather

WOOOHOOOO! We turned one!

As we celebrate the one-year anniversary of

the magazine, I am reminded of the rst day

we decided to take the leap of faith, which

became The Reverse Review. At the me, one

of our main goals was to take an industry,

which was sll very young as compared to

the mortgage industry as a whole, and onewhere there was a lot of ignorance and

misinformaon, and educate people in our

niche. As I reect on the past year, I am very

pleased with the progress we have made. We

have focused month aer month on trying

to bring new and fresh informaon to our

audience; informaon about sales & markeng

taccs to help grow your business, as well

as keeping you abreast of all the changes

occurring in the industry. We have also been

fortunate to expand our contributor base every

month, which now provides us with monthly

legal and servicing educaon.

As we move forward, our goal connues to be

educaon; the educaon of the new comers to

the market, as well as the veterans. In order

to fulll our goal, we urge our readers to write

to us and share your thoughts about what you

would like to see in print each month. This

publicaon would not be successful without

you and we want to hear your ideas.

Thank you to the sta ofThe Reverse

Reviewfor a wonderful and fullling rst

year of educang and communicang to

the Reverse market. Thank you to our new

creave designer, Wil Guenthoer, for making

the magazine look phenomenal this month

(we hope you all enjoy the new design andlayouts). Finally, a special THANK YOU to

the adversers, contributors, and readers in

helping us make TRR such a success. We could

not have done this without you.

Thanks for reading and see you all soon!

Erica English

Editor-In-Chief

Aman Makkar

Publisher


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CONTENTS

ESSENTIALS

14 Filling the FunnelSam Collins

5 Note From the Editor 10 Ask the Underwriter 12 Industry Snapshot

44 Ask the Servicer

20 Age of Authencity

Valerie VanBooven

34 A Country in CrisesMichael Banner

38 Creang a World ClassReverse Mortgage

Training Program,

PART III

Jacqueline Del Priore

24 FEATURE: Keeping YourReverse Experience

Non ToxicWeiner Brodsky Sidman

Kider, PC

30 Now, I Can Hear You.Part Two of the Sales

ConversaonMonte Rose

45 46Directory The Last Word: Daves TOP 9


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April 2009


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Jim Milano- Keeping Your Reverse Experience Non-Toxic - Regulatory Challenges ofEntering The Reverse Mortgage Business, page 24James M. Milano is a Member of the law rm of Weiner Brodsky Sidman Kider PC.

Jim is Co-General Counsel of the Naonal Reverse Mortgage Lenders Associaon(NRMLA) and is naonally recognized as one of the leading lawyers in the area ofreverse mortgage law. Jim can be reached at [email protected] or by telephone at

202.628.2000.

Valerie VanBooven- Age of Authencity, page 20Valerie VanBooven RN BSN is a Senior Service Markeng Expert and the NaonalMarkeng Director for Next Generaon Financial Services, a Division of 1st MarinerBank. She is a professional speaker and the author of the books Aging Answers (2003)and The Senior Soluon (2007). She can be reached at [email protected] visit her website at www.myseniorservice.com

contributorsRalph Rosynek-Ask the Underwriter, page 10Ralph Rosynek is President and CEO of 1st Reverse as well as a HECM DE Underwriter.Mr. Rosynek has been involved in mortgage lending for over 30 years with the last 5+years exclusively providing reverse mortgage lending soluons. To contact Mr. Rosynekor to learn more about 1st Reverse Financial Services, Please visit www.1streverse.comor call 877.574.1000.

Michael Banner - A Country in Crises, page 34Founder of LoanWell America, Inc., Michael has been in the mortgage industry for 27years. He is one of few Reverse Mortgage professionals accredited to teach connuededucaon classes for CFPs, CPAs, aorneys & insurance agents. A proven senioradvocate, he is a member of NRMLAs State & Local Issues Commiee and sits on theBoard of Directors for the FPA of Tampa Bay. Michael has been interviewed by theWall Street Journal, the Tampa Bay Business Journal, Sr. Market Advisor & The ReverseMortgage Wire as well as numerous other Reverse Mortgage Internet sites. For moreinformaon: [email protected] or 877.700.0555

John Lunde- Reverse Market Snapshot, page 12John Lunde is President and founder of Reverse Market Insight, the premier source for

market intelligence and analycs services in the reverse mortgage industry. RMI clients

include ve of the top ten reverse mortgage originators, both lender and independent

servicers, as well as some of the largest nancial services rms in the world. Find out

more at www.rminsight.net or call 949.281.6470.

Joel Schiman- Keeping Your Reverse Experience Non-Toxic - RegulatoryChallenges of Entering The Reverse Mortgage Business, page 24Joel Schiman is a member with the law rm of Weiner Brodsky Sidman Kider, P.C. Therm serves as General Counsel to the Naonal Reverse Mortgage Lenders Associaonand advisor to reverse mortgage lenders and industry parcipants throughout thenaon. Mr. Schiman can be reached at [email protected] or by telephone at

949.798.5570.


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Happy

Anniversary

to You!!!

Ask The Underwriter

Ralph Rosynek

With April marking the 1st Anniversary oThe Reverse Reviewand paper being the

traditional 1st Anniversary git, how tting

that we start o the month o April with

killing more trees or paper to add to

our HECM les! Time to lay in a supply

o more toner!

Mortgagee Letters 2009 -09, 10 and 11

did a last minute rush to the nish

line in March 2009.

ML-2009-09

Adopon of Market Condions Addendum (Fannie Mae F1004MC/Freddie Mac Form 71) and Appraisal Reporng Requments for Properes located in Declining Markets

Currently, all Federal Housing Administraon (FHA) Roster Appraiare required to report on housing trends in the Neighborhood secof the applicable property specic appraisal reporng form. The form Standards of Professional Appraisal Pracce (USPAP) mandthat an appraiser maintain documentaon necessary to supporanalyses, opinions and conclusions for each appraisal assignmena work le. In order to ensure greater transparency and accuracappraisals performed for FHA-insured nancing, FHA will adoptMarket Condions Addendum

(Fannie Mae Form 1004MC/ Freddie Mac Form 71, released Novber 2008). For all appraisals of properes that are to be securityFHA-insured mortgages and that are performed on or aer Apr2009, the appraisal must include the Market Condions Addendu

To read this mortgagee leer, the others listed below and any aments in their enrety, please visit: hp://www.hud.gov/oadm/hudclips/leers/mortgagee/ view the 2009 leers and clicthe leer of your choice. Mortgagee Leers from previous yearsbe found on the same page.


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April 2009

Underwring Impact Comment: The operave words are on or aerApril 1, 2009. Your Underwriter suggests you send a copy of thismortgage leer to your appraisal vendors as it will impact all HECMappraisals.

ML 2009-10

HUDs Updated Policies on HECM Counseling, and Several NewRequirements:

The leer includes a reiteraon that lenders are strictly prohibited

from assisng a senior in scheduling counseling; borrowers are not tobe pressured in any way and must contact a counseling agency at theirown pace.

Lenders must now provide a list of no fewer that 10 counselingagencies to every client, including 5 local agencies that are withinthe seniors local area and/or state, with at least one agency withinreasonable driving distance in order to provide face-to-face counselingif the senior so elects.

In addion to the 5 local agencies, the other 5 agencies include Na-onal Foundaon for Credit Counseling, Money Management Interna-onal, CCCS of Greater Atlanta and the Naonal Council on Aging andthe AARP; in ML 2009-10, HUD provides toll-free numbers for these 5agencies.

HECM counselors must review a seniors unique nancial situaonduring the counseling session; the counselor must document theseniors budget based on nancial informaon provided by the senior(such as income, assets, debts, monthly expenses); this budget analy-sis, required by secon 255 of the Naonal Housing Act, mandatesthat the counselor evaluate and discuss with the senior any appropri-ate alternaves to a HECM loan.

HUD revised the HECM Counseling Cercate to provide a spaceto record the method of payment for the counseling session, eitherUpfront Fee for Counseling Session or Financed Fee for CounselingSession, as well as a box to check if the fee has been waived.

Underwring Impact Comment: Pull your counseling informaon listNOW and revise it according to the new leer.

A good borrower safeguard would be to conduct a companyreview of the changes to HECM Counseling.Addionally, include a company posion statement as tocounseling requirements and guidelines for loan originators andHECM borrowers.

