The official magazine of the National Reverse Mortgage Lenders Association www.nrmlaonline.org July-August 2024 Volume 17, No. 4 INSIDE: Spreading Reverses Through Forwards: Loan Officers Discuss How They Brought Reverse Mortgages Into Their Portfolio Mix The Evolution of the HECM, Part II P. 24 P.28 PREPARING FOR NOW AND THE FUTURE Loan Officers Learn New Skills Through Training Programs
From the Top Julia Gordon, Assistant Secretary for Housing and Federal Housing Commissioner, U.S. Department of Housing and Urban Development By Darryl Hicks 10 Those We Help Homeowners stay afloat with a reverse mortgage By Darryl Hicks 32 Features 20 Preparing for Now and the Future Loan officers learn new skills through training programs By Joel Berg 24 Spreading Reverses Through Forwards Loan officers discuss how they brought reverse mortgages into their portfolio mix By Thomas A. Barstow 28 The Evolution of the HECM, Part II By Darryl Hicks Columns 2 In Reverse Making stars out of your LOs—and clients By Thomas A. Barstow 4 Steve Irwin: Moving Forward We must align servicing with customer expectations 6 Board Room Recruiting from within By Jim Cory Departments 8 Hey, Members A roundup of issues and news for NRMLA members 34 Servicing Corner HECM borrowers win with these changes 36 Member News Who’s who in reverse mortgage July-August 2024 Volume 17, No. 4 CRMP: Across the Kitchen Table A chat with Tim Nelson, CRMP, and Mary Nelson, CRMP, V.I.P. Mortgage Inc., Scottsdale, AZ By M. Diane McCormick 14 Contents PUBLISHER Peter Bell pbell@dworbell.com SENIOR EDITOR Thomas A. Barstow thomas.barstow@theYGSgroup.com ASSOCIATE EDITOR Darryl Hicks dhicks@dworbell.com MANAGING EDITOR Therese Umerlik therese.umerlik@theYGSgroup.com MANAGING EDITOR, DWORBELL, INC. Jessica Hoefer PRESIDENT Stephen Irwin NRMLA EXECUTIVE COMMITTEE CO-CHAIRS Scott Norman, Finance of America Reverse Michael Kent, PHH Mortgage Corp. dba Liberty Reverse Mortgage DESIGNER Tara Smith ADVERTISING SALES Natalie Matter Bellis natalie.matterbellis@theYGSgroup.com Reverse Mortgage is the official publication of the National Reverse Mortgage Lenders Association. The magazine is published every two months. For inquiries regarding association membership and/or magazine subscriptions, please call Darryl Hicks at 202-939-1784. Advertising and editorial inquiries should be directed to Natalie Matter Bellis (natalie.matterbellis@theYGSgroup.com) and Therese Umerlik (therese.umerlik@theYGSgroup.com), respectively. Association & Subscription Contact: National Reverse Mortgage Lenders Association 1400 16th St., NW, Suite 420 Washington, DC 20036 202-939-1760 lross@dworbell.com Industry: www.nrmlaonline.org Consumers: www.reversemortgage.org Advertising & Editorial Contact: National Reverse Mortgage Lenders Association 1400 16th St., NW, Suite 420 Washington, DC 20036 202-939-1760 ©2024 National Reverse Mortgage Lenders Association
Making Stars Out of Your LOs— and Clients Companies Broaden Appeal of Reverse Mortgages Within Their Own Ranks By Thomas A. Barstow WATCHING MOVIES AND film has been a hobby of mine for as long as I can remember. I like a good montage scene, whether it involves concerned citizens passing out flyers, sharpening pencils and gathering support before they go to fight city hall, or warriors sharpening their knives and cleaning their gear before going into battle. If Hollywood were to make a movie about loan officers (LOs) in the past year or so, the montage for preparedness might include images of them going through their list of former clients, making the rounds to their contacts and learning new skills before the next wave of mortgages washes over them. At least that is what I In Reverse 2 REVERSE MORTGAGE / JULY-AUGUST 2024
pictured when I read the articles in this issue of Reverse Mortgage magazine. The cover story, Preparing for Now and the Future (p. 20), examines how companies have been working diligently to train forward LOs to add reverse mortgages to their portfolios. “There is a very good chance that a forward loan originator is going to be contacted by a previous customer who says, ‘Hey, I’m approaching retirement. I’m interested in learning more about a reverse mortgage. What can you tell me?’” Amy Smith, senior vice president of reverse support and training at Fairway Independent Mortgage Corp., tells writer Joel Berg in that article. “If they don’t have at least the information to speak about it as an option, then their borrower may go someplace else.” Some LOs have been working with forward and reverse mortgages for years, while others are just starting to work with reverse mortgage clients. Although he started in the mortgage industry decades ago, Chris Carr with Guild Mortgage only recently added reverse mortgages to his product mix. Like many skeptics, Carr acknowledges that his misunderstandings and biases kept him from working with the products before this past year. As more leads started to reach his desk, he decided to learn, taking advantage of Guild’s intense training opportunities that helped make him a convert. “I started to believe in the product,” he says in the article Spreading Reverses Through Forwards (p. 24). He also sought and obtained a reverse mortgage for himself. One of the leaders at Guild is Jim Cory, CRMP, managing director of reverse mortgages. Cory, who also is a vice chair of NRMLA, talks about Guild’s training in that same article, and he writes this issue’s Board Room column, too: Recruiting From Within (p. 6). Cory outlines how all LOs of forward and reverse mortgages could greatly benefit from expanding their product offerings, in particular learning about the HECM for Purchase. The HECM for Purchase product has recently been streamlined to be more like traditional mortgage products, which should make it easier for LOs to understand. And their real estate and financial planning contacts might be more willing to learn how to discuss these products with their clients if the LOs are more informed. “For too long, reverse mortgage originators and lenders have only pushed the traditional reverse mortgage,” Cory writes in the column. “Many of us have specialized in only doing the traditional reverse mortgage, sometimes having given up on the HECM for Purchase. It’s not a failure of the HECM for Purchase; it’s just the wrong salesperson selling through the wrong channel.” We also have in this edition a deep discussion with