New Data Shows Financial Assessment Reduces Reverse Mortgage Defaults

Reverse mortgage defaults have dropped precipitously since the implementation of Financial Assessment rules in 2015, according to an analysis from New View Advisors, LLC published Friday.
The New York City-based financial services firm compared data on tax and insurance defaults for home equity conversion mortgages issued between July 2015 and December 2016 — a period that began two months after the formal implementation of FA on April 27, 2015 — and defaults on HECMs originated between October 2013 and March 2015.
New View found that reverse mortgages issued in the pre-FA period had a tax and insurance default rate of 1.17 percent, a number that dropped to just 0.39 percent for HECMs post-FA. The firm also analyzed the incidence of so-called “serious defaults,” which New View defined as tax and insurance defaults plus foreclosures and other loans with a “called due” status, and found a similar decline: Severe defaults accounted for 1.80 percent of all HECMs in the pre-FA period, and 1.03 percent after.
“Based on this result, we should give the Financial Assessment concept high marks for reducing defaults,” New View wrote in its post. “However, this is a mid-term grade that needs to be tested further as the post-FA portfolio ages.”
New View also noted that the average loan amount, as well as the size of subsequent draws, has risen after in the post-FA period, as the pool of HECM borrowers includes a greater proportion of homeowners with better credit and higher-valued homes. 
Michael McCully, a partner at New View, said the results shouldn’t surprise anyone in the industry. “Financial Assessment is supposed to weed out those who are less likely to pay,” he said. “It makes sense that the nature of the borrower would start to shift somewhat.”
Written by Alex Spanko

Chicago Law School Receives Reverse Mortgage Ed. Grant

The John Marshall Law School in Chicago received a more than $34,000 grant to help fund its continuing reverse mortgage education programs for the public.
The school’s Fair Housing Legal Support Center and Clinic runs the Reverse Mortgage Project — Suburban Outreach Initiative, which hosts educational events and provides other informational services to potential reverse mortgage borrowers in the southern and western suburbs of Chicago. Eight public presentations are scheduled this year under the initiative.
“I am looking forward to the opportunity to the opportunity to take our ongoing reverse mortgage awareness program to audiences outside the city of Chicago,” said R. Dennis Smith, project manager for the school’s Fair Lending and Home Preservation Law Project, in a statement. “Reverse mortgages are neither good nor bad, but they are much more financially complex than the simplistic impression about these loans left by commercial advertising.”
John Marshall received the grant from the Retirement Research Foundation, a Chicago-based group that advocates for seniors. The school said it also plans to use some of the funding to study reverse mortgages’ role in estate planning and home ownership.
Written by Alex Spanko

Holiday Weekend Round-Up: H4P Resources, RMF’s New Ad

Stories about the industry’s reaction to the changing reverse mortgage consumer captured RMD readers’ attention this week, with an all-in-one guide to HECM for purchase leading a pack that also included an analysis of Reverse Mortgage Funding’s new pitch to potential borrowers and a look at how originators have won over financial advisors with pure data.
7 Must-Read Reverse Mortgage for Purchase Resources — RMD compiled a list of seven articles about the under-the-radar home equity conversion mortgage for purchase (H4P) transaction, in which borrowers use a HECM to buy a second property. RMD’s list includes breakdowns from such varied outlets as Seeking Alpha,, and the Denver Post — all in one easily sharable place for clients and mortgage professionals alike.
RMF Uses “Unconventional” Message to Reach New Audience — Executives at Reverse Mortgage Funding noticed that consumers in focus groups were consistently skeptical of ads that promoted the HECM “no-payment” option. So they created a new spot that downplays that aspect in favor of a “flexible payment” approach, which RMF says has been getting a positive reception from viewers.
Lenders Adapt Approach to “New” Reverse Mortgage Borrower — RMD explored how lenders are working to hone their messages to borrowers that plan to use HECMs as a part of their retirement portfolios, and not to meet immediate financial needs — while they tend to be more informed than the needs-based borrowers of years past, they can also sometimes be harder to convince.
Data Key to Financial Planners’ Reverse Mortgage Perceptions — A financial planner who once thought HECMs were only loans of last resort learned to discuss them with clients the same way that he was convinced to change his perception: the presentation of cold, hard numbers.
Reverse Mortgages Around the Web
Reverse Mortgage Nightmare — Long on all-caps words and short on details, Mobile, Ala. NBC affiliate WPMI shows that news organizations still use the phrase “reverse mortgage” to scare the public into tuning in.
ReverseVision’s Birdsell Honored — Jeff Birdsell, vice president of professional services at the San Diego, Calif-based software provider ReverseVision, was named as one of Mortgage Professional America magazine’s Hot 100 for 2017. Birdsell has been developing mortgage-origination software since the 1990s, and is a founding member of the National Reverse Mortgage Lenders Association.
And finally, a reminder that RMD’s offices will be closed for the Presidents Day holiday on Monday. We hope you enjoy your long weekend, and our daily coverage resumes on Tuesday.
Written by Alex Spanko