ML 2009-11

Remember HECM for Purchase Mortgagee Leer, ML 2008-33, someof the provisions of ML 2008-33 are included in the new MortgageeLeer 2009-11:

With regard to HECM for purchase transacons, the maximum claimamount will be the lesser of: 1) the appraised value of the home; 2)sale price of the home; or 3) the HECM loan limit.

HECM mortgagors may have only one principal residence at any oneme; current HECM mortgagors that plan to sell their exisng resi-dence and use the HECM for purchase program to obtain a new prin-cipal residence must payo the exisng FHA-insured mortgage beforethe HECM for Purchase mortgage can be insured.

HUD also provides guidance to prevent the pracce known as buyand bail where the homebuyer purchases a more aordable home

with the intenon to cease making payments on the previousmortgage.

The monetary investment required may be met through the use offunding sources approved under HUD Handbook 4155.1, REV-5, seon 2-10, except that (i) sweat equity, (ii) trade equity, (iii) rent creor cash from the following pares may not be used: (a) a seller or aother person or enty that nancially benets from the transaco(b) any third party or enty that is reimbursed, directly or indirectlthe seller or any other person or enty that nancially benets frothe transacon.

If a property has major property deciencies (as outlined in ML 2011), all repairs of such deciencies must be completed by the selleprior to closing.

Lenders must examine HUDs Limited Denial of Parcipaon List (Land the General Services Administraons (GSA) Excluded Pares LSystem to determine whether the seller, real estate agent, builder, other pares involved in the transacon, appears on either list. Threverse mortgage will not be eligible for mortgage insurance if thename of any party to the transacon appears on either list.Borrowers cannot obtain gap nancing if there are is a lack of funavailable to purchase the new home outright. This restricon inclusubordinate liens, personal loans, cash withdrawals from credit carseller nancing and any other lending commitment that cannot be

sased at closing.With ML 2009-11, HUD included an Aachment showing severalexamples of the calculaon of the required monetary investment tthe senior must make in HECM for purchase transacons.Underwring Impact Comment: Be very careful with vericaonof earnest money and funds to close. There sll is not a rm, cleadenite, permied (did I use enough adjecves?) conclusion on tsubject of gis from close family members. Your underwriter willadvise you when a more clear statement on this topic is available

Perhaps the best approach for your rst few purchases would be make sure all pares are communicang; realtors, borrowers, processors, underwriters and closing/selement agents alike.

Besides new rules and guidance, the issue of incorporang new bhaviors for all of the pares is a very big factor in the success of ttransacon. Remember, many borrowers havent done a purchasin 20 years, most Realtors know how to get a forward purchaseclose, most tle/selement agents are familiar with closing documents and requirements for a forward purchase, and lastly, forsome investors, funding a loan on the day it is supposed to fund mbe an excruciangly painful endeavor.

Oh, did I menon many of our loan originators are not from theforward world and we also have that new live-pricing lock yoloan issue!Please be aware of the need for a 3 day right of rescission if the brower is also bringing addional proceeds to the table to provide a line of credit facility.

Lastly, as we raise our glasses to The Reverse Review as the magazenters its second year of publicaon, a special toast to the addionof another permanent xture to the Magazine, Ryan LaRose, the mbehind, Ask The Servicer. Ryan and I look forward to really starngsome trouble with you, our readers, as we connue to tell you whayou dont want to hear, claim you didnt know and scratch your heawondering who the he$% came up with that great idea!

Cheers.


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reverse mortgage industry snapshot

Lender Distribuon by YTD Growth Rate

Stascs Provided by Reverse Market Insight - February 2009

Top 10 Rankings by Region

10 Regions, ranked by HECM unit volume YTD. Including rank change from prior YTD, as well as growth rates.

Also includes acve lenders and growth

Lender distribuon graph and table, showing number of lenders growing at various growth rates YTD vs. prior

YTD, including volume aributable to each group of lenders.

Client Noces

1) Help improve data quality in the Reverse Mortgage industry. If you believe your companys numbers on this report are inaccurate, please e-mail us

([email protected]) and we will review your feedback promptly. Please include your name, company and contact informaon along with a thorough descrip

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 youve been looking for a source for Reverse Mortgage intelligence beyond MIC endorsement numbers, weve got just what you need.

Find out more at www.rminsight.net/rmarket.php


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1April 2009

24 Month Penetraon and Unit Volume

2 year trend graph of monthly HECM unit volume and industry penetraon against 62+ homeowner households naona

Appendix

1) All stascs based on retail originaons from HUDs Monthly HECM MIC reports

2) Loans are in unit volume, based on HUD reported mortgage insurance cercate issuance

3) Lenders are aggregated using HUDs lender idencaon numbers and unique lender names, along with feedback from

reporng lenders

HUD Regions and Corresponding States/Territories

Region 1 - New England

Conneccut

Maine

Massachuses

New Hampshire

Rhode Island

Vermont

Region 2 - New York/New Jersey

New York

New Jersey

Region 3 - Mid-Atlanc

Delaware

District of Columbia

Maryland

Pennsylvania

Virginia

West Virginia

Region 4 - Southeast/Caribbean

Alabama

Florida

Georgia

Kentucky

Mississippi

North Carolina

Puerto Rico

South Carolina

Tennessee

U.S. Virgin Islands

Region 5 - Midwest

Illinois

Indiana

Michigan

Minnesota

Ohio

Wisconsin

Region 6 - Southwest

Arkansas

Louisiana

New Mexico

Oklahoma

Texas

Region 7 - Great Plains

Iowa

Kansas

Missouri

Nebraska

Region 8 - Rocky Mountain

Colorado

Montana

North Dakota

South Dakota

Utah

Wyoming

Region 9 - Pacic/Hawaii

Arizona

California

Federated States of Micron

Hawaii

Nevada

Region 10 -

Northwest/Alaska

Alaska

Idaho

Oregon

Washington


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lling the funnel...Your Building

Block to Success


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1April 2009

written by Sam Collins

ritical to your success in the reversemortgage business is gathering leads.

This gathering o leads, sorting and usinglead inormation is necessary to begin interaction with

your senior prospects. This process is called Filling the

Funnel.C


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You see; leads are a powerful resource to have. Todays leads

are tomorrows originaon, or next months, or next years.

Therefore, it is important for you to understand the impor-

tance of your leads.

One important concept for you as an originator or broker is

the ability to create a workable senior prospect database.

This database enables you to market to your prospects now

and in the future. By pung your senior prospect leads in

your database, you are securing a lucrave future for busi-ness, originaons and ulmately referrals.

The more senior prospect leads you have in your funnel, the

more originaons youre going to have down the road. Why?

Because you have the list and you are going to devote your-

self to be constantly standing in front of them.

Where Oh Where Has That Lile Lead Gone?

Queson: What happens when prospecve leads are not put

into the funnel? Where do they go?

Lets say that you capture a reasonable amount of prospects

and work the enre incoming leads. You discover there are

some seniors who are ready to go now. So, what do you do

with the rest of the leads who were not ready? My guess,

many of those leads may get lost! Why? Its probably not

tenonal, but because of the overwhelming nature of just

ing business and living life, many of those leads just get los

and unfortunately end up in the trash can or a scrap piece

paper, then lost forever.

When I rst started in the reverse mortgage business, I ha

hired a loan ocer who was struggling. He had been wor

in the business for 6 months and had only closed 2 reverse

mortgage loans. He came to me discouraged. I suggestedgo back to his old leads and call them again, send them inf

maon, or touch base with them in some way. His respon

was What Leads? I menoned he had been given over

100 prospects, What happened to the other 98? The lo

ocer stared at me and confessed, I threw their stu awa

I didnt think I would need it. Well, I have to tell you this

a wake up call for my loan ocer and for me. Somemes t

which causes you pain can make you stronger.

What is the Price of Lost Leads?

What is the ulmate result of a loss or discarded lead? W

really there is only one answer to that queson. You will

have to seek out more leads. And thus, (if not corrected),

the process will begin again. Yes, youll pour more money

into purchasing leads, make the quick originaons, loose o


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1April 2009

discard the lost and if you are not careful, the process repeats

itself again and again.