Assistant Secretary For Housing and Federal Housing Commissioner Julia Gordon. Darryl Hicks, NRMLA’s vice president of communications, chats with Gordon in the From the Top question-and-answer article (p. 10). Gordon outlines how the HECM has gone through significant changes and improvements in recent years. “We remain deeply committed to this program,” Gordon tells Hicks. “The input that we’ve had from the industry and the dialogue that we have both with individual lenders and servicers, as well as with NRMLA, is critical to helping us maintain and enhance this program for the seniors who rely on it.” That insight from a top regulator should be encouraging, especially knowing how far reverse mortgages have had to travel to gain wider acceptance, a journey that, unfortunately, is still in its initial steps. So, it might be a while before Hollywood finds a solid plotline and runs with it. If it did, perhaps the movie montage could include a group of well-informed seniors who are fine-tuning their retirement plans, examining their Medicare insurance and Social Security benefits and seeking an equity release program that works for them. It might not win an Academy Award, but it could help the next generation of retirees age in place without stress or worry. And your LOs, of course, would be the heroes of this action film. Thomas A. Barstow, senior editor of Reverse Mortgage, is a writer and editor based in Pennsylvania. In Reverse Some LOs have been working with forward and reverse mortgages for years, while others are just starting to work with reverse mortgage clients. REVERSE MORTGAGE / JULY-AUGUST 2024 3
We Must Align Servicing With Customer Expectations By Steve Irwin, President, National Reverse Mortgage Lenders Association CUSTOMERS ARE CONTINUALLY raising the bar on what they expect from their service providers. We all look to have what we want and need, faster, better and cheaper. We operate in the times referred to by marketing guru Regis McKenna as the age of the “never satisfied customer.” We are fooling ourselves if we don’t think this axiom doesn’t also refer to reverse mortgage borrowers, their families and their trusted advisers. A surefire recipe for exacerbating customer dissatisfaction is misaligning the customers’ expectations with the actual service that can be delivered. Often, there is a disconnect between the expectations of a reverse mortgage client when their loan is transferred to the loan servicing team and the policies and procedures required of that loan servicing team. It is incumbent on us all—and in the plainest language possible—to clearly define and describe how the loan works and the responsibilities the borrower carries into the reverse mortgage transaction. The expectation of the client needs to be properly set against the service that can be delivered to that client. Fortunately, the Consumer Financial Protection Bureau has created its You have a reverse mortgage: Know your rights and responsibilities guide. This helpful tool, from an independent voice, can help us all properly set expectations. While NRMLA is looking at suggesting updates, it is still a useful tool, and we should share this document every chance we get. It should be used as a “leave-behind” and be included in the closing package. It should be shared with referral partners and prospects. It should become part of the larger understanding of our product category. (This guide is available to download for free at https://bit.ly/4bEvLGW.) NRMLA has also developed materials its members can download for free (reversemortgage.org/about/ consumer-guides/). What You Need to Know About Your HECM After Closing and our What Do I Do When My Loan Is Due? further serve to properly set clients’ expectations after the loan closes and is transferred to the “administration” phase. Please share these guides with your clients, their family members and their trusted advisers. I would urge you to let us know if we could develop any additional materials that might help properly set client expectations, or if any of these existing guides could use refining. The more we do to align customer expectations with the realities of the loan servicing life cycle, the better our industry perceptions will be. It’s hard enough to meet the ever-changing needs of the customer. Customer expectations need to be established in a way that sets your servicer up for success. Moving Forward Steve Irwin “We must be willing to let go of the life we planned so as to have the life that is waiting for us.”—Joseph Campbell, U.S. author and academic expert in the field of comparative mythology 4 REVERSE MORTGAGE / JULY-AUGUST 2024
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Board Room Recruiting From Within By Jim Cory I WAS ASKED to write about recruiting reverse mortgage originators. Every time I put pen to paper or fingers to keyboard, and ask where we can find the reverse mortgage loan officer for tomorrow, I come up with the same answer: the traditional loan officer of today. The loan officer of today needs to be proficient in all products, and that applies to reverse and forward. What is the real difference between a reverse mortgage loan originator and a forward mortgage loan originator? Believe it or not, the main difference is marketing. To whom you market will dictate whether you specialize in reverse or forward. If you market to all ages, then you’re a forward loan originator. If you market specifically to older Americans, then you specialize in reverse mortgages. Or at least you should. HECM for Purchase The big answer here is the HECM for Purchase. HECM for Purchase is an amazing product. Even more so than the traditional reverse mortgage, it evokes phrases, such as “too good to be true” and “what’s the catch?” Since it is true, and there is no “catch,” why does it make up less than ten percent of the market? I always thought it was the real estate agents. My personal belief is that real estate agents subconsciously, or sometimes even consciously, hate reverse mortgages. And Jim Cory 6 REVERSE MORTGAGE / JULY-AUGUST 2024