Second Annual ReverseVision Event Attracts New Reverse Mortgage Blood

Mortgage professionals new to the industry are exploring the ins and outs of reverse mortgages, as shown through the attendance at a growing industry event held in San Diego last week.
A year following its inaugural UserCon in January 2016, reverse mortgage industry software provider ReverseVision held its second annual conference last week, drawing a larger attendance than its first and many new players in to the industry.
“Our goal was to up the game,” says Wendy Peel, vice president of sales and marketing for ReverseVision. “Let’s bring in the new blood and treat this product the way it deserves to be treated—as a smart wealth management and retirement planning tool.”
The event, which took place in San Diego for the second year, was capped at 200 registrants and sold out its full capacity. But a key distinction,  ReverseVision leadership realized, was the number of new participants who are beginning to explore bringing reverse mortgage offerings to their existing business versus existing ReverseVision users.
A kickoff “HECM facts track” session open only to new originators and lenders drew 93 attendees—far exceeding expectations. Among the new participants, ReverseVision found roughy half are looking at the reverse mortgage from the corporate level, and the other half are currently originating forward mortgages and have done a small handful of reverse mortgage loans in the past.
“A small percentage were people who might have done a few reverse mortgages in the past and are now needing a refresher because they want to ramp up again,” says Kelly Kelleher, ReverseVision director of corporate marketing and events.
The the event is among several other company initiatives to bring new entrants to the reverse mortgage space and help educate new and existing originators and lenders. In recent years, ReverseVision has rolled out RV University as a training ground comprising online courses on topics from reverse mortgage basics to learning the ins and outs of new non-borrowing spouse rules. The company is also launching a monthly live training course next month; has participated in “forward” mortgage events such as as the American Bankers Association annual conference, and the Mortgage Bankers Association’s annual conference; and last year launched a reverse mortgage sales tool, RV Sales Accelerator (RVSA), that combines three areas: contact management, advanced calculators to demonstrate scenarios for financial selling and sales knowledge.
The goal is to inform new participants and to gain their investment in the HECM product to help them grow their business, Peel says.
“When you invest a little time and money into something, you see the opportunities you hadn’t seen before,” she says of new industry participants. “We should see an increase in industry loan volume specifically from the people at our conference.”
The positive reception among industry players new and old for the last two years has prompted ReverseVision to start the planning stages for its 2018 UserCon, again in February in San Diego. While the details have yet to be released, one theme on the agenda will be the HECM for Purchase (H4P). There is some anticipated expansion in terms of attendance, but the conference again will be capped in terms of number of attendees.
“Register early,” Peel says.
Written by Elizabeth Ecker

Maine Gov. Touts Reverse Mortgages in New Legislation

Reverse mortgages could become a central part of Maine’s foreclosure law if the governor has his way.
Under new legislation proposed by Gov. Paul LePage, a Republican, any town considering foreclosure on a home due to unpaid taxes would have to first inform the residents of several potential relief options, including a home equity conversion mortgage, tax abatements, or a lien in which the town takes ownership of the property until the residents die, according to the Morning Sentinel of Waterville, Maine.
LePage’s concerns about foreclosures on elderly and lower-income Mainers intensified after he learned about the story of Richard and Leonette Sukeforth, two 80-year-olds who lost their home after the town of Albion, Maine foreclosed on it in December 2015 due to nonpayment of property taxes. LePage was reportedly angered by the situation and attempted to intervene directly, even inviting Richard Sukeforth to his State of the State address in February.
Though LePage didn’t specifically reference reverse mortgages in that speech, he did speak at length about foreclosures and elder housing issues.
“Communities and the Maine Municipal Association may do things right — they follow the law regarding tax liens and foreclosures. But they should do the right thing: Help the elderly stay in their homes,” LePage said, according to the state’s transcript of the address.
“It is unethical and immoral to take away a senior citizen’s home,” the governor continued. “They lose all the equity they built up during their lives. They end up on the street.”
The state has yet to release any specific details about the legislation, and multiple members of LePage’s press team did not return requests for comment from RMD. The Morning Sentinel reported that the governor expected to have the legislation before the state’s legislature sometime in February.
LePage, known in New England and across the country as a conservative firebrand, has advocated for HECM products in the past, telling a Turner, Maine beef farmer at a 2015 town hall meeting that “maybe we can get you a reverse mortgage,” in response to his concerns about his tax burden.
More recently, LePage suggested at a January town hall meeting in Biddeford, Maine that all fixed-income homeowners should have a home equity loan.
Written by Alex Spanko