In this process, not only are you spending more money in

markeng eorts, but in purchasing more leads you are leaving

thousands of dollars of prots just sing on the table.

Lets do a quick calculaon. Lets say you are spending $5000

per month on markeng for leads and you are able to generate

50 leads. Of those leads you generate immediately 5

originaons, you gross $20K in originaon fees and you feel

prey good. Aer 12 months you havent done too badly, but

what about those 45 X 12 or 540 leads that were le on the

table. Lets say half of your leads or 270 were not qualied, but

the remaining 270 had a chance, and you were able to close

another 5% or 14 originaons, which resulted in $70K of

addional originaons. Had you thrown the leads away or lost

them, that addional income would be lost, and the business

would have most likely gone to your compeon. This is

certainly something you cannot aord to let happen.

You Dont Have To Be Pushy To Be Successful!

This is so true in the reverse mortgage space. Senior clients cansee through a pushy salesman. Your goal is to become the trust

advisor through consultave approaches. When you start to

understand the importance of every lead, you will noce your

approach will change and your mindset creates a whole new set

of values. Recognize what others are doing to close originaons,

toss out the bad and use the good.

Your goal is to be polite even if the senior client is not ready to

move forward. We all know our senior clients will not move for-

ward unl they are ready, not when you are ready. The secret is

simple, steady as she goes with polite persistence.

Capture your leads to capture more originaons!

Realizaon: no maer where your leads are generated from,

you are not the only person trying to sell to the hot leads.

Remember the need for leads is greater than the supply, so

it is common sense to recognize two or more persons may be

working the same lead to win the senior clients business.

ne important concept or you as anoriginator or broker is the ability to createa workable senior prospect database. This

database enables you to market to yourprospects now and in the uture.

O


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Here is the building block strategy for you to take away. Treat

each and every senior prospect as if they were already your

client and remember many will be. There is no way to gauge

how much a prospecve lead is worth in the future. Why

take risks with potenal dollars? Understand that leads are

only worth the originaons that come from them. But, in

senior markeng, you never know when the originaon will

occur. Remember, your senior clients are working on their

schedule, not yours.

Converng the Funnel

Assuming by now you have determined how to ll your fun-

nel, you need a plan to make sure you culvate all those not

so hot leads. You should also realize that managing your

funnel is a mammoth task and is one of the primary reasons

why leads go in the trash or just get plain lost.

The secret to lead conversion mastery is dependent on your

ability to execute faithfully. I know you have heard it before;

however, the secret is really no secret at all. To master the

funnel you must master follow up. When you choose to

execute your follow up, you are comming to interacngwith your senior client. In order to interact, you must have

a message and a reason for your client to really get to know

you and interact with you.

Many of you are probably using the old fashioned method

of follow up. Maybe you are using a le folder system, a

notebook, scky notes, or the Ill remember to call them

back system. If you are sll using the laer and it is work-

ing for you, then keep doing it. However, even the brightest

and most knowledgeable of originators nd it impossible to

remember all their non-acve clients. Why? Because in

order to keep your pipeline full, your business requires manypotenal clients and our client is not on the same schedule as

us.

Establishing a consultave follow up system requires pa-

ence. However, it requires you use some form of technol-

ogy. Yes, you need some form of automaon to keep up. If

not, you are going to do three things; one, connue along the

same old path geng the same old results; two, drive your-

self crazy; and three, connue to lose money on unconver

leads that slip through the funnel.

The old days of just picking up the phone and geng an

appointment are gone. Oh yes, you might get luck here

and there, but this business in not for the faint of heart, it

hard work and smart work. The arena of compeon has

proven they want the business also. So, dont immediatel

think your senior prospect doesnt have choices and dont

think they immediately see the value of you and a reverse

mortgage. The senior client wants to be shown not told.

establish the value and relaonship your senior client nee

to know exactly what they will be receiving and exactly ho

it is going to impact their lives. Its not about you; its abo

them.

Boom line, if you fail to move your prospect through the

funnel, youre not going to get the opportunity to make m

ey. So why should your senior client choose you to do bu

ness with. What have you oered them that others cant?

Usually, the answer is nothing. For example, if one denst

hands every client a toothbrush and the other denst doe

the same, there is no dierence. However, if you are hand

a toothbrush, an egg mer, and a two-minute demonstra

you have been oered something of value. So most of us a

not giving our prospecve client the why me answer the

desperately want. Choose me because Ill give you a fre

toothbrush is not a good reason for picking a denst.

Your senior prospects are looking for value. Value they do

typically nd in a sales or markeng message. This value

creaon is where most of us go astray and fail to dieren

ourselves.

Conversion techniques to keep the funnel owing

You must add Value in order to add Revenue

Please keep one thing in mind; content rich materials. Le

face it not all of your materials will contain valuable inform

on, but most of it should. The informaon has to be rela

and be of interest to your senior client. The value I am tal

about is any knowledge you can impart to your senior pro

pect that they will appreciate. For example, rather than th

same old same old approach, you could send a report thatexplains the dierence between adjustable and xed rates

or a report about the growth of technology among seniors

and how knowing that will help them. What if you were t

one person to educate your client? It would certainly set

apart.

Keeping your name in front of the prospect can only be on

with follow up. Your prospect will think of your considera

ere is the building block strategy oryou to take away. Treat each and every

senior prospect as i they were alreadyyour client and remember many will be.

There is no way to gauge how much aprospective lead is worth in the uture.

H


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1April 2009

every me they see your name. All the while you are building

trust. This strong relaonship will carry on once they become

clients.

The trust is the value they receive without the hard sell.

So, your rst step to becoming the welcomed guest is to be

that person who is invited to all the pares because you are

fun and interesng. This could be youthe person everyone

wants to be around. Creang valuable content does not haveto be complicated either. You already know a lot about re-

verse mortgages, throw in some fun facts, interesng success

stories, and youll quickly have a fan club. Oen when I visit a

client, they tell me they have the Sam Collins pile of informa-

on. Yes, they actually have folders with all the informaon

I have sent them. Now, thats a fun feeling to see all my stu

there and guess who got the business!

At the risk of overloading you with the funnel, I saved the

best conversion technique for last because I am so excited to

tell you about it. Show dont just tell. Wouldnt it be nice

if you had the me to personally approach each one of your

prospects? Wouldnt it be great if you could sit in front of

your prospects and share with them all the good stu about

how a reverse mortgage can help change their lives? Imag-

ine being face to face without driving yourself crazy wonder-

ing who might be stealing your business and feeling good

about yourself when you helped your client by saving thei

home or improving their way of life.

Show your senior clients you care by creang a systemac

proach to each and every prospect. Become a fanac abo

your follow up and hold yourself and your team accountab

for each step and each contact.

There are many CRM systems and even manual systems thwill provide you with the right tools to ll your funnel and

keep it full with a steady ow of qualied and interested

prospects. We use a rich content infused system for our fo

low up. There are many systems out there and choices.

Will all your prospects actually do a reverse mortgage? No

but many will eventually. All you need to do is make sure

you are at the end of the funnel waing!


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2April 2009

Marketing

Reverse Mortgages

in the Age o AuthenticityVALERIE VANBOOVEN RN BSN

Late 2008 and early 200

have delivered a lot bad new

bad press, scams of grand proportio

and as a result consumers are more wary an

skeptical than ever. On the other hand we als

have seniors who are in desperate need of casow because they have lost more than ha

if not all of their nest egg


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As sales people and marketers of Reverse Mortgages, we

nd ourselves in a situaon where its more important than

ever to educate consumers about our products and services,

as well as establish credibility and trust along the way. Even

more important than establishing our credibility is maintain-

ing our credibility- making sure that every me we close a

Reverse Mortgage its for the right reasons, and has suit-

ability wrien all over it.

Theres also never been a more important me to educate the

prospects family. Sons and daughters are ercely protecve

of their parents in mes like these, and somemes ercely

protecve of their perceived inheritance (whether that be ap-

propriate or not!).

Recently an email was sent to me about class acon lawsuits

and Reverse Mortgages. Im not sure where it came from or

who wrote it, but it became very apparent that down the road

we will see more of this. This is the reason why its a good

idea to have a one price policy for all of your HECM custom-

ers. Although some companies allow loan ocers to sell

higher margin products and receive higher commission, taking

the stance that a one price strategy provides fair value for the

client, company and loan ocer is the right approach.

