Memorial Day Round-Up: Policy Experts Push Low-Cost Reverse Mortgage

Reverse Mortgage Daily will be observing Memorial Day on Monday, May 30, but will return to our normal posting schedule Tuesday, May 31. In the meantime, we’d like to wish all RMD readers a safe and enjoyable Memorial Day weekend.
Until we meet again, in case you missed it, here’s what happened in reverse mortgage news this week:
Reverse Mortgage Industry Digests FHA’s Latest HECM Changes—Last week the Federal Housing Administration proposed a number of substantial changes to the Home Equity Conversion Mortgage program, including new rules aimed at further strengthening the HECM program while also reducing risk to the Mutual Mortgage Insurance Fund.
Reverse Mortgage Interest Rate Caps Spell Trouble For Secondary Market—Though the new rules proposed by the FHA last week aimed to benefit HECM borrowers, industry members are saying there is the potential that the changes could adversely impact the secondary market. One particular rule they are concerned about is the proposed cap on lifetime interest rate increases on all HECM adjustable rate mortgages to 5%.
Policy Experts Push Creation of Low-Cost Reverse Mortgage Product—This week the BPC Commission on Retirement Security and Personal Savings released a report about the nation’s booming senior population. To better serve their housing and health care needs, bipartisan policymakers are recommending the creation of a new, lower-cost reverse mortgage product as a part of improving the ability to age in place.
This Reverse Mortgage Lender’s Two-Fold Strategy for Attracting Fresh Talent—Hiring new talent is vital for the success in the reverse mortgage industry. Sharon Falvey, director of sales operations for Open Mortgage in Austin, Texas shares her company’s strategy to find the freshest talent to serve the industry.
Retirees’ Aging in Place Desires Don’t Include Reverse Mortgages—Survey results released this week by The American College found that though the majority of people want to stay in their homes for as long as possible, a very small percentage of them know basic reverse mortgage knowledge.
Written by Alana Stramowski


Former Skeptics, These Financial Planners Now Accept Reverse Mortgages

There have been many changes to the reverse mortgage program in the past few years, forcing financial planners who were once skeptical to now realize how these products can benefit their clients and, in certain cases, their own businesses.
There has been an overwhelming amount of positivity toward reverse mortgages, due in part to a combination of the recent improvements made to the program and from the media becoming more educated and painting reverse mortgages in a better light.
“We’ve seen a lot of streamlining and clarity from the reverse mortgage program,” says David Holland, certified financial planner and CEO of Holland Financial in Ormond Beach, Fla. “I wasn’t particularly keen on them at first and I used to always tell clients to be careful and only to use them [reverse mortgages] as a last resort.”
Holland has since changed his tune. There is a fairly large market for reverse mortgages in Florida, he explains, which is why earlier this year he launched Holland Mortgage Services, a licensed mortgage broker specializing exclusively in reverse mortgages. The new business line is setup as an independent broker, allowing Holland to work with any reverse mortgage lender that operates a wholesale channel.
“Since the launch in February, we have already closed four loans and have two more currently pending,” says Holland, who notes he is currently partnered with two reverse mortgage lenders.
With a more neutral outlook from before the changes were enacted, James Kinney, owner and certified financial planner at Financial Pathways in Bridgewater, N.J., explains that he was not completely against reverse mortgages before the new regulations were put into place, but thought the program needed to be regulated.
“I was somewhat favorably disposed before, if it was for the right person,” says Kinney. “But the changes have helped make reverse mortgages more sustainable and suitable for the people who are taking them out.”
Using a reverse mortgage as a safety net is how Kinney sees it. “My father uses one, my mother-in-law uses one and they have benefited greatly from them,” he says. “You just need to know exactly what you’re getting into.”
Slowly, but surely, reverse mortgages will become even more mainstream as the population ages and a growing share of older Americans find themselves looking for new ways to fund their longevity.
“We’re already beginning to see somewhat of a more balanced commentary from major news outlets,” Holland says.
About 93% of reverse mortgage media coverage was either positive or neutral in the second half of last year, according to data from the PR NewsWire monitoring service and the National Reverse Mortgage Lenders Association. Of the more than 5,000 news stories about reverse mortgages in the past year, only 4.2% conveyed a negative sentiment.
The protections will just keep improving upon themselves, Kinney shares. “The changes are very useful and have helped keep people from getting in over their heads,” he explains.
The one area that needs more of a focus is educating financial planners.
“If more finance professionals can learn the benefits of this product and how to use it correctly, we will see an increase in financial planners adding reverse mortgage origination to what they do,” Holland says.
Both Kinney and Holland can agree that with more education in the financial services industry, the more the reputation of reverse mortgages will start to change.
“The changes are not radical at all” explains Holland. “They’re just trying to answer as many concerns as possible to ensure everyone’s clear on what a reverse mortgage can and cannot do for them.”
Written by Alana Stramowski


