The Reverse Review October 2008

October 2008

THE

REVERSE review

Trusts, Powers of Attorney and Reverse Mortgages Heather Moulden PAGE

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Imagine this, “you’ve successfully taken a reverse mortgage application, and discovered that your widowed borrower has a trust with her deceased husband. Now what? Many brokers and loan officers are suprised to learn that borrowers are allowed to remain in their trusts for reverse mortgage loans.” Learn the right questions to ask and the correct advice to give your client to protect them through the process.

CONTENTS

12 Spotlight:

Mortgage Bankers Association

20 Trusts, Powers of Attorney and Reverse Mortgages

16 Marketing Heather Moulden Reverse Mortgage Products to Baby Boomers 26 7 Secrets for Paul Fiore Cost-Effective 18 Successful Lead Marketing: Incubation Step-by-Step Gretchen Williams

Valerie VanBooven

28 Are You Prepared to Survive Harsh Economic Times? Sam Collins

30 The Good, The Bad & The Ugly Shannon Hicks

34 Borrowers With Personality David Gutmann

ESSENTIALS 5 Note From the Editor

6 Ask the Underwriter

10 Industry Snapshot

37 Directory

8 Contributors

38 The Last Word: You, of Tender Years, Can’t Know the Fears, Your Elders Grew By October 2008

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Successful Companies Rely On ReverseVision THE

REVERSE

review

Co-Editors Aman Makkar & Erica English Copy Editor Harpreet Makkar Design & Production Jason Westbrook Printer The Ovid Bell Press

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Subscriptions and Editorial Content phone : 858-217-5332 email : [email protected] website : www.reversereview.com

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© 2008 The Reverse Review, LLC. All rights reserved. The Reverse Review, LLC is a California limited liability company and is the publisher of The Reverse Review magazine. Reproductions or distribution of any materials obtained in the publication without written permission is expressly prohibited. The views, claims and opinions expressed in article and advertisement herein are not necessarily those of The Reverse Review, its employees, agents or directors. This publication and any references to products or services are provided “as is” without any expressed or implied warranty or term of any kind. While effort is made to ensure accuracy in the content of the information presented herein, The Reverse Review, LLC is not responsible for any errors, misprints, or misinformation. Any legal information contained herein is not to be construed as legal advice and is provided for entertainment or educational purposes only. Postmaster : Please send address changes to The Reverse Review, 10801 Thornmint, Ste 250, San Diego, CA 92127

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editor’s note senior clientele for us to educate them and lead them down the right path throughout this process. The only way we can educate them is to be educated ourselves. And in the end, education creates trust.

Gotta stay focused ... As we head into the last quarter of 2008, we’re facing the most tumultuous times in our industry, our nation’s economy, the world’s economy, and possibly our personal lives. Coming into this year, I knew it would be bad, but could never have scripted such a wild ride. As we live our lives from day to day, many of us, including myself, put the blinders on and do the best to live our lives for what we have today. While we have many concerns ranging from job stability to our investment accounts, we must do our part and remain focused on our industry. If you’re thinking about the fears you have on a day to day basis, think about the fears our seniors may have with financial losses during this crisis and rising health care and energy costs.

As we publish our seventh issue, I want to thank our contributing authors who have worked with us to help educate the reverse mortgage industry. I truly feel the content created by our authors each month is educational and insightful. Thank you for educating us and supporting the reverse mortgage industry.

Aman Makkar Editor

After reading the articles submitted to us this month, my energies were re-focused. I was reminded that we as an industry are on a mission. That mission is to do our best while playing our part in the reverse mortgage transaction. From lead generation to servicing, we each play a crucial role when we target this segment of the market. There is a dependence and an expectation from our October 2008

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ask the underwriter Ralph Rosynek

| this month’s question |

What is the next question or “second question”? Recently, a Reverse Sales and Marketing class turned into a very heated debate as I conducted “Loan Originator File Tips”. As the session went on, there seemed to be a lack of consensus in response to some of my questions. My purpose was to assist in avoiding processing and underwriting issues by encouraging Loan Originators to become more engaged in the interview process, thereby providing a more complete file at the time of submission for processing. Regardless of the form of application (face-to-face, mail or telephone), I believe the next question or “second question” if not asked, in many cases, commences the Murphy’s Law process of “a poorly originated file results in a nightmare of a reverse mortgage transaction”. Case(s) in point: a. Your appraiser advises the 2 unit building being appraised is a combination store front and apartment. By the way, the borrower lives in back of the storefront on the 1st floor and the 2nd floor is rented – and yes, the store front is a bar. What question(s) didn’t you ask? b. Your borrower is vested in a life estate. There are 7 remaindermen children – 1 is in the military serving abroad and another hasn’t been seen, heard or spoken to in 9 years, and yes, he was estranged from his spouse as the borrower recalls. What question(s) didn’t you ask?

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As we eagerly wait for the implementation of changes to our industry and products, ushered in by HERA, it might be a good thing to sharpen our origination skills. While there may be some thoughts of a very active holiday season ahead after a quiet summer, the experienced will certainly take into account that operations and staffing cut backs in many areas may affect the ability to mend and repair a large number of poorly originated/processed files. It won’t be the first time lack of training and education have combined with Investor back room issues to delay some of the best efforts by Originators to provide timely service to their Borrowers. So let’s play 20 questions! This is a learning exercise. Your responses to these questions will be anonymously tabulated and reported in the next issue of The Reverse Review. Please e-mail your responses to [email protected]. Please respond with your answer in the form of a question. 1. Your Borrower indicates they believe the value of their home is $250,000.00. What should you ask next? 2. When inquiring about property ownership, your borrower indicates as far as he or she knows, they are the only one on title. What should you ask next? 3. You have been advised that one of your borrowers will be represented by an attorney-in-fact. What should you ask next?

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4. You have been advised that the spouse of your borrower is deceased. What should you ask next? What would be your “second question”? 5. As you arrive for your appointment at the borrower’s home, the property is located in the middle of the block surrounded by small commercial storefronts and vacant lots on a busy thoroughfare. What should you ask next? 6. The borrower and his/her daughter (age 47) are both on title. What should you ask next? If the borrower’s spouse were 47, would you ask a different question? 7. The borrowers are currently behind on their present mortgage. What should you ask next? 8. You are on the phone with the pre-qualified borrower arranging a time, date and location for the application session. What should you ask next? 9. Your subject property is a condominium. What should you ask next? Pose the “second question” based upon your previous question. 10. At application, your inspection of the borrower’s most recent mortgage statement indicates a preliminary payoff amount in excess of your pre-qualification calculation. What should you ask next? 11. The borrower provides you with a 2-inch thick living trust file. What should you ask next? Pose the second question as well. 12. At application you discover the subject property has a well and septic. What should you ask next? 13. Your borrower is unable to find his social security card. What should you ask next? 14. Your borrower indicates minor repairs are needed. What should you ask next? Pose the second question also. 15. The trusted advisor for your borrower requests an application by mail as the borrower conducts their affairs “slowly”. What should you ask next? 16. The address identification documents provided by your borrower do not reflect the subject property address. What should you ask next? 17. The borrower responds they have no mortgage. What should you ask next? 18. The borrower indicates they are seeking a reverse mortgage to purchase a smaller home. What should you ask next? Pose the second question also. 19. In discussion with the borrower, it is revealed that part of the proceeds will be used for “investments”. What should you ask next? 20. The borrower advises they have already completed counseling and are seeking an application appointment. What should you ask next?

ReverseVision Makes Companies Successful

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contributors Valerie VanBooven

Ralph Rosynek

- Ask the Underwriter, page 6 Ralph Rosynek is President and CEO of 1st Reverse as well as a HECM DE Underwriter. Mr. Rosynek has been involved in mortgage lending for over 30 years with the last 5+ years exclusively providing reverse mortgage lending solutions. To contact Mr. Rosynek or to learn more about 1st Reverse Financial Services, Please visit www.1streverse.com or call 877-574-1000.

Gretchen Williams

- Successful Lead Incubation, page 18 Gretchen Williams is the Director of Sales for Reverse Mortgage Directory and focuses on advising industry professionals on Internet marketing strategy and successful lead incubation. Every month RMD provides thousands of guaranteed reverse mortgage leads to hundreds of Lenders across the United States through ReverseMortgageAdviser.com. RMD also offers consumer access to its National Lender Directory.

John Lunde

- Reverse Market Snapshot, page 10 John Lunde is President and founder of Reverse Market Insight, the premier source for market intelligence and analytics services in the reverse mortgage industry. RMI clients include five of the top ten reverse mortgage originators, both lender and independent servicers, as well as some of the largest financial services firms in the world. Find out more at www.rimnsight.net or call 949-281-6470.

Sean Brickford

- Successful Lead Incubation, page 18 Sean Bickford has been in the mortgage industry for the past 5 years, exclusively working with Reverse Mortgages for the 4 years. During that time Sean trained a team of loan consultants on lead follow up. As an Executive Account Manager at RMD he is eager to share his knowledge and experience with RMD and its clients.

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- 7 Secrets for Cost-Effective Marketing: Stepby-Step, page 26 Valerie VanBooven RN BSN is a Senior Service Marketing Expert and the National Marketing Director for Next Generation Financial Services, a Division of 1st Mariner Bank. She is a professional speaker and the author of the books “Aging Answers” (2003) and “The Senior Solution” (2007). She can be reached at valerie@nextgenfinser. com. Please visit her website at www.MySeniorService.com

Sam Collins

- Are You Prepared to Survive Harsh Economic Times?, page 28 Sam Collins is the President of Sam Collins Reverse Marketing, LLC and Founder of REMALO, the Reverse Mortgage Association for Loan Officers. REMALO is a web based National sales, marketing, training, and full service center, created exclusively for Reverse Mortgage Loan Officers, Correspondents, Branch Managers, and key executives, and brokers. www.remalo.org

Heather Moulden

- Trusts, Powers of Attorney and Reverse Mortgages, page 20 Heather Moulden is the National Sales Manager for Premier Reverse Closings (PRC), one of the reverse mortgage industry’s first dedicated title and settlement companies. PRC has an experienced team of individuals who have closed more than 100,000 reverse mortgages nationwide, as well as a reverse mortgage specific title and trust/POA review department. For more information on Premier Reverse Closings, visit www.PRClosings. com or call 800-542-4113.