The message: Do the right thing, or start pung those com-

mission checks in your personal defense fund., Bre Carter,

Founding Partner NGFS/1st Mariner Bank.

Markeng in the Age of Authencity - Come Out from Be-

hind the Curtain

The methodology for markeng our products and services inthe Age of Authencity has changed dramacally in only a

maer of months. For those of you who have yet to enter the

Social Media Markeng landscape, the me to get involved

is now. I see your compeon working hard on their blogs,

Twier posts, Facebook business pages, Squidoo, Scribd, and

other accounts that not only increase their visibility on all

search engines, but also allow them to educate prospects-

and beat the pants o of you in the online markeng space.

Some other important points to keep in mind:

Online social media markeng means personal rst,business second. When seng up a Facebook account,

a blog or any other means of communicaon, let people

know who you are as a person- your passion for seniors,

your reason for being in this line of work. All of that

informaon allows you to then talk about business, and

convey a message of trust. No more hiding behind the

corporate we. On the other hand, we dont want to

know about your messy divorce, or any other personal

problems. Keep it all smiles and bueries and rainbow

for the general public.

Your About Us page on your main website needs to

change. Gone are the days of the corporate we un-

less you are Coca Cola or Pepsi. About Us needs to be

About You. Your name, your face, your personal/prof

sional bio needs to be highlighted instead of a picture

your oce building.

Contact Us beer mean what it says. If your Contac

Us page is a form that does not give the phone num

or email address or mailing address of your oce, you

doing yourself and your clients a disservice. There is no

ing worse than wanng to talk to someone, only to be

faced with an online form to ll out and no direct ema

phone number. Dont hide behind your website.

Laws Change, Products Change, the Only Constant is Chan

In the last 6 months we have seen good and not-so-good

legislaon pass regarding the HECM product. Markeng m

sages have changes, loan limits and product oerings have

changed more than once. Companies who oer the Revers

Mortgage have entered the space and then disappeared. L

ocers have le the business, or been laid o as a result o

the current economic situaon. Big local names are exing

stage le. There is no doubt that consumers might be a li

confused.

Take this opportunity to be a world-class expert on the

subject, oer educaon oine and online. Get out there

and make a dierence in your community. Funnel markendollars to programs that work to provide solid no obligao

informaon. Show your staying power.

One Bad Apple Spoils if for the Whole Bunch

Finally, in the Age of Authencity all eyes are on this indu

try. The media thrives on the one case that they can nd h

lighng a senior and family who feel they have been duped

Dont be the bad apple that spoils it for the whole bunch. W

need to share the hundreds of stories about seniors lives w

have been changed for the beer. Grab those tesmonials

and blog about them, post them on your website, write prreleases about them (with permissions), and share the goo

stories that the general public needs to hear.

There is a lot of opportunity for all of us in 2009 and beyon

lets start sharing the message online and oine as much a

possible with passion, credibility, and vision.


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2April 2009


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25/48

2April 2009

During these tumultuous times,when news articles referring to mortgages are

frequently preceded by adjectives such as toxic ortroubled, reverse mortgage participants have fared

somewhat better than their forward brethren. Not

surprisingly, recent statistics published by FHA

suggest that new forward players are entering into

the reverse arena at an unprecedented pace. For

example, during the first six months of 2008, over

1,000new originators entered into the business,

representing an 86% growth rate, while overallvolume grew just 5%.1

1ReverseIQ Newsletter, September 12.2008, Reverse Mortgage Insight, Inc.


26/48


As new reverse mortgage market parcipants embark upon theirreverse mortgage journey, the rst hurdle they must overcome isobtaining all necessary regulatory approvals. Consequently, as a use-ful refresher for those already in the business and a primer for thoseentering, we focus in this arcle on many of the regulatory approvalrequirements and related issues that impact new reverse mortgageparcipants as they step into the reverse mortgage space.

Since most reverse mortgages originated on the market today areFederal Housing Administraon (FHA) insured Home Equity ConversionMortgages (HECMs), we cover several topics related to FHA-approval.

In addion, we also address certain non-FHA specic issues thatapply to all reverse mortgage lenders and originators, whether theyoriginate FHA-insured HECMs or non-FHA insured proprietary reversemortgages.

FHA Mortgagee Approval

In order to parcipate in the originaon and funding of, and invesngin, FHA-insured loans, including the FHA-insured HECM, one must beFHA-approved. Under FHA parlance, an approved enty is a mort-gagee and there are four dierent classicaons of mortgagees:non-supervised mortgagees, supervised mortgagees, loan correspon-dents (which can be either supervised non-supervised) and invesngmortgagees.

Non-supervised mortgagees (i.e., mortgage lenders) are non-deposi-tory nancial enes that have as their principal acvity the lendingor investment of funds in real estate mortgages. A non-supervisedmortgagee may originate, underwrite, purchase, hold, service, and sellFHA-insured mortgages and submit applicaons for mortgage insur-ance.

Non-supervised loan correspondents are non-depository nancial en-es that have as their principal acvity the originaon of FHA-insuredmortgages for sale or transfer to one or more sponsors that under-write the mortgages. Sponsors must have Direct Endorsement (DE)authority (as discussed below).

Supervised mortgagees are nancial instuons that are members ofthe Federal Reserve System, and nancial instuons whose accountsare insured by the Federal Deposit Insurance Corporaon (FDIC),

or the Naonal Credit Union Administraon (NCUA), such as banks,savings associaons, and credit unions. Supervised mortgagees mayoriginate, underwrite, purchase, hold, service and sell FHA-insuredmortgages as well as submit applicaons for mortgage insurance.

As is the case with supervised mortgagees, supervised loan corre-spondents are also either members of the Federal Reserve System ornancial instuons whose accounts are insured by FDIC or NCUA.The dierence, of course, is that supervised loan correspondents mayonly originate FHA-insured mortgages for sale or transfer to one ormore sponsors that underwrite such loans.

As its name implies, an invesng mortgagee is an organizaon, incing a charitable or not-for-prot instuon or pension fund, whichinvests in FHA-insured mortgages with funds under its own controAn invesng mortgagee may purchase, hold, and sell FHA-insuredmortgages, however, an invesng mortgagee may not submit applons for mortgage insurance.

Finally, it is important to note that an FHA mortgagee approval oapplies to the legal enty that is the actual applicant and does notcover any of its subsidiaries or aliates. A subsidiary or an aliatean approved mortgagee must apply for FHA approval separately.

General Requirements for FHA-Approved Mortgagees

Now that we understand the dierent types of approved mortgagelets review the general requirements for each type as well as the scic requirements for dierent forms of business organizaon.

A non-supervised mortgagee must maintain a warehouse line ofcredit adequate to fund the mortgagees average 60-day producopipeline, but no less than $1 million. The line of credit must be issdirectly to the mortgagee. In lieu of a warehouse line of credit, FHpermits non-supervised mortgagees to provide evidence that it haentered into a mortgage funding program with a nancial instuothat provides for table funding or concurrent funding of all mortgaoriginated by such mortgagee.

A non-supervised mortgagee is also required to spend a majority ome and assets in the producon of real estate mortgages and in tlending or investment of funds in real estate mortgages, or a directrelated eld. Unless organized as a not-for-prot enty or otherwiapproved by FHA, these principal acvies must contribute at leasone-half of the entys gross revenues.

With few excepons, both supervised and non-supervised mortgagmust originate, close, fund, and submit mortgages for FHA insuranendorsement in their own names. A mortgagee may not perform a part of the loan originaon process, such as taking the loan ap-plicaon, and rounely transfer the underwring package (appraisreport and/or mortgage credit package) to another mortgagee, excbetween a loan correspondent and its sponsor, and a principal andauthorized agent (discussed below).

A loan correspondent may process an applicaon and submit it toone of its sponsors for underwring. Again, its sponsor must haveauthority (discussed below). The loan correspondent may close theloan in its own name, or in the name of the sponsor that underwrithe loan. [However, be mindful that in certain states applicable lawmay require that an originator that closes loans in its own name, ha mortgage lender license. Further some states prohibit an originatfrom closing loans in its own name unless the enty also funds theloan with its own funds.] Most importantly, an FHA-approved loancorrespondent may not underwrite the loan. That is the job of a

As new reverse mortgage ma

ket participants embark upotheir reverse mortgage journey, thrst hurdle they must overcome obtaining all necessary regula-tory approvals.