Ginnie Mae to Start Stress Testing Issuers

Ginnie Mae already has plans set in place to monitor its issuers’ operations, but they plan to take it to the next level, according to an article published this week on National Mortgage News.
In hopes of troubleshooting more effectively in the future, the plan is to model how the liquidity of companies that issue Ginnie Mae mortgage-backed securities would look under stress, the article states.
“With rate changes and delinquency changes changing the whole complexion of an issuer, just getting the snapshot of their financials periodically isn’t enough,” Ted Tozer, president of Ginnie Mae, said to National Mortgage News. “We need to be more dynamic to understand how close they are to the tipping point. Then we could actually see some of them deteriorating to the point where things are going to happen. That would give us time to remediate. That gives us time to counsel.”
Currently, Ginnie’s traditional customer base is already subject to stress tests under the post-crisis regulatory regime, but nonbanks are not.
This new implementation will be extremely helpful managing nonbanks, especially because some of the more active mortgage-backed securities (MBS) issuers in this group have unseasoned portfolios.
Because banks don’t necessarily stress test the liquidity risks specific to Ginnie Mae, the agency plans to stress test them as well.
“We’re going to have to regimen that all issues will go through whether they are banks or nonbanks,” Tozer said in the article.
It was suggested that even though the stress tests may not be on the horizon right now, issuers should examine their available supply of ready cash to make advances to bondholders that potentially wouldn’t stand up to a shock, Tozer explains in the article.
Read more at National Mortgage News.
Written by Alana Stramowski


This Memorial Day, Take Advantage of These Reverse Mortgage Jobs

Reverse mortgage lenders continue their search for skilled professionals heading into Memorial Day weekend. If you’re a reverse mortgage pro who’s currently on the job hunt, take advantage of the various job opportunities available today.
In this week’s RMD jobs listing, Open Mortgage and Nationwide Equities are now hiring reverse mortgage loan officers, DE underwriters and retail sales managers. Meanwhile, Home Point Financial and VanDyk Mortgage Corporation are offering positions for a reverse mortgage processor and originator, respectively.
Click the following opportunities that are now open to find out more. Or for a complete list of jobs, visit the new Reverse Mortgage Jobs Online.

Reverse Mortgage Loan Officer – Open Mortgage, LLC
DE Underwriter – Nationwide Equities Corp.
Regional Sales Manager – Nationwide Equities Corp.
National Retail Sales Manager – Nationwide Equities Corp.
Reverse Processor – Home Point Financial
Reverse Mortgage Originator – VanDyk Mortgage Corporation

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 Reverse Mortgage Jobs Online today!
Written by Jason Oliva