Shannon Hicks

- The Good, The Bad & The Ugly, page 30 Shannon is a reverse mortgage originator David and VP of Product Development with Gutmann Reverse Fortunes, Inc. In the past is Cohe has worked with a non-proft CEO and organization assisting in planned General Counsel giving and fundraising and as for Customized an agent in the financial services industry. Lender’s Services, He currently teaches reverse mortgage Inc. (CLS). Mr. Gutmann seminars for both financial professionals and his partner Laura R. and borrowers across Northern Ward acquired CLS from Public California. For more information Abstract Corp./First American call1.866.592.2096. Title Insurance Company of New York in July of 2008. CLS is a multi-state title/settlement services agency, with a particular expertise in reverse mortgages. He was admitted to the practice of law in New York State in 1982, and was previously in private practice with a mid-sized firm in the Rochester, New York area where he concentrated his practice in real property law; both residential and commercial, and has 15 years of experience with reverse mortgages. He is a member of the New York State and Monroe County Bar Associations.

David Gutmann

Paul Fiore

- Marketing Reverse Mortgage Products to Baby Boomers, page 16 Paul joined Senior Lending Network, a program of World Alliance Financial Corp., in 2005 and currently serves as chief learning officer. Mr. Fiore’s focus is on educating partners on all aspects of the reverse mortgage industry and positioning the company as a leading institution for training in the industry. He recently held the position as vice president of sales for Senior Lending Network’s national retail division. Paul Fiore earned his bachelor’s degree in marketing from New York Institute of Technology.

Stephen Kinney

- You, of Tender Years, Can’t Know the Fears, Your Elders Grew By, page 38 Stephen Kinney is CEO of Stephen Kinney Associates a company that specializes in training and consulting services to the reverse mortgage industry. Stephen has 26 years experience in the mortgage industry and an expert in reverse mortgages.

- Borrowers With Personality, page 34

October 2008

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reverse mortgage industry snapshot Statistics Provided by Reverse Market Insight - August 2008

Top 10 Rankings by Region

10 Regions, ranked by HECM unit volume YTD. Including rank change from prior YTD, as well as growth rates. Also includes active lenders and growth

Lender Distribution by YTD Growth Rate

Lender distribution graph and table, showing number of lenders growing at various growth rates YTD vs. prior YTD, including volume attributable to each group of lenders. Client Notices 1) 2) 3)

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! 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 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

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24 Month Penetration and Unit Volume 1.80%

12000

1.60%

1.20%

10000 Units

1.00%

Penetration

1.40%

0.80% 0.60%

8000

0.40% 0.20% 6000

0.00% 2006-9

2007-1

2007-5

2007-9

MIC Units

2008-1

2008-5

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 Connecticut Maine Massachusetts New Hampshire Rhode Island Vermont

Region 3 - Mid-Atlantic Delaware District of Columbia Maryland Pennsylvania Virginia West Virginia

Region 5 - Midwest Illinois Indiana Michigan Minnesota Ohio Wisconsin

Region 7 - Great Plains Iowa Kansas Missouri Nebraska

Region 8 - Rocky Mountain Colorado Region 2 - New York/New Jersey Region 4 - Southeast/Caribbean Region 6 - Southwest Montana Arkansas North Dakota New York Alabama South Dakota Louisiana New Jersey Florida New Mexico Utah Georgia Wyoming Kentucky Oklahoma Texas Mississippi North Carolina Puerto Rico South Carolina Tennessee U.S. Virgin Islands October 2008

Region 9 - Pacific/Hawaii Arizona California Federated States of Micronesia Hawaii Nevada Region 10 - Northwest/Alaska Alaska Idaho Oregon Washington

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MBA 2008 Reverse Mortgage Lending Fall Conference Miami, Florida

SPOTLIGHT Interview with Regina Lowrie and John Courson This month The Reverse Review had the wonderful opportunity to attend the MBA’s Reverse Mortgage Lending Conference in Miami, FL and to sit down with John Courson and Regina Lowrie. The MBA has recently formed a Reverse Mortgage Task Force which will be lead by former MBA Chairwoman Regina Lowrie. In the interview below John and Regina discuss their goals and aspirations for this task force. Reverse Review: Talk to us about the Executive Reverse Mortgage Task Force. What are its goals and objectives? Regina Lowrie: We’ve put together a pretty comprehensive agenda of a number of high level issues that are on the forefront. One is educating the senior, and that’s where the MBA Home Loan Learning Center comes in, with a special section for reverse mortgages. [We’ll be] talking to seniors, helping the understand, so they’re not going into a 20 minute or 1 hour counseling session totally blank, not understanding anything about a reverse mortgage, and unable to really ask any intelligent questions to make a good decision. Second, we’re working on developing a best practices and code of ethics for our loan originators and along with that, MBA is putting together a reverse loan officer accreditation program that we will be able to offer by the end of the year. This will really help instill these best practices in the origination process. Therefore our members that are looking at this as a new business opportunity can do it right and look out for the best interest of the senior.

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John Courson: With this task force, we will also have a focus on servicing. We need to get a subset of servicers, because they have a different set of issues than counseling, appraisals and so on. We can be a forum for them to get together because certainly as this product grows, the servicing is going to get more and more of a spotlight on it. RR: Talk to us about the environment in today’s marketplace. What does the future hold for us? JC: We’ve really got an opportunity. We’ve got a chance, as my grand kids say, to have some “do-overs”. There is an opportunity now to really look at the basic tenets and structure of the business. The question is, is the industry ready. Are they bold enough to take those actions that we need to take to bring in the accountability, bring in the transparency, and to really align the interest of borrowers with the interest of our for profit members. That’s going to be one of my tasks in leading us through this opportunity and seizing the environment; to take that blank sheet of paper to re-write and restructure some of the basic tenets of our business. RL: Amidst this crisis, I’m still very very bullish on the housing industry. Housing drives this economy. We have a growing housing demand, both in tenant and owner occupied properties. Once the credit markets settle, there are going to be huge opportunities for the housing markets to bounce back with resilience because housing has become more affordable now. RR: How do we educate people in the industry and outside of the industry? RL: That’s actually one of the major missions of this executive task force. We want to raise awareness within MBA of the need to improve our marketing and communications, whether it’s through press releases, conferences, the MBA Home Loan Learning Center; we see that as a part of our mission. One of the things we’ve

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discussed is putting together a marketing piece to dispel the myths of the reverse mortgage industry. When we think about the growth in this industry, and some of the tremendous work that’s been done by NRMLA and others in this industry, we still have such a long way to go. RR: How do you see the MBA’s role with NRMLA in the reverse mortgage industry: JC: We see it as complimentary. Frankly, they’ve done a very good job. Obviously, they’ve done a yeoman’s duty in working with the people that are out there originating loans. Peter Bell and I have known each other for 20 years. They’ve done a very good job of that. In our case, the task force is there to work with the CEOs and the people who are running the enterprises. We have corporate members at the senior executive level and they’re looking for us to play this role. So, I think it’s absolutely a perfect compliment. Between the two, we’re all working for the same goal. The companies that belong to NRMLA are also members of the MBA. So, I think our members are looking for value on both sides of the equation. RL: As things come up in Washington, on the hill, if NRMLA and the MBA can walk up on the hill together, in lockstep, how powerful will that be for the industry? So, John is right. It is a compliment to what NRMLA does we’re looking for ways in which we can work together in the industry.

about John Courson & Regina Lowrie... John Courson is COO of the Mortgage Bankers Association (MBA) and will become the Association’s President on January 1, 2009. Courson has been involved in the mortgage industry for more than 40 years and served as Chairman of MBA in 2003. From 2004 to 2008, Courson served as Chairman of the Board of Directors of the California Housing Finance Agency, a position for which he was appointed by Governor Arnold Schwarzenegger. Regina Lowrie is President and CEO of Vision Mortgage Capital, LLC, Operating Subsidiary of American Home Bank N.A. Vision Mortgage Capital was formed by Regina Lowrie in June 2007 to be a premier mortgage banker dedicated to meeting the emerging housing needs of – first time homebuyers, move-up buyers, immigrants, senior citizens and existing homeowners – “housing the future.” Lowrie is also President & CEO of RML Investments Inc. – a company that currently serves the real estate financial services industry in many capacities to include consultative services to mortgage bankers and an advocate for fighting mortgage fraud. She is also former chairwoman of the national Mortgage Bankers Association (MBA). The MBA is the only national organization dedicated to meeting the professional needs and interests of companies who have a vested interest in the mortgage industry.