it makes sense to me why they hate our beloved product. Every traditional reverse mortgage that is done takes a home off the market, removing a potential sale and a potential purchase. The purpose of the traditional reverse mortgage is to keep older Americans in their homes—to let them age in place. If you’re looking at the real estate sales market, that’s not a great outcome. But I feel that I’ve wrongly accused the real estate agents of gatekeeping against the reverse mortgage. The real estate agent doesn’t originate the loan. It’s the purchase loan officer who originates the loan. The purchase loan officers are the true gatekeepers—ones from large originators, such as Fairway, CrossCountry and Guild Mortgage—to name a few. Training or Retraining The key is in training, or sometimes retraining, the forward purchase loan originator to originate the purchase reverse mortgage. Every forward purchase loan originator should offer a reverse option to every older American client. For too long, reverse mortgage originators and lenders have only pushed the traditional reverse mortgage. Many of us have specialized in only doing the traditional reverse mortgage, sometimes having given up on the HECM for Purchase. It’s not a failure of the HECM for Purchase; it’s simply the wrong salesperson selling through the wrong channel. For the reverse originator, I urge retraining, a refocus on traditional purchase mortgages. Consider embracing the purchase channel and purchase lender. Be an expert in retirement financing for older Americans: forward purchase, reverse purchase, forward cash-out, traditional reverse, home equity lines of credit and the like. For the forward originator, embrace the HECM for Purchase. Offer an interesting option to your older clients who would have no monthly principal and interest payments. Refinance your aunt or your former purchase customer into a traditional reverse mortgage. Offer the HECM for Purchase to your next older client. In short, we need less recruiting and more retraining. Retrain forward to do reverse and reverse to do forward. Recruit from within and expand your business and our distribution overall. Learn reverse and learn forward. You’ll expand your business and be much more interesting to your agents and lead sources. And as a bonus, you’ll be much more interesting at dinner parties. Jim Cory, CRMP, is managing director of reverse for Guild Mortgage. He is also vice chair of NRMLA. Board Room CALL US AT (888) 369-1573 OR EMAIL US AT WHOLESALE@HIGHTECHLENDING.COM TO LEARN MORE! REVERSE MORTGAGE / JULY-AUGUST 2024 7
Hey, Members A Roundup of Issues and News for NRMLA Members By Darryl Hicks IN THIS ISSUE, we highlight news from the first and second quarters of 2024, with links to more information. If you have questions, contact me at dhicks@dworbell.com. • A survey of 4,558 adults finds that to retire comfortably will take $1.46 million, up from $1.27 million a year ago, says Northwestern Mutual’s 2024 Planning & Progress Study in April. (https://bit.ly/3xxngix) • BlackRock CEO Larry Fink, whose company manages $10 trillion in assets, half of which are for retirement, has challenged government and business leaders to fix a retirement crisis caused by medical advances that have boosted longevity. (https://bit.ly/4aA6fCt) • A March 2024 study by the Collaborative for Equitable Retirement Savings finds that Black and Hispanic workers withdraw a larger portion of their account balances before retirement, which might explain the savings gap between different ethnicities. (https://bit.ly/4cvJYaH) • The European Pensions and Property Asset Release Group and EY published the Global Equity Release Roundtable 2023 report, which says the global equity release market could hit $50 billion by 2033, more than doubling its current size. (https://bit.ly/4auv3f8) • Fifty-four percent of Americans say their goal is to live to 100, even though 66 percent fear running out of money more than death, according to a March 2024 study from Corebridge Financial and The Longevity Project. (https://bit.ly/3TqNnyL) • The housing wealth of homeowners 62 and older fell by $119 billion in the fourth quarter, to $12.84 trillion, according to the NRMLA/RiskSpan Reverse Mortgage Market Index. (https://bit.ly/3IKMRa3) • The U.S. Census Bureau projects the number of Americans ages 100 and older to jump from an estimated 101,000 in 2024 to about 422,000 in 2054, according to a January 9, 2024, paper by the Pew Research Center. (https://bit.ly/4csssEk) • Ginnie Mae implemented cybersecurity incident reporting requirements on March 5, 2024, as part of its commitment to the security and integrity of all operational systems and technology infrastructure related to its mortgage-backed securities. (https://bit.ly/3x6VNE3) • Only 19 percent of female workers are “very” confident that they will retire with a comfortable lifestyle, according to 23 Facts About Women’s Retirement Outlook, a November 2023 survey by the Transamerica Center for Retirement Studies®. (https://bit.ly/3wY7ZXu) • One way to fix the U.S. retirement system is to provide better access to housing equity in retirement, according to a February 28, 2024, paper by the Brookings Institution. (https://bit.ly/3TMirKE) • Florida Gov. Ron DeSantis signed legislation in May that could potentially save borrowers thousands of dollars in closing costs by basing the state’s documentary stamp tax on the principal limit of a reverse mortgage instead of the maximum claim amount. The law went into effect on July 1, 2024. • NRMLA and its HUD Issues Committee sent a letter to the U.S. Department of Housing and Urban Development on February 26, 2024, that recommends ways to improve the Federal Housing Administration’s condo approval forms and policies. (https://bit.ly/3sgHyYm) • A February 6, 2024, article in the Wall Street Journal noted that today’s 65-year-olds are wealthier, and, by many measures, healthier and expected to live another 20 years. (https://on.wsj.com/3PwAQZt) Darryl Hicks is NRMLA’s vice president of communications. 8 REVERSE MORTGAGE / JULY-AUGUST 2024