This Reverse Mortgage Lender’s Two-Fold Strategy for Attracting Fresh Talent

Attracting new talent to the reverse mortgage sector not only grows the pool of skilled professionals equipped to serve America’s booming senior population, but can also provide non-industry personnel with a fresh perspective on the significance of home equity in retirement planning.
Changes to the Home Equity Conversion Mortgage program in recent years, and the variety of financial planning research that has since followed, provides an opportunity for the reverse mortgage industry to reach professionals beyond its niche in the broader financial services industry.
Reverse mortgage lenders and industry services providers continue to educate, network and recruit outside professionals to the HECM world. While some market participants have been successful in these recruitment efforts, the greater reverse mortgage industry faces a conundrum that it must overcome.
“Lenders today won’t hire folks without experience, but you can’t earn experience until a lender hires you,” said Sharon Falvey, director of sales operations for Open Mortgage. “We are working on ideas on how to bridge that gap.”
For Open Mortgage, bringing new professionals into the reverse mortgage business is largely a two-fold strategy that relies on the expertise of the company’s internal management team as well as the growth of its wholesale operation.
The Austin, Texas-based Open Mortgage has been active in the reverse mortgage market since 2010, predominantly through its retail origination channel. In the 12-month period trailing March 2016, Open Mortgage reported 626 retail HECM endorsements and 82 wholesale units, according to recent industry data tracked by Reverse Market Insight.
While the company has operated a wholesale division, albeit on a relatively smaller scale than its retail channel, it now plans to ramp-up the wholesale side of its business more formally.
“It was important for us to launch our wholesale operation correctly,” Falvey told RMD. “We determined what our niche was and launched when we had the bandwidth to do it.”
This niche focuses on connecting with traditional mortgage professionals who want to diversify their product offerings, adding a reverse mortgage to their arsenal of services. Typically, these targeted pros are individuals who may have an interest in entering the reverse space, but don’t have a devoted team to support them.
That is where Open Mortgage’s staff comes into play. This year, the company added reverse industry veteran Cecilia Delgado to serve as an account executive. In her role with the Open, Delgado will be “leading the charge” for the company’s wholesale operations out of San Diego, Calif.
“We’d really like to focus on California first, add team members and expand,” Falvey said.
To strengthen its reverse mortgage sales team, Open Mortgage this week announced the hiring of Sue Haviland, a Certified Reverse Mortgage Professional and founder of Reverse Mortgage Success, a training and education project that assists loan officers who want to specialize in the HECM space.
Recently, Open Mortgage selected ReverseVision’s RV Exchange as the technology vehicle to “re-launch” its reverse mortgage wholesale operation. By doing so, the company aims to not only streamline efficiencies within its own personnel, but also views technology as a critical component to fostering greater collaboration with mortgage professionals both within and outside of one’s own organization.
“It is important to make the entire industry healthier than it is today,” Falvey said. “We have to continue using technology to put information out to the community so they can understand what a reverse mortgage truly is and what it was meant to be.”
Written by Jason Oliva


AAG Expands Jumbo Reverse Mortgage to California Wholesale Partners

American Advisors Group is now offering its proprietary jumbo reverse mortgage product, AAG Advantage, to its wholesale partners in California.
AAG first launched the AAG Advantage product in select states last September, though only on a retail basis. Now with the wholesale expansion, California brokers and loan officers will be able to originate jumbo reverse mortgages through AAG on properties valued at $6 million.
“We’re pleased to now offer the AAG Advantage to our wholesale partners in California, where many of their clients’ property values tend to be higher,” says Kimberly Smith, senior vice president of wholesale lending at AAG. “With AAG Advantage and our solid network of California wholesale partners, we can help extend reverse mortgages to a greater number of seniors, provide them access to more funds and help them age in place with increased security and peace of mind.”
By utilizing the AAG Advantage product, owners with home values that exceed the $625,500 loan limit for traditional FHA-insured Home Equity Conversion Mortgages will now have the opportunity to borrow up to $3 million in loan proceeds.
Similar to a traditional HECM, the AAG Advantage is designed for borrowers age 62 and older, however, the jumbo does not require borrowers to pay mortgage insurance premiums that are typically charged with government-insured reverse mortgages.
As a result of the product expansion, AAG’s California wholesale partners can now market the AAG Advantage to both owners of property types eligible for a HECM loan and to owners of Ginnie Mae-approved condominiums.
AAG Advantage is currently available to borrowers in California, Connecticut, Florida, Illinois, Pennsylvania, Texas and Virginia. On a wholesale basis, the product is only available to brokers and loan officer partners in AAG’s California network, however, the company plans to expand the product to other states via its retail and wholesale platforms in the future.
To date, AAG is just one of two reverse mortgage lenders currently offering proprietary jumbo products. In 2014, Finance of America Reverse launched its HomeSafe jumbo reverse mortgage.
Written by Alana Stramowski