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Marketing Reverse Mortgage Products to Baby Boomers Paul Fiore

In January 2008, the first of the baby boomer generation turned 62 years old and since that time, per the US Census, more than 6,500 people continue to turn 62 each day. This represents a tremendous opportunity for the reverse mortgage market. The baby boomer generation is a new and unique customer and they have the potential to help make reverse mortgages even more popular and mainstream than they are in the current environment. However, before you approach this group, there are some distinct differences between baby boomers and the traditional reverse mortgage customers, those of the WWII generation. To be successful, everyone involved in the reverse mortgage industry must learn what the differences between these two generations are and how to market to each segment. The Traditional Reverse Mortgage Market For as long as we have been selling reverse mortgages, we have focused on the traditional senior marketplace. Seniors from this generation have slowly begun to understand and embrace the concept of a reverse mortgage. Specialists in reverse mortgages have worked hard to overcome many of the concerns and misconceptions these clients have about this type of loan. Quite often, this generation is classified as being house rich, but cash poor. Many of these clients bought their homes years ago, witnessed a significant appreciation in value and paid off any liens or mortgages. They remember hard times and how important it was for them to pay off their home and own it free and clear. This generation is not prone to making many major financial decisions with regard to their home and since most do not have a mortgage on their house, they may be hesitant to take a reverse mortgage and create new debt. The concept of “managing debt” is not something that these seniors are familiar with and quite often they have many fears and concerns regarding reverse mortgages. This client base generally wants to leave their home to their children as a form of inheritance since this is typically their biggest asset.

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Unfortunately, many seniors from this generation are facing major financial struggles such as affordable healthcare and rising energy costs. They often rely on social security income to fund their lifestyle and with the cost of living continuing to rise year after year, even though they don’t have a mortgage payment, they struggle to make ends meet. When approaching seniors who fit this profile, it is very important to discuss their fears and concerns openly and illustrate how a reverse mortgage can potentially change their life. Many times, the senior will look to their children or a caregiver for advice with regard to a reverse mortgage or any other financial opportunity. Education and relationship building serve as the best tools for approaching this type of senior and their caregivers. They need a trusting relationship and thorough understanding of the product in order to make a final decision. Baby Boomers Require a Different Approach The boomer generation has a completely different mindset from the more traditional senior and ultimately a different set of objectives. Before you approach boomers, you need to understand their motivation. A more traditional client may be house rich and cash poor, however, the boomer generation is much more inclined to carry and manage debt through the years. Members of this generation typically have refinanced their home at least once and have taken advantage of how the housing market has appreciated over the years. Their plan is centered on taking advantage of financial opportunity as it presents itself. They reinvested money back into their homes, allowing the home to grow and appreciate in value. Typically, they paid off credit card debt by refinancing their home and are accustomed to a certain level of debt. Overall, baby boomers are much more comfortable with the idea of taking a reverse mortgage. In fact, many in this generation have embraced the concept because they understand that they can use it to pay off their existing mortgage, allowing them to lift a huge financial burden in their retirement years. This client is more apt to look at a reverse mortgage as a financial tool that maximizes their ability to lower overall monthly expenses. Another distinction with this generation is that they have fewer concerns about using their house as the source of inheritance for the family. Many baby boomers have set up a retirement plan and are now looking at ways to keep their home and avoid dipping into their retirement funds. They approach the reverse mortgage like they do everything else – they shop for what they consider to be the best proposal. They do

their homework and when they reach the reverse mortgage specialist they often understand many of the nuances of the product and are closer to making a decision than a traditional client. The most common obstacles in selling to this generation is competition. When dealing with baby boomers, reverse mortgage specialists will find themselves in a very competitive market and will need to distinguish themselves. Although this client is an educated consumer, it is important to remember that building a relationship with them and understanding what motivates them to seek a reverse mortgage is key to getting the business. Each reverse mortgage specialist must take the time to learn the customer’s financial plan and how a reverse mortgage fits into the scenario. How a reverse mortgage will change their life is as important as how much money they qualify for. Loan officers who are adept at illustrating the lifestyle benefits to their customers will exponentially increase their business. While this is still a relationship-driven sale, it is one that tends to occur more quickly because so much of the research is done by the client before they ever contact the lender. One point to remember, these clients are going to research all their options and a reverse mortgage may just be one of the choices. It is up to the reverse mortgage specialist to work with them to see if a reverse mortgage is, in fact, the best option. How can you quickly identify if the product is right for your customer? Jot down at least five ways a reverse mortgage will impact the customer’s situation in a positive way. If you are unable to make this list, you may have a challenge in convincing your client that this is the right choice for them. And, truthfully, that’s okay. You will be a much more respected sales person if you are honest and treat your clients in an ethical manner. If you were unable to help them but treated them with respect, they will remember you and refer you to others. Conversely, if you are able to come up with at least five benefits for your client, make sure you point each one of them out clearly and concisely. In the End, It’s a Matter of Trust While understanding these generational differences will put you one step ahead when you first speak with a customer, the one consistent factor in working with all seniors is building relationships. The primary goal is to assist your clients in make the best decision for their particular situation. By demonstrating that you are working in your client’s best interest you will embark on a clear path to success.

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Commentary by Reverse Mortgage Adviser

Successful Lead Incubation Gretchen Williams

As the Boomer Generation enters their golden years there will continue to be an influx in seniors using the Internet, especially for research and educational purposes. For many of those in the industry, the idea of marketing online is still very new and turning those online inquiries into closed loans is a whole other story. We have recently welcomed a new member, Sean Bickford, to our team. Sean comes to us with an extensive background in the Reverse Mortgage industry. While originating loans, Sean and his team spent much of their time working Internet leads. In this article we will be interviewing Sean in order to share his expertise on successful lead incubation. Life as a Loan Consultant - The Last 4 Years Since entering the industry 4 years ago Sean has had a wide range of experience in different aspects of consulting and originating Reverse Mortgage loans. Sean has worked for different sized lenders from the small, mid-sized to the large corporate lender, and utilized almost every marketing channel available. During these 4 years Sean experienced failures and successes, while gaining a wealth of knowledge. It is this first-hand insight and knowledge of the Reverse Mortgage industry that allows Sean, as an Account Manager with Reverse Mortgage Adviser, to assist other loan consultations to more efficiently and successfully grow their business and close more loans. When Sean first entered the industry, he conducted all of his business through face-to-face consultations. In addition, he has also managed a team of loan consultants who were focusing on marketing to borrowers via direct mail, TV ads, print, radio, Internet leads and cold calling. Sean extensively trained his team on different selling techniques using phone, mail and face-to-face presentations. By the end, Sean was working out of a large call center and began conducting all of his business through the mail and over the phone, all the while working with borrowers located throughout the country. The Interview RMA: What was the biggest obstacle you encountered having utilized so many different marketing channels and

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lead sources while generating business for yourself and your team? Sean: It became really apparent early on that we could not treat all borrowers the same. The first step was to understand the origination of the lead and adjust the approach from there. The conversation was very different when speaking with a borrower generated by telemarketing efforts, versus those generated reactively to a borrower’s inquiry. The introduction was key, and even more so when leaving messages. In addition to letting the borrower know who you are and why you are calling, it is equally important to disclose how you received their information. RMA: What did you find was the biggest difference between those leads where the borrower had been solicited (i.e. direct mail, telemarketing, etc) versus those where the borrower had initiated the request? Sean: There tended to be a great deal more clarity when speaking to borrowers who had initiated the request. Making your affiliation with the lead source known from the onset helped give you credibility from the first call. Having that immediate trust with the client allows them to open up more easily, and allows you to uncover their motivation more quickly. In the end, I found that the Internet leads were the most successful because they provided us with a great deal of quality and consistency. More importantly, we realized one of the highest closing ratios with Internet leads when compared to all other lead sources we utilized. By the end, we had moved to a purely online lead model.

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RMA: What suggestions do you have as it relates to appointments? Sean: There were 3 different things that I always tried to do. First, be specific when setting follow up appointments and avoid using open-ended questions. Instead make statements like, “I am going to call next Friday at noon to give you time to think about what we talked about and answer any questions you may have”. It is always best to make them tell you if a specific time doesn’t work for them, rather that asking a question that they can simply reply yes or no to. Second, when possible, include family or other third party decision makers. This applies to any meeting you have with a borrower, whether it be face-to-face or over the phone. You do not know what kind of information they may be getting from friends or family who may be misinformed. Having as many people involved with you and your client during the presentation of the program will help dispel any misconceptions and will help you turn their focus to the loan’s benefits. And lastly, focus on goals. Borrowers can easily get sidetracked, particularly by fees; to overcome this it is important to maintain a strong focus on the borrower’s goals. Determine your client’s need/motivation and constantly remind them of the monthly savings they would receive by eliminating their mortgage payments. Help them establish a personal connection, by asking them: “How will this loan affect your daily life? What would change? How will you spend the money?” RMA: Do you have any suggestions for those who may be having a difficult time making contact with potential borrowers? Sean: I would first try to use a different phone number. For instance, if you typically call from a landline try using your cell phone. This will help you overcome issues where your number may come up as “unlisted” on caller id. Also try to call at different times of the day. This is especially important in instances where a request is made by a third party (on behalf of the senior). Often times an adult child researching the program for their parents will provide a home number but they are at work the majority of the day. Try calling after work hours if need be. Sending emails with varying subject lines or topics may also help spark interest and get a response.

Sean: The ability to send my clients marketing materials such as information packets gave me a great opportunity to, not only, follow up but to go over the information with them in detail once they received it. Sending your client something tangible they can keep for their records will show that you take the time and effort to make sure your clients are well informed. I categorized each of my clients into lifecycles of 30, 60 or 90 plus days. The lifecycle of each client was determined by their unique situation and need. Having access to a Client Relationship Management (CRM) tool will help increase your ability to properly follow up with each lead. Use these lifecycles to customize your CRM tool to set automatic reminders for periodic phone calls, emails and/or letters ensuring you remain in contact with your leads over a longer period of time. If you do not have access to such a tool you need to at least develop a system to track your follow up and results. I approached follow up with my clients as an opportunity to provide them with as much relevant information as possible on a consistent basis. This helps ensure they do not seek out the information elsewhere and disseminating it over time helps prevent overwhelming the client. I also found that interest rate changes were always a good reason to regularly contact my clients. I would let them know that I would be calling each week to update them on rate changes. Since higher interest rates decrease the monies a borrower qualifies for I would also use these calls to create a sense of urgency for those clients qualifying for just enough to pay off their mortgage balance. This allowed me to help more of my clients (particularly those with the most need) while avoiding situations where they would lose the loan they so desperately needed. You can leverage the “Principal Limit Lock Disclosure” in much the same way since signing the application will allow the borrower to lock in the loan amount (based on the expected rate as of that day). RMA: To what do you attribute most of your success? Sean: Regardless of the type of lead I was working, persistence and follow up strategy were by far the most important factors. A successful follow up strategy requires organization, in which case my CRM tool was my saving grace.