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From the Top FEW PEOPLE WHO have served as Assistant Secretary for Housing and Federal Housing (FHA) Commissioner have had as much of a positive impact on the HECM program as Julia Gordon. Since being confirmed by the U.S. Senate on May 12, 2022, Gordon has guided HECM through some turbulent times. The proactive responses by Gordon and her team and their continued engagement with the industry have been key to sustaining the market and its participants. Not only is she a strong leader within the U.S. Department of Housing and Urban Development (HUD), but Gordon also is one of the few FHA Commissioners with a background in consumer advocacy and housing finance, which makes her ideally suited for the job. Reverse Mortgage magazine sat down with FHA Commissioner Gordon to discuss the challenges of managing the HECM program, policy successes and future priorities. Reverse Mortgage: How has your perception of the HECM program evolved since becoming FHA Commissioner? Julia Gordon: Coming into this job, I was well aware of the HECM program and the challenges it created for the Mutual Mortgage Insurance (MMI) Fund. But I think what surprised me most was just how complex the program itself is. The complexities start at origination and extend through loan maturity. The other realization Julia Gordon Julia Gordon, Assistant Secretary for Housing and Federal Housing Commissioner, U.S. Department of Housing and Urban Development By Darryl Hicks 10 REVERSE MORTGAGE / JULY-AUGUST 2024
I had upon becoming FHA Commissioner was how important this program can be to support seniors who want to age in place. Many seniors, especially now, have a good deal of home equity but don’t have access to a wide range of programs to help them tap that equity. For example, they may be living on fixed incomes that prevent them from qualifying for a home equity line of credit. The only other option they would have if HECMs weren’t available would be to access products in a less-regulated financial marketplace, which can be risky, even more than the complex HECM program. RM: In terms of volume, the HECM dwarfs in comparison to FHA’s forward mortgage program, and yet we understand that FHA spends an inordinate amount of time managing it. Why do you think the HECM program is such a challenge to administer? JG: HECM is a complex and highly regulated program. We have statutes, regs, years and years of mortgagee letters and stand-alone policy documents. That’s why the publication of the HECM section of the Single-Family Housing Policy Handbook this past year was so incredibly important. While the portfolio itself accounts for less than five percent of the total MMI Fund, it is the most volatile part of that fund. Its performance is highly dependent on house price appreciation forecasts, where only moderate changes in appreciation expectations can have a significant impact on the actuarial picture of the portfolio. This is a complex program to operate both in the primary market and at the secondary market level, which requires a great deal of collaboration and cooperation between FHA and Ginnie Mae, as well as a lot of collaboration with the housing counseling industry, which plays such a critical role. RM: What do you consider to be your proudest achievement thus far? JG: First, I should note that our achievements are collective, featuring the work of a large number of people across our organization. We have policy experts. We have people in the National Servicing Center. We have people in our finance and budget team. There are information technology (IT) specialists and procurement gurus. That said, I think all of us agree on the importance of issuing the Single-Family Housing Policy Handbook, which has been a work in progress for many years. What I think I can look to as a more personal achievement is the orientation that we now apply to all our work, which is to be as transparent as possible and to aim to make policy and operational changes that are wins for all our stakeholders—lenders, issuers, servicers and borrowers. That’s what I’m most proud of, and I think you can see those results in a wide range of the changes that we’ve put out this year, both in HECM and in our other lending programs. RM: What additional reforms would you like to see implemented in the time you have left? JG: Our agenda includes making some currently nonassignable claims assignable, modernizing technology, reviewing origination costs and, overall, ensuring that HECM is as strong as it can be to meet seniors’ needs. We’re also supporting Ginnie Mae’s efforts to explore HMBS 2.0, which we believe would provide excellent liquidity support for the industry. RM: You manage one of the largest insurance funds on the planet, and I respect your prior comments that you want to be an attentive steward of those assets. Nevertheless, one of the biggest consumer criticisms of the HECM program is that it’s too expensive. Would you be receptive to looking at opportunities to reduce costs without creating additional risk to the MMI Fund? JG: We’re already looking at proposals related to the mortgage insurance premium for the program, as well as the full range of origination charges that HECM borrowers encounter. We hope that the industry can partner with us as we make HECM more understandable to seniors so that they know what they are paying for and what to expect throughout the life cycle of their HECM loan. RM: As we look to create a HECM for the future, one of the realities of aging is that most of us become more forgetful the older we get, which in the case of the HECM can lead to complications with verifying occupancy, keeping taxes and insurance current, etc. From the Top From the Top continued on page 12 REVERSE MORTGAGE / JULY-AUGUST 2024 11
Have you and your team considered policy reforms to help improve the servicing of HECMs, so that these types of unfortunate events that could lead to foreclosure can be avoided? JG: Yes, absolutely. Not only are we considering them, but we’ve already made several changes, among them assessing annual occupancy by telephone and reducing tax and insurance defaults by allowing servicers to offer eligible homeowners a longer period to repay property charges advanced by the servicer. Also, I cannot overstate how important HECM housing counseling requirements are. The housing counseling sector is continually trying to improve its work in this area. Some challenges are extremely hard to address. For example, we know that many children of HECM borrowers, who become heirs when the last surviving parent dies, were not included in the original decision-making process to obtain the HECM loan. Counselors and everybody else involved in this industry try as hard as they can to encourage family involvement when considering a reverse mortgage, but that’s not always possible or realistic. RM: Some borrowers can live 15 to 20 years after getting a reverse mortgage before a maturity event occurs. It’s not realistic for these borrowers or their children or trusted advisers who may