27/48


28/48


Each mortgagee is responsible for the originaon and/or underwringprocesses they perform. The loan must be closed in the name of theprincipal, although either party may submit the closed loan for insur-ance for the benet of the principal.

The amount of the originaon fee each party receives is a contractualmaer to be determined by the two pares, subject to RESPA andother applicable laws. The aggregate amount of the originaon fee iscapped under applicable HECM regulaons and Mortgagee Leers.

Employees of FHA-Approved Mortgagees

FHA also has strict rules concerning the employees of mortgagees. TheMortgagee Approval Handbook provides that employees must be un-der the direct supervision and control of an FHA approved mortgagee.The mortgagee must be able to demonstrate the essenal characteris-cs of the employer-employee relaonship upon inquiry by HUD.

Compensaon of employees may be on a salary, salary plus commis-sion, or commission only basis and includes bonuses. All compensa-on must be reported on Form W-2. Independent contractors are notacceptable originators of FHA insured mortgages. In addion, employ-ees who perform underwring and loan servicing acvies may notreceive commission income.

A mortgagee may employ full-me or part-me (less than the normal40 hour work week) sta. Although employees of a mortgagee mayhave other employment, including self-employment, such outsideemployment may not be in mortgage lending, real estate or a relatedeld. Consistent with this posion, an informal leer was issued bythe Atlanta Home Ownership Center (or HOC) on October 5, 2006,providing that an individual acng as an FHA loan originator employeecannot act as an acve real estate broker and originate FHA-insuredloans. The informal leer did go on to provide, nonetheless, that loanocers of a FHA-approved lender not involved with FHA nancingmay concurrently originate loans and act as a real estate broker. Note,however, that some states laws prohibit or place limits on real estatebrokers also acng as mortgage brokers in the same transacon, andother restricons, including those under RESPA, may be applicable.

Also, on August 30, 2007, HUDs Oce of Lender Approval issued aninformal leer stang that HUD does not prohibit an individual that

maintains a real estate broker or sales agents license from being em-ployed as a loan ocer by a mortgagee as long as the FHA-approvedlender has controls in place to ensure that the individual does notmake use of their real estate broker or sales agents license. The let-ter went on to reiterate the guidance provided earlier in the October5, 2006 leer that these HUD requirements do not apply to thoseindividuals employed by the mortgage lender who do not parcipatein FHA related acvies.

Direct endorsement underwriters are subject to the same limitaoAn underwriter may not work on a part-me basis for any other mgagee, even underwring convenonal mortgage loans. In addioan underwriter may not underwrite loans for a parent or subsidiarthe underwriters approved employer.

State Forward Mortgage Approval Requirements Apply to Re -verse Mortgages

Almost every state has mortgage lending requirements that apply tmortgage lenders and mortgage brokers. Reverse mortgage transa

ons, including FHA-insured HECM loans, oered on the market toare rst lien residenal real estate secured transacons. Thereforereverse mortgage originators, including FHA-insured mortgagees, nto be aware that state forward mortgage lending laws also applythose enes or persons conducng reverse mortgage operaons,less an enty enjoys preempon or is exempt, as discussed below.

Because state forward mortgage approval requirements generalapply to reverse mortgages, parcipants in the reverse mortgagebusiness must have all appropriate licenses for the state in whichthey wish to conduct reverse mortgage acvies. Accordingly, statlicensed mortgage originators who wish to operate on a naon-widbasis must obtain licenses from state regulators in most U.S. jurisdons, unless an exempon applies. Some states may oer an exemon from licensing for enes that are FHA-approved, maintain aminimum net worth or post a bond. However, the number of statethat oer exempons from licensing to mortgage lenders and morgage brokers has decreased over the past several years, and that tris likely to connue.

As discussed above, under FHA rules, an approved loan correspon-dent may close FHA-insured HECM loans in its own name with itsown funds. If an FHA-approved loan correspondent does so, it wogenerally be acng as a mortgage lender, rather than as a mortgagbroker, for state mortgage licensing law purposes. Therefore, a FHapproved loan correspondent who closes a HECM loan in its ownname with its own funds would generally need to obtain a mortgalender license under state forward mortgage laws, unless otherwexempt.

Note, also, that federally chartered enes, such as naonal banks

regulated by the Oce of the Comptroller of the Currency (or OCCand federal savings associaons regulated by the Oce of ThriSupervision (or OTS), and their operang subsidiaries, may rely on eral banking laws and regulaons to preempt the applicaon of stamortgage licensing requirements.

SAFE Act - Loan Originator Licensing and Registraon

As part of Congress eorts to promote uniformity and enhanceconsumer protecon, HERA included the Secure and Fair Enforcemfor Mortgage Licensing of 2008 (or SAFE Act). The most signicantelement of the SAFE Act is the requirement that all loan originatorincluding those that work for state or federally chartered depositoinstuons, must be licensed or registered. Unless states enact looriginator licensing laws, consistent with the SAFE Act, federal rule

supplied by HUD will apply. States generally are required to enact SAFE compliant laws by or before July 2009 (with a few states haviunl July 2010). Most states legislatures are draing and enacngsuch laws now and the eecve dates of those laws are looming.

Under the SAFE Act, loan originators must be licensed (if employedby a state licensed mortgage company) or registered (if employed a state or federally chartered depository instuon, or a subsidiaryof such instuon if the subsidiary is regulated by a Federal bankinagency) and maintain a unique idener through a naonwide liceing system. The SAFE Act denes the term loan originator as anindividual that takes a residenal mortgage loan applicaon and o

Each mortgagee is respon-sible or the origination and/

or underwriting processes they per-

orm. The loan must be closed inthe name o the principal, althougheither party may submit the closedloan or insurance or the ben-et o the principal.


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2April 2009

or negoates mortgage terms. Administrave and clerical personnel,as well as processors and underwriters, are not considered loanoriginators, unless they otherwise meet the denion based upon theacvies they perform.

State licensed loan originators must also sasfy the following mini-mum standards under the SAFE Act: (i) they may not have had anoriginator license previously revoked; (ii) they may not have pledguilty or been convicted of a felony during the seven year period priorto licensing, or at any me if such felony involved fraud, dishonesty,breach of trust or money laundering; (iii) they must demonstrate

nancial responsibility, character, and general tness; (iv) they mustsasfy pre-licensing educaonal requirements and pass a wrien test;(v) they must clear a background check, which includes submingngerprint cards, personal history and experience informaon, and anauthorizaon to obtain a credit report; (vi) they must meet either networth or a surety bond requirement, or pay into a State fund.

State Reverse Mortgage Specic Approval Requirements

In addion to FHA approval (for enes wishing to originate FHA-insured HECM loans), state forward mortgage approval, and loanoriginator licensing/registraon under the SAFE Act, as discussedabove, several states have enacted specic statutory requirements forreverse mortgage originators and/or reverse mortgage loan programs.Several states have laws that address reverse mortgages in one way oranother. Most of these states do not have separate approval require-

ments for reverse mortgage programs or originators, however, somedo.

States that have specic requirements for reverse mortgages generallyfall into one of two broad categories: (A) states with comprehensiveschemes that require separate approval of reverse mortgage origina-tors and/or reverse mortgage programs, as well as imposing consumerdisclosure and other substanve requirements and lending restric-ons; and (B) states that impose substanve requirements or limita-ons without a separate approval requirement.

For instance, laws in North Carolina, New York and Tennessee fallinto the rst category. North Carolina requires enes that makereverse mortgage loans to obtain approval from the North CarolinaCommissioner of Banks. This requirement applies even if the enty

has already obtained forward mortgage approval in such state,or is exempt from the forward mortgage law. Note, also, that theNorth Carolina Oce of Commissioner of Banks takes the posionthat brokering of reverse mortgages is prohibited in North Carolina(as outlined in the Commissioners March 11, 2005 Declaratory Ruling2005-01).

Tennessee and New York similarly require enes that originate re-verse mortgages in that state to submit a leer applicaon along withother informaon showing the lenders nancial responsibility andother informaon pernent to the lenders loan programs. The NewYork approval requirements are onerous and require lenders to origi -nate loans with certain substanve limitaons. As in North Carolina,the reverse mortgage approval requirements in Tennessee and NewYork apply even if the enty is also licensed (or exempt) under for-

ward mortgage laws in such states. However, note that New Yorksreverse laws specically exempt FHA-insured HECM loans.