RMA: What processes did you have in place for continued follow up? How long was that follow up schedule?

October 2008

Gretchen Williams Reverse Mortgage Adviser (888) 407 - 6365 reversemortgageadviser.com

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trusts, powers of attorney and reverse mortgages Heather Moulden

Congratulations! You’ve successfully taken a reverse mortgage application, and discovered that your widowed borrower has a trust with her deceased husband. Now what? Sneaking suspicion tells me that it all gets a bit blurry from here. Many brokers and loan officers are surprised to learn that borrowers are allowed to remain in their trusts for reverse mortgage loans. While the Federal Housing and Urban Development Department (HUD) has guidelines to follow, most reverse mortgage lenders vary slightly in interpretation and implementation of these requirements. Some call for attorney opinion letters, while others allow for your title company to review and approve trusts.

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Often, brokers and loan officers aren’t even aware that title companies will review trusts to meet reverse mortgage lender, HUD and state guidelines. In most of the “forward” world, keeping borrowers in a trust isn’t even a consideration, but in the reverse world, it’s a philosophical must.

Last, familiarize yourself with your lender requirements. Do they allow trusts? If they do, what’s their review process? Do they allow for Powers of Attorney? How long does title have to be seasoned? What could have been an easy solution for the Smith couple, turned into a complicated situation, with no way of changing their condition. However, to help others avoid the same conundrum; most reverse mortgage lenders have implemented programs to provide an alternative for borrowers with trusts.

What most reverse mortgage lenders and brokers are trying to avoid, is seniors unknowingly complicating their reverse mortgage situation due to ill advice. At the advice of their mortgage broker, the Smith couple took their property out of a trust, and after the close of the reverse Some lenders require attorney opinion letters for their mortgage, they recorded a deed back into the trust. Their trust reviews, however many attorneys charge upwards broker assumed that there wouldn’t be any repercussions of $150 an hour. Other reverse mortgage lenders have since it was a common practice in the forward world. But, implemented a system, which allows title companies to unfortunately for the Smith couple and their mortgage review trusts, powers of attorney and conservatorships as a broker, a reverse mortgage is very different from a forward part of their closing services. Since most reverse mortgages mortgage. This couple ended up losing their Medicaid benefits, and the Smiths were devastated. This is why it’s are still needs-based loans, this provides a huge advantage always important to consult for your borrowers who are all appropriate parties when watching how they spend At the advice of their mortgage broker, the you are changing title. every dollar. In today’s Smith couple took their property out of a trust, competitive marketplace Another scenario is for loan applications, and after the close of the reverse mortgage, senior homeowners who this may also provide a are in a rush to close their they recorded a deed back into the trust... probable advantage for reverse mortgage and don’t This couple ended up losing their Medicaid the loan officer taking the realize their property isn’t application. benefits, and the Smiths were devastated. held in a trust, yet want to have a trust recorded However, not all on their property. After they close their reverse loan, the title/settlement companies are created equal. They vary borrowers can have a trust prepared that meets lender greatly in their interpretation of how to review trusts. It’s guidelines, and request permission from the lender to have important to pick a provider who is familiar with reverse the property placed into the trust by recording a deed at the mortgage guidelines – not just title guidelines. Since a trust County Recorder’s office. If the senior borrowers were to is not breathing, nor is it filling out the application for a place the property back into a trust without lender approval, reverse mortgage, it must meet certain guidelines in order there is a chance that the trust could change the terms of to qualify for a reverse mortgage. Lenders require different the loan and therefore trigger a maturity event. guidelines be met for revocable, irrevocable and A/B trusts, and they should be familiar with each of these. These types of scenarios can simply be avoided by following these relatively easy steps. First and foremost, If you are unsure of their knowledge on the subject, learn the differences between a conventional loan and a ask questions. For example: How many reverse mortgage reverse mortgage. There are fundamental principles that trust reviews have you completed? What are some of the vary with a reverse mortgage, and it’s truly a key to success expectations I should set for my borrowers? Who performs in this industry. your trust reviews? Does your trust review form indicate if the trust conforms to HUD guidelines? Does your trust Second, pick providers who are familiar with reverse review form indicate what problems, if any, need to be mortgages. There are appraisers, title companies, notaries addressed and what needs to be done? or closers available nationwide, with experience in working The trust reviewers should know the differences between with reverse mortgages. Those who are committed to the a review for a forward mortgage and a review for a reverse industry are trained to watch for fraudulent documents and mortgage. For a forward mortgage, the title officer checks signs of elder abuse. Your lenders typically have preferred to see that the trustee of the trust is the current trustee of provider lists available – ask them. public record and that the trustee has the power to borrow.

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For a reverse mortgage, title must check these things as well as, check to see that the borrower is the immediate beneficiary and make sure the trust is revocable. How does the process begin? If you do choose to work with a title company, the most important thing to do is obtain a full, signed and dated copy (not the original) of the trust. While in some states trust certifications are accepted, they must still outline all pertinent specifications to meet the parameters of HUD and/or private investors. Most trust certifications fall short of this expectation, so it’s better to educate your borrowers early on as to why you’ll need a full copy of their trust. Remember, nobody needs to know who gets the grand piano or the china set when mom goes, so please don’t send the will. Once you have a copy of the trust, submit it to your title/settlement provider to review right away. Most title companies who are truly familiar with reverse mortgages should have a trust review department specifically versed in how to read pertinent supporting documentation. As soon as the title commitment/preliminary title report is completed, the trust is now ready for review. The trust must match the vesting on the preliminary title report/title commitment, and if this varies, your settlement agent will let you know as soon as possible. Examples of variances: Sometimes trustees may match, but a different date is reflected in the vesting, or there may be only half of a trust provided. The review process itself will vary for different lenders. Some lenders want to know if the borrowers are lifetime beneficiaries, while others just want to make sure the borrowers are the immediate beneficiaries. Most lenders want the trust to be notarized, while title guidelines only require the trust to be signed. Make sure your title company is adhering to your lender’s guidelines; otherwise the review process could be delayed.

revocable trusts Revocable living trusts are what HUD requires for reverse mortgages. Most should meet HUD guidelines and qualify for a reverse mortgage, but there are always exceptions to the rule. Submit the trust to your lender and title company right away so they can confirm if the trust meets HUD’s requirements.

irrevocable trusts Irrevocable trusts, unfortunately, cannot and will not meet guidelines for any reverse mortgage at this time. If the borrower is currently in an irrevocable trust, and if all parties are still alive and well, they must “bust the trust” in order to obtain a reverse mortgage. If one party has passed away, unfortunately they will not meet qualifications for a reverse mortgage and must search for other options available.

a/b trusts Even if a title company assesses your trusts, there may be occasions that call for further review. Remember, this is a measure to try to save your borrowers’ money up front. Sometimes the borrowers still face the inevitable prospect of spending money for an attorney review. If an application is taken from a borrower who has a spouse that passed away, and they were in a trust together, more than likely the borrower will be in what’s known as an A/B trust or a “spillover trust.” This means that upon one person’s death, a portion of the trust becomes irrevocable and may no longer qualify for a Home Equity Conversion Mortgage (HECM). If that’s the case, there are still measures the borrower can take to meet HUD’s guidelines for a reverse mortgage. It just may take some extra work. The A/B trust split is a way of avoiding federal estate taxes. If the estate does not reach a certain threshold level (in terms of the how much the estate was worth) at the time of the passing, the majority of trusts do not split. The threshold level changes every couple of years. Most title companies don’t have the capabilities (at least not currently) to determine the size

Once the trust has been reviewed, your title/settlement provider will let you know that the review process is complete and whether the trust has been approved or needs further evaluation by an attorney.