have gone through counseling with them to remember everything they learned. What do you think about periodic counseling post-closing to help them understand their obligations? JG: I believe it would be ideal to have more touch points for borrowers. I’ll be honest with you—the challenge is funding. We’ve asked for more funding for counseling, but we’ve not gotten as much as we need to make the counseling more robust, and particularly as borrowers age, they are less and less likely to be able to pay for that counseling themselves. I think it would be enormously additive to this program if Congress chose to fund a much more robust housing counseling outreach program. RM: NRMLA has proudly enforced a code of ethics since its founding. Are there any practices going on in the marketplace that concern you and need to be addressed? JG: In all our programs, FHA finds unintentional mistakes and encounters the occasional bad actor. As I’m sure your readers know, FHA has a quality assurance division, and if we see anything that isn’t being run according to our policies and procedures, we have steps we can take to address it. More generally, as we go forward and look at origination costs as I talked about earlier, we want to make sure that the borrower fully understands what they’re paying for and that they’re being charged the appropriate amounts for the products and services they’re receiving. RM: The cost of homeowners insurance has dramatically increased across many parts of the country, which negatively impacts all FHA borrowers. What is FHA doing to address this problem? JG: Across the entire Office of Housing, all of HUD and in every federal agency that touches housing, there is incredible urgency about the skyrocketing costs and reduced availability of comprehensive property insurance. This is an existential problem that is going to take partnering on the federal, state and local levels to address. Long term, we need to address climate change, which is driving the increased incidence and intensity of natural disasters. We need to make sure that borrowers are well aware of what coverage they need and what coverage they might not have if they aren’t keeping up with their insurance policies. In the HECM program, for those borrowers who have Life Expectancy Set-Asides (LESAs), we know that increases in the cost of insurance can cause LESAs to run out earlier than expected, which might become a more widespread problem. I hope everybody in the industry is paying sufficient attention right now because it’s going to take all of us working together to make sure borrowers can accommodate changes in the cost of insurance. RM: What does a typical day look like for you? JG: The Office of Housing comprises many program offices. There’s FHA, which has a single-family portfolio, both forward and reverse, a multifamily portfolio and a healthcare portfolio with hospitals and residential care facilities. There’s the Office of Housing Counseling, the Office of Manufactured Housing Programs and our assisted rental multifamily programs, along with support offices, such as our risk office and operations team. In addition to the 7.6 million or so single-family borrowers whom we serve, we assist millions of renters From the Top From the Top continued from page 11 12 REVERSE MORTGAGE / JULY-AUGUST 2024
and people in healthcare facilities. Every day is a whole new adventure. Yet while my days are quite busy, they’re made manageable by the incredible team we have here at FHA and more broadly in the Office of Housing. Coming from outside HUD into this job, I heard the stereotypes of government workers, and I’m here to tell you those stereotypes are not true. Some of the smartest, most creative and hardest-working people that I’ve met in this industry are working here at HUD. We’re especially fortunate to have some of those people working in the HECM program. For example, we recently made some changes to the assignment process that involved multiple staff from across the country, from our Home Ownership Centers to HUD headquarters. They’re all trying to make sure that the experiences our partners have when they interface with us are as good as they can be, and we do all of this while being under-resourced, including sometimes having to work without a full fiscal-year budget. Also, my day includes far more than just policy and operational decisions within the Office of Housing. It includes time spent working with HUD’s chief information officer, on IT modernization, human resources issues, procurement matters and a variety of cross-cutting departmental initiatives. I can assure you that this job is never boring. RM: Do you have a closing message that you would like to convey to our members? JG: We remain deeply committed to this program. The input that we’ve had from the industry and the dialogue that we have both with individual lenders and servicers, as well as with NRMLA, is critical to helping us maintain and enhance this program for the seniors who rely on it. We have tried to be as transparent as we can be. We put policies up on the drafting table before we finalize them so that we can crowdsource the wisdom that so many people in this industry have. America is aging, and HECM is maybe not the first tool that everybody turns to, but it’s going to be an increasingly important tool, and we want it to remain strong and viable. We want to support liquidity in the sector, and we want to make sure borrowers can access the program at a reasonable cost. We want to hear from you, our stakeholders, including lenders, servicers, NRMLA, borrowers and consumer advocates, both through our formal rulemaking and through the policies and changes that we post for feedback. That’s how we can keep this program strong and viable into the future. Darryl Hicks is NRMLA’s vice president of communications. From the Top NATIONWIDE REVERSE MORTGAGE FIELD SERVICE EXPERTS FOR OVER 30 YEARS 1.800.639.2151 www.nfronline.com Inspections - Preservation - Insurance Loss Inspections - Violation Management - Vacant Property Registrations - Utility Management - REO Services - Special Services REVERSE MORTGAGE / JULY-AUGUST 2024 13