The reverse mortgage laws in Iowa and Massachuses also containdetailed substanve rules, including disclosure requirements and lend-ing limitaons, however, reverse mortgage originators in such statesare not required to obtain a separate regulatory approval at the entylevel. Instead, Iowa and Massachuses require originators to submittheir proposed reverse mortgage loan program(s) to the stateregulator for approval before the originator can oer the program toseniors in such states.

Note that in Iowa, the state regulator has previously approved certadjustable interest rate HECM programs to be oered to seniors insuch state. Thus, lenders wishing to oer such adjustable interestrate HECM loans in Iowa would need to le a nocaon with theIowa regulator, without the need to go through a separate programapproval process.

In Massachuses, the state regulatory agency has taken the posiothat lenders presently must submit all of their programs, includingFHA-insured HECM programs, for approval, even if the same progrhas previously been approved for another lender. Also, note that t

Massachuses regulator takes the posion that the HECM for HomPurchase loan program requires separate approval, or an amendmto the originators exisng loan program approval if the originatorexisng program approval did not include HECM for Home Purchasloans.

California law falls into the second category. While there is no seprate reverse mortgage licensing requirement, California law imposrequirements upon reverse mortgage transacons and originators,cluding prohibited pracces, such as limits on cross selling or tyof annuies, and foreign language and other disclosure requireme

Other states with laws or regulaons that address reverse mortgagin some way, some of which may impact the originators approvalrequirements, include Arkansas, Colorado, Delaware, Hawaii, IllinoMaine, Minnesota, Missouri, Nebraska, Rhode Island, South CaroliSouth Dakota, West Virginia and Wisconsin. Finally, Texas has spe-cic and detailed requirements for reverse mortgages that appear the Texas State Constuon. However, as in California, there is noseparate reverse mortgage originator licensing requirement in Texaalthough forward mortgage licensing or regulatory approvals canand do apply in Texas.

As we have seen above, mortgage companies entering into the revmortgage space are subject to numerous regulatory approval requments. These include FHA mortgagee approval (for enes wishinoriginate FHA-insured HECM loans), state forward mortgage appal, loan originator licensing/registraon pursuant to the SAFE Act, areverse mortgage substanve and specic originator and/or prograapproval, where applicable. These barriers to entry may be high, bnot insurmountable, and can best be understood and implemente

by working with seasoned subject maer experts who have speciaexperse in the reverse mortgage arena. Working with these expewill facilitate full compliance with these requirements and help enthat both your inial and connuing forays into the reverse mortgaworld will be blessedly un-troubled and non-toxic.

This arcle provides only an overview of some of the federal andstate laws and regulaons that may aect reverse mortgage lendand nance maers. Although the pracce of Weiner Brodsky Siman Kider P.C. is naonal in scope, aorneys within our rm do nacvely pracce law in all jurisdicons, and these materials are nintended to and do not provide legal advice. Because of the geneity of this arcle, the informaon provided herein may not be appcable in all situaons and should not be acted upon without specilegal advice based on parcular situaons.

By Fed Kamensky, Joel Schiman and Jim Milano, of the law rm oWeiner Brodsky Sidman Kider, P.C. The law rm serves as GeneralCounsel to the Naonal Reverse Mortgage Lenders Associaon andadvisor to reverse mortgage lenders and industry parcipants throout the naon. The rm has oces in Washington, D.C., NewportBeach and Dallas. Addional informaon can be found at www.wbcom or by telephone at 202.628.2000. Messrs. Kamensky, Schimand Milano can be reached at [email protected], [email protected], and [email protected], respecvely.


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Now, I can hear you.Part Two of the Sales Conversation

By Monte Rose


31/48

3April 2009

alespersons earn the right to be heard by

demonstrang uncommon awareness of the

prospects dilemma coupled with world-class

experse and mely intervenon.

All are essenal to achieve maximum sales

impact. Awareness without experse is weakness, and

experse without awareness is dangerous. The former is

nothing more than the proverbial pat on the back, whilethe laer is like a surgeon performing a tonsillectomy

when the paent needed an appendectomy. Close, but no

cigar.

Tardiness, which is born of midity, bankrupts the

opportunity to serve. I am not referring to your ability

to be on me for an appointment. I am speaking of a

prevailing recence to boldly move the conversaon for-

ward for the sake of the prospects good. If your physician

checks your heart and nds a blocked artery, he or she will

say, This is serious, and we need to take care of this rightaway. Thats not being pushy; its mely intervenon.

Top performers embrace the risk of appearing pushy in

order to serve their prospects best interests.

In the March installment Can You Hear me, Now?, I

discussed the rst two phases of the sales conversaon:

1) the relaonal, and 2) the conceptual.

The relaonal phase paves the way for trust, and the con-

ceptual phase establishes the qualitave foundaon foragreement.

Now, lets examine the niy griy phases of our com-

municaon challenge: 3) the praccal and 4) the taccal.

VIABILITY

The sales conversaon moves through various levels of

agreement. The praccal phase focuses upon a quanta-

ve reality. Youre determining the viability of your solu-

on. Does the program provide enough benet to solvetheir problem or meet their objecve?

Yes, No, Maybe?

I want to emphasize the word, enough. If your prospect

has set the expectaon bar higher than is realisc or nec-

essary, you will need to help them re-calibrate. If theyre

xated upon an arbitrary home value or benet dollar

amount, its your job to oer objecve perspecve.

I understand you want $1200 per month; however, as

weve looked at your income and expenses, it appears

that $800 would sll provide a posive cash ow cushio

for you. Wouldnt you agree?

I will denitely do my best to make this happen for youbut there are some factors that neither you nor I contro

If we end up with $800 per month, youll sll be able to

breathe much easier, wont you?

It is in the praccal phase of the sales conversaon that

you describe and explain the details of the program.

Discuss the features, monetary potenal, and restate th

experienal benets. Youll set reasonable expectaons

Youll handle concerns. Youll ask for the order.

CAUTION

The eecve salesperson maintains their tuned in hig

awareness status during this poron of the conversao

Reading the body language of the prospect. Keeping th

conversaon lively and alive. Sensing when the prospe

has had enough. The art part of sales energizes the

praccal phase, as well as the relaonal and conceptua

phases.

Dont become inaenve and disconnected during the

discussion of the details. Its easy to do. Resist the temtaon to spew facts and ne print. Look them in the ey

Are they engaged? If theyre bored, change the pace of

the conversaon or move on to another aspect of the p

gram. Answer their quesons, but take care that you

dont poncate simply because you know ______ a

want to impress them.

S

The sales conversation

moves through various

levels of agreement. Thepractical phase focuses

upon a quantitative re-

ality. Youre determin-

ing the viability of your

solution.


32/48


There are two basic objecves in the praccal phase:

Determine if your soluon is whats best for

them, and if Yes,

Obtain agreement to get started, today.

PROCESS

The taccal phase is about mechanics. Filling out the ap-

plicaon is the rst step in the loan process; and working

through the paperwork is no small challenge. Have you

ever experienced a situaon where the prospect balked

at signing all those papers? That is exactly the reason I

consider this a crically important selling opportunity.

Its during these moments that youll reconrm the value

of the program. By this me, you and/or the prospect(s)

may be emoonally and mentally exhausted, but you must

bring your A game to this phase of the sales conversa-on.

FORMULATE A PAPERWORK GAME PLAN

I found that by creang a roune that included a logica

organizaon of the paperwork, I could keep everyone

focused during this nal stage of the sales sequence.

Heres my suggeson.

First, explain and request the list of items youll need t

client to provide.

Prepare a single sheet in advance and have it in your l

Include two copies (him/her).

Next, complete the 1009.

This is the applicaon. Generally, its the primary docu

ment that gives my rm your permission to gather the

facts on your behalf.

Next, the 72 hour disclosures

The numeric disclosures specic to your new client con

tain the good news. These are good faith esmates

of your benet and the costs. Celebrate the fact that

theyre receiving money or eliminang monthly payme

or creang an emergency fund via the credit line. Rest

the experienal benet. Wont it be great when you

__________? Whats the rst thing youll do when y

receive your money? When you get to _____, you m

promise to send me a postcard.