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of the estate at the time of the passing of the spouse. Title relies on the attorney to review the estate at the time of the passing to see if it hit the threshold level of splitting into an A Trust (usually revocable) and a B Trust (usually irrevocable). Loans with trusts in certain regions may be more apt to split into A/B trusts (think Manhattan or Beverly Hills). If it doesn’t reach the threshold level, then many trusts remain completely revocable. Once it’s been determined that the borrower is in an A/B trust, the trustee must have the power to encumber the property. The attorney review will help determine if the estate had sufficient assets to split.

powers of attorney Reviewing trusts may be complicated, but what if you have a borrower who is competent, yet can’t sign the loan paperwork? What if your potential borrower has a degenerating health condition like Alzheimer’s? Is your deal dead on arrival? Thankfully, no. Recently a reverse mortgage loan officer in California met with Mrs. Smith, whose husband was diagnosed with Alzheimer’s. Fortunately, before Mr. Smith was diagnosed with the disease, he executed a financial power of attorney that Mrs. Smith could use in case something was to happen to him. As the years went on, Mr. Smith’s

condition worsened, and Mrs. Smith was overwhelmed with mortgage payments and medical bills. Just as the problem became insurmountable, she happened to hear about reverse mortgages and turned to the Internet for further guidance. Luckily, Mrs. Smith was able to obtain a reverse mortgage, while keeping Mr. Smith and herself on title. They were fortunate to be able to find the reverse mortgage as a solution, allowing them freedom from mortgage payments, and the ability to pay for Mr. Smith’s healthcare. Most everyone who is successful in the reverse mortgage industry has the borrowers’ best interest in mind when helping them look at all accessible options available. However, both HUD and lenders are keenly aware of fraud that exists, and have therefore deemed some rules necessary for borrowers using a power of attorney. According to a study done by the National Center on Elder Abuse, 60.4 percent of all perpetrators of financial abuse are adult children, including powers of attorney and trustees of trusts. It’s very important to pay close attention to your borrowers’ needs and individual situations if they are indeed using a power of attorney or trust. The type of power of attorney that should be used for a reverse mortgage is a financial power of attorney – not a medical one. A power of attorney is a document that gives one person legal authority to perform certain acts and/or

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make certain decisions for another. The person granting the authority is called the Principal; the person acquiring the authority is called the Attorney in Fact or Agent. To be used for a reverse mortgage, an Attorney in Fact needs to have the power to borrow money, encumber real property and execute contracts, etc. Unless the POA specifically allows it, an Attorney in Fact cannot use the POA for self-serving purposes (example: a wife may not deed her husband off title so she can obtain a reverse mortgage in her name only). There are many types of powers of attorney, but the most common one used for a reverse mortgage is a durable power of attorney, which means the document takes effect upon delivery and survives the incompetence of the Principal. This type of document also becomes void upon death of the Principal. Another common type of power of attorney used for reverse mortgages is a springing power of attorney. This document takes effect only upon the incompetence of the principal. Either of these types of powers of attorney is suitable, provided they meet lender and title guidelines. This is another instance in which title companies familiar with reverse mortgages will come in handy.

If you know that a power of attorney will be utilized for the purposes of the reverse mortgage, obtain a copy of the power of attorney and submit it to both your lender and title company for review. The title company should know how to review the power of attorney for both title and lender purposes. Guidelines will vary depending on if the borrower is using the power of attorney by itself or in conjunction with a trust. Sample requirements: If the borrower is using the power of attorney by itself: „ If competent, the borrower must sign the up front documentation and attend counseling. „ The borrower must sign an affidavit stating they know the power of attorney is being used to obtain a reverse mortgage. If the borrower is using the power of attorney in conjunction with a trust: „ The power of attorney will sign on behalf of the borrower as an individual. „ If a borrower is incompetent, the trust and power of attorney will determine how many doctor’s letters are needed. For example: if the trust calls for two letters, but the power of attorney calls for one, title will need to see two letters.

conservatorships Contrary to Mrs. Smith’s story, some borrowers desperately need the money, but are sorely lacking proper documentation to ascertain a reverse mortgage. Recently there was an Attorney in Fact who signed loan documents, but could not provide the original POA at closing, which was required. The borrower was suffering from Alzheimer’s and could not re-execute a new power of attorney for recording purposes. Her doctor’s letter implied that she was not mentally stable. In this case the power of attorney was rendered useless, and the person acting as Attorney in Fact had to proceed with obtaining a court’s approval authorizing her to act on the borrower’s behalf. This process is known as a conservatorship. A conservatorship is a legal proceeding in probate court wherein a petition has been filed, and granted, requesting oversight of the affairs of someone who is or has become incapable of handling his or her own affairs, including financial matters. The court appoints a conservator to make certain decisions or perform certain acts on behalf of the conservatee. Setting timeframe expectations with borrowers is the best business practice you can implement if a

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conservatorship must be obtained for use in a transaction. Some conservatorships can take upwards of six months to be realized – sometimes longer. If you are choosing to see your borrower through the process of obtaining a reverse mortgage with a conservatorship, please submit all documentation to title for review as soon as possible. They will review all appropriate court documentation to make sure guidelines have been met, including the court approval for the reverse mortgage itself. Essentially what title and lenders will want to see are the Permanent Letters of Conservatorship, and a court order authorizing the reverse mortgage. (Note: terms may vary from state to state.)

our industry’s reality In today’s reality of a declining market, trusts, conservatorships and power of attorney documents, in addition to financial complications, are all too familiar within the reverse mortgage industry. That’s why selecting partners familiar with the reverse mortgage process will help make you successful.

mortgage loans is on the decline. In order to remain a strong player in the reverse mortgage game, it’s important to educate yourself continually on the needs and expectations of the seniors in your target community, as well as back-end guidelines that will help get your loans closed quickly. Mark Twain once said, “Always do right – this will gratify some, and astonish the rest.” While it might sound altruistic in nature, this quote is indicative of our industry. There are very few people who are in the reverse mortgage industry who aren’t looking out for the senior demographics’ best interest. Those companies who are in this industry for the right reasons will be successful over the long term. Given the current situations with the sub-prime mortgage meltdown, there are few companies who are without change in recent months. Products were revoked, pricing has changed multiple times and companies were swallowed whole – all because of circumstances bigger than any few groups of individuals. Any company who can weather this kind of storm and still focus on seniors’ needs will continue to thrive, even if we are in a declining market.

To further complicate our industry, there is a surge of new reverse mortgage brokers just as the volume of reverse

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7 Secrets for Cost-Effective Marketing: Step-by-Step

Valerie Vanbooven

I’m divulging all of my secrets for this issue of The Reverse Review on lead acquisition! Aren’t we all looking for the MOST cost effective marketing strategies? Wouldn’t it be great if the postcard mailers really pulled the numbers they used to? Everywhere I turn, Reverse Mortgage originators, and frankly anyone who serves the senior market, are looking for the magic bullet that improves their lead conversion. Is it seminars? More postcards? Newspaper ads? Online marketing? Who should you listen to, and where should you begin? There are lots of questions. Here are some real answers. I would say that 90% of Reverse Mortgage originators would do a lot more business if they would take the time to understand the dynamics of successful internet marketing. I know that very few of you are internet gurus, and very few of you have the time to learn a completely new skill. However, just a few tweaks of your website, and a few hours spent each month reaching out to consumers on the internet will TURN those LEADS into CLIENTS. There is no magic bullet. If you aren’t interested in spending a lot of marketing money these days (and who is?) then you will need to spend a little time and focus on education.

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If my income was based on commissions only, then here is what I would have in my arsenal of marketing tools without question:

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A short (professional, not goofy) video on Reverse Mortgages customized with my name, picture, logo, phone, website etc at the end. I would have that video in a DVD format (for handing out to seniors and their family members) and in a MPEG or WMV file for posting on the internet.

a. Side note on the video: If you don’t sound professional, please let someone else do the video for you, do not do voiceover work if you don’t know what that means. Want a good example? Go to www. youtube.com and type in Reverse Mortgages. Look at some of the WORST videos ever created on the subject. Get a good laugh and while you are there, take note of the really well done videos. Learn from those who have done a professional job. b. Once I have my video put together, I would post it on every video website on the internet using a title

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like this: “Reverse Mortgages for Seniors in St. Louis, Missouri” The reason I added my location is because when an individual surfing the web does a search for “Reverse Mortgages St. Louis, MO”, my video is likely to come up first in their search results. Make sense? I don’t care to serve the entire country, I just want clients in St. Louis, MO. This is called using long-tail key words.

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A 30 minute recorded “radio show” on CD, again, professionally done, great host, great voiceover, great interview. This builds credibility and trust instantly with seniors and adult children of aging parents. Have it on your website for download and on CD for distribution to prospects and referrals. My Articles: I would write at least 5 articles or more (350 words each) on Reverse Mortgages. Think of the top frequently asked questions, and write an article on each. Submit those articles to every service on the internet that accepts free article submissions.

money. I’m talking black and white, 2-sided, fun, interesting factoid kind of newsletter. Something that makes people smile. Don’t put long boring articles about Reverse Mortgages in EVERY issue. Keep it simple. Just a small reminder that you cared enough to say hello is all it takes for a senior and their family to respect and acknowledge that you are a kind and thoughtful professional. When they decide to move forward with the Reverse Mortgage process, you will be top on their list (and on their coffee table) for that first phone call. In a nutshell, those are the 7 steps to dominating your local market. All of the suggestions are affordable, easy to duplicate, and cost more of your time than your money. If you are sitting around without appointments, get busy and learn the secrets that successful marketers already know: education, content, trust, credibility- show the consumers in your local area that doing business with you is a no-brainer. Can’t do it all yourself and need help? Reach out to those of us who do this all day long. We are always glad to point you in the right direction.

My Website: I would certainly look into a website makeover. Eliminate the clutter. Eliminate the 5000 options for people to click on. Focus on ONE thing: getting the lead’s information. Don’t give away good stuff until the person visiting your website gives YOU their name and email address. If you have an unprofessional looking website, or if you have dozens of information options on your website, it’s time to redesign it, make it simple, effective and compelling. Make people WANT to give you their information. Use great headlines, great titles, and great content. My FREE OFFER: Every ad, every website, every presentation, everything I hand out would have a free offer attached. That could mean a free e-book, or a free DVD, free radio show CD, free booklet, free report, free vial of life, free discount prescription drug card, free something. NOT a FREE CONSULTATION. The free consultation is over-used, and completely ineffective. Everyone offers a free consultation. Take those words out of your vocabulary and off of your ads. It’s a given. Think of something tangible and compelling that will educate your prospect and make them believe they would be absolutely CRAZY to do business with anyone else but you.

HUD Foundation Specialists

M Manufactured actured Hou Housing sing Troubleshooters T rouble FFoundation Inspections, Upgrades & Repairs EEngineer Certificatio C ons

My monthly newsletter: Every month without fail, a newsletter should go out to your prospects, clients, past clients, and referral sources. I’m not talking about a 4-color slick expensive newsletter, don’t waste your October 2008

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Are You Prepared to Survive Harsh Economic Times?