MARY NELSON FELT passionate about the impact she was having in medical research, doing investigative drug and medical device studies. But the work was draining, and she came home one day and said she just didn’t love it anymore. Her husband, a veteran of reverse mortgages, said, “Great, come work for me.” She hesitated, saying she wanted “to make a difference in people’s lives.” Making a Difference With Reverse Mortgages “What I didn’t realize until I got in the business is that I am making an incredible difference in people’s lives,” she says. Today, they are CRMPs with V.I.P. Mortgage Inc. Their agile, carefully constructed team presents reverse mortgages as viable options for a diverse range of clients. They focus on education to dispel old myths, while growing the business by leveraging unique partnerships with financial planners and forward loan officers. Tim Nelson has been in the mortgage industry for 30 years. The pivot to reverse came in the wake of the 2008 financial crisis, when his employer, a major lender, dropped the wholesale mortgages he’d been working on. He was skeptical when a former account executive introduced him to reverse mortgages. But the schooling opened his eyes to reverse mortgages as “the way that middle America retires going forward,” and he joined her at Wells Fargo. One year later, Wells Fargo got out of reverse mortgages. Tim Nelson shifted to MetLife, which exited reverse mortgages after eight months. He had been working with financial planners on the retirement strategy potential of reverse mortgages, and he realized it was time to stop hitching his fate to the vagaries of corporate giants. Husband and Wife Build Business To Help Others A Chat With Tim Nelson, CRMP, and Mary Nelson, CRMP, V.I.P. Mortgage Inc., Scottsdale, AZ By M. Diane McCormick CRMP: Across the Kitchen Table 14 REVERSE MORTGAGE / JULY-AUGUST 2024
CRMP: Across the Kitchen Table Setting Roots At V.I.P. Mortgage, he found a company with a commitment to family, a mission of doing what’s best for the client and a small reverse mortgage setup. In 2012, Mary Nelson switched from medical research to reverse mortgages. She jokes that she wished she had paid more attention to the calls she heard her husband making over the years, but she learned quickly. He was the loan officer, and she was the processor. In 2013, Tim Nelson became Arizona’s first CRMP. The credential elevated his credibility with financial planners, he says. “If I’m going to be the expert, I wanted to have that designation to go with it,” he explains. “When I went out to talk to financial planners, the CRMP would make it clear that this is my passion and that we can coordinate nicely.” Building the Business By building the reverse mortgage division, he found he was helping V.I.P. Mortgage diversify through his relationships with financial planners. They had long been referring their younger clients to V.I.P. Mortgage’s forward loan officers. With Tim Nelson on board, those same financial planners could refer their clients 62 and older for consideration of reverse mortgages. Before long, he couldn’t handle the volume of reverse mortgage opportunities coming in, so he started hiring reverse mortgage loan officers he knew. Mary Nelson stepped up as a processor for them, as well. One day, they went hiking, and she asked, “Why don’t we look at becoming closed-loan sellers?” With a “go for it” from the V.I.P. Mortgage owner, they expanded the team, adding capabilities for underwriting, processing, closing and selling to investors. “Slowly but surely, I became operations manager,” she says. Tim Nelson stayed on the sales side. It was a monumental change with a steep learning curve, and NRMLA became a partner in the journey. “We spend our time educating, educating, educating the consumers and the referral partners,” Tim Nelson says. “Because the product is misunderstood, there’s a lot of education. NRMLA also needed to educate us on how compliance works and how to become a closed-loan seller. NRMLA’s support allowed us to become experts in creating this little business at V.I.P. Mortgage. We do everything separately from traditional loan officers. Our business is self-contained. It’s us, with our team.” Mary Nelson adds, “The knowledge and information we got through NRMLA is priceless.” Earning Her CRMP With all that was going on, Mary Nelson decided in 2016 to earn her CRMP. “I need that knowledge,” she thought. “I need all the compliance in the back end. I need to get that education and have that credibility behind me as the operations manager.” Team Nelson now comprises nine loan officers and seven operations staff. They service their share of last-resort borrowers, but a good portion of the business supports homebuyers and retirement strategy clients. “We cover all the different needs out there, from the borrower who’s going to lose their home to the borrower who’s trying to find their forever home but can’t afford it without a reverse mortgage, or the savvier borrower looking to work with a financial planner to make this one of the legs of their retirement plan,” Mary Nelson says. Even amid growth, Tim Nelson noticed recently that in-house referrals usually came only from forward loan officers whose clients asked about reverse mortgages. As Mary Nelson put it, forward loan Tim and Mary Nelson have built a team at V.I.P. Mortgage that presents the reverse mortgage as a viable option for their clients. CRMP continued on page 16 REVERSE MORTGAGE / JULY-AUGUST 2024 15
officers who didn’t understand the product “weren’t that excited to refer to us.” However, the calls coming directly from eligible seniors continued climbing, underscoring the need. Working With Forward Loan Officers In response, the Nelsons launched a training effort to encourage referrals from V.I.P. Mortgage’s forward loan officers. “We concluded that for the loan officer to refer that loan to us, the loan officer needed to be educated to understand the product better,” Tim Nelson says. The process worked. Forward loan officers are making more referrals, and those who take the training can, if they choose, originate the loans—with wraparound support from the Nelsons’ office. Team members complete the applications and assist at every turn. When forward loan officers meet with borrowers, Tim Nelson is there to answer any complex questions. “We’re starting to see some very nice results from this change,” he says. “After several months, 50 percent of our loans are originating from forward loan officers. We put controls and supports around it, and we’re having great success with them taking on that business.” Today’s bumpy real estate climate helps explain, in part, why