Next, the generic credit and mortgage disclosures

Why? These are the least threatening pieces of paper i

the stack of 100. These disclosures are common to m

mortgages. They conrm to you a wide variety of

The effective salesperson

maintains their tuned

in high awareness status

during this portion of the

conversation. Reading the

body language of the pros-

pect. Keeping the conversa-

tion lively and alive.

HUD Foundation Specialists

Manuactured Housing

Troubleshooters

Foundation

Inspections, Upgrades

& Repairs

Engineer

Certifcations


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3April 2009

informaonfrom vendor contact informaon to

how you should be treated according to federal law.

Next, the reverse mortgage specic disclosures and re-

quests for informaon

Now, move through the remaining paperwork. Memorize

a succinct and truthful explanaon for each form. State

your explanaon or denion and gently move the pro-cess along. Remind them, that as they connue to review

the disclosures, if they have a quesonSimply give me a

call.

Next, show them the specimen copies of the security

instruments

Explain the two Notes and two Deeds of Trust arrange-

ment. Reinforce the value of the federally insured stature

of this program. Help them appreciate the protecon of

this feature.

Last, give them the counseling opons

Explain the safeguards of the program, and give them the

contact informaon for counseling vendors.

Create an intenonal paperwork ow. Conrm the sale

along the way, thanking them for the opportunity to work

on their behalf. The taccal phase gives you an opportu-

nity to calibrate the magnitude and scope of their inial

decision. If its just an applicaon then its not a big deal

in terms of magnitude and scope. Take care to seed real-isc expectaons regarding me and benet amount.

Want to be heard?

Be direct and honest, but gracious.

Look people in the eye and smile.

Dont interrupt. Always let your prospect, borrow-

er, or client nish his/her sentence. Just because

they take a breath, doesnt mean theyre nishedspeaking.

Use simple, plain language. Avoid industry jargon.

Explain everything clearly and concisely, and dont

invent noise. Dont answer quesons that perhaps

are not essenal or that theyre not asking.

BE the expert, dont just pretend to be; become

one. Know the ne print regarding process,

disclosures and documents.

Pracce reecve listening. It sounds like you

worry each month about meeng your expenses

am I hearing you correctly? Its a conversaona

tool that claries and validates the clients story.

Keep in mind the relaonal queson: Does the

prospect nd me approachable?

Keep in mind the conceptual queson: Does the

prospect nd my soluon conceivable?

Keep in mind the praccal queson: Does my so

on provide enough security?

Keep in mind the taccal queson: Does my pro

cess insll condence?


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one of us can pick up a newspaper, turn on thetelevision or go online without being remindedthat we are surrounded by crises

The Mid East crisis, the energy crisis, the WallStreet crisis and of course the one most talkedaboutthe Main Street crisis. Each one of thesecrises have something in common, they aregoing to take a long me to x.

However, there truly is a crisis that no one speaks about. Its the crisisthat is aecng the seniors of our naon everyday. It is a crisis that is

as serious as the ones menoned above. Except this crisis hits evencloser to home, it aects our parents, our grandparents and ourfavorite aunts & uncles.

Can the Reverse Mortgage possibly be one of the best soluons to thiscrisis?

Lets see

Barbara Stucki is one of the naons leading researchers in the eld ofprivate sector nancing for long-term care. With over 12 years of workin nding ways to pay for long-term care, Dr. Stucki has been quoted orher work cited by USA Today, Money Magazine, Bloomberg News, Kip-lingers Personal Finance Magazine, and Readers Digest New ChoicesMagazine among others.

Currently, Dr. Stucki is the Project Manager for the Naonal Councilon the Aging, where she heads a naonal iniave that is idenfyingways to increase the use of reverse mortgages to pay for long-termcare services and insurance. Prior to her work at NCOA, Barbara wasa policy analyst for the American Council of Life Insurers, with publica-ons including Passing the Trust to Private Long-Term Care Insuranceand Making the Rerement Connecon: The Growing Importance ofLong-Term Care Insurance in Rerement Planning. She has also worked

for six years on consumer issues for seniors as a policy analyst at AARP.Dr. Stucki is currently Secon Editor for the CSA Journal. She also chairsthe Editorial Board for the American Society on Agings Business Forumon Aging, serves on the board of the American Associaon of LTC Insur-ance, and is a member of the Naonal Academy of Social Insurance.She has tesed on long-term care nancing issues before Congress,as well as addressing state legislators, aging organizaons, and service

providers on the looming long-term care crisis.

Dr. Stucki is President and Founder of the Kenning Group, a consult-ing company that provides independent research on long-term care

nancing and mature consumers. Barbaras training is in anthropologyand gerontology and she has a doctorate degree from NorthwesternUniversity.

I have never had the pleasure of meeng Dr. Stucki and hope that I getthe honor one day very soon, but can we all agree her level of exper-se in the problems todays seniors face is second to none?

In 2005 Dr. Stucki created a 104 page comprehensive plan entled UseYour Home to Stay at Home Expanding the Use of Reverse Mort -gages for Long-Term Care- A Blue Print for Acon.1

Lets take a look;

In 2000, the naon spent $123 billion a year on long-term care forthose ages 65 and older, with the amount likely to double in the next30 years. Nearly half of those expenses are paid out of pocket by indi-viduals and only 3 percent are paid for by private insurance; govern-ment health programs pay the rest.

According to the study, of the 13.2 million who are candidates forreverse mortgages, about 5.2 million are either already receivingMedicaid or are at nancial risk of needing Medicaid if they were facedwith paying the high cost of long-term care at home. This economicallyvulnerable segment of the naons older populaon would be able toget $309 billion in total from reverse mortgages that could help pay for

long-term care. These results are based on data from the 2000 Unisity of Michigan Health and Rerement Study.

Theres been a lot of speculaon whether reverse mortgages couldpart of the soluon to the naons long-term care nancing dilemmsaid NCOA President and CEO James Firman. It s clear that reversemortgages have signicant potenal to help many seniors to pay folong term care services at home.

According to the study, out of the nearly 28 million households ageand older, some 13.2 million are good candidates for reverse mort-gages.

Weve found that seniors who are good candidates for a reversemortgage could get on average $72,128. These funds could be useto pay for a wide range of direct services to help seniors age in placincluding home care, respite care or for retrong their homes, saProject Manager Barbara Stucki, Ph.D. Using reverse mortgages fomany can mean the dierence between staying at home or going tnursing home.

Seniors can choose to take the cash from a reverse mortgage as a lsum, in a line of credit or in monthly payments. If they choose a lumsum, for example, Stucki said that they could pay to retrot their hoto make kitchens and bathrooms safer and more accessible especimportant to those who are becoming frail and in danger of fallingthey choose a line of credit or monthly payments, an average revmortgage candidate could use the funds to pay for nearly three y

of daily home health care, over six years of adult day care ve daweek, or to help family caregivers with out-of-pocket expensesand weekly respite care for 14 years. They could also use it to

purchase long-term care insurance if they qualify.

Up unl now, though, most of these seniors have not tapped theequity in their homes -- esmated at some $1.9 trillion -- to pay foreither prevenve maintenance or for services at home, noted PeteBell, execuve director of the Naonal Reverse Mortgage Lenders

Associaon. Nong that the average income of men aged 65 and ois $28,000 and $15,000 for women, he added, This study shows thunlocking these resources can help millions of house rich, cash pseniors purchase the long-term care services they feel best suit thneeds.

Just one year later, in March 2006 @ the Medicaid Commission Meing, The Naonal Council on the Aging presented; Promong AgingPlace Through Greater Use of Reverse Mortgages.2

This study showed the following:

Challenges of aging in place

Fixed incomes and limited liquid assets may not be enougpay for services and supports, along with everyday expens

Hard to manage the family budget when unstable healthmakes the need for funds unpredictable.

Seniors with impairment oen have diverse needs, such astransportaon, home modicaons and repairs, and help daily acvies.

Families cannot do it all. Nor can the government.

Home equity A new nancing opon

About 82 percent of seniors are homeowners. Among oldehomeowners, 74 percent have no mortgage.

N

Can the Reverse Mortgage possibly beone o the best solutions to this crisis?