Sam Collins

The U.S. being the world’s greatest superpower is showing signs of weakness at home and abroad. Excesses in spending, conducting a war on two fronts, rapid growth in stock equity, unsurpassed home equity growth, a weakened dollar, dependence on social programs, entitlements, a greedy Wall Street, consumer spending out of control, and an aging population are all contributing to harsh economic times. Are you prepared to survive the inevitable? If you are not careful you might think Armageddon is around the corner. However, do not fret, as the American spirit is still alive and well. I have confidence that our economy will pull together. Yet, there are many who will not survive the challenges that confront us. Harsh times call for emphatic direct action. Sitting back and doing nothing will surely lead to your destruction. If you are in a competitive market, doing nothing is exactly what your competition is hoping you will do. The reverse mortgage pie has only so many slices and when it gets completely divided, you may be left with the crumbs and this is not the place you want to be. Now is the time to consider a complete business diagnostic. You must dissect every facet of your business model. Here are some tips for your diagnostics and consideration: • Review your current and projected expenses to find waste and opportunities to increase your profits. • Review your current marketing systems to find missed opportunity costs which lead to missed profits.

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Review your training curriculum. Are you keeping pace with program changes? Are your new originators up to speed? Can you or they explain TALC and what it really means? Do your originators and staff know the specific terminology relative to the reverse mortgage industry? What is your current pricing structure? Are you consistently offering products that will give you the proper return in order to stay in business? Have you reviewed your sales processes to ensure maximum conversion from prospect to converted active origination? Have you reviewed your current ads, direct mail pieces, letters, brochures, and other marketing materials and changed them if they are not working? Is your criterion for direct marketing pinpointing the highest probability sales model? Are you challenging your list provider to make sure they understand what you are looking for them to produce and what is producing the highest return on your investments?

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Is your entire team rowing the boat in the same direction? Is there one leader who is asking for input from all team members? If one team member fails to pull their weight are you willing to let them go or decide what you need to do to get them on board before they drown everyone? What affect will new legislation have on your business? Are you prepared to quickly change marketing efforts once HR3221 is fully implemented or partially clarified?

A regular review and assessment of your business is of the utmost importance if you are going to succeed during these harsh times. You must be prepared to change your strategies. If your diagnostics recognize flaws in your system, you must change them. Fine tuning your business is where you can substantially improve your net profits without working harder or longer. Remember, working smarter is the secret to more profits. Another tactical approach may be to address other expenses. You may be tied to a lease or a projected long-term contract. You may be surprised landlords and others may be willing to work with you and lower your monthly expense, if you lay it on the line. Remember, they are experiencing the same thing as you. There are not a lot of new tenants willing to pay for your space or new businesses that will pay the rent your landlord is asking. Not asking to lower your expenses is similar to not asking for a sale. You will never get the sale if you don’t ask. So, what do you have to lose if you don’t ask? If you are experiencing harsh economic times, you must consider the fear and anxiety your senior clients are experiencing. Here are some key points to keep in mind: • Your senior prospect’s spending may be outstripping their savings. • Your seniors may be unable to keep up with the current cost of medical care. • Many of your seniors are under the perception social security will give them a comfortable retirement and realize now savings have not kept pace. • Paying for groceries and gas is a weekly financial burden and puts undo psychological pressure on your senior. • Many are unable to budget for unforeseen expenses. • Fear the stock market might collapse, thereby losing their 401K, IRA, or pension incomes. Review the latter key points. There are a vast number of opportunities for you to be a resource for your senior prospects during these harsh economic times. These are the times you should use your consultative selling skills. You must be prepared to empathize and show genuine concern

for the fearful things your senior clients are experiencing. You must offer solutions a reverse mortgage can provide for your seniors. Recently, I was taking an application from a borrower who was facing foreclosure. Luckily, we were able to stop the foreclosure and save our senior client’s home. Our client was 79 years old. She had no money saved and her husband had passed within the last year. During our meeting she sat shaking and sincerely worried about her predicament. My heart went out to her and I knew we had to try our best to reassure her we could save her home. Luckily, it all worked out and she was able to remain in the home in which she and her husband had raised their children and had fond memories. I have heard of similar stories and I am sure you have probably experienced similar situations. Surely, your ability to solve these severe situations will position you to be a good steward and client advocate to help get seniors through tough economic times and when this occurs you will naturally insure your future success and survival. The NRRI (National Retirement Index) reveals nearly 45 percent of households are “at risk” of not having enough money to maintain their living standards during retirement. This fact is noteworthy, since many folks have not saved enough money for retirement to keep up with the same standard of living when they were working. Stimulating your prospective senior clients is tricky. You don’t want to seem too pushy, but you must be politely persistent. Your senior prospects are being bombarded with many possibilities, which add to their anxiety. For you to survive and endure during harsh times your goal must be to increase your audience, and in turn this will result in you being able to talk to as many senior clients as possible. The more seniors who get to know you, the more relationships you build, thus ultimately resulting in more business for you. Now is your time to make serious choices. Are you a survivor or are you going to be a casualty? I am sure you want to survive the current harsh times. History has proven, when harsh economic times occur, they are usually followed by prosperity and resurging profitability for those who survived the tough times. Now is the time to implement the strategies necessary for your survival. Good Luck. If you are stuck and feel like you have no where to go, or you simply want to talk through some ideas and solutions for your specific business, email me to set up an appointment for a free 30 minute consultation. My email is [email protected] . To see tools and systems to help you through these harsh times, visit http://www. samcollinsmarketing.com or consider joining the REMALO Membership Team, http://www.remalo.org.

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The Good, The Bad & The Ugly Is the FHA Legislation for reverse mortgages all it’s cracked up to be? It’s perhaps the most hyped and anticipated legislation in the reverse mortgage industry. The Housing and Economic Recovery Act (HERA) and the FHA Modernization Bill. Conventional wisdom on the street touts the benefits as the greatest advent since the arrival of Robert Wagner on television ads. While positive in many respects pundits are missing some of the drawbacks and unintended consequences of this new legislation. Origins of Bill While there were many reasons for the changes to the FHA reverse mortgage, a few key areas were the catalyst of the bill: Loan limits, origination fees and financial product sales. If you are unfortunate enough to live where your commute entails staring at the bumper of the car in front of you for extended periods of time, then you are fortunate to work in a higher lending limit area. Lending limits across the country varied wildly from $200,000 to $362,790 for FHA HECM loans. One result was heavy market penetration in urban areas while less populous areas garnered less attention. Loan originators enjoyed more qualified properties due to the higher principal limit and larger paychecks based on higher property values. As a result, this left smaller communities on the table as viable, but less profitable areas in which to market. More importantly it left many borrowers with higher valued properties unqualified due to their area’s lending limit. The lending limit increase passed in October brings a more equitable opportunity for qualified borrowers to obtain a reverse mortgage without being penalized for living in a less-populous area. FHA has Changed Your Paycheck Another key change in the new legislation is the reduction of loan origination fees. I would suggest this provision is rooted in the myth of the greedy reverse mortgage originator and the desire of lawmakers to garner political points with the populace for being “consumer advocates”. As originators we knew this bill would reduce our income, but hoped the increased lending limits and more qualified properties would compensate for the loss. The reality may be quite different. Why? Most property values are rapidly falling and with consumer confidence shaken, it may be quite some time before we see loan production offset reduced loan origination fees. Also, to date HUD has yet to settle upon what the new loan limits will be. 30

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Shannon Hicks

So where does that leave us today? Let’s take a $350,000 property with a lending limit of $321,955. Total loan origination fees would be $6,439, or 2% of the lending limit. The new loan origination for the same property is 2% of the first $200,000 in value, then 1% above that to a maximum of $6,000. What is the new loan origination fee? $5,210 or 20 percent less than before! What happens when lending limits are finally approved? The loan origination is now $5,500, but still 15 percent less. Ironically, the FHA insurance remains a full 2% of the property’s value or maximum claim amount. Smaller lenders will have to cut expenses, staff or increase overall loan volume to make up for reduced loan origination fees. This poses a challenge as overall originations have fallen sharply this year. We’ll never fully know why FHA saw fit to reduce loan origination fees. We can only guess that it was an effort to lower the upfront entry costs and to protect consumers from “greedy” loan officers. AARP was one of the biggest forces behind this provision in the bill. Strip away the hype and the truth is the cost of originating a HECM loan has not gone down. Reverse mortgages are one of the most laborintensive and time-consuming loans in our marketplace. The vast majority of loan officers in our industry are caring individuals with the desire to provide the best service possible to our senior clients. A typical reverse mortgage originator’s loan volume was less than that of his forward mortgage counterpart (before the market fell) because of the labor-intensive nature of the loan. What was different? We had to fully disclose our true origination costs upfront while many in the forward mortgage space could charge a smaller upfront fee then make much more on the back end of the loan. The Wild West Besides loan limits and origination fees, the FHA sheriff has ridden into town to chase out the bad guys. Now, no reverse mortgage originators may cross sell financial products, or benefit financially from their sale. Did I say bad guys? Well, yes if you consider those who came into the reverse mortgage business with the only intention of selling financial products. As with any new market the early days often end up looking like the Wild West. As the reverse mortgage market expanded much like Manifest Destiny in the last five years, shady players arrived on the scene along with the early pioneers. One of the industries that seized upon reverse mortgages initially was the financial and insurance industry. The reason was easy; the largest holder of wealth in the country (seniors) and trillions of dollars of untapped, invest able