the forward loan officers are coming on board. Plus, he says, many loan officers are aging along with their clients, helping them see the value of reverse mortgages as retirement strategy tools. Helping Clients For clients, the reverse mortgage experience is transformational. Mary Nelson remembers the borrower whose home was “literally falling down around him.” Through NRMLA, she found a contractor that performs repairs on spec, to be paid at closing. The loan officer himself helped with the rehab. The renovations made the home livable and gave the owner the income he needed to stay there. “To see the before and after pictures was unbelievable,” she says. “This man is still living in the house. That was a case where we changed his life by repairing his home and allowing him to stay in it.” Another client could no longer tend to the needs of her husband, who had dementia, but she couldn’t afford to place him in a nursing home. With a reverse mortgage, she found a facility where he would be cared for while she stayed in their home. “That was a huge, lifesaving change for her,” Mary says. “Otherwise, the only way she could have afforded to take care of him would have been to sell the house.” Increasingly, clients resemble the man who called recently to say that inflation and skyrocketing homeowners insurance were eroding his fixed income and making his mortgage payment unmanageable. “More and more people are retiring with a mortgage payment, and that’s a tough pill to swallow every month,” Tim Nelson says. Education Is Key Through it all, education continues “almost one-on-one,” he says. The product has evolved in drastic ways, but old myths and misperceptions linger. When Tim Nelson gives presentations, Mary Nelson likes to watch body language changing, as real estate agents and financial planners in the audience start with a defiant slouch, gradually begin leaning in, and end with, “Wow! How did I not know about this before?” “You’re watching the lightbulb go on,” she says. “Education is a huge part of this industry, and we’ve barely scratched the surface of people we can help.” Going forward, the Nelsons are piggybacking off V.I.P. Mortgage’s new initiative to offer wholesale conventional loans. Adding reverse mortgages as a wholesale channel “is a huge step for us,” Tim Nelson says. “We saw their venture as an opportunity for us to grow that business, as well.” The unwavering support of V.I.P. Mortgage is a key factor that keeps them going, the Nelsons say. “Whenever we’ve gone to the owners to ask about something to take the business to the next level, they’ve always supported us in every move,” he says. The V.I.P. Mortgage slogan, “Where People are Priority,” applies to employees, as well as clients, Mary Nelson adds. CRMP: Across the Kitchen Table CRMP continued from page 15 16 REVERSE MORTGAGE / JULY-AUGUST 2024
Their team members, including some who have been with them for more than ten years, are also motivators. “Our team is like family,” she says. “I just love working with my operations team. They give 110 percent to this department, and it’s a joy to work with them.” Working Together Comes Naturally The Nelsons have been married for 43 years. They met when she was putting herself through college by working as retail store night cashier, and he was the assistant manager. When people ask how she can work with her husband, she responds, “That’s how I met him.” The Nelsons have two grown children. Their son is a fire medic in Denver. Their daughter is a physical therapist who lives near them, and the Nelsons love spending time with her children, their five-year-old twin grandsons. Tim Nelson is an avid golfer. And they are both big fans of the Arizona Diamondbacks. As for their clients, Tim Nelson marvels that he’ll send birthday cards and get calls back from them, saying the reverse mortgage was the best thing they ever did. “Not many people can work a job where someone calls a year later and says, ‘You changed my life forever,’” he says. “The impact you have on people’s lives is incredible.” They wish they could reach more people, but first, there are old misperceptions to overcome. “The good news is, each month we’re still making a difference in people’s lives,” Tim Nelson says. “That’s what keeps you going. We could go on forever with stories about how we change lives. We are making a difference every day in this business. That’s the fun part of the job.” M. Diane McCormick is a writer and editor based in York, PA. CRMP: Across the Kitchen Table EVERY RO ERTY NEEDS RDI N Preservation Inspection Title and Diligence Property Maintenance Property Management & Tenant Services Appraisal and BPO REO Asset Management Vacant Property Registration & Utility Processing guardianassetmgt.com Guardian Asset Management is your only source for comprehensive property management services. As a national leader in the industry, we have the expertise and experience to deliver consistent and high-quality services ensuring client satisfaction. OUR SERVICES INCLUDE: REVERSE MORTGAGE / JULY-AUGUST 2024 17
20 REVERSE MORTGAGE / JULY-AUGUST 2024 PREPARING FOR NOW AND THE FUTURE Loan Officers Learn New Skills Through Training Programs By Joel Berg
EDUCATION HAS LONG been seen as a key to unlocking the market for reverse mortgages, with an emphasis on potential borrowers and referral partners, such as financial planners and real estate agents. Lenders aim to dispel lingering myths about reverse mortgage products and demonstrate the value they can bring to older homeowners, efforts that are starting to bear fruit, executives say. “I think the next five years are going to be very interesting for the reverse mortgage industry,” says Chris Downey, a senior vice president at The Federal Savings Bank and co-chair of NRMLA’s Education Committee. But reverse mortgage companies also are directing their educational efforts inward as they seek to broaden the ranks of originators and ensure their staff members are up to date on the latest products and technology. “Whether someone has been in the industry for over a decade or whether they are new to selling reverse mortgages, training and education are vital parts of their success,” says Laura Hanna, national director of change implementation and sales development at Finance of America Reverse (FAR). “They foster and grow their expertise, build trust with clients, help with career advancement and ensure