Financial Planning: Manage Housing Wealth with Reverse Mortgages

Housing costs are taking up more of older adults’ incomes than anything else, however, borrowing against established home equity can help retirees manage their housing assets in retirement, according to a recent article from Financial Planning.
“On average, the value of housing equity is about 35% higher than the total value of all financial assets such as savings, brokerage accounts and retirement accounts,” the article states.
Housing dominates the asset side of the balance sheet, the article explains. Financial planners can go two different paths when assisting clients in managing this asset. One is for clients who have sufficient equity in their home and the other is for those who don’t.
For those with home equity they can tap into, establishing either a home equity line of credit or looking into a reverse mortgage with current low interest rates are the two suggested options, the article says.
“Reverse mortgages, in particular, continue to evolve and are gaining more acceptance as prudent strategies for the right candidates,” the article states. “They now offer greater safety via federal insurance and pre-screening of applicants.”
It is made clear however, that this option is not for everyone and that financial planners should ask themselves if it is a financially suitable option for someone to strive to pay off their mortgage in the first place.
“Housing is the largest source of wealth for Americans over 65, according to a 2010 Boston College Center for Retirement Research, Using your home for Income in Retirement,” the article states.
Read the full Financial Planning article.
Written by Alana Stramowski


Reverse Mortgage Interest Rate Caps Spell Trouble for Secondary Market

The Federal Housing Administration last week proposed several new rules for the Home Equity Conversion Mortgage (HECM) program, including interest rate caps on adjustable-rate reverse mortgages. But while FHA asserts these new changes will benefit HECM borrowers, industry members say this proposal could adversely impact the secondary market.
FHA’s set of proposed rules largely aim to create borrower protections and reduce risk to the Mutual Mortgage Insurance Fund. Perhaps one of the most significant proposals is the agency’s plans to cap lifetime interest rate increases on all HECM adjustable rate mortgages (ARMs) to 5%, as well as reduce the cap on annual interest rate increases on HECM ARMs from 2% to 1%.
The intention of the new annual and life-of-loan rate adjustment caps, as FHA puts it, is to provide greater interest rate protection to borrowers and more closely align annual caps with those of forward FHA mortgages.
“The proposed rate adjustment caps can benefit some borrowers through lower rates of interest accruals resulting in higher residual equity in the property,” states the Department of Housing and Urban Development (HUD) in an economic analysis on the impact of FHA’s proposed rules for the HECM program.
Higher residual equity, HUD adds, can also reduce the “crossover risk” on the loan—the time in the future when the loan balance grows to exceed the property value.
“Offsetting these benefits to borrowers and to FHA is the effect of transferring some interest rate risk from borrowers to mortgagees on the margins mortgagees charge to all HECM borrowers,” HUD states. “That is, all borrowers will share the increased cost of the additional interest rate protection that some borrowers (specifically those whose loans are seasoned during a rising interest rate environment) will receive.”
HUD admits that if the rate caps have an impact, it will reduce the mortgagee’s margin between the interest income and the cost of funds, lowering the mortgagee’s net income on the loan. As a result, HUD speculates that mortgagees will likely respond to this risk of reduced earnings by raising either the initial interest rate on the loan or other loan charges.
Secondary market players argue the impact of this proposal will spell higher margins for adjustable rate HECMs as the product will then become less inviting to investors.
Ginnie Mae has been the primary vehicle for funding HECM loans since it created the HECM mortgage-backed securities (HMBS) program in 2007. The agency can also serve as collateral for Real Estate Mortgage Investment Conduits (REMICs) backed by HMBS, known as H-REMICs, which further broadens the potential capital investor markets.
However, the 1% periodic cap proposal for adjustable rate HECMs is a “non-starter” for the HMBS and H-REMIC investor base, said Darren Stumberger, executive vice president at Live Well Financial.
“The theoretical cost to uncap the HECM loan back to where it is today is several points, and the unrealistic best-case scenario would be that Investors pursue derivatives to do just that and this change causes origination coupons to skyrocket, saddling the consumer with much higher interests costs (making the loan more costly),” Stumberger told RMD in an email.
The realistic base case expectation is that this change eliminates the buyer base and the sector becomes extinct, Stumberger added.
“Conservative domestic bank buyers of HECM floaters are not in the business of buying bespoke derivatives to hedge cap risk on fairly plain vanilla Ginnie Mae floating rate paper,” he said. “Without floater buyers, there is no demand to support the sector.”
In FY 2015, approximately adjustable-rate HECMs accounted for approximately 84% of total endorsements, while fixed-rate loans comprised the remaining 16%, according to data from the Department of Housing and Urban Development. Of this proportion of adjustable-rate loans, 45% were monthly ARMs and 39.2% were annual ARMs.
While it is difficult to estimate the value of the interest rate risk that transferred from the borrower to the mortgagee under this shift in product utilization, an informal estimate based on information from Ginnie Mae analysts suggests a range of 20-25 basis points in higher yield demanded by HMBS issuers.
“This may not necessarily translate into a full 20-25 basis point increase in HECM ARM margins to the extent the yields on HMBS depend on many factors, but it serves as a benchmark for estimating the impact of the proposed rule,” HUD states.
Written by Jason Oliva