RMD Job Board: See Who’s Hiring to Grow Their Business

Each week, RMD compiles all of the jobs posted on the Reverse Mortgage Daily Job Board in the one spot where more than 7,000 daily subscribers in the industry can see it. This week, new positions from Professional Mortgage Alliance, Reverse Mortgage Funding, and HighTechLending join RMD’s list of jobs at reverse mortgage firms around the country.

Reverse Loan Officer/Certified Instructor – Professional Mortgage Alliance LLC
Inside Account Executive – Reverse Mortgage Funding LLC
Inside Reverse Mortgage Loan Officer – HighTechLending d.b.a. AmericanSenior
DE Underwriter – Finance of America Reverse
Reverse Mortgage Loan Processor – Finance of America Reverse
Wholesale Account Executive – American Advisors Group
Reverse Mortgage Banker – BBMC Mortgage (Division of Bridgeview Bank Group)
Reverse Mortgage Loan Processor – Longbridge Financial LLC
Underwriter – Longbridge Financial LLC
Reverse Mortgage Originator – Preferred Reverse LLC
Unique Opportunity for ONE Reverse Mortgage Specialist (Nevada-based) – iReverse Home Loans
Regional Sales Manager – Nationwide Equities Corp.
Reverse Admin/Lock Desk – HighTechLending d.b.a. AmericanSenior
Reverse Mortgage Loan Processor – HighTechLending d.b.a. AmericanSenior

Visit our website for additional opportunities in the reverse mortgage industry.
The best and the brightest read RMD. Want them to join your team? Post your jobs to the Reverse Mortgage Daily Job Board today!

Industry Vet Suits Joins Federal Savings Bank

Mike Suits, a mortgage veteran who has spent more than 15 years in the marketplace, joined The Federal Savings Bank as a senior vice president of home equity conversion mortgages, the Chicago-based bank announced yesterday.
Suits will lead Federal Savings’ reverse mortgage retail team in Austin, Texas, overseeing the bank’s planned growth in the region while also monitoring internal operations. The Round Rock, Texas resident most recently served as a reverse mortgage regional production director at Reverse Mortgage Solutions, Inc., which ceased originating loans last month when its parent company, Walter Investment Management Corp., announced its exit from the HECM-origination business. Prior to his job at RMS, Suits helped establish Capital Mortgage Services’ reverse mortgage unit as a division manager.
“I’m thrilled to have Mike join The Federal Savings Bank team,” executive vice president Mike Crossett said in a statement. “He has tremendous experience in the HECM industry and understands the customers well.”
Suits has served multiple HECM industry trade organizations, including the Texas Mortgage Bankers Association’s Reverse Mortgage Committee. The Texas A&M alumnus also played semi-pro football, and is certified to officiate high school football, basketball, and baseball games.
Written by Alex Spanko

RMF Uses “Unconventional” Message to Reach New Audience

Often featuring celebrity spokesmen who deliver messages geared toward needs-based borrowers, ads for reverse mortgages tend to follow a familiar script. But Reverse Mortgage Funding has taken an “unconventional” approach with its latest campaign, focusing on the reverse mortgage as an alternative to traditional home equity lines of credit. In the process, RMF says it’s tapping into a new group of potential borrowers.
Jean Noble, the Bloomfield, N.J.-based firm’s chief marketing officer, said participants in multiple focus groups and surveys thought that the “no payment feature” of reverse mortgages seemed “too good to be true.”
“We lose credibility because the feature is not relatable to any other financial product,” Noble told RMD.
So RMF began marketing its HECM credit-line products as “FlexReverse,” and introduced a two-minute television advertisement touting the “flexible payment option” in October. In the spot, which airs during a variety of sports, news, and movie programming, an actor portraying a potential borrower calls RMF and asks about the difference between home equity loans and reverse mortgages.
The RMF agent in the ad then says that unlike a home equity loan, HECM credit lines give borrowers “the freedom to pay as much or as little as you wish” — not even mentioning the option for not making any payments at all until the very end of the description. The tagline, both in a graphic and read by an announcer, encourages callers to “take control of your finances.”
The message mirrors what Noble told RMD in November during a discussion about changing industry terminology at the National Reverse Mortgage Lenders Association’s annual meeting in Chicago.
“That message really resonates with the customer base because they feel like they have flexibility and control,” Noble said in November.
Noble said RMF has gotten a positive response to the ads from consumers so far, noting that the “unconventional” message is attracting borrowers that normally would have opted for a traditional home equity loan.
“By going after this market we feel that we are doing our part to help grow the industry and attract a different type of customer,” Noble said.
Written by Alex Spanko