assets. While this may have fueled expansion of the product, it spawned a host of problems. The temptation was too great for many who asked themselves “why make $3,000 on the sale of a reverse mortgage, when I can make another $6,000 selling an annuity?” So, compelled by greed, many insurance-licensed originators placed reverse borrowers into products that produced no income benefits but lined their pocketbooks quite nicely. They had forgotten the mission and were consumed by the commission and lawmakers had to step in. That being said, we must ask ourselves, “is the sale of all financial products a bad idea with reverse mortgages?” While consumer protection is good for the borrower due to abuse, financial products may be appropriate in some instances. The real key here is someone besides the loan originator should be able to provide the borrower with options where appropriate. The needs for long term care and not outliving one’s income are two of the greatest concerns for seniors. I’ve often wondered, what is the exposure to the borrower if they leave all of their money in the loan, versus separating it and taking complete control? That’s the role of an outside advisor removed from the loan process, but a valid question nonetheless. While protected, the consumer must remain empowered to make decisions in their best interest. The provision prohibiting loan officers from crossselling financial products is good, but in the end, lenders will have to police their own. Overzealous lawmakers: There’s an adage in sales that goes like this: always be selling. I would argue a similar one applies to lawmakers, always be campaigning. Lawmaking in our nation’s capital is largely a reactionary process. A problem rears its ugly head and lawmakers try to fix the problem as best they can after the horse is out of the barn. The FHA Modernization Bill covered a host of lending problems facing our country and the reverse mortgage provisions were a small part of the overall plan. The mindset most lawmakers approach issues with is a litigious one versus a business worldview. Why? Most of our lawmakers are attorneys. While making a bill watertight legally is good, the business end of the bill is often overlooked. I would venture to guess very few lawmakers who worked on the bill had any lending experience. This leads special interest groups with experience in the lending industry trying to influence and educate our elected officials. It’s this lack of real world experience that often leads to trouble.

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The Law Of Unintended Consequences Because the reverse mortgage is the child of FHA legislation in the late 1980s, it’s the government’s game and their rules. That’s fair. But one wishes that more consideration was given to the true effects legislation will have on businesses and the consumer in the end. Having observed what goes on underneath that great dome in DC, I would venture to say that lawmakers are masters of the law of unintended consequences. Ironically, shortly after the new FHA Modernization Bill passed with reduced loan origination fees, banks responded promptly by increasing margins. This increase in margins was not solely driven by investors seeking more safety in the secondary markets, but banks having to compensate for the loss of loan origination income despite the static costs of originating a reverse mortgage. Within a week we saw banks increase their margins for HECM products a stunning 50 basis points. Assume a portion of the margin increase was to offset lower origination fees and you can easily see the longterm costs will far exceed what the consumer saved up front. These are side effects anytime the free market system is over-legislated. The politicians get the publicity of “consumer protection” while the consumer foots the bill. In fact much of our current housing crisis is rooted in bad legislation of

the 1990s that had the intention of making “lending more equitable and accessible” to the average American. This summer Washington State seniors experienced the brunt of legislative “good intentions” when legislators voted unanimously to move unregulated mortgage brokers under the scrutiny of the Department of Financial Services. The end result? Businesses subject to the new Consumer Loan Act (mostly brokers) were banned from doing any “reverse style” mortgage. Lawmakers left in their wake a mess where only banks and credit unions could offer reverse mortgages eliminating much choice and availability for the consumer. When asked about the unintentional banning of reverse mortgages, director of the Department of Financial Institutions Scott Jarvis replied, “Sometimes, legislation may have unintended consequences, but if no one comes to complain or bring it to their attention, it’s not fair to fault the Legislature for it,”. I think that pretty much sums up the legislative viewpoint. Even more recently California seniors and reverse mortgage lenders had reason to be concerned about new lending legislation with the introduction of Assembly Bill 1830 drafted by Assemblyman Ted Lieu. This bill made it all the way to Governor Arnold Schwarzenegger’s desk only to be vetoed. The bill would have banned all negative


 
 
   












 

 



 



 








 


  






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For more information contact Laura R. Ward at [email protected] or 866-724-0040. www.CLS.us.com

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amortization loans. Fortunately an amendment was made to exclude reverse mortgages from the negative amortization prohibition. Imagine if this small detail had been overlooked. You can see how the devil is in the details and the importance industry vigilance plays in today’s regulatory environment. What Lies Ahead? To be fair, there are many good things that came from FHA Modernization Bill and Housing and Economic Recovery Act. One is the ability for seniors to use a reverse mortgage to purchase a home. The other is homeowners in previously low lending limit areas will benefit from a national lending limit of $417,000 targeted to go into effect November 1st. In fact those lending increases may save thousands of seniors from foreclosure who need to escape adjustable rate loans. The FHA insurance fund will do quite well with lending limit increases, if we can keep the monies safe from Congressional spending. Increased lending limits will make more money available to borrowers, but also entail higher insurance costs. The two percent charge upfront and the ongoing .5% charge seem more than sufficient to offset the limited exposure to loan deficiencies. This is good news because the coming wave of baby boomers will most likely precipitate another boom in reverse mortgage loans that must be secured. The less risk to investors means continued access to HECM loans. Today we stand at a unique crossroads in the reverse mortgage industry. Interest rates are historically low today, but will most likely increase. Also many companies will be moving from the CMT index to LIBOR in the effort to secure larger lines of credit from international pools of investors. Couple this with the strong possibility that home values may continue to decline for the next several years and seniors may have their best opportunity to maximize the benefits of a reverse mortgage today than in the future. With change comes challenge and opportunity. It is up to us to evolve and adjust to the new marketplace. If we do, brighter days lay ahead and more Americans will retire comfortably with a reverse mortgage.

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Borrowers With Personality David Gutmann You may not think (from the title agent’s perspective) it makes much difference what a borrower’s age, mental state or personality is like. However, when dealing with reverse mortgages these are very important attributes to consider. I have been handling reverse mortgage closings for almost fifteen years, and it became apparent early on just how relevant this can be.

once - and paid that off as well), and have few if any credit cards; although we are beginning to see this change with the “sub-prime reverses”. The new seniors, on the other hand, are more a product of the times. They have owned two or three or more homes, have refinanced a number of times, have numerous credit cards and are more attuned to how the system works.

One of my first reverse mortgage closings was at a borrower’s home. The loan officer met me there and when we concluded the execution of the documents he quickly excused himself, as he was late for another meeting, leaving me with one of the most fearsome and fearless individuals in this business. No it wasn’t the state insurance commissioner. No it wasn’t a class action attorney. It was an elderly widowed woman, with pictures of her children and grandchildren, a full pot of coffee and cookies………… Obviously the loan officer had been in this situation before and knew enough to quickly throw me in front of the beast while he made a quick escape.

Clara

The point, of course, is that many senior borrowers are much different than other borrowers. They’re retired. They’re on a different schedule. They’re not caught up in the rat race any longer, and operate at a slower pace than the rest of us. They don’t want to be hurried, so we need to slow down to their pace. In addition, recently there have been many more “sub-prime reverses” taking place. This is largely due to the current economic climate. I have come to recognize that there are several types of senior borrowers. In addition, there are particular financial issues that affect these seniors with resultant title issues. Below I have summarized six categories of senior borrowers. Why is this important to the title agent? If you can recognize the type of borrower you have it will greatly enhance your ability to clear title issues. The title issues haven’t changed, but how you interact with the borrower to resolve the issues will go a long way in being able to do so more expeditiously. The six categories are divided into two parts, the old senior and the new senior. Actually, the old senior is more appropriately termed the traditional senior; think of your parents or grandparents. The traditional seniors generally are more conservative, have lived in their homes for a number of years, have only owned one (possibly two) homes, paid off their original mortgage a long time ago (maybe refinanced

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Clara is an elderly widow. Unfortunately, she doesn’t totally understand financial issues. When asked about financial matters her response may be “My husband always took care of all the bills”. This type of borrower could also be an elderly widower. He or she is usually doing a reverse mortgage for the more typical reasons; additional monthly income, to come current with real property taxes, or making repairs on the house. They are also looking for guidance, if they don’t already have that from a child or other family member. If treated like parents or grandparents, they can become very trusting of the loan originator and even the title agent very quickly. Like the other categories of traditional seniors they tend to save everything, which can be helpful when trying to track down the mortgage satisfaction from that mortgage paid off twenty five years ago. They have it in a file somewhere, they just didn’t know what it was when they received it, or what it looks like. I remember one originator calling us from her cell phone in a borrower’s attic going through a number of boxes of papers looking for documentation to clear several title issues. If you don’t have such an ambitious originator working with you, you may end up having the borrower faxing or sending you numerous documents hoping that one of them is what you need. Even my own dad, who passed away several years ago, still had the original contract from the purchase of what was his newly built home, along with the change orders and invoices for light fixtures from over fifty years ago. Not to mention all the paid receipts for all the carpeting and appliances replaced over the years. You can spend an extraordinary amount of time on the phone with these senior borrowers tying to obtain information or locate documentation. In addition, they sometimes use this as an opportunity for visiting. “Are you married? Do you have any children?” Brushing them off quickly can be risky, as this may come across as being rude. There can be a fine line between “being rude” and spending an extraordinary amount of time on the phone with this

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borrower. Your title clearing or escrow personnel need to be able to recognize this type of borrower rather quickly and be able to walk that fine line in order to gather the necessary information and form a bond with the borrower at the same time. Fred Fred, the second type of “traditional senior” may be diagnosed with dementia. It’s not usually advanced; otherwise he would have a family member or friend assisting with his application. These borrowers are quite often using the reverse mortgage as a means to remain in their home and pay for in-home care. They usually have trouble comprehending the issues involved as well as difficulty remembering certain details or transactions from the recent past. With regard to a mortgage refinance just three years ago you might hear “I probably did, but I just don’t remember”. With these seniors you should be prepared to find out if there is a family member or friend who can assist them with requests you may have. Don’t forget that these borrowers, too, have accumulated many years of documents relating to their home, and a family member may know where to look for clues. Also, many times the loan originator may be able to fill you in on the borrower’s mental capacity prior to you contacting them. Or, the originator may find it better if you deal with them rather than the borrower, so as not to confuse them. Too many parties to the transaction all contacting the borrower with different requests can cause unnecessary confusion. Helen Helen is another “traditional” senior borrower and she is in financial trouble. She has a limited understanding of financial issues, but is in desperate need of help. She has numerous credit card bills, real property taxes that are in arrears, and mortgage payments in arrears. These types of borrowers may have also had foreclosure proceedings commenced, whether for taxes or mortgage loan. In addition, they may have filed for bankruptcy. Some may be behind on their Chapter 13 payments and risk having their bankruptcy dismissed. Their bills have reached a critical level and they don’t know where to turn for help. Fortunately, the mortgage originator found them, and as it turns out a reverse mortgage may help payoff their debt with no monthly payments going forward. I say may, because much of this depends on how much equity the senior has in their home. A debt level exceeding the value of the home means that a reverse probably is not the answer. Even if it is the answer there can be a considerable amount of work; from coordinating with a bankruptcy attorney and trustee, to holding off a foreclosure proceeding. These are usually time consuming and complicated issues to deal with when time is of the essence.