Credit.com Q&A Weighs Reverse Mortgage Decisions

Considering a reverse mortgage is a tough call for anyone, even those in retirement who are tight on cash. In a recent article, Credit.com provided one worried reader with some food for thought on the prospect of getting a reverse mortgage.
The reader explained that they own a home without a mortgage and money is tight, but still aren’t sure if a reverse mortgage is that best option to pay for their expenses.
Taking a reverse mortgage is not a decision to take lightly, the article explains.
“Unlike a traditional forward mortgage where you send principal and interest payments to the bank to build your equity over time, with a reverse mortgage, the bank sends you payments over time which reduces your equity and builds up the debt you owe on the home,” Bryan Smalley, certified financial planner with RegentAtlantic, said to Credit.com.
Even though there are no payments owed on the motgage while a person is living in their home, when they either move, sell the home or pass away, they or their heirs will be held accountable for paying back the bank by selling the property, Smalley explains to Credit.com
It’s important to compare prices and shop around though before making a decision about a reverse mortgage, he explains in the article, because costs tend to be higher for a reverse mortgage.
Aside from taking out a reverse mortgage, Smalley stresses considering other alternative options to fund living needs. A home equity loan and a home equity line of credit are two alternatives to a reverse mortgage Smalley gives in the article.
Downsizing to a smaller home is another option, he explains, if tapping into home equity doesn’t feel like the best option.
Even though older Americans have stronger credit, that doesn’t necessarily mean they don’t have to follow smart spending habits, the article explains. Overall, they should be making a decision based on what’s right for their individual financial situation.
Read the Credit.com article.
Written by Alana Stramowski


Open Mortgage Adds Sue Haviland to Strengthen Reverse Mortgage Team

Open Mortgage, headquartered in Austin, TX, has strengthened its reverse mortgage team with the addition of Certified Reverse Mortgage Professional Sue Haviland.
Haviland joins the dedicated staff at Open Mortgage with more than 30 years of experience in the mortgage industry and 15 years with a focus on reverse mortgages.
“Sue is joining a dedicated staff of reverse-focused sales support team members,” said Sharon Falvey, director of sales and operations at Open Mortgage. “They keep our loan officers current on the latest trends, industry updates and sales techniques, and Sue’s expertise can only strengthen our top notch team.”
In addition to founding Reverse Mortgage Success, a training and education project that assists loan officers who want to specialize in the reverse mortgage space, Haviland holds the CRMP certification and has published several articles as well as appeared on television and radio shows.
“I’ll always originate reverse mortgages,” Haviland said. “I really enjoy working with my senior clients, and it helps keep me up-to-date on the challenges in the marketplace.”
Haviland is looking forward to being part of the team at Open Mortgage to bring a better mortgage experience to everyone.
“It’s great to be associated with such a dedicated group of reverse mortgage professionals,” she said. “Open Mortgage has positioned itself to be a leader in the industry.”
Written by Alana Stramowski