we are all up to date on market changes, regulations and new products.” Companies also see training and education as integral to their efforts to recruit and retain staff, while creating a bigger salesforce for reverse mortgages. Several companies, for instance, have ramped up programs that expose forward lenders to the reverse world and build their comfort with the product. “There is a very good chance that a forward loan originator is going to be contacted by a previous customer who says, ‘Hey, I’m approaching retirement. I’m interested in learning more about a reverse mortgage. What can you tell me?’” says Amy Smith, senior vice president of reverse support and training at Fairway Independent Mortgage Corp. “If they don’t have at least the information to speak about it as an option, then their borrower may go someplace else.” Shifting to Reverse Knowledge of reverse mortgage products is critical for success in the industry. However, knowledge of the customer is equally, if not more, important, say executives involved in training. Reverse lenders serve a unique demographic, one protected by law. Effective training programs need to focus at least part of their attention on the characteristics of older borrowers, whose complex needs don’t always fit easily on a loan application. “You almost universally will run into estate planning questions, healthcare questions, so you need to be something of a jack-of-all-trades and know enough to identify an issue and bring in the right experts,” says Downey, who joined Chicago-based Federal Savings in July 2023 when it merged with his reverse company, Harbor Mortgage Solutions in Braintree, MA. Many lenders pick up those skills through direct experience. The Federal Savings Bank encourages forward originators to refer potential reverse clients to reverse Preparing for Now and the Future continued on page 22 Chris Downey Laura Hanna Amy Smith “You really need to make sure that you are providing all reverse team members with a steady stream of training on product and policy updates, on an equal level to any forward products. To retain reverse LOs, we need to show them they are valued as much as forward LOs.” —Amy Smith, senior vice president of reverse support and training at Fairway Independent Mortgage Corp. REVERSE MORTGAGE / JULY-AUGUST 2024 21
specialists and then to shadow the process if they are interested in learning more, Downey says. “Some are happy just to make the referral. They’re way too busy on the forward side,” he says. But others start to take a stronger interest in the reverse side. “We’ve had people jump over and all they want to do are reverses.” The transition from forward to reverse is not straightforward, notes Hanna. She describes it as a “reprogramming” of sorts to ensure forward lenders are asking the right questions and listening for different cues. FAR’s training programs include a focus on sales behaviors to help originators better serve their clients, Hanna says. “It’s so much deeper than just the product details and the guidelines. It’s genuinely a different clientele that is coming to us for different needs and different reasons.” Training Keeps Workers Despite the challenges, more originators are open to adding reverse products to their portfolio—and to the companies that give them the tools to succeed, industry executives say. “If you can offer them a training program that really prepares them to go out and meet with seniors and referral partners, that can be a real attraction,” says Michael Pankow, national director of reverse mortgage lending at City First Mortgage Services LLC. Armed with a better understanding of reverse mortgage products, originators are better able to answer the concerns that borrowers might have, Pankow says, noting that City First takes a holistic approach to its training. “Our training doesn’t cover just the nuts and bolts of the reverse mortgage,” Pankow says, adding that it also covers the best ways to present the product to an older population. The training efforts at City First have yielded a growing number of reverse mortgage applications, he says. But more importantly, they are generating better-looking deals that are more likely to close. “The difference is that our people now know how to identify a more qualified reverse mortgage borrower,” he says. Indeed, many forward lenders discover to their surprise that reverse mortgages actually are easier to close, he adds. Unlike forward loans, which may require credit scoring and salary documentation, a reverse mortgage relies mostly on financial assessment. Providing the Tools Given the many questions that can arise during the application process for a reverse mortgage, companies strive to build a platform that can support originators regardless of what they encounter in the field. The platform can include access to other experts, industry executives say. But it can also include an array of technologies designed to streamline the lending process. Every company has unique systems on which its originators must be trained. But companies also tweak those systems at regular intervals to improve the borrower experience. That leads to the need for additional training. “We’re always looking at different ways that we can enhance the experience for both internal and external customers,” Hanna says. Advances in technology are also changing how training and education are delivered. In January, Fairway shifted from a three-day in-person training program to a web-based program that originators can take at their own pace using prerecorded materials. The program is for forward originators interested in learning more about reverse loans. Many forward originators were simply unwilling to give up three days to sit in a classroom, Smith says. “It’s also very overwhelming. Your eyes start to glaze over.” Online tools also offer trainees a chance to rewind and review material, an option they might not have in a traditional classroom, Smith adds. And by offering a self-paced, online approach, Fairway expects to reach more forward loan officers (LOs) than before, she says. Many originators have signed up for the program, says Smith, adding that the company is monitoring their progress. It is still early, she notes. “But overall, I would Preparing for Now and the Future continued from page 21 Michael Pankow 22 REVERSE MORTGAGE / JULY-AUGUST 2024
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