In addition, we have had several files where the foreclosure proceeding had already resulted in the sale of the property with no opportunity to redeem. At this point a referral to an attorney and possibly social service agencies may be the best that can be offered. Don’t forget that these seniors don’t know where to turn for help, and simply providing some telephone numbers may be enough to point them in the right direction. Many times the borrower’s situation may become evident before you as a title agent are involved in the transaction and the loan originator may have already made a referral. However, there are times when the title agent may be asked for this type of help. Why would you want to bother with this if there is no possibility of a closing and no fee? Simply put, because it’s the right thing to do. Consider it your civic duty, and a way of “giving back”. Don’t forget, you want to treat these folks as you would your own parents or grandparents. Also, if you are able to recognize this type of borrower early on, asking some questions and staying in contact with the loan originator, may help avoid wasted time working on title issues that ultimately won’t get resolved. Plus, your customer knows that they have someone they can count on. Sophie Sophie, although having exceeded her life expectancy is still very sharp, understands financial matters, and has a firm grasp on what she is doing. These seniors are frequently doing a reverse mortgage in order to be able to remain in their homes during their last years. Some are terminally ill and are using the reverse to pay for in-home care to remain in their home, in familiar surroundings, with their family at their side. They are usually well aware of what they are doing and are consciously leveraging their equity to make their lives and possibly their last days more enjoyable and comfortable. I am reminded of the transaction we handled for a borrower over 100 years of age, whom we are told is still enjoying her home. My staff tells me that she was “as sharp as a tack” throughout the process. As you might imagine these senior borrowers are able to assist quite well with any title clearing issues. It is also important when dealing with end of life issues, to advise your witness/notary closers of the circumstances so they know what to expect when meeting with the borrowers to sign the documents. The last two categories of seniors fall into a different age group, and could be called the “new seniors”. These borrowers range in age from 62 to 72 or thereabouts. Dick Not unlike my third category above, Dick has financial issues. However, he is pretty familiar with the issues, as he has been there before. He has previously refinanced for the

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same reason. Using his home equity to get out of financial trouble. Think credit card debt, home equity lines of credit and multiple refinancing. This was always possible while property values were on the rise and he always had increasing equity to tap into. Now it’s a matter of paying off the debt and having no payments going forward. These borrowers know how to the system works and are familiar with the length of foreclosure proceedings and how to avoid process servers. They are confident that they know more than you about legal issues and title related matters and can be quite convincing, especially to the title novice. They have even, on occasion, convinced a loan originator that their title agent doesn’t know what they are talking about. As soon as you recognize that you have this type of borrower, have a conversation with your loan originator so that they know what the issues are, and what you need to do, and will be doing to clear up those issues. Already having established a good working relationship with your customer goes a long way in this regard. Marty Marty doesn’t really need a reverse mortgage, like our other borrowers. He is knowledgeable about reverses and he may have the assistance of his CPA and/or attorney. He also has a specific use for the equity he is tapping into. He may be purchasing a sail boat, sports car, vacation home or planning

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on traveling. These borrowers have more than enough equity in their homes for purposes of the reverse mortgage. Generally speaking these transactions do not have major title issues. These would be on par with jumbo conforming forward mortgages. Some borrowers have had considerable experience with financial transactions and prefer to move matters along and “get the deal closed”. Others will want to carefully consider all the costs and details. After all that is how they got where they are; by being careful and reading the fine print. In either case title clearing should not be time consuming. Naturally, personalities are as diverse as the number of borrowers with whom you will interact. Categorizing some more common traits could help in setting your expectations as to how much time will be necessary on particular transactions. In addition, you may be able to identify which of your staff will interact best with each type of borrower. I know enough now to ask a few questions of my staff before I head out to a closing just in case I need to spend some extra time for visiting. I’ve matured since those early closings. I’m now a member of AARP and don’t mind spending a little extra time with a borrower. Besides now I have my own pictures to share.

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October 2008

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the last word Stephen Kinney - You, of Tender Years, Can’t Know the Fears, Your Elders Grew By The turmoil in the financial markets in the past few weeks, and recent experiences with my own parents got me thinking about the words of my favorite Crosby, Stills, Nash, and Young song “Teach Your Children”: “And you, of tender years, can’t know the fears, that your elders grew by, and so please, help them with your youth.....” To me, these words are about the importance of sharing life experiences between parents and children. Last November my mom called me because my father was having difficulty managing their day-to-day finances. My 79-year-old father, who until recently worked a 35 hour week, had begun suffering from the effects of advanced Diabetes and Parkinson’s disease. Now my mother was faced with the challenges of my dad’s declining health, and taking over the household finances. She was completely unprepared. Over the next few months I spent days going through their paperwork and the household finances, tracking down assets, and trying to make sense of the investments, insurance, and annuities they had accumulated over the years. While my father was doing the best he could, I was shocked to discover that over the years he had been victimized by investment, insurance, and annuity schemes, as well as trusted investment advisors who put the amount of the commission they made ahead of my parent’s best interests. Over the years I rarely had conversations with my father about their finances. When I did they were usually brief. Occasionally, I would see a bank or investment statement and quiz my dad about them. I expressed concern over the performance of these funds and my dad would respond, “I trust Mary Smith (not her real name), she handles our investments.” In hindsight, I regret letting it go, but I was afraid of prying. Adult children often don’t ask their parents about their finances, and seniors are often reluctant to talk about them. A recent survey by Crestwood Associates for lender Golden Gateway Financial backs this up. The survey indicated that 50% of seniors have not had an in-depth discussion about their own finances with their adult children. More telling is that nearly 40% of the seniors surveyed had not discussed their finances with their children because “that’s the way they wanted it”. Past research reveals that seniors are concerned about privacy or not wanting to burden children with such matters. However, for many seniors and their children, not talking about their finances is a serious mistake. The turmoil in the stock and credit markets must be very frightening to seniors. Even if they didn’t live through the depression, senior parents grew up in a simpler time; well before mortgage backed securities and credit default swaps. Unless they’ve been very diligent, it’s likely they have not kept pace with changes in modern investments and finances. Heck, Wall Street doesn’t even understand them. The sophistication of modern investments, combined with the overwhelming variety of

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complicated options, make seniors easy targets for smooth talking investment advisors who are not necessarily looking out for their best interests. Children of senior parents grew up in a different time; we are more familiar with these products. Even seniors with children who have limited knowledge of investments can make wiser choices by seeking help from a child. Children can help research a prospective investment, helping parents to ask the right questions, read the fine print, or find an ethical advisor. Children who get involved in parents’ finances benefit by gaining perspective on their parents’ retirement, and their own. Lessons learned from parents’ years of experience will benefit their own investment and retirement planning. In the reverse mortgage industry we struggle with stories of seniors victimized by unethical originators every day. We’ve all seen how each of us becomes a victim when just one person in our industry takes unfair advantage of a senior. Thirty-two percent of reverse lenders in a recent survey indicated that negative publicity was the cause of loss of business. With more than 1300 new lenders entering the industry this year alone, each of us has responsibility to insure seniors are making an informed, thoughtful decision, and to guard against a few unscrupulous originators taking advantage of seniors. NRMLA has set up procedures to report abuses, so protect seniors and your industry by making them aware of originators abusing borrowers. In my training classes I often teach participants methods and techniques to develop trust. I do this because I truly believe it is in every senior’s best interest to understand what a reverse mortgage can do for them. Without trust, few seniors will take the time to listen to all you have to teach them. With that trust comes the responsibility to do your best for them, and that entitles your to earn a fair return in the process. Sometimes doing right means losing a sale, but the trust you earned will likely pay you back three-fold in positive word of mouth, referrals, and a place in Heaven. So what’s the moral of the story? For you and your parents; Insist on getting involved! Even against your parents protest, let them know in the end all decisions are theirs, but two heads are better than one. Each of you will benefit from the exercise and each other’s perspective. For your clients; get seniors and their children talking about finances. Invest in yourself and your clients by reading everything about reverse mortgages and seniors. Invest in a comprehensive training program and become an expert in your field. You may not be able to do the job of a certified financial planner, but your clients will benefit and your sales will grow. Take a little extra time, preferably with children present, to do a cash flow analysis of how a reverse mortgage may (or may not) help them live a happier, more comfortable life. “And you, Who are on the road, Must have a code, That you can live by.” - Crosby, Stills, Nash & Young

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