Data Key to Financial Planners’ Reverse Mortgage Perceptions

Originators and other players in the reverse mortgage space say that challenges remain when convincing financial planners and other retirement experts that reverse mortgages are a good idea for some borrowers, but a solid education can be the best cure for skepticism — and positive thinking about the products is gaining traction.
Shelley Giordano, chair of the Funding Longevity Task Force, says that she’s seen a steady improvement in understanding among financial advisors since the task force formed in 2012  Giordano specifically points to the gradual release of academic papers from researchers such as Wade Pfau, Gerald Wagner, and Barry and Stephen Sacks as key weapons against the perception of reverse mortgages as a loan of last resort.
“For the very first time, we [have] real data that stands up to this perception of what a reverse mortgage is,” Giordano says. Still, she noted that a lack of knowledge about HECM products continues to be pervasive.
“Unfortunately, financial advisors generally are not trained on housing wealth,” she says.
Ed O’Connor, a reverse mortgage specialist for First Bank Mortgage in West Babylon, N.Y., says he’s also noticed an increase in the prevalence of positive news articles about reverse mortgages, but that he’s still gotten the best reception from advisors who have actively put in the work to understand HECM loans.
“If they’ve taken the time to learn about the product, it either fits for a client or it doesn’t,” O’Connor says. “They’re not changing their thought process just because the rest of the world is.”
O’Connor also speculated that some financial advisors are beginning to see a subtle advantage to recommending HECM loans to customers that otherwise would need to take money out of their 401(k) accounts; if the client chooses a HECM, the advisor avoids taking a hit to the amount of assets under his or her control.
For financial advisor Jack Dvir of Financial Pointe in Newbury Park, Calif., the change in perception about reverse mortgages came only after close consultation with a trusted advisor. A former certified public accountant and a financial planner for the past 16 years, Dvir initially saw HECM loans as a final option for homeowners who had simply run out of money.
But after getting to know a reverse mortgage consultant who provided unbiased opinions based on clients’ actual financial situations — including, he says, advising against reverse mortgages for multiple customers — he began to trust the product and see HECMs as a potential option to cover long-term care expenses and other costs that spring up during retirement.
He likened the use of reverse mortgages to elevator safety: “You don’t want an elevator with just one cable. You want multiple cables in case one snaps. I’ve come to look at reverse mortgages to provide that extra cable.”
Dvir said he’s discussed reverse mortgages with about half of his clients — some of whom still react negatively based on news reports they’ve seen about foreclosures or predatory lending tactics. When faced with a skeptical client, Dvir employs the same strategy that convinced him: He shows the customer the hard numbers, running various scenarios to show how a HECM might or might not help them. And he’s won some converts in the process.
“It’s hard to argue with the numbers,” he says.
Written by Alex Spanko

Reverse Mortgage Originators Clocked Strong Finish to 2016

Despite persistent concerns about a downturn in the reverse mortgage industry, home equity conversion endorsements jumped nearly 20 percent in December 2016 as compared to the previous month, according to new data released today by Reverse Market Insight, Inc.
The Dana Point, Calif.-based research firm reported a 22.5 percent gain in retail endorsements and a 16.9 percent jump in wholesale endorsements from November 2016, for a blended overall total of 19.9 percent.
“That growth might have been fueled by some year-end cleanup, but growth is welcome from just about anywhere these days,” the firm noted.
Reverse Mortgage Funding continued its impressive gains, more than doubling its output in November 2016 — generating 748 loans — to claim a 9.9 percent market share for the year, behind American Advisors Group and Finance of America Reverse. Liberty Home Equity Solutions and One Reverse Mortgage rounded out the top five HECM generators by volume for 2016, according to RMI.
Written by Alex Spanko