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world class

Creating a

Reverse MortgageTraining Program

Jacqueline Del Priore


39/48

3April 2009

Welcome back to our discussion o creating acomprehensive and eective training program tomaximize perormance within your organization.

You may access parts one and two o this seriesat www.reversereview.com in our February andMarch issues.

In this part, the loan ocer will be vividly describingeach element o the loan in a meaningul way tothe borrower as well as explaining how each aspectshould be important or exciting to them. Here isa wonderul exercise to teach the loan ocers tomaximize success with each sale.


40/48


In our last segment, we reviewed the sales process in great

detail. We learned that the rst part of the sales process was

a fact-nding mission to uncover the borrowers wants and

needs; this is achieved through strategic listening and asking

of open-ended quesons. We spoke about the second part

of the sales process where the loan ocer will match the

features of the loan to the benets it will provide specically

for the client. We said that by using the best loan structure

to customize the loan to a parcular borrowers situaon, the

loan could become a vehicle to meet those wants and needs.In this part, the loan ocer will be vividly describing each

element of the loan in a meaningful way to the borrower as

well as explaining how each aspect should be important or

excing to them. Here is a wonderful exercise to teach the

loan ocers to maximize success with each sale. Have them

fold a piece of paper in half lengthwise. On the le hand side,

let them list all the features of the loan. On the right side,

directly across, have them list the benet directly derived

from that feature.

It would look something like the list to the right.

Now teach about bridging features to benets. A bridge is

used to perk up a borrower and have them give you their full

aenon. Here are some great bridges:

Why this is important to you..

Why youre just going to love this is

Why you should be excited is.

Why this is so great.

Using our example above:

FEATURE

BRIDGE

BENEFIT

Ask for Feedback: Isnt that excing?

Elaborate: You wont have to move your recliner ever again

Using the borrowers name in the bridge is very helpful.

Feature Beneft

Will pay o mortgageNo check to write .Creates $900 cash

Provides $3000 lump sumFix hole in roo so wont ge

wet while watching TV!

$200 term payment Quit job at Wal-Mart today

Creates credit lineNot assessed interest until us

money or emergencies.

Fix deck in spring

Credit line growthMakes more credit available

as time goes on

Payment fexibilityLoan can change with

you as you do

Low interest rate Good value

Closing Costs Financed Few out o pocket expense

Government insurance Terms guaranteed. No worri

No prepay penalty Sell anytime

Retain ownership Leave home to kids

Our loan will provide youwith a check or $3000 shortlyater closing.

Mr. Greenjeans,what this is

fnally going to do or you is

Allow you to fx that crazy hole

in the roo thats been letting train in on your Sunday aterno

ootball games!


41/48

4April 2009

It keeps them focused and lets them know that some important

informaon is coming up.

Have your loan ocers pracce bridging features to benets

while in class. The best salespeople do this naturally, but it is

a pracced technique that creates an expert! Speaking in this

format can become second nature. It creates a design for the

sales call.

While training, watch for the structure of the presentaon,making sure the feature is ed properly with a bridge and give

accolades for using the proper emphasis, the clients name, vivid

descripon and great bridges that really call aenon to the

benet.

To further enhance eecveness, a salesperson can order the

benets in the presentaon to have the most impact. Lead with

something excing like, Congratulaons! You can quit your

hated job at Wal-Mart! Let that sink in. Its like winning the

loo! Then go on to explain slowly and carefully bridging each

feature to benet. A great way to lead into the close is to choose

which benet will cinch the deal and lead into the applicaon.Let it be the cherry on top of the cake!

Loan ocers will encounter objecons during this part of the

process. Teach them to embrace objecons! Answering objec-

ons is a part of establishing trust. If a customer didnt trust you,

he would be reluctant to voice his objecons. These are great

opportunies to help the borrower beer understand the prod-

uct. If a customer cares enough to voice an objecon, he wants

to be sold. So, in a real way, this is actually a buying signal. If he

didnt want to progress, he would just thank you and hang up.

Once you teach your loan ocers to expect objecons, you musthelp them to be prepared. Heres a great workshop idea thats

fun and compeve.

Collect the most frequently heard objecons amongst your sta

and form teams. Have the teams work individually on outlining

the best way to address each, then hear them out and all can

vote on which ones are best. Further rene them if needed by

somemes combining two great answers. Create a collecon of

all the best counters for each objecon giving credit to the team

that came up with the winning ones. Combine all the objecons

and answers into a booklet which can be used as a great job aid

and for future trainings. The loan ocers will have taken pride increang it and will be excited about rening it.

Closing costs should be menoned in the sales presentaon.

I dont think you can move to the applicaon stage without

having the client agree to these charges. I train the loan ocers

to group the selement charges into three parts, The MIP, the

originaon fee and the third party fees.

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Have the loan ocers pracce explaining that the MIP goes

straight to HUD and is the most important closing cost since

it provides for the unique non-recourse feature. The origina-

on fee encompasses all the lender may charge as they are

regulated and restricted by HUD and the third party fees such

as tle, recording, appraisal, etc. are charged to the borrower

exactly as they are charged to the lender and are necessary to

the transacon.

While a loan ocer should know how to explain all fees onthe GFE, they should not have to do so unless prompted dur-

ing the disclosure review. Here is a way to assume the next

step. If a client is hung up on selement charges, assure

them that when they go through the documents, they will

have an opportunity to review the good faith esmate, which

will detail all fees.

The objecve of the second part of our sales process is to

close the sale by seng an appointment to take the mort-

gage applicaon.

Set the table for the applicaon. As borrowers ask quesonsduring the sales presentaon, say, Later, when we go through

the loan applicaon, I can show you where this is described in

great detail. This is also great for addressing objecons and,

therefore, serves a dual purpose. For instance, if a client was

concerned about what prompts a maturity event, we would

want to address this concern during our sales presentaon

briey, but set the table for the loan applicaon by explaining

that later during the applicaon process we will be perusing

the Important Terms document that describes in detail all that

we are speaking about.

If we were to begin with the end in mind, we would set aboutthis process with the thought that we are listening carefully

for buying signals from the client as well as leading them into

the applicaon process.

If the feedback from the borrower is that they understand and

are enthusiasc about the benet the HECM can provide and

it is believed that all objecons have been properly addressed,

moving on to the next stage of the process is in order.

Our process will look something like this:

FACT FINDING

MATCHING RESULTS TO BENEFITS

LOAN APPLICATION

COUNSELING

Post your sales process in your training room. It is a road m

for success. Make sure to train the goal for each part.

The loan applicaon or disclosure review should be a con

maon of everything in our sales presentaon and borrow

ers should be eager to see this in wring. Make applicao

appointments only when the borrower is fully sold with t

full expectaon of signing. The borrower should be fully

prepared for their appointment by the loan ocers promp

ing for collecng the necessary documents. The loan oce

should explain the applicaon process to the borrower in d

tail as the next step and move to make the in-person or ph

appointment. All necessary signers should be present for t

appointment and have ample me set aside.

A separate appointment for the disclosure review is wise a

very necessary when the applicaon is being taken by pho

It should be conrmed the day prior and the docs should

arrive on me. Here are a few helpful hints for sending the

docs through the mail. Put the borrowers copy in a separ

envelope taped shut. Provide the client with a prepared re

turn envelope and your company pen to sign. Clearly indi-

cate where each borrower should sign and date. Fill out t

applicaon and have the loan ocer sign where they shou

before sending the package out. Give the borrower a list of

the documents they will need to return with the applicao

This promotes borrower condence. Make sure the nameare spelled correctly. These details really count!

Help your loan ocers have fabulous disclosure reviews by

training them well. Create a disclosure review workshop.

through the process in class by providing the students each

with a sample applicaon. Let them mark it up properly.

Have them sign where indicated. Have them X where the

borrower signs. Ask quesons about each document and

have them answer. Have the loan ocers read the Import

Terms Disclosure. They need to know whats on there incl

ing where to nd the history of the index. This is helpful sa

informaon.

Ive created a wonderful disclosure review tool and you ca

too! Just put an applicaon in a three ring binder. As the

pages are turned, the le side will be blank. This is where

the quick explanaon for the page to the right can be wri

You can also list important points to remember on this pag

For example the quick explanaon to

the reverse review april